Role of Private International Law in E-Commerce

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Introduction

The world’s trend of emerging technologies, stiff market competition, many enlightened consumers, and the unrelenting drive by firms for higher profits are some of the issues tied to the safety of online consumers (Prabhaker, 2000). But the current trend of much investment in online transactions does not guarantee safety to the consumer. Along this line, the conventional process of resolving legal conflict, that is court litigation, is principally organized on a territorial basis. Along this line, each state has its laws and courts, which are usually called upon in ruling upon disputes that fall under their countries’ jurisdiction (Lauterpacht & Greenwood, 1991).

In addition, most of the decisions made by the courts are based on the application of local laws. Nevertheless, the territorially based approach of resolving conflicts confers several challenges when dealing with international conflicts, particularly those involving the use of the Internet (Boele-Woelki, Kessedjian & Pelichet, 1998). This is because many activities are carried out on the Internet with little consideration of the laws regarding business and the relevance of territorial boundaries (Campbell & Woodley, 2003).

It is generally known that symbols or signs used by different organizations usually have to be protected by law. However, on the Internet, it is common for organizations to use these symbols without due regard for their owners or what the law says about them (Campbell & Woodley, 2003). A problem, therefore, arises when different individuals or organizations use a logo from one company that is protected by the trademark rights of its country of origin. In such a case, it becomes difficult to determine which country’s intellectual property rights are being flouted. Such a case presents an ambivalence of determining which laws of jurisdiction should be used in hearing the proceedings.

This paper will evaluate the problems encountered in international law concerning consumer dealings in goods and services via the internet. In particular, the paper will present an analysis of whether consumers can find reprieve in foreign courts over transactions conducted via e-mail or the Internet in general.

Role of Private International Law in Dispute Resolution

According to Snijder & Weatherill (2003), private international law has been attracting much attention in recent years concerning being used as an alternative means of resolving international disputes. Additionally, it has been hoped that private international law is the best means to alleviate complex issues in disputes such as those involving the use of the Internet.

The following sections of the paper will therefore pay attention to the relationship between the different branches of private international law and intellectual property rights and the role they play in protecting the various parties involved in transactions over the Internet.

Aspects of Private International Law

Private international law is also commonly known as conflict of laws about law-oriented jurisdictions (North, 1993). It is a body of law that aims at resolving questions that arise from the presence of foreign elements in legal accounts (North, 1993). Such accounts include disputes in contract dealings involving inter alia the legal status of real estate that is located in foreign jurisdiction, copyright ownership terms and so forth (Hultmark, Ramberg & Kuner, 2002).

In particular, copyright ownership is one of the thorniest issues since it may involve a copyright owner living in one country and various Internet users living in other countries, who may be accused of flouting copyright terms by using an item patented in the copyright owner’s country (Cox, 2006). Yet it is evident that Internet material can easily be downloaded and used in any country.

Private international law is usually applied by considering its use under two major branches. The first section is aimed at determining which country’s courts have jurisdiction over conflicts involving foreign elements and the appropriate conditions that have to be met for the decisions made by foreign courts to be recognized by a given country (Sender, 2002). The second item aims at determining which nation’s laws can be applied to resolve issues in legal relationships in which foreign elements are involved, or the “applicable law” (Sender, 2002).

Private international law is unique in that it is not strictu sensu about its application (Sender, 2002), i.e. it does not have provisions that comprise binding rights and obligations between different states. Rather, it is a kind of municipal law that aims at regulating conduct between private organizations. The law’s “international” aspect stems from the fact that it is applied in contexts involving foreign elements (Sender, 2002).

One outstanding feature of international private law is that as municipal law, each country has its own version of international laws (Sender, 2002). Consequently, there is no guarantee that a particular dispute, such as one arising over the Internet can be reliably solved using a given set of international laws. At the same time, one country can solve a particular dispute using its laws in a particular way, while another country will solve the same dispute in a different manner. This is applied based on the different rules of national law.

