FD Utkarsh

8/18/2019 FD Utkarsh

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TABLE OF CONTENTS

. "o1ic............................................................................................................................................2

3. Research Methodolo4y...............................................................................................................2

2. y1othesis..................................................................................................................................2

/. +ntrodction................................................................................................................................2

0. 5hat +s E-Commerce6 ...............................................................................................................0

• Cate4ories of E-Commerce..................................................................................................7

7. ( ,rief istory of Consmer Contracts +n #rivate +nternational Law........................................8

• Stats of ( Server................................................................................................................9

• :ormation of Contracts........................................................................................................;

8. Consmer Contracts in E-Commerce and #rivate +nternational Law........................................<

• Dilemma =f #arty (tonomy............................................................................................<

• "ar4etin4 (nd #arties> #r1ose.........................................................................................

9. ?risdiction in ,siness-"o-Consmer E-Commerce Contracts..............................................3

;. ?risdiction in Electronic Consmer Contracts@ "he Rle-,ased (11roach +n the ,rssels +

Re4lation......................................................................................................................................3


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TOPIC : E-contracts and Conflict of Laws

R ESEARCH METHODOLOGY :

Doctrinal methodB i.e. collection of data from 1rimary as well as thro4h secondary

sorcesB will !e sed for the 1re1aration of the 1roect.

:or the said methodB athor will cover im1ortant national and international le4al

docmentsB dicial 1rononcementsB o1inion of different rists on the to1icB etc.

(lsoB recent de!ate's) 'if any) on the said to1ic will !e tried to !e inclded in the

1roect to 1rovide the latest develo1ment on the chosen to1ic.

• "he 1roect will also contain athors 1ersonal views alon4 with references and le4al

1osition re4ardin4 the s!ect at hand.

HYPOTHESIS :

"he !asic 1remise with which the researcher has initiated the research for the 1roect is that

conflict of laws isses arise freFently in the e-contracts. "herefore there is need for 1ro1er

nderstandin4 of the inter1lay !etween these two streams. (lso it is im1licit for one to resort

to the conflict of laws in cases of e-contracts where there are individals of from varios

states may !e involved. 5ith this 1remise in mindB the researcher has initiated the 1roect and

may well reach to new nderstandin4s re4ardin4 the to1ic in hand.

INTRODUCTION :

Consmer cross-!order access to stice has !ecome a hotly de!ated to1ic in the

contem1orary worldB es1ecially with the contri!tion and inflence of e-commerce.

+nternational !siness transactions are descri!ed in the form of an international contractB

containin4 the o!ective's) and commitments of each of the 1arties involved and the terms

which 4overn the transaction. 5hen 1arties from different contries enter into a contractB they

are 4overned !y international contract law nless they a4ree to a!ide !y the laws of one of

the contries. +nternational contract law is a !ranch of 1rivate international law. "his ty1e of

law is freFently a11lied to as international sales law. +nternational sales contracts are

4overned !y the United Nations Convention on Contracts for the +nternational Sale of %oods

'C+S%) from ;9


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develo1ed their own code for international transactions. "hese rles have evolved into the

contract laws of today.

"he develo1ment of information commnication technolo4y in 1articlar creates a !orderless

Gcy!er mar&etB which ena!les consmers to have easyB convenient and low cost contact with

!sinesses internationally. :reFent online !siness-to-consmer transactions challen4e the

traditional 1rivate international lawB renderin4 it an o!stacle which discora4es the

confidence of !oth 1arties and 1revents the frther develo1ment of consmer oriented e-

commerce. Consmer 1rotection is no lon4er merely a domestic concernB !t !ecomin4 an

isse in 1rivate international lawB es1ecially in the a4e of electronic commerce. +t is more

im1ortant to esta!lish a11ro1riate 1rivate international law rles for e-consmer contractsB

which shold 1rovide sfficient 1rotection to the consmers and encora4e develo1ment of

electronic !siness-to-consmer commerce.

WHAT IS E-COMMERCE?

+t is a rather difficlt tas& to 1rovide a 1recise definition of the term e-commerce. "heliteratre on this s!ect contains varios descri1tionsB ran4in4 from !road and etensive to

rather concise and sim1le formlations. +n the followin4 lines there will mention a nm!er of

sch definitions with a view to 1rovide an as accrate as 1ossi!le 1ictre.

