The Work of the European Commission in the Context of this Legal Framework - Essay Example

E-Commerce Represents a Challenge for the conflict of Laws E-Commerce- A Challenge for the Conflict of Laws Academia Research Writer Farzeela E-Commerce laws The development of electronic commerce in the UK and European Union has been reached to such an extent where it is in challenging conflicting modes towards the response of the EU and English law. Directive 2000/31/EC has created the basic legal framework for electronic commerce in the Internal Market where it has not only faced obstacles but has also taken certain measures to remove obstacles to cross-border online services in the European Union and provides legal certainty to business and citizens alike. The work of the European Commission in the context of this legal framework consists of ensuring: that information society services benefit from Internal Market principles of free movement of services and freedom of establishment in an enlarged European Union. monitoring and follow-up of Directive 2000/31/EC, including regular reports on its application. that both the existing and the new Member States must correctly implement and apply the legal framework for electronic commerce as provided by Directive 2000/31/EC. appropriate follow-ups to complaint concerning information society services. general monitoring of legal, technical and economic developments of electronic commerce and the Internet. (Electronic commerce, 2005a) E-Commerce for Internal Market The Electronic Commerce Directive, which was adopted in 2000, sets up an Internal Market framework for electronic commerce and its global users, and provides legal certainty for business and consumers alike. It establishes harmonized rules on issues such as the transparency and information requirements for online service providers, commercial communications, electronic marketing, electronic contracts and limitations of liability of intermediary service providers. The proper functioning of the Internal Market in electronic commerce is ensured by the Internal Market clause, which means that information society services are, in principle, subject to the law of the Member State in which the service provider is established. In turn, the Member State in which the information society service is received cannot restrict incoming services. In addition, the Directive enhances administrative cooperation between the Member States and the role of self-regulation. Examples of services covered by the Directive include online information services (such as online newspapers), online selling of products and services (books, financial services and travel services), online advertising, professional services (lawyers, doctors, estate agents), entertainment services and basic intermediary services (access to the Internet and transmission and hosting of information). These services include also services provided free of charge to the recipient and funded, for example, by advertising or sponsorship. (Electronic commerce) Governing Laws in the EU The European Union is maintaining momentum in its efforts to regulate the Internet and electronic commerce, especially with respect to conflicts of law in cyberspace. A directive establishing a common legal framework for electronic commerce within the European Union1 E-commerce Directive) was adopted in early summer 2000, enshrining the "country of origin" principle in the on-line environment. Effectively, this principle means that an on-line retailer established in one of the European Union member states is allowed to offer e-commerce services on-line throughout the European Union as long as it meets the legal requirements of its country of domicile. However, the legal certainty established by the E-commerce Directive is already under threat. The European Commission intends to revive an idea from 1967 regarding the creation of a Council Regulation2often called Rome II Regulation. Another closely related instrument is the regulation on jurisdiction and the enforcement of judgments in civil and commercial matters (the Brussels Regulation), adopted at the end of last year. The Brussels Regulation establishes rules for choice of jurisdiction in cyberspace disputes. It was met by criticism because it designates as the competent court in a business-to-consumer dispute the courts in the country of the consumer's domicile, in cases where the company has "directed activities" towards that country. While the stated intention of the Brussels Regulation was to avoid the mere accessibility of a Web site being sufficient to trigger jurisdiction in the consumer's domicile, e-commerce companies fear that this will be the ultimate effect of the provision. Moreover, as the Regulation renders choice of forum clauses unenforceable in consumer contracts, it is difficult for companies to protect themselves from being sued in a country with which they do not want to trade. The Brussels Regulation is the intra-EU equivalent of the upcoming Hague Convention on jurisdiction and foreign judgments in civil and commercial matters, which will set forth cyberspace jurisdictional rules on a global basis when the current negotiations come to an end. Like the E-commerce Directive and the Brussels Regulation, the Rome II Regulation would apply only to entities established in the European Union. Companies established outside the EU will be faced with different approaches in each member state with