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EU Commission Plans Legal Threat to E-Commerce

Tax-news.com

14 July 1999


The EU Commission is considering a proposal from Justice Commissioner Anita Gradin that buyers of products over the Internet should be able to sue the merchant concerned in their own countries rather than in the originating country. Although such a regulation would be consistent with the 30-year old Brussels Convention which lays down a similar rule for trading in physical goods, it apparently runs counter to the EU's proposed law on e-commerce, which has already been approved by the European Parliament and is likely to pass into law - this e-commerce law makes on-line transactions liable only in the country of origin. Of course there are substantial problems of definition, analogous to those that arise in connection with taxation: where is the country of origin if a consumer in one member state buys something offered through a passive server in another member state, but the contract as such is founded in an offshore jurisdiction? Large companies with plenty of lawyers could probably handle a consumption-based rule, but it could be a nightmare for a small company which doesn't even know where its Internet customers might be. Such threats from the Commission constitute one more good reason to be outside the jurisdiction altogether!

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