+n a 1a1er 1!lished !y the Ero1ean Commission in order to descri!e the natre of e-

commerce and to identify several isses on this areaB the definition sed incldes@

“any form of business transaction in which the parties interact electronically

rather than by physical exchanges or direct physical contact.”2

1 :eatres - +nternational ?risdiction in Ero1ean Union E-Commerce Contracts availa!le at

[email protected]!9-;

2 Ero1ean CommissionB Electronic Commerce-(n [email protected].!eHecommerceHanswersHintrodction.html.

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http://www.llrx.com/features/eu_ecom.htm#b8-9http://www.llrx.com/features/eu_ecom.htm#b8-9http://www.ispo.cec.be/ecommerce/answers/introduction.htmlhttp://www.ispo.cec.be/ecommerce/answers/introduction.htmlhttp://www.llrx.com/features/eu_ecom.htm#b8-9


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MeanwhileB the Ministry of Economic (ffairs of the Netherlands 1!lished in ;;9 a 1olicy

1a1er desi4ned at e1andin4 and im1rovin4 the se of e-commerce. "his 1lan refers in its

trn to electronic commerce as coverin4@

“all business transactions that are carried out electronically with a view to

improving the efficiency and effectiveness of market and business processes.”3

=ne of the most concise definitions for e-commerceB s1ecific for the dynamic world of

!sinessB has !een s44ested !y Mr. (.#. van $erc&hovenB 1rodct develo1ment-mana4er at

5orld =nline +nternationalB formerly a leadin4 Dtch +nternet 1rovider@

“E-commerce is the use of telecommunication and computers in order to support

trade.”

:rom the aforementioned definitions one may infer a nm!er of factors that seem to a11ear

on more than one occasion@

:irstlyB e-commerce 1res11oses the eistence of a !siness transaction. SecondlyB the 1arties

to sch a transaction will maintain contact thro4h electronic means rather than conventional

ways of commnication. LastlyB e-commerce is desi4ned at creatin4 a more efficient !siness

environment.

avin4 esta!lished thatB it is Fite o!vios that e-commerce is not limited to +nternet. +t rather

incldes all !siness transactions carried ot thro4h electronic meansK sch is the caseB for

instanceB with the so-called Electronic Data +nterchan4e transactions '“ED+”)B develo1ed in

the ;9


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environments where e-commerce is !ein4 condcted. +n factB in a definition of e-commerce

recently sed in a wor&in4 1a1er of the Ero1ean CommissionB it is only the +nternet that is

mentioned as the medim where transactions are !ein4 conclded@

“E-commerce! the buying and selling of goods and services using the "nternet.”#

Categories of E-Commerce

Electronic transactions may !e conclded !etween varios 1arties@ #rivate enter1risesB

consmers or 1!lic athorities. De1endin4 on the 1arties 1artici1atin4 in the transactionB e-

commerce can !e s!divided in for distinct cate4ories8@

'i) ,siness to !siness transactions involvin4 1erformance a4ainst 1ayment or

1erformance a4ainst 1erformance 'for eam1le when one 1arty s11lies statistical

data in echan4e for the reslts of a mar&et research).

'ii) ,siness to consmer transactions involvin4 the 1rchase of 1rodcts !y

individals otside their trade or 1rofession. (n additional term sed to descri!e

this cate4ory is electronic retailin4.

"hese first two cate4ories may also !e classified nder the headin4 electronic trading .

'iii) ,siness to administration transaction is a cate4ory that finds itself in an

inci1ient sta4e. +t involves commercial relations !etween com1anies and 1!lic

!odiesB for eam1le followin4 a 4overnment 1rocrement contract.

'iv) "he consmer to administration cate4ory has only recently emer4ed and is of

a rather limited a11lication. oweverB one can ima4ine that a certain de4ree of

efficiency and effectiveness can !e added to 4overnment activities if a nm!er of

sch o1erations will !e conclded on-line 'for eam1le in welfare 1ayments or ta

matters).

.