respect to choice of law in the on-line context. Some member states certainly will consider their own laws applicable to anything that has effects in their jurisdiction, while others may be willing to apply a "country of origin" approach to choice of law even to on-line activities undertaken by non-EU entities. (Morrison Foerster) European Union Legislation on E-Commerce There are three main EU legislative initiatives, which are taken in the recent years affecting e-commerce as a response to the conflict of laws: The E-Europe Package: This Directive, aimed at creating a coherent legal framework for e-commerce development within the Single Market, was finally approved on 4th May 2000. Its key components are as follows: The directive implements the principles of free movement of services and freedom of establishment. The most controversial issue regards the liability of on-line service providers. The Directive establishes an exemption from liability for intermediaries where they play a passive role as a 'mere conduit' of information from third parties and limits service providers' liability for other 'intermediary' activities such as the storage of information. The Directive also clarifies that the Internal Market principle of mutual recognition of national laws and the principle of the country of origin must be applied to Information Society services. Place of establishment. The Directive defines the place of establishment as the place where an operator actually pursues an economic activity through a fixed establishment, irrespective of where web sites or servers are situated or where the operator may have a mailbox. Transparency. The Directive requires Member States to oblige Information Society service providers to make available to customers and competent authorities in an easily accessible and permanent form with the basic information concerning their activities (name, address, e-mail address, etc). On-line contracts. The Directive requires Member States to remove any prohibitions or restrictions on the use of electronic contracts. In addition, it ensures legal security by imposing certain information requirements for the conclusion of electronic contracts in particular in order to help consumers to avoid technical errors. Commercial communications. The Directive defines commercial communications (such as advertising and direct marketing) and subjects them to transparency requirements. Implementation. The Directive strengthens mechanisms ensuring that existing EU and national legislation is enforced. This includes encouraging the development of codes of conduct at EU level, stimulating administrative co-operation between Member States and facilitating the setting up of effective, alternative cross-border on-line dispute settlement systems. Proposal for a directive on a common regulatory framework for Electronic Communications Network and services This package of measures was adopted by the Commission in July 2000, and now needs to proceed through the fairly complex EU legislative process in order to become law. Some of its components are technical not controversial. The main elements of the package are as follows: Proposal for a directive on universal service and users' rights relating to electronic communications networks and services; Proposal for a directive on access to, and interconnection of, electronic communications networks and associated facilities; Proposal for a directive concerning the processing of personal data and the protection of privacy in the electronic communications sector; Proposal for a directive on the authorization of electronic communications networks and services; Proposal for a regulation on unbundled access to the local loop; Proposal for a decision on a regulatory framework for radio spectrum policy in the European Community. The E-Europe Action Plan The European Council held in Lisbon on 23/24 March 2000 set the ambitious objective for Europe to become the most competitive and dynamic economy in the world in e-commerce. It recognized urgent needs for Europe to quickly exploit the opportunities of the Internet. To achieve this, the Heads of State and Government invited the Council and the Commission to draw up a comprehensive e-Europe Action Plan using an open method of co-ordination based on the benchmarking of national initiatives, combined with the Commission's recent e-Europe initiative as well as its Communication 'Strategies for jobs in the Information Society'. In response to this endorsement the Commission adopted a draft Action Plan on 24th May 2000. This draft was agreed upon by the Feira European Council on 19/20th June. The objectives set out in the Action Plan are 1. A cheaper, faster, secure Internet 2. Investing in people and skills 3. Stimulate the use of the Internet 4. Accelerating e-commerce As can be seen, the Action Plan is largely euro-waffle, and it remains to be seen what specific measures will come out of it. The Plan concludes: The e-Europe targets can only be achieved if Member States, the European Parliament and the European Commission are ready to commit themselves to this Action Plan and to the reassessment of priorities, which it will imply. None can afford to relax; no matter how advanced they may be relative to others. A 'two speed e-Europe' must be avoided. Each Member State must be ready to set new priorities, to provide adequate funding and to remove obstacles to achieve the targets. Each will have to draw