Another unique characteristic of private international law is that the rules applied in the system are usually not substantive and neither are they procedural (Sender, 2002). As an example, most of the international private law rules stipulate that questions regarding the status of real property have to be solved by the substantive laws of the country where the property is located (Sender, 2002). Thus if an individual purchases real estate online and legal complication arises in the transaction, he or she has to seek justice from the courts located in the county where the property is located.

To say the least, this may be a very expensive process that the buyer may even think of abandoning the property, whose value may be less than the projected cost of solving the suit. Thus, it is evident that private international law rules do not really solve the substance of a question, but they simply aid as an object of attribution that facilitates the determination of other laws in particular countries, which are relevant in resolving international disputes.

Private international law also has a long tradition concerning the different legal systems in the world. This particularly concerns the transboundary movement of goods that is typical of e-commerce- which is one of the major sources of disputes in which foreign elements are involved. It is worth noting that such disputes require some form of private international laws irrespective of how crude they may be, to be resolved. In this context, private international law has been developed and adopted as a requisite component of all legal apparatus applied in the jurisdiction of any nation in the world.

Private International Law and Consumer use of the Internet

With the widespread use of the Internet, there has been an intensification of cross-border relationships, thus leading to an increase in the complexity of issues about jurisdiction and application of the law. This has confronted the international community with several challenges especially about the rights of consumers as they make use of Internet facilities.

The Internet’s instantaneous global presence has altered the dynamics of business transactions radically. For instance, once a website is developed and published; it can be made available virtually everywhere in the world, being accessed by clients (Bainbridge 2000). These clients are also able to view and order different products from the website if the company provides such services. If a website of any other online facility develops a connection with all countries in the world, it becomes difficult to determine which courts should be in charge of resolving which disputes in case they arise. This emphasizes the need for applying international private law- that is if it can be effective.

The paradigm shift in business mechanisms concerning Internet use confers worthwhile legal impacts as pertains to consumer protection. If transactions involved parties from the same area of jurisdiction, there would be no problem with laws. Nevertheless, if the parties involved are located in different countries (as is common with transactions done over the internet), questions arise whether the courts in the consumer’s country (or country of destination) or the sellers’ country (country of origin) should have jurisdiction (Snijders & Weatherill, 2003).

Arguing in favor of the country of origin, the sellers involved in Internet transactions may be likely to comply with the laws in their country. In the same way, while being in favor of the country of destination, a common perception is that consumers will not have sufficient resources and even the vigor to pursue the sellers in foreign courts. Since consumer protection is regarded as an issue of public policy and concern in many countries, this makes an international dispute on the whole very vexing to solve (Dickie, 1999).

The concept of intellectual property rights is a thorny issue concerning private international law. This is because the Internet is used to distribute many products of consumer interest, but which unfortunately may not have genuine sources. Such products include software, music, text, films and so forth (Bainbridge, 2000). These products are the heart of property rights disputes about copyright (Bainbridge, 2000). The fact that consumers can download these products and distribute them- in violation of the copyright law, makes matters worse. For instance, can the copyright owners of such products sue consumers for distributing the products without due regard to the set procedures? And in which country will the hearing be done?

Another is an issue with regard to consumers’ use of Internet products is whether the products are distributed lawfully or unlawfully. It is common knowledge that many online companies can pirate and distribute software programs, music or other products as their own while presenting themselves as the genuine owners of the products (Franda, 2001). In such cases, it is difficult for consumers to pursue such companies in foreign courts (for malfunctioning products) even if they had the means because in the first place they may not know the country from which the company involved in the piracy originates. In light of this, there are deep questions regarding the Internet and consumer rights, particularly whether foreign courts can be of any help to aggrieved consumers. In addition, private international law can never be complete if it does not address the issue of intellectual property rights about Internet use.