BENEFITS AND PROBLEMS OF E-CONTRACTS

6 Ero1ean CommissionB wor&in4 1a1er “E- Ero1eB an +nformation Society for (ll”B

[email protected]!ectivesHarea


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E-commerce se1arates a sin4le action into different sta4es and each cold ha11en in different

1laces. :or eam1leB when a !siness sends a consmer a di4ital 1rodct !y emailB the email

will !e ori4inally stored in the server of the consmer>s mail!oB which is located in state (K

the consmer cold then download it to his com1terB which is in state ,K the consmer may

not o1en it directlyB !t ta&e the la1to1 to state CB where he o1ens the mail and ses the

di4ital 1rodct. =r the consmer mi4ht have different email addresses and for the sa&e of

convenienceB the consmer ses one email address located on the server in state D to

download all the incomin4 messa4es from other addresses. +n this caseB the ot4oin4 email

will !e first stored in state (B then transferred to and stored in state D. +t is not wise to ta&e

the location of an >action> as the nesB for it may occr in more than one form. 9

Status of a Server

"he internet cannot rn withot the 1artici1ation of a serverB which acts as an intermediary to

facilitate commnications !etween internet sers. ( server is a com1ter sed to host

we!sitesB mail!oes and relevant data messa4es. ( server 1lays an im1ortant role in e-

commerce. +t acts as the >stora4e> of an e-com1anyB hostin4 all di4ital 1rodcts. +t is the 1lace

where online stores are 1hysically locatedB where the di4ital s!ect matter is technically

deliveredB and where the 1arties> electronic a4ents are located. oweverB the stats of a server

is ncertain. =n the one handB it does 1lay an im1ortant role in electronic transactionsB sincealmost all internet transactions have to !e carried ot thro4h the server. =n the other handB it

is not clear whether this technically im1ortant role is also s!stantially si4nificant in 1rivate

international law. +n many casesB a server only holds fortitos and s1erficial connections to

a transaction. +t fnctions as no more than a medim of commnicationB sch as a tele

machine in traditional commerceB which ndermines the idea of 4ivin4 too mch wei4ht to

the location of the server when decidin4 1rivate international law isses. ( !siness can

freFently chan4e its server or ado1t more than one server for its commercial activities. :or

eam1leB it can se one server to host its we!site and another for a mirror siteB in order to

1rovide Fic&er access to a lar4er amont of consmers. ( !siness can also se one server to

host its we!siteB a second server to receive orders and 1ayments and a third server to store

and 1load di4ital 1rodcts. "he server sed to host the we!site can sim1ly !e chosen

randomlyB and only 1rovides technical s11ort withot any decision ma&in4B res1onsi!ility or

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atonomy. E-commerce !rin4s a new Festion as to whether a server can contri!te as a new

connectin4 factor for the conflict of laws in e-commerce.;

Formation of Contracts

E-commerce also !rin4s challen4es to the formation of contracts. (n e-contract will !e

conclded not only in different formB !t also !y different 1rocedreB which raises s1ecific

Festions as to its validity. "his isse is im1ortant in the conflict of laws !ecase it

determines the validity of a choice of law or choice of form clase. :rom a 1rivate

international law 1ers1ectiveB the validity of a contract or contract terms can !e addressed

either !y the choice of law a11roach or !y the niform law a11roach. +f ado1tin4 the first

o1tionB the 1otential difficlty is that where the relevant system of law desi4nated !y the

choice of law rle has no 1dated le4islation for e-contractsB the contract mi4ht !e

nreasona!ly invalidated irres1ective of !oth 1arties> intention. +f ado1tin4 the second

o1tionB it is Festiona!le as to how the niform rles cold !e esta!lished to re4late e-

contracts and whether this com1romise cold !e reached !y different contries.<

CONSUMER CONTRACTS IN E-COMMERCE AND PRIATE INTERNATIONAL LAW

Consmer contracts and e-commerce have !ro4ht new isses for 1rivate international law.

#rivate international law 1ro!lems !ecome more com1licated in electronic consmer contracts. S1ecial consideration has to !e esta!lished to 1rotect consmers as the wea&er

1arty in 1rivate international law. (dditionally these s1ecific rles have to !e 1dated to !e

a11lica!le in e-commerce. "he characteristics of consmer contracts ma&e some 1otential

soltions for e-commerce nreasona!leK while the s1ecific natre of e-commerce ma&es some

effective methods for consmer contracts 1ro!lematic.