the attention of citizens to the emerging possibilities of digital technologies to help to ensure a truly inclusive information society. Only through positive action now can info-exclusion be avoided at European level. (Legislation, 2005a) E-commerce in the UK National Legislation on E-Commerce There is little UK legislation which deals specifically with e-commerce and it is generally a matter of applying general legislation and common law rules to transactions and the like. One recent piece of legislation which is intended to address some of the specific issues raised by new technologies is the Electronic Communications Act 2000 aims to build confidence in e-commerce and the technology underlying it. The Act provides for the recognition of electronic signatures and prohibits any discrimination based on the form of signature. Electronic signatures will also be admissible as evidence in legal proceedings. Existing contractual arrangements between businesses for the recognition of electronic communication between them will not be affected. The Act also deals with encryption and the storage of information. In addition to this Act, the following items of legislation, which are relatively recent relate in part to e-commerce and use of the Internet generally: The EU Consumer Protection (Distance Selling) Regulations 2000 - these are EU regulations which fall to be implemented in the UK and cover the sale of goods and provision of services by businesses to consumers where the "sale" is not made face to face (e.g. over the Internet). These regulations set out minimum standards and require the business to provide certain information to the consumer before the contract is concluded and give the consumer the right to cancel the order within 7 days and to receive a full refund. If the consumer is not notified of his right to cancel then the cancellation period is extended to 3 months. The Data Protection Act 1998, which restricts the ability to export personal data outside the European Economic Area. The Regulation of Investigatory Powers Act 2000 - this legislation seeks to provide a framework for the interception and acquisition of communications and data in such a fashion not intended to infringe rights arising under The Human Rights Act 1998. European Legislation (draft) Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. This regulation proposes to introduce uniform modern standards across the EU and simplify the formalities governing the enforcement of relevant judgments. EU Council directive on certain legal aspects of electronic commerce in the internal market - aims to define the place of establishment as the place where the operator actually pursues its economic activity through a fixed establishment, irrespective of where websites or servers are situated or where the operator may have a mailbox. Obliges Member States to remove any prohibitions or restrictions on the use of electronic contracts and aims to ensure legal security by imposing certain information requirements for the conclusion of electronic contracts establishes an exemption from liability from intermediaries such as ISPs and ensure consumer confidence in fair-trading. Domain Names The top-level domain names in the UK are administered by Nominet and in addition there are commercial sub-domains, which include .co, .ltd and .plc. UK based domain names are allocated on a first-come first-served basis by Nominet UK Limited. Apart from certain domains like. co.uk and .plc.uk it is not necessary to prove that you are entitled to the domain name before registering it3. All claimants were entitled to injunctions together with orders requiring the defendants to assign the domain names to the respective brand owners on the basis that registration of the names in question was erosion in the good will in the name and amounted to an instrument of fraud. As these were all well-known names, the Court also held that threats to infringe the claimant's trademark had been established. The position may be different where the name in question is less distinctive and would not be regarded as a well-known trademark. Nominet UK has a dispute resolution procedure but the frailty of this procedure effectively means that for. co.uk registrations restore is usually sought from the Courts. Consumer Legislation Sellers of goods can be liable to their customers for supplying defective products under the provisions of the Sale of Goods Act 19794. Other laws and rules regarding the sale of goods will also apply to any contract concluded electronically but sales of goods and/or contracts for the provision of services by businesses to consumers which are concluded over the net will also be governed by the Consumer Protection (Distance Selling) Regulations 2000. Electronic Contract Formation Under English law, the formation of a contract requires an offer; acceptance, consideration and an intention to create legal relations and modern technological developments have not generally changed this. There is a distinction between an "offer" and an "invitation to treat"5 and if a party does not want to be contractually bound unless and until it accepts the other party's offer it should construct its website accordingly. The offer must be accepted and the acceptance must come to the notice of the offeror. There is no direct case law on whether acceptance by e-mail takes effect when it is sent6 or when it is received7 but it seems more likely that