The Internet Has Virtually Reduced the World to a Global Village

The internet has changed the world. It has greatly impacted communication virtually reducing the world to a global village by enabling individuals to communicate easily and quickly. The internet has also changed the conventional ways of buying and selling and has transformed commercial activities. The term “e-commerce” simply put is the use of the internet to conclude contracts through electronic means. In Europe, statistics show that most countries have a growing internal e-commerce market with more and more e-shoppers using the internet to purchase goods and services daily. [1] Countries like Norway, Germany, France and the United Kingdom (just to mention a few) have the highest percentage of individuals between the ages of 16-74 that use the internet to order goods and services. [2] While national e-commerce markets flourish, such an evident contrast exists with regards to the growth of cross border consumer e-commerce. A report on cross border e-commerce in the EU [3] shows that while consumer e-commerce is taking off at the national level all over Europe it is still quite rare for consumers to purchase goods and services on the internet from other Member States. [4] A further report conducted in 2006 estimated the European e-commerce market to be worth 106 million Euros. [5] Cross border e-commerce has an untapped potential that could empower not only the economies of member states, but consumers as well by providing them with diversity in choice and prices.

There are noticeable barriers to cross border consumer e-commerce which hinder its growth. Several reports like the above mentioned EU report [6] and the Organization for Economic Cooperation and Development (OECD) Conference on Empowering E-Consumers [7] have identified several barriers that have stunted the growth of cross border e-commerce. Factors such as: lack of internet connectivity in homes across local areas in Europe; lack of access to specific websites from other countries advertising goods and services; inadequate consumer confidence in online payment systems from other jurisdictions as well as delivery methods, returns policies and refunds. Language has rightly been identified as one of such barriers, [8] perhaps one of the most important aspects, because it encapsulates such matters as communication, advertising and jurisdiction.

This essay begins by giving a background on the laws that govern jurisdiction and choice of law in Europe, so as to lay a foundation and provide a context for which jurisdiction shall be considered. It then focuses on the main issue regarding the impact of the language of a website on issues of jurisdiction and applicable law, in order to point out the significant issues therein which lends credence to the fact that language is a barrier to the development of cross border e-commerce. The scope of this essay is mainly focused on the European Union since it presents the perfect model for a diverse multi-linguistic and multi-cultural Community. Occasional examples of other countries have been used to provide a contrast on what is obtainable in Europe. The respective Directives which govern E-Commerce in the EU have been used for reference, as well as several relevant European Court of Justice (ECJ) cases. These have been considered in an attempt to display the framework put in place regarding jurisdiction and applicable law on commercial transactions in the EU and how the courts have interpreted these laws. This essay will further explore other factors that impact jurisdiction and applicable law thereby hampering the growth of cross border consumer e-commerce. It concludes by making recommendations as to the ways cross border e-commerce can be encouraged in the EU, and possible alternatives to circumvent issues of determining jurisdiction and applicable law when dealing with disputes arising from electronic commercial activity.

BACKGROUND

It is trite knowledge that legal action sometimes ensues as a result of commercial contracts. D.R Johnson and D. Post, in an article titled “Law and Borders – The Rise of Law in Cyberspace”, [9] explore how the internet disregards geographical boundaries, and how conventional laws of jurisdiction are “thrown in disarray” and as a result need to be properly governed by clear legal rules. [10] The importance of this need cannot be over stated, especially when considering disputes arising from e-contracts, especially in cases involving cross border consumer e-commerce.

Jurisdiction has to do with the authority of a court to adjudicate over a matter, while conflict of laws instructs the courts on what laws to apply in disputes containing foreign elements. Countries may have different national laws which may affect the terms and conditions of a contract, and render the contract unenforceable [11] . In the event of a dispute between parties, the court needs to have the competency to sit over the matter and also to enforce its judgement. There also needs to be certainty on which laws to apply. Disputes involving contracts concluded at a distance by electronic means raises several questions regarding jurisdiction since it usually involves two parties from different geographical locations.

In Europe, the 1968 Brussels Convention was the governing document on matters concerning jurisdiction and the enforcement of judgments in civil and commercial matters. It contains specific rules that lay out criteria for establishing whether a court can sit on a matter. Article 2 of the convention provides that persons domiciled in a contracting state whatever their nationality can be sued in the courts of that state [12] . However, Article 5 provides rules relating to contracts and permits persons domiciled in a contracting state to be sued in another contracting state, where the performance of the contract took place in that other state. [13] Furthermore, the Convention provides that where a contract was carried out by a branch or an agency, and a dispute arises, any court in the member state where the branch or agency was situated has jurisdiction to hear the matter [14] . These rules, however, relate to geographical locations of which would be hard to determine when dealing with contracts concluded via a website using the internet.