Dilemma of Party Autonomy

(ltho4h e-commerce challen4es traditional 1rivate international law rlesB one 1rivate

international law doctrineB 1arty atonomyB esca1es the difficlties 4enerated !y e-commerce.

#arty atonomy has !een favored es1ecially in e-commerceB for it can easily avoid the

difficlty of localisation and identification !ro4ht !y e-commerce. Most recent 1rivate

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11 S1ra Note ;

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international law le4islation has 1laced the doctrine of 1arty atonomy in a 1rimary 1ositionB

!y reco4nisin4 the 1arties> choice of law and choice of cort a4reements. oweverB this

doctrine wor&s 1ro1erly anywhere ece1t in contracts with an ineFality of !ar4ainin4 1owerB

incldin4 consmer contractsB where 1arty atonomy cold easily 1rovide nfair reslts and

de1rive consmers of their ri4hts. "he effect of 1arty atonomy has !een widely restricted in

consmer contractsB which !rin4s more ncertainty and difficlties to consmer contracts

than other commercial con-tracts in e-commerce.3

Targeting and Parties' Purpose

Since ordinary conflicts rles cannot wor& 1ro1erly in consmer contractsB some

risdictionsB sch as the EUB 1rovide 1rotective conflicts rlesB where the defalt form for a

consmer dis1te shall !e the form of the consmer>s home state and the defalt a11lica!le

law is the law of the consmer>s home contry. "hese 1rotective conflicts rles wold

dama4e a !siness>s reasona!le e1ectation ifB !y any reasonsB the !siness cannot foresee

!ein4 s!ect to the risdiction and system of law in a 1articlar contry. "he normal

a11roach to !alance the interest of consmers and the e1ectation of !sinesses is to esta!lish

a sco1e to 1reclde some consmers from !ein4 1rotected. +n most casesB the sco1e is

esta!lished accordin4 to the activities of a !siness. +f the !siness tar4ets its consmers in a

1articlar contry the !siness shold !e s!ect to the 1rotective rles which either assi4n risdiction to that state or a11ly the national law of that state to 4overn the con-tracts. "he

1ro!lem is that what constittes >tar4etin4> will !e hard to decide in e-commerce. "he

international characteristic of e-commerce ma&es a we!site accessi!le in every contry where

the internet access is availa!le. +t is 1ro!lematic if this can !e nderstood as >tar4etin4>. +n e-

mail tradin4B a !siness cannot reasona!ly &now eactly which states an email wold reach

!y sendin4 4ro1 emailsB !ecase the e-mail address sometimes wold 1rovide nil or

misleadin4 information as to the reci1ient domicile or ha!ital residence. 2

!URISDICTION IN BUSINESS-TO-CONSUMER E-COMMERCE CONTRACTS

(s already hi4hli4hted in the 1recedin4 1art of the 1roectB a11roimately one third of todays

world e-commerce is condcted !etween !sinesses and consmers. De to the ra1id 4rowth

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13 =renB ?oa&im S"B +nternational ?risdictions over Consmer Contracts in E- Ero1e availa!le [email protected]!leH27722236seFJ1a4eIscanIta!Icontents 'last accessed on 0.


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of the nm!ers of 1rivate hoseholds connected to +nternetB one can reasona!ly e1ect that

this 1ercenta4e will contine to increase. Under these circmstancesB the Festion arises

which cort has risdiction to try international conflicts arisin4 from consmer contracts

conclded thro4h +nternet. 5ill the same rles a11lica!le to conventional consmer

contracts a11ly6 =r shold other considerations !e ta&en into accont6/

A necessary distinction

+n answerin4 this FestionB one le4al 1ecliarity 1osed !y e-commerce mst !e nderstood.

