E-Commerce Directive Makes Headway in the EU

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BRUSSELS - The EU's Council of Ministers approved the e-commerce directive last month pretty much as written, but left a few legal loopholes that could trip up Web merchants without sharp legal advice.

The basic premises remain. A vendor legally entitled to sell on the Web in one EU country is allowed to sell in all of them. And in most cases the law of the country of origin - that is the law of the land in which the product is on offer - will prevail.

Kimmo Sasi, the Finnish president of the Council when the directive was approved, called passage "one of the most far-reaching successes of the Finnish Presidency.

"We will now have a more clear-cut legal framework for the shopping mall of the future. The directive sets out a minimal set of rules for the consumers to know whom they are dealing with.

"These are also common rules, so that sellers do not have to deal with fifteen different legal systems. It also gives security for Internet intermediaries. They will not be held responsible for the data they transmit provided they fulfill certain conditions."

However, European direct marketers believe the directive still has some way to go before it becomes law in all the member states and that booby traps exist which should be removed.

Thus in court cases the law of the country in which the buyer lives may be applied. The Germans were particularly insistent on that point, which has a murky legal background that reaches into the sixties.

Before the 1992 Maastricht treaty gave the EU powers over international private law, mostly contracts, it had to issue conventions covering different legal situations that were used as guidelines.

Some of these guidelines may be incorporated into the directive in determining which courts have jurisdiction in any cross-border consumer vs. seller dispute, i.e. country-of-destination laws may indeed apply.

"This will be a field day for lawyers," one European direct marketer said. "Companies newly entering the European market will need good legal advice well before they go in."

Nevertheless, the Federation of European Direct Marketing believes that the directive will get through a second reading of the European parliament next spring, certainly no later than May, and then become law.

"We need the directive as law, otherwise cases will splash around and create dangers for everyone," one official said.

Generally, Europeans are more comfortable with rules and regulations than Americans. And they fear that any delay in adoption will make the directive outdated by the time it does become law.

Even more worrisome is the likelihood of national law being applied while the directive wends its way to passage. Already the European Internet community has a closet-full of horror stories when national regulators stepped in.

At the very least the directive will put a stop to that by setting out community-wide parameters to which e-tailers can keep more easily than to the chaos of national law.

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