acceptance would take effect when received. This may however depend upon the design of the website rather than on the law and the best policy is to have terms and conditions which state how acceptances are to be communicated and how and when they will be received.8 Digital signatures A particular concern, inevitably, is the ease with which e-mails can be forged and the rules of evidence are generally moving away from an emphasis on admissibility.9 Liability of Internet Service Providers (ISPs) The decision in Godfrey -v- Demon Internet sent shock waves through UK-based ISPs. The case involved an author who discovered that defamatory material about himself was posted on the Internet. He contacted the ISP hosting the site and asked them to deal with the matter but they did not take any action. The court was willing to hold the ISP liable for the content received and published on its server as it had been alerted to the presence of defamatory material - that fact was key to the court's decision to regard the ISP as a publisher of defamatory information. The Godfrey case suggests that there may be risks of an ISP, by hosting a site containing material that infringes copyright, being liable under the Copyright Designs & Patents Act10. 11ISPs will be required to develop and provide technical facilities to the police and security services which permits quick and easy access to their systems and they will have to bear at least some of the cost. Any person authorized by the Act can ask to see everything that an ISP is doing, all material it is handling and any information on site it controls, provided that disclosure is in the interests of national security, the prevention of a crime or the economic well being of the UK12. Data Protection The processing of personal data in the UK is governed by the Data Protection Act 1998. A data controller is a person who holds personal data13 and must comply with 8 data protection principles. All data controllers must notify certain registerable particulars with the Data Protection Commissioner (unless exempt). Data should be obtained and processed fairly and lawfully. Processing will be fair if the data user lets the data subject know its identity, for what purposes it is collecting the data and to whom it will be disclosed. Companies operating web sites would be considered data controllers and must ensure that all data are processed in accordance with the Act14. E-Commerce and Taxation The current UK government is keen to be, a promoter of e-commerce and enterprise generally. The UK government's e-tax agenda is a good summary of the problems but short on solutions. It also emphasizes the UK government's commitment to contributing to the international debate. We do at least have the framework of broad e-tax principles, these are as follows: - 1. tax must not become a barrier to e-commerce; 2. there should be neutrality between online and offline transactions, 3. there should be certainty, so that businesses involved in e-commerce can anticipate the tax involved; 4. that any proposed tax mechanism should be effective; 5. that any proposed tax system should be efficient; 6. that there should be no new taxes but that existing taxes should be adapted. (Martineau Johnson) Text and Cases Braintech, Inc. v. Kostiuk15 On 7 May 1997 the respondent Braintech obtained a default judgment in the District Court of Harris County in the State of Texas against the appellant Kostiuk. On 9th May 1997, Braintech commenced an action on this judgment in the Supreme Court of British Columbia. On 2nd April 1998, after a summary trial Braintech obtained a judgment in its favor. In 1996, Kostiuk is alleged to have used the Internet to transmit and published defamatory information about Braintech. Specifically, the means of dissemination was alleged in Braintech's amended pleading as follows: A discussion group has been established on the Internet to facilitate discussion and exchange of information regarding technologies, stocks and investments. This discussion group, which is operated under the name Silicon Investor, allows those interested in technology companies like Braintech to exchange information relevant to possible investments in such companies. The electronic transmission and publication of the defamatory statements are, as I have said, in issue. There are no particulars in the record of either the information transmitted by Kostiuk or of his defenses to the allegations of defamation. It was assumed at trial and heard that both are valid causes of action sounding in tort. The trial judge in the case at bar instructed himself with respect to the Morguard test, namely, whether there was a real and substantial connection to Texas, and concluded that the evidence strongly supported there being such a connection. It is apparent the "real and substantial connection" relied upon for the assumption of jurisdiction by the Texas Court is the alleged publication there of a libel which affected the interest of resident present and potential investors. This is true only if the mode of communication through the Internet supports this conclusion. From what is alleged in case at bar it is clear Kostiuk is not the operator of Silicon Investor. It is equally clear the discussion group is passive as posting information volunteered by people like Kostiuk, accessible only to users who have the means of gaining access and who exercise that means. In these circumstances the complainant must