"o !e more 1reciseB a !asic distinction has to !e made accordin4 to the natre of the

o!li4ation to !e 1erformed. (s a conseFenceB one may identify some cate4ories of e-

commerce ot of which two main cate4ories are@ =n one hand there is the trade with 1hysical

4oods and services andB on the other handB the trade with electronic materials 'softwareB

ima4esB voiceB tet etc.). "his !asic distinction leads to a frther division of e-commerce

contracts@ +n the former caseB the +nternet is !ein4 sed as the medim to commnicate and

sometimes to even conclde a contractB while in the latter event the +nternet re1resents the

1lace where the 1erformance ta&es 1lace. +n other wordsB while in the first case the contract is

conclded !y sin4 electronic means !t the 1erformance ta&es 1lace otside the electronic

environmentB in the second instance the whole transactionB from the moment an offer is !ein4

made and ntil the o!li4ation in Festion is !ein4 1erformedB can !e located on the same

networ&.0

!URISDICTION IN ELECTRONIC CONSUMER CONTRACTS: THE R ULE-BASED APPROACH IN

THE BRUSSELS I R EGULATION

"he ,rssels Re4ime is a set of rles re4latin4 which corts have risdiction in le4al

dis1tes of a civil or commercial natre !etween individals resident in different mem!er

states of the Ero1ean Union 'EU) and the Ero1ean :ree "rade (ssociation 'E:"(). +t has

detailed rles assi4nin4 risdiction for the dis1te to !e heard and 4overns the reco4nition

and enforcement of forei4n d4ements.

"his is a revised version of the ;79 Convention on ?risdiction and the Enforcement of Civil

and Commercial ?d4ements 'hereinafter the “,rssels Convention”)B de to enter into force

14 +!id

15 S1ra Note

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on st of March 3


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MoreoverB the former condition inclded in article 2'2) ! of the ori4inal ,rssels

Convention accordin4 to which the consmer has to ta&e the necessary ste1s for the

conclsion of the contract in the State of his or her domicile has !een omitted from the new

tet. (s a resltB one cold reasona!ly e1ect thatB as lon4 as a consmer has his or her

1ermanent domicile on the territory of a Contractin4 stateB the e-commerce contract can !e

conclded not only from this domicile in one of the Union statesB !t also while the 1erson in

Festion is on a !siness tri1 toB let s 1resmeB ?a1an. =f corseB in sch a case one

condition is that the we!-site where the 4oods or materials are !ein4 advertised wold !e

availa!le in the Contactin4 State where the consmer has his or her domicile. 9

+t shold !e also noted that in order to tri44er the 1rotection of these risdictional rles the

fact whether the o!ect of transaction is 1hysical 4oods or services or electronic materials is

irrelevant. "he only two conditions that ma&e article 0 a11lica!le are domicile in one of the

Contractin4 States and conclsion of the contract otside the trade or 1rofession.

(s a conseFenceB the answer to the a!ove mentioned hy1othetical Festion wold !e thatB

indeedB an +nternet com1any !ased in the Netherlands cold reasona!ly e1ect to !e sed in

any of the Contractin4 states where its we!-site is availa!le. "he only way to avoid sch a

sitation is to clearly state that the 1rodcts are not intended for a certain mar&et.

!URISDICTION IN BUSINESS-TO-BUSINESS E-COMMERCE CONTRACTS

+f consmers enoy a 1rivile4ed statsB the rles a11lyin4 to contracts conclded in the

framewor& of a trade or 1rofessionB the so-called !siness-to-!siness contractsB are of a

different natre. +n factB the revised version of the ,rssels Convention does not 1rovide

s1ecific risdictional rles to !e a11lied when concldin4 an e-commerce !siness-to-

!siness contract. (s a conseFenceB the 1roect attem1ts in the followin4 1art to 1rovide

several soltions !ased on the already eistin4 rles.;

APPRAISAL OF THE BRUSSELS I R EGULATION

"he main risdictional rle of the ,rssels ConventionB 1reserved in the recently ado1ted EC

Concil re4lationB states that defendants domiciled in a Contractin4 stateB whatever their

nationalityB shall !e sed in the corts of their 1lace of domicile '(rt. 3). +fB howeverB the

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defendant is domiciled in a third contryB then the res1ective national rles of each of the

Contractin4 states will a11ly 'art. /). Since !siness-to-!siness contracts are conclded

mainly !y com1anies or le4al 1ersonsB the act refers s to the new article 7< for the definition

of the term “domicile” as a11lica!le to these 1arties. +n accordance to this latter 1rovisionB the

domicile is to !e esta!lished havin4 de re4ardB alternativelyB to the 1lace where the com1any

or the le4al 1erson “has its stattory seatB central administrationB or 1rinci1al 1lace of

