Luxembourg--James A. Graham|
Consumer Protection / Advertising
Comments to the proposed draft by the ABA
James A. Graham
Assistant lecturer at the French-German Law Center, University of Saarland (Germany)
Assistant lecturer at the Universitarian Center of Luxembourg
Research Fellow at the Economical Law Laboratory, Public Research Center G. Lippmann (Luxembourg)
1. Rallying the suggested division by the proposed draft of the ABA(1), the paper will only deal with the consumer category "transactional", understood as "the area where disparate bargaining power exist within contractual relations".
2. The comments will cover French, Luxemburgish, and European law, especially because both national legal systems are based on the Code civil and are both submitted to European Law.
3. On the contrary to the American approach, the legislators of European countries do not believe in general in the "Self-Regulation" approach. Consequently most of the countries are conceiving laws in order to rule the activities on the Internet(2). However, the national discussions are only dealing with substantive law(3) and not with private international law matters. One of the reasons is perhaps that the conflicts rules have their origin in international conventions, especially those concluded in the frame of the European Community, like the Brussels and the Rome Conventions. In so far, the main discussions are done on the European level focusing the both mentioned conventions. Yet that does not want to say that there are no problems in national law as we will see in a first point before dealing with the European Conventions.
I. NATIONAL LEGAL SYSTEMS
4. The national legal systems have a dual regime in regard to jurisdiction. If the defendant is domiciled or if the obligation is performed in the EC, one has to refer to the Brussels Convention. In the other cases, the judge applies its national jurisdiction rules.
5. Neither the French nor the Luxemburgish Law do have any particular jurisdiction rule for consumers transactions with the exception of forum choice clauses. Article 48 of the French civil procedure rules forbids the electio fori choice clause in contracts in which a consumer is involved. The SORELEC case(4) however ruled that the disposition only applies in national contracts and not in international ones(5). Nevertheless, legal authors debate if the second condition provided by article 48 - the clause must figure in the contract in a "apparent manner"(6) in order to be valid - applies to international consumers contracts. Does this mean that the clause must figure on the same page, in click-wrap contracts e.g., or, is it admissible that the contract in itself contains a hyperlink to another page where figures the forum-choice clause ? The answer probably depends from case to case following the presentation made by the seller. We do consider that if a consumer has to follow several links without knowing exactly where the clause figures, the condition of article 48 is not respected.
6. In this sense we do regret that the proposed draft only deals with material conditions and not with formal validity. The latter is sometimes much more protective than the first ones. In so far, one could argue that in the Carnival Cruise Lines case(7), the forum selection clause printed on the back does not respect the condition of accessibility because at the moment of the transaction when the consumer bought its ticket, he didn't know that there was such a clause because he had first to buy the ticket before being able to read the conditions printed on the back. Related to Internet transactions, it is important to define precisely how a seller has to present the contract and its choice-clauses on his site.
7. Article L-132-2 of the French Consumer Code forbids any arbitration clauses in consumer contracts if the consumer is domiciled and the contract has been concluded in the EC. However the fulfillment of the last requirement constitutes a probatio diabolica. How can a consumer prove that the contract has been concluded in its State ? That's why the consumer organizations are pleading that the condition should be interpreted as a irrefutable presumption. As article L-132-2 is the result of a transposition of a European directive, maybe the requirement will be changed with the adoption of different recent proposals of the Commission, which are in general in favorem arbitrii(8).
8. Article 1135-1 of the Luxemburgish Code of civil law provides that forum-choice and arbitration clauses in adhesion contracts are only valid if they have been separately signed. This means, apart of the problem of recognition of the electronic signature and the electronic proof, that click-wrap clauses are null and void.
II. EUROPEAN LAW
A - JURISIDICTION
9. The basic principle of the Brussels Convention(9) is that only the forum domicilii has jurisdiction to adjudicate. However, the Convention provides some limited exceptions. One of these is article 13 that allows the court of the domicile of the consumer to judge the litigation if :
- in the State of consumer's domicile the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising; and
- the consumer took in that State the steps necessary for the conclusion of the contract.