offer better proof that the defendant has entered Texas than the mere possibility that someone in that jurisdiction might have reached out to cyber space to bring the defamatory material to screen in Texas. There is no evidence Kostiuk had a commercial purpose that utilized the highway provided by Internet to enter any particular jurisdiction. The allegation of publication fails as it rests on the mere transitory, passive presence in cyber space of the alleged defamatory material. Such a contact does not constitute a real and substantial presence. Regarding Law authorities, this is an insufficient basis for the exercise of an in personam jurisdiction over a non-resident. The record demonstrate British Columbia was the natural forum for the resolution of the dispute between two residents for the following reasons the connection in the case at bar show that the Texas was not an appropriate forum: 1. Kostiuk is a non-resident of Texas who has neither done business nor maintained a place of business nor appointed an agent for service there. His only connection is deemed by virtue of the allegation of having committed a tort in Texas. 2. Braintech is Nevada Corporation domiciled in British Columbia. 3. Braintech has had no presence in Texas since 31st December 1996. 4. No person in Texas is alleged to have seen the alleged defamatory material and the witnesses required to prove its damages are acknowledged to be citizens of Canada. The only proof of damages in the record is the McDonald affidavit of 17th April 1997, sworn in Vancouver. 5. No juridical advantage is alleged to accrue in Texas that is not available if a defamation action was brought in British Columbia. 6. The authorities cited in Braintech's brief in support of default judgment relate to the use within Texas of electronic communication for actual business purposes. 7. To enforce recovery of the default judgment obtained in Texas on the deemed proof of use of an electronic discussion board would encourage a multiplicity of actions the world over wherever Internet was available. 8. The mode of service in the case at bar falls below the minimum constitutional standard for and American Court. (Gerald, Stephen, 346) Shetland Times Ltd. Vs Wills and Another16 The pursuers own and publish the Shetland Times, a newspaper which carries local, national, and international news. The defenders provide news reporting service and trade under the name the Shetland News. The pursuers have recently established a website. By this means they make available on the Internet items including photographs, which appears in printed edition of the Shetland Times. Such items are stored electronically by reference to an index of relative headlines. Since about October 14, 1996 the defenders have included among the headlines on their front page a number of headlines appearing in recent issues of the Shetland Times as reproduced on the pursuers' website. These headlines are verbatim reproduction of the pursuers' headlines as so reproduced. A caller accessing the defenders' website may, by click on of those headlines gain access to the relative text as published and reproduced by the pursuer. Access is gained and subsequent access to other such headlines also gained without the caller requiring at any stage to access the pursuers' front page. In this action the pursuers seek a judgment that the defenders' actions constitute an infringement of Copyright owned by them. The grounds of action are two fold. The pursuers maintained that the headlines made available by them on their website are cable programs17 with in the meaning of section 7 of the Copyright, Designs and Patent Act 1998 that the facility made available by the defenders on their website is a cable program service within the meaning of Section 7 and that the inclusion of those items in that service constitutes an infringement of copyright under section 20 of the act. The pursuers' activities constitute infringement by copying under section 17 of the act. The pursuers' contention that the service provided by them involves the sending of information is prima facie well founded. Although in a sense the information seems passively awaits access being had to it by callers that does not, at least prima facie, preclude the notion that the information, on such access being taken, is conveyed to and received by the caller. If that is so, the process may arguably be said to involve the sending of that information. If the information is being sent, it prima facie is being sent by the pursuers on whose website it has been established. The fact that the information is provided to the caller by his accessing it through the defenders' website does not, result in the defenders' being the persons sending the information. The resolution of the above issues may in the end turn of technical material not available at the hearing on interim interdict. On the information that was available and on the basis of the argument presented, the pursuers have a prima facie case that the incorporation by the defenders in their website of the headlines provided at the pursuers' website constitutes and infringement of section 20 of the act by the inclusion in a cable program service of protected cable programs. (Gerald, Stephen, p 356) Bibliography Electronic commerce, 2005a Gerald R. Ferrera, Stephen D. Lichtenstein, Cyber Law: Text and Cases, p 346, 356 Legislation, 2005a Martineau Johnson, Morrison Foerster Read More