!siness.”3<

"he 1ro!lem that a11ears when dealin4 with e-commerce is that seldom these co-ordinates

are rather difficlt to !e esta!lished. Since these three criteria are alternativeB the findin4 of

any of the a!ove will sffice to conclde that a com1any or a le4al 1erson is domiciled in a

certain territory. oweverB as it has !een stated a!ove in the 1revios sectionB +nternet

com1anies canB at timesB !e difficlt to locate. "hey mi4ht either have their stattory seat and

central administration in a so-called +nternet-1aradise contryB whereas the 1rinci1al 1lace of

!siness may !e in the electronic environmentB es1ecially if they focs on trade in electronic

materials. +n this caseB the cort seied with sch an isse may se a nm!er of other criteria

in order to esta!lish the domicile of sch a com1any or le4al 1erson@ "he etension of the

domain nameB the lan4a4e of the we!-site and the crrency sed to e1ress the 1rices of

their offer. "he 1ro!lem wold a11earB of corseB if the etension wold !eB for eam1le.comB the lan4a4e of the site En4lish and the 1rices stated in US Dollars andHor Ero. +n sch

a caseB one shold trn to the alternative risdictional rles contained in article 0 of the

,rssels + re4lation.3

Forum Solutions

"rnin4 to the 1rovisions of article 0B the first 1ara4ra1h esta!lishes the 4eneral risdictional

rle in matters related to contracts accordin4 to which the corts of the Contractin4 states of

the 1lace of 1erformance are com1etent to addicate in sch conflicts. :rther in the same

1ara4ra1h it is stated that in a contract for the sale of 4oods or the 1rovision of services

risdiction !elon4s to the corts of the 1lace where the 4oods were delivered or shold have

!een delivered orB in case of service 1rovisionB in the corts of the Contractin4 state where the

20 "an4B Ohen4 So1hiaB Eclsive Choice of :orm Clases and Consmer Contracts in E-CommerceB '3


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services were 1rovided or shold have !een 1rovided. "his seems to !e a satisfactory

1rovisionB a!le to clarifyB to a certain de4reeB the a!ove-mentioned dilemma. +n other wordsB

1rovided that the contract is for the s11ly of 1hysical 4oods or 1rovision of servicesB the

article nder analysis in this 1ara4ra1h is a11lica!le to !siness-to-!siness e-commerce

contracts.33

oweverB if the contract is for the sale of electronic materials 'softwareB ima4esB voiceB tetB

etc.)B the fore4oin4 1rovision can !e hardly a11lica!le. +n sch a contractB the 1lace where the

1erformance ta&es 1laceB orB to !e more s1ecificB where the materials are !ein4 deliveredB may

!e located only after considera!le efforts. Even when attem1tin4 to constre article 0')! in

an etensive mannerB ths considerin4 electronic materials as !ein4 assimilated to 4oods or

servicesB the 1lace of delivery is Fite difficltB if not im1ossi!leB to !e esta!lished@ +s it the

1lace where the s11lier enters the data in the hardware or the 1lace where the data is

downloaded. 5hat ifB in a contract !etween two com1aniesB one Dtch and the other En4lishB

the electronic material is !ein4 downloaded from a la1to1 while the 1erson res1onsi!le for

this activity is on a !siness tri1 to %reece6 5ill this mean that the cort of the latter state can

try a conflict arisin4 from sch a contract6 "he scarcity of rles in this area cases the answer

to sch Festions to !e o1en for inter1retation. +n 1articlarB the 1ro!lem arises !ecase sch

materials can !e downloaded anywhere in the world.32

OUT-OF-COURT !URISDICTION

Possile enefits

Com1ared to other cate4ories of tradeB e-commerce 1resents a nm!er of s1ecific featres@

#erha1s one of the most evident is the s1eed with which transactions are !ein4 conclded.

Es1ecially when electronic materials are !ein4 1rchasedB the sim1le downloadin4 of the

software in Festion can last for only a few moments. (nother featreB of corseB is that de

to +nternets 4lo!al accessi!ilityB a com1any or le4al 1erson offerin4 4oodsB services or

electronic materials !y sin4 this medim can reasona!ly e1ect to sell 1rodcts worldwide.