10. It is true that many legal authors consider the first requirement as always fulfilled in the case of a accessible Website. However, such an interpretation is totally wrong. In fact, the Schlosser Report, quoting the Giuliano-Lagarde Report on the Rome Convention, put in exergue that by advertising one has to understand an advertising specially "directed" to a country. For example, a consumer responding to a publicity published in an American Journal cannot invoke the special rule of article 13. However, if the American Journal publishes a special German version, the consumer benefits from his forum actoris. Mutatis mutandis we do consider that an American site, in english, with prices in $, does not fulfill the requirement. On the opposite, an American firm having a site with a French domain name and its pages in french can be considered as fulfilling the condition of article 13.
11. The real difficulty is once again the requirement of the conclusion in the consumer's State. Technically speaking, the contract is not concluded on the consumer's Pc; it's concluded on the seller's server. Consequently, the consumer can never benefit from his protection.
12. That's why, the Commission in its proposal of regulation has eliminated the second requirement and replaced the wording of the first one by "directed to a member State". Unfortunately, during the Commission's public hearing in Brussels(10), we were surprised how the new draft was misinterpreted by the representatives of industry who consider that the simple fact of having a Website fulfills the new requirement. We think that the proposed provision goes in the right direction. In fact, activities should be considered as directed to a Member State if the site is "targeting" in a special manner the local consumers (the site is registered in a European cctld(11), the pages are in a national language, the prices are in euros, etc).
13. Article 17 of the Brussels Convention deals with prorogative jurisdiction. Unfortunately the Convention does not mention if there is a requirement of « internationality » in order to valid the electi fori agreement. Most of the legal writers sustain that the simple fact of choosing a foreign court in a « internal » contract is not sufficient to confer an international character to the agreement and thus has to be ruled by national civil procedure rules. Two cases of the CJEC can at least be cited in this sense(12). For our part, we defend the idea that a virtual contract, concluded and/or executed on the Internet is always international per se, because Internet is an international space(13).
14. The principal difficulty of the above mentioned article regarding to Internet is its requirement of a writing. Nonetheless we think that it is possible to have a functional approach to it. In its ruling in the Porta Leasing case(14), the Court did not insist on the medium but on the fact that article 17 is a rule that aims to insure that the consent of the parties has been expressed in a clear and precise way. Following this ruling one can conclude that a virtual clause signed digitally fulfills the requirement. One can go one step further in saying that a click-wrap clause is valid as well, even if the problem of the electronic proof will remain. By the way, the proposal of the Commission for the new text of the Brussels Convention joints this point of view as the new draft only retains as condition that the forum choice clause must be "accessible on screen". The proposed draft by the Conference of the Hague of the new convention regarding jurisdiction goes in the same direction(15).
B. APPLICABLE LAW
15. As we said the Rome Convention(16) constitutes the Uniform Law for contractual matters of the fifteen Member States of the European Community. Although one does consider that the Convention applies to cybercontracts, there remains the question in which cases there is a "conflict of law", as required by article one. For example, is a contract concluded on a site hosted by a server in Germany between a French seller and a French buyer ruled by the Rome Convention as there is a "foreign" point of contact ? In order to avoid endless discussions in order to know when a virtual contract is "international" we consider that it is always international per se. Some authors indeed consider that the internationality is conferred by the international character of the medium(17); for our part we do consider Internet as a new international space(18).
16. Once the virtual contract qualified as international, the main principles of the Convention apply. The first rule is the freedom of choice of the applicable law. Where there is no express or implied choice, art 4(I) applies as the proper law the law of the country with which the contract is most closely connected, and art 4(2)-(4) provides a number of presumptions as to closest connection. The main presumption, laid down by art 4(2) is in favor of the law of the country of the relevant residence of the characteristic performer at the time of contracting.
17. It is wrong to say, as the ABA draft did, that "it is illegal for merchants to defer by contract or otherwise to a law other than of the consumer's jurisdiction"(19). The seller can always choose whatever law ! Article 5 only provides a minimum protection through a mandatory rule ("loi de police") in a limited number of cases: the contract must "target" the consumer in its residence State and, in case where the applicable law is not the one of the consumer's country, the consumer can nevertheless count on the protective principle established in his country where he lives. In other words, if the contract elects for example the seller's law which provides the same protection than the consumer's law, only the seller's law will be applied by European courts. However, if the seller's law is less protective, both laws, the seller's one and the consumer's one, will be applied. For example if the lex protectionis provides on the contrary to the lex contractus the possibility for the consumer to return the merchandise, the rule will be applied as a mandatory rule. But, if the consumer's law does not provide a protective rule for the form of the contract, the latter will be ruled by the seller's law.