The European Community Regulation No. 44/2001 also known as the Brussels Regulation has replaced the Convention and now provides for jurisdiction and the enforcement of judgments in civil and commercial matters. Article 2 provides that persons domiciled in member states can be sued in any other member state regardless of their nationality, while Article 5 provides for issues regarding special jurisdiction. The Regulation slightly modifies the Convention and contains essentially the same rules with some notable distinctions. Article 15 (1) of the Regulation which is similar to Article 13 of the Convention, provides for consumer contracts it states:

1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if:

(a) It is a contract for the sale of goods on instalment credit terms; or

(b) It is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or

(c) In all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.

The most notable change from the Brussels Convention is Article 15 (1) (c) which allows a consumer to sue in his home state any trader that pursues “commercial activities” in that consumers domicile or by any means “directs activities” to that member state. This means that any trader that advertises his goods or services in a member state other than his own through the aid of newspapers, television ads or a website will be deemed as “directing activities” to that member state. This prompts the question; where an offer is made on a website and it is not directed specifically to the Country of the consumer, but is available to a global population would it still be considered as “directing activities” within the contemplation of the Directive? Rosner N. States that since the Brussels Regulation is prevalently consumer protection based, if a consumer can conclude a contract online through a website accessible in that consumers country, the consumer can sue in his or her domicile. [15]

The main issue focused on here is jurisdiction and choice of law regarding e-contracts concluded on websites over the internet. To properly tackle the fact in issue, a consideration will be made as to what would constitute as “directing activities” through a website. To show that an undertaking directs its activities to a particular member state is to determine the jurisdiction where a matter can be tried in the event of a dispute. The impact of the language of a website, on issues of jurisdiction and applicable law will now be considered.

LANGUAGE OF A WEBSITE AND THE IMPACT IT HAS ON ISSUES OF JURISDICTION AND APPLICABLE LAW

Language is the means for communication and it plays an important role in trade. With the advent of the internet, the act of buying and selling has changed significantly. Websites are used to advertise and sell goods or services and they are written in different languages. Weihbold U. states that the most common barrier for not engaging in cross border sales in Europe is the difference of language and culture particularly when it comes to advertising [16] . Maguire J. says, in the United States of America and Canada, cross-border contacts are plagued with plenty hurdles among which are; exorbitant duty fees and shipping costs, and most importantly language and cultural barriers [17] .

The language of a website could be understood in two different ways. Firstly as the actual language itself, meaning the website could be written in French, Spanish or English for example; or the use of the language on the website meaning the exact wording used. The mere language of a website is insufficient to determine which court has jurisdiction to hear a matter, but it can influence it. The way the language is used and the actual content of the website needs to be considered as well, in order to properly ascertain such an issue.

As already explained, the global nature of the internet means that websites can be accessed all over the world. The mere fact that a website written in German should mean that it is directed at people in Germany is flawed reasoning because other countries in the world speak German as their lingua franca. To be able to determine jurisdiction or choice of law from the language of a website such a language must be so unique that it is spoken only in a specific part of the world. A suitable example would be a website in Maori. Therefore, a website in German with prices in Euro’s and confining its orders for goods and services to consumers located in the Germany only, would be difficult to ascribe as being directed anywhere but Germany regardless of the fact that other countries in Europe speak German as a national language. In such an instance, it is implied that the trader intends to be bound by the decision of the Courts within that jurisdiction because his goods and services are only available to people within a particular country, taking into consideration all the Directives that govern E-Commerce. Where any consumer should decide to sue, they most likely would be domiciled in Germany. This neatly takes care of the Jurisdiction problem because the way the language on the website is used has revealed its true content and purpose. The distinction above is made to illustrate that though both aspects can be interwoven, they are also two separate concepts. For the purpose of this essay the language of a website shall be understood to mean the actual language and not the way it is used.

Several unique cases which have been brought before the European Court of Justice (ECJ), have explored the concept of the language of a website in trying to answer the jurisdiction question, by determining if a website directs its activities to another member state as provided for by the Regulation [18] . The opinion of the Advocate General Ms Verica Trstenjak in C-585/08 Pammer; and case 144/09 Hotel Alpenhof which was presented in May 2010 [19] provides an astute argument supporting why the language of a website cannot be the only criteria for determining if an undertaking directs its activities to a member state. The Advocate General, stated that it would be problematic to assume that an undertaking directs its activities to a particular member state on the basis that the website is written in a language that is the national language of such a state, even in instances where the language is not so common and is used mainly in that state alone [20] . It could be that other people living in other member states speak that language as well, in such an instance they could access and understand the website also. The Advocate General further contemplated a situation where a website is written in a language that is widespread. [21] An ideal example would be the English language which is the official language of so many countries around the world. This scenario prompts the question where a website in written in English and can be accessed by anyone anywhere in the world, would that constitute “directing activities”?