(t the same timeB com1anies or le4al 1ersons active on the +nternet may at times !e difficlt

22 S1ra Note .

23 S1ra Note .

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to trace accordin4 to traditional criteriaB i.e. stattory seatB central administration or 1rinci1al

1lace of !siness.3/

Considerin4 these s1ecial featres 1resented !y e-commerceB settlements of dis1tes in corts

mi4ht not constitte always the most sita!le o1tion. +t is a well &nown fact that cort

1rocedres last very often for Fite a lon4 timeB even when the isses concern conventional

contracts. =ne cold hardly ima4ine that for a contract in which the 1erformance has !een

com1leted in a few mintes the 1arties will tolerate havin4 to wait for a few monthsB or

sometimes even lon4erB for a d4ement to !e rendered.

Under these circmstancesB 1erha1s ot-of-cort dis1te settlement wold constitte a valid

alternative to the conventional cort system. +n this mannerB the isses discssed a!ove may

!e sccessflly tac&ledK es1ecially in the event these !odies wold !e s1ecialied in e-

commerce transactionsB the isse of time-consmin4 1rocedres cold come to a sond

soltion. :or instanceB one can ima4ine that in this case the 1roceedin4s will !e condcted

thro4h electronic mailB ths savin4 time and costs. "he efficiency of this soltion will !e

e1ressed also in terms of redced costs for the 1arties and certainty as to where in the world

can a distri!tin4 com1any !e sedB re4ardless of the fact that it condcts !sinesses on a

4lo!al scale. Li&ewiseB !ein4 a s1ecialied !odyB isses sch as the domicile of a com1any or

a le4al 1erson can !e tac&led thro4h the develo1ment of clear case-law !ased rlesB ths

addin4 to the certainty of law in the area of e-commerce. 30

!ut-of-court dispute settlement in Europe

avin4 !een aware of the im1ortance of sch mechanisms for the settlement of le4al

conflictsB 1articlarly in cases the amont nder dis1te is of low vale and the 1arties

involved are of ne4li4i!le sieB the Ero1ean Commission chose to refer to this matter in its

draft 1ro1osal for a directive on electronic commerce@

“$ember %tates shall ensure that! in the event of disagreement between an

"nformation %ociety service provider and its recipient! their legislation allows the

effective use of out-of-court schemes for dispute settlement! including appropriate

electronic means.”

24 +!id

25 S1ra Note 32

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"he Electronic Commnications Convention !ilds 1on earlier instrments drafted !y

the CommissionB andB in 1articlarB the UNC+"R(L Model Law on Electronic Commerce

and the UNC+"R(L Model Law on Electronic Si4natres. "hese instrments are widely

considered standard le4islative tets settin4 forth the three fndamental 1rinci1les of

electronic commerce le4islationB which the Convention incor1oratesB namely non-

discriminationB technolo4ical netrality and fnctional eFivalence.39

"he Convention a11lies to all electronic commnications echan4ed !etween 1arties

whose 1laces of !siness are in different States when at least one 1arty has its 1lace of

!siness in a Contractin4 State '(rt. ). +t may also a11ly !y virte of the 1arties> choice.

Contracts conclded for 1ersonalB family or hosehold 1r1osesB sch as those relatin4 to

family law and the law of sccessionB as well as certain financial transactionsB ne4otia!le

instrmentsB and docments of titleB are eclded from the Convention>s sco1e of

a11lication '(rt. 3).

(s noted a!oveB the Convention sets ot criteria for esta!lishin4 the fnctional

eFivalence !etween electronic commnications and 1a1er docmentsB as well as

!etween electronic athentication methods and handwritten si4natres '(rt. ;). SimilarlyB

the Convention defines the time and 1lace of dis1atch and recei1t of electronic

commnicationsB tailorin4 the traditional rles for these le4al conce1ts to sit the

electronic contet and innovatin4 with res1ect to the 1rovisions of the Model Law on

Electronic Commerce '(rt.


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'(rt. 3). "he Convention frther clarifies that a 1ro1osal to conclde a contract made

thro4h electronic means and not addressed to s1ecific 1arties amonts to an invitation to

dealB rather than an offer whose acce1tance !inds the offerin4 1artyB in line with the

corres1ondin4 1rovision of the C+S% '(rt. ). MoreoverB the Convention esta!lishes

remedies in case of in1t errors !y natral 1ersons enterin4 information into atomated

messa4e systems '(rt. /).2<

:inallyB the Convention allows contractal 1arties to eclde its a11lication or vary its

terms within the limits allowed !y otherwise a11lica!le le4islative 1rovisions '(rt. 2).