Disharmonies in the Private International Law and why consumers may not get justice in court over Internet disputes

The absence of an internationally unified code of laws makes it difficult for consumers to pursue sellers of products in e-commerce transactions in courts. In Europe for example, the European private law has been well underway but the set of laws may still need several years of amending it to be considered as a serious set of procedures that can be used for legislative action (Rickett & Telfer, 2003; Stone, 2006).

In addition, some European Union member states have been in the process of implementing their large-scale reforms, which only apply to their codes of privacy laws. Specific examples of such codes include the Civil Code of the Netherlands and the German Civil Code that was approved by the German parliament (Rickett & Telfer, 2003). These differences in-laws make it difficult to resolve international disputes, particularly those arising from the use of the Internet.

Even though Article 5 of the Rome Convention emphasizes the supposition that consumers should always be accorded binding substantive rules of the domestic law in their home country irrespective of the choice of the various law clause in the consumer contract (Schaub, 2004), it is evident that this is obviously not a being applied in e-commerce. This is because the Article applies the stipulated principle only to particular contracts completed under certain circumstances if the consumer was contacted by the seller of a given product using a special invitation addressed to him or her or by advertising, and if the consumer had fulfilled all requirements in his or her country before being involved in the contract (Rickett & Telfer, 2003). Given this given that most companies advertising online change their adverts frequently, consumers may not be able to produce evidence of the adverts.

Although Regulation No. 44/2001 of the Rome Convention has some significance in dealing with e-commerce, it has given rise to strong criticism mainly from the business communities who note that the section imposes a heavy financial burden to dealers in e-business (Bael, 2003).

Another area of the convention that has attracted a lot of criticism is Article 15 of Regulation No. 44/2001 which in part declares: “by any means, directs such activities to…” According to Bael (2003), this wording implies that the mere fact that a consumer has access to any business’ website from its home country means that the business will have its operations directed towards the consumer. Thus, by accessing an organization’s website, a consumer subjects himself or herself to the terms stated by the organization whether accessible from its website or not.

The application of the stipulation of the Rome Convention also meets challenges from various countries’ local laws. For instance, in Britain the House of Lord rejected the law, saying that it was only applicable in line with specific contact stipulated by European common law.

Other pieces of legislation that relate to e-commerce and consumer rights in Britain are the Brussels Convention (which was amended to become the Brussels Regulation) and the English common law. In particular, the English common law is confusing legislation since can not handle conflicts related to parties from different countries. For instance, if a customer from the United States buys goods from an English vendor and fails to pay, both the United States and Britain have a right to claim jurisdiction of the case. Such a case would involve an exorbitant cost and render useless the worth of pursuing it.

The Brussels Convention/Brussels Regulation

To save occurrences such as the above-mentioned, the Brussels Convention focuses on ensuring that international disputes are dealt with, at least amicably. The Convention has a clause that expresses concern over issues of jurisdiction. An example is section Article 17 which states:

“If the parties, one or more of whom is domiciled in a contracting state, have a greed that a court or the courts of a contracting state are to have jurisdiction to settle any disputes which have an arisen or which may arise in connection with a particular legal relationship, that court of those courts shall have exclusive jurisdiction” Chissick and Kelman (2002).

The Brussels Regulation explains the rules applied in consumer provisions, which are implemented through judgment orders and civil jurisdiction. Although the guidance has no legal force, it is intended to help consumers understand the rules of commerce and also advises courts on different legislations and the nature of jurisdiction.

Conclusion

The impasse in resolving Internet disputes needs more impetus to resolve since the exiting laws cannot be used to solve such disputes effectively. Although the private international law provides some reprieve in resolving complex cases involving Internet use, the fact that the set of laws has to be applied hand-in-hand with the local laws in different countries makes it ineffective.

For instance, the requirement for parties involved in real estate transaction disputes to pursue the matter in foreign courts makes it difficult for courts to provide justice. It is therefore worth noting that consumers may find it unnecessary to go to courts to pursue cases involving online transactions given the exorbitant costs and complex procedures involved.

References

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