Based on the opinion presented by the Advocate General it is obvious that the mere language of a website is insufficient to determine issues of jurisdiction. However, she stated that language of a website can be relevant in several aspects. Where a website is written in a particular language but provides a facility to choose other languages, it shows that the undertaking intends that the goods or services provided on the website be accessed by a larger consumer base [22] , and it further accepts that it may be sued in different jurisdictions.

The joint declaration of the Council and the Commission on Articles 15 and 73 of Regulation No.44/2001 [23] , states that the language of a website does not constitute as a relevant factor in determining if an undertaking directs its activities to a member state. It is humbly asserted that the language of a website though insufficient in itself, is very relevant when taken into consideration with other factors.

There are several factors that influence issues of jurisdiction and choice of law when dealing with cross border consumer e-commerce transactions. The first to be considered is the content of a website. The E-Commerce Directive [24] , the Distance Selling Directive [25] and the Directive concerning Distance Marketing of Consumer Financial Services [26] provide for and govern contracts concluded by electronic means in member states. Article 4 of the Distance Selling Directive provides that prior information be given to a consumer before the conclusion of a distance contract, while Article 5 of the E-Commerce Directive provides for the information that must be “easily, directly and permanently accessible” to anyone viewing a website. This involves information like the identity of the seller, contact information, price and condition of goods, delivery arrangements and rights of withdrawal. This information contained on a website also indicates if a contract can be concluded with a consumer from another member state. Where there are options for delivery to other member states, or the website facilitates payment options from other states, it shows that the seller intends to conclude cross border contracts. As provided by the Brussels Regulation rules, in the event of a dispute the consumer has the option of suing in his domicile. All the information provided on a website as required by the Distance Selling Directive can indicate if a website directs its activities to a member state and thereby be a determining factor in issues of jurisdiction. In the United States of America, where a U.S Federal District Court in New Jersey held that it lacked jurisdiction to sit on a case between a U.S company and a Spanish company [27] ; the court took into consideration that the website was in Spanish, the prices were in pesetas and Euro’s only and the company only shipped to Spanish addresses. Irrespective of the fact that the case was a trademark infringement issue (among other things), the whole information available on the website was taken into consideration to guide the courts who further held that the Spanish company was not reaching out to New Jersey [28] .

The terms and conditions of a website also play a big role in determining what choice of law will be applied to the contract but not what court will have jurisdiction to hear a matter. Where the terms and conditions are poorly drafted, an undertaking can find itself subject to laws in a jurisdiction that is not favourable to such an undertaking. It is trite law that parties to a contract are bound by any agreements made between them, therefore where a consumer accepts the terms and conditions on a website which contain that a particular law be applied to regulate the contract, such a consumer agrees that he be bound by such terms and conditions. Some terms and conditions provide for dispute resolution or out of court settlement options. Where the question of jurisdiction arises however, the courts can look into the merits of a case to determine issues of jurisdiction and applicable law regardless of the terms and conditions. While Article 3 of the E-Commerce Directive [29] entitles electronic contracts to be regulated by the laws in the suppliers domicile it permits this only in the context of Article 1 (4) [30] which states that the Directive does not establish extra rules on private international law nor does it deal with Issues of jurisdiction of courts.

The Advocate General Trstenjak, in her legal opinion on the Pammer and Alpenhof cases, stated that in determining if an undertaking directs its activities to a member state, consideration among other things, should also be given to the top-level domain name of a state as it could be an indication that the undertaking directs its activities to a specific member state hence the choice of law and jurisdiction could be implied unless expressly agreed otherwise [31] . Where an undertaking sets up a website with the domain name .uk, it could mean that its goods and services are directed to the UK customer market. Where the same undertaking sets up more websites ending in other domains for other countries it shows it intends to conclude contracts with other member states.

Advertising online is another factor that needs to be considered when dealing with issues of jurisdiction. Where a seller advertises by placing ads on search engine pages, or on other websites accessible in member states other than that of the seller it could be said the seller visualizes the possibility of conducting business with consumers from those member states. Gusakova E. makes a notable distinction when considering the concept of “directing activities” with regard to advertising on websites. He examined a scenario where websites that merely advertise products without providing the means to conclude a contract could not give grounds for determining jurisdiction [32] . Where advertising is done using an intermediary or agency, or where a website is contained on an internet directory that provides links to the website providing the goods and services advertised; where this is accessible in a consumers domicile it could be an indication of an intention to conduct business in such a domicile. The key aspect in this regard would be if through any of the above mentioned avenues, a consumer can conclude a contract online with a trader, then such a trader would be subject to the jurisdiction of the courts of a consumers domicile. The European Court of Justice (ECJ) in its judgement in the Pammer and Hotel Alpenhof cases held that in determining if an undertaking uses a website or that of an intermediary to advertise its goods or services, it will be considered as directing its activities to the member state of the consumers domicile. [33]