"elation to Private %nternational Law and E&isting Domestic Law

5hether the Convention a11lies to a 4iven international commercial transaction is a

matter to !e determined !y the choice of law rles of the State whose cort is as&ed to

decide a dis1te ' lex fori). "hsB if the rles of 1rivate international law of that State

reFire a11lication of the s!stantive law of a Contractin4 State to the resoltion of the

dis1teB the Convention will a11ly as law of that Contractin4 StateB irres1ective of the

cort>s location. "he Convention is also a11lica!le if the 1arties to the contract have

validly chosen its 1rovisions as the law a11lica!le to the contract.

MoreoverB States may also consider ado1tin4 the 1rovisions of the Convention at the

domestic level. Sch decision wold 1romote niformityB economiin4 on dicial and

le4islative resorces as well as frther increasin4 certainty in commercial transactionsB

es1ecially in li4ht of the diffsion of mo!ile devices for electronic transactions. +t is

1articlarly recommended for those risdictions that have not yet ado1ted any le4islation

on electronic commerce. =therwiseB 1rely domestic commnications are not affected !y

the Convention and will contine to !e 4overned !y domestic law.2

CONCLUSION

"he +nternet was first develo1ed in ;8


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to the 8th centry Re1!lie& der LetterenB an academic networ& develo1ed amon4 Ero1ean

scholars. "he si4nificant difference isB howeverB that the echan4e of information system sed

in the 1ast remained at the sta4e of a strictly academic-oriented networ&B whereas the +nternet

has evolved to entail a 1re1onderantly commercial character.

5hile 1rovidin4 a reasona!le 1rotection standard for consmers concldin4 e-commerce

contractsB the re4lation fails to address the isse of domicile of com1anies and le4al 1ersons

condctin4 !siness activities eclsively thro4h electronic means. "his omission is even

more evident in the !siness-to-!siness contractsB es1ecially when it is difficlt to esta!lish

the 1lace of 1erformance of the o!li4ation in Festion.

=ne 1ossi!le way to avoid these 1ro!lems wold !e the inclsion of a form choice clase in

the initial contract. 5hile !ein4 a!le to a1t for the risdiction of a certain cortB the 1arties

may at the same time choose to solve their ftre dis1te !efore an ot-of-cort 1anel. +n this

last caseB the main 1ecliarity of e-commerceB namely efficiency in terms of timeB may !e

1reserved

(s far as the law a11lica!le !y sch dis1te settlement !odies is concernedB of corse the will

of the 1arties is in this case is very im1ortantB and the 1anel will !e !ond !y the choice of

law a4reed amon4 the 1arties. +f sch a choice of law clase is missin4B the !ody mi4ht loo& at the law of the form or of another contryB in accordance to the 1rivate international law

rles a11lica!le in that res1ective state. oweverB one can ima4ine the sitation where!y an

inde1endent !ody of rles and re4lations wold !e develo1ed to a11ly only to le4al

relationshi1s connected to the cy!ers1ace. Sch a develo1ment wold not !e entirely

sr1risin4.

"wo models for conflicts rles relatin4 to electronic consmer contracts. :irst 1ro1osalPthe

1rotective modelPcontines to a11ly the consmer>s risdiction and a11lica!le law as the

defaltB 1rovided that the contract in Festion falls nder the sco1e of 1rotection. (

risdiction or choice of law clase !etween the 1arties wold 4enerally !e considered validB

tho4h a risdiction or choice of law a4reement is 1rima fade ineffective. "he second

1ro1osalPthe mied modelPalso allows a consmer to !rin4 an action a4ainst a !siness in

either the !siness>s or the consmer>s risdiction. (dditionallyB in the a!sence of an

a4reement !etween the 1artiesB the a11lica!le law is that of the ha!ital residence of the

consmer. Unli&e the 1rotective modelB howeverB the mied model allows for the ado1tion of

risdiction or choice of law a4reements. Electronic Consmer Contracts in the Conflict of

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;. United Nations Convention on the Use of Electronic Commnications in +nternational

Contracts 'New Aor&B 3

Documents

FD Utkarsh