18. The application of the particular consumer provision is not very easy for virtual contracts in so far that the conditions for the application of article 5 are the same than the ones of article 13 of the Brussels Convention :
- in the State of consumer's residence the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising; and
- the consumer took in that State the steps necessary for the conclusion of the contract.
In this sense, like article 13, the revision of the Rome Convention should omit the "conclusion requirement", as it is nearly impossible to prove where the contract has been concluded. The first requirement should be more clearly defined in order to know what a "specific invitation" means in the Internet.
19. First, we would like to stress out that in a European view the conclusion drawn by the ABA draft that the chosen law should only provide "a minimal consumer protection characteristics that a legal regime should have in order for its law to be deferred to when chosen in a contract between a vendor and a consumer" and not "provide every single protection that the [consumer's] country does"(20) is not acceptable, even if there is a possibility to conciliate both views.
20. Indeed, as the ABA draft pointed out, we can consider, on one hand, that the consumer has no right to invoke its law if he buys on a "foreign" or "neutral" site because the situation is the same as if he had gone "physically to England"(21). However, on the other hand, there should be no reason to deny the application of the protective rules of the consumer's law if the site is "targeting" the consumer's country.
21. There are two ways of defining the notion of "targeting" as the American case-law does. The first method is the Zippo sliding scale(22), which is not acceptable because, as a author pointed out : "The current hodgepodge of case law is inconsistent, irrational, and irreconcilable"(23). The second method is the one utilized in the Millenium Case(24): the identification of a "intentionally or purposefully target of activities". If the vendor targets purposefully its activities to a consumer state, it is not shocking to retain the jurisdiction of the consumer's country and to apply the protective rules of its law. Criterions for the targeting can be specific "national" pages(25), cctld, pages designed in a national language, national currency, etc.
22. The targeting method could be a conciliation between the American case-law and the European codified rules of conflict providing thus an "harmonization" without sacrificing the particularities of national legal systems.
1. 9/4/99, 1-760533
2. E.g. the Luxemburgish E-commerce bill, www.crpgl.lu/lde.
3. E.g. the German and the Austrian Digital Signature Law, www.cyberbanking-law.lu.
4. Civ1, 17 déc. 1985, Rc, 1986.537, note Gaudemet-Tallon.
5. For the problematic of the "internationality" of a cybercontract, see infra 14.
6. "Que la clause ait été spécifiée de façon très apparente dans l'engagement de la partie à qui elle est opposée".
7. Quoted by the ABA draft, p. 3.
8. E.g. art. 17.1 of the proposed regulation on e-commerce, COM (1999)427 final, http://europa.eu.int/comm/dg15/en/media/eleccomm/999.htm
10. Hearing on Electronic Commerce : Jurisdiction and Applicable Law,Brussels, Charlemagne, 4-5 November 1999.
Position papers submitted to the European Commission : http://europa.eu.int/comm/scic/conferences/991104/contributions.pdf
11. Country Code Top Level Domain.
12. Castelleti, 16 mars 1999, Mainschiffahrtsgenossenschaft, 20 fév. 1997.
13. See infra 14.
14. 10 mars 1992, C-214/89.
15. Art. 4.2.b in its version of June 18th, 1999, ftp://www.hcch.net/doc/241e.rtf.
17. Hanotiau, The Transborder Flow of Data, Applicable Law ad Settlement of Disputes, International Contracts for Sale of Information Services, ICC, 1997.175, 184.
18. Graham, Der virtueller Raum - sein völkerrechtlicher Status, JurPC, Web-Doc 35/1999, www.jura.uni-sb.de/jurpc/aufsatz/19990035.htm.
19. P. 28.
20. P. 31.
21. Draft, p. 31.
22. Zippo Manufacturing Co v. Zippo Dot Com, Inc., 952 F.Supp.1119 (W.D. Penn. 1997).
23. Stravitz, Personal Jurisdiction in Cyberspace: Something More is Required on the Electronic Stream of Commerce, SCL Rev., 1998.625, 639.
24. Millenium Entreprises, Inc. v. Millenium Music LP, Civ N° 98 1058-AA (D. Ore, 1999).
25. See, e.g., the site of Dell : www.dell.com
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