Anther interesting factor to be considered is one which was raised by the Advocate General Trstenjak, regarding advertising through the sending of unsolicited emails containing information and links connecting consumers to websites that enable them to conclude contracts [34] . The Advocate General asserted that where an undertaking sends unsolicited emails to consumers, it will be immaterial if the undertaking had no idea what domicile the emails were being sent to, the undertaking will be liable to being sued in any member state [35] . Such a scenario could be an indication of “directing activities” and could influence the courts in determining issues of jurisdiction.

The various Directives that govern E-Commerce in the European Union as contemplated above, puts together a framework aimed at providing some certainty involving the rules relating to cross-border consumer e-commerce. The barriers to cross border consumer e-commerce go beyond determining what court has jurisdiction to adjudicate a matter, or what laws will regulate the proceedings. These are issues that arise when a contract has actually been concluded and a dispute occurs. The above mentioned factors collectively impact issues of jurisdiction and applicable law. The ECJ and the Advocate General, in their interpretation of Article 15 (1) (c) and (3) of the Brussels Regulation have shed some light and provided an inexhaustive list of factors that can guide the national courts when determining issues of jurisdiction.

CONCLUSION

The importance of laws and rules that regulate and govern commercial activity cannot be over-stated. E-Commerce presents a new set of challenges that the traditional laws and approaches used in regulating trade cannot properly cater for. In Europe the Directives and Regulations provide some certainty but every now and again there are factors that further raise new questions with regard to the adequacy of existing laws to meet up with emerging trends and advancement in the use of information systems to engage in E-Commerce.

Advancement in technology now enables an internet user to access websites written in languages that such a user does not understand. Internet browsers such as Google Chrome, translates the website from one language to another. For instance where an internet user predominantly accesses the internet in Polish, where a search is conducted on Google for example and a website written in English is presented the browser asks the user if the user requires the page to be translated from English to Polish. The implications of how such advancements will impact issues of jurisdiction or applicable law are yet to be determined. It seems that such advancements are the beginnings of an attempt to bridge the communication gap caused by the language of a website in terms of internet access.

This essay has shown the potential that cross border consumer e-commerce has within the EU. It is trite knowledge that language is one of the barriers that hinder the growth of cross border e-commerce. It has also been asserted that regulatory barriers as well as barriers that chip away at consumer confidence have played an equal part in frustrating cross-border transactions [36] . This essay has focused on the language of a website and how it impacts issues of jurisdiction and choice of law. It has also considered other factors that influence these issues by looking at several European cases brought before the ECJ for interpretation.

There are several ways to enhance consumer confidence in cross-border transactions, and thereby encourage cross-border trade. As mentioned earlier one of the factors that hinder cross border trade is lack of access to the internet in some remote parts of several European countries. Most countries are setting up regulatory frameworks to provide universal service so that people can have access to the internet. It has been recommended that member states develop information campaigns to inform consumers of their rights when engaging in cross border transactions [37] . Customers need to know the forms of payment when concluding cross border transactions, and personal data used is protected and safe. It has further been recommended that developing easier VAT obligations for sellers concluding contracts with consumers at a distance will encourage more sellers to trade freely with cross border consumers [38] . There needs to be improved payment methods for cross border contracts. Banking costs usually deter consumers from buying from other member states because they may end up paying more for the items purchased. There needs to be a practical alternative.

Disputes resulting from e-contracts do not have to end in litigation. Efficient dispute resolution has been attributed as one of the ways of instilling consumer confidence in cross border e-commerce [39] . Reports have shown that consumers hardly commence court proceedings concerning cross border purchases [40] . Most dissatisfied customers take no further action, even with the provision of the EC’s Online Dispute Resolution (ODR), It seems that consumers do not see the rationale behind commencing court proceedings or ODR especially with regard to small transactions not amounting to 100 Euro’s. Most terms and conditions in online contracts now contain clauses for an option to settle disputes through Online Dispute Resolution (ODR) mechanisms. Some undertakings such as Ebay provide ODR alternatives for consumers that access its services and successfully resolve any disputes that arise. Although Ebay usually performs its activities within national markets because it has a different website for different countries, all of which end with the country’s top-level domain code; an example can be drawn from the successes it has had in dealing with disputes. The EU needs to set up a workable framework that will effectively enable consumers to settle dispute online through arbitration or mediation. Not only will this save costs but it will be less time consumer and will greatly encourage consumer confidence in cross border transactions which hopefully will eliminate further disputes as to what jurisdiction the issue can be brought and what law must apply to the proceedings.