This content is from: Local Insights

European Union

EU adopts directive on e-commerce

On May 4 2000, the European Parliament approved the draft Electronic Commerce Directive. The Directive will enter into force upon its publication. From that date, member states will have 18 months to implement it into national law.

The Directive aims to provide a coherent legal framework that will allow electronic commerce to benefit from the free circulation of services and the freedom of establishment in the single market, whilst ensuring effective protection for consumers. In its final form, the Directive adopts a flexible minimalist approach, focusing on those areas where the approximation of national rules is currently deemed necessary for unhindered cross-border e-commerce.

The Directive covers both business-to-business and business-to-consumer on-line services, whether they are provided for remuneration or free of charge. It applies to such service providers established within the EU. The place of establishment is where the service provider actually pursues its economic activity through a fixed long-term presence, irrespective of where the server is situated or where the service provider is incorporated.

Most importantly, the Directive introduces the home country rule to ascertain which law regulates the pursuit of on-line services provided in the single market. This provides that on-line service providers established in one member state offering goods or services in another member state will be subject to the rules and regulations applicable in their country of establishment rather than those applicable in the member state of the recipient. Member states may not restrict service providers from another member state from offering their goods or services in their territory unless the restrictions are necessary for general interests such as the protection of investors or the prevention of criminal offences. Even then, the restrictions must be proportionate and have to be notified to the European Commission for review.

Moreover, member states cannot make the provision of on-line services subject to prior authorization or any measure with equivalent effect when this is not required for the same activity carried out off-line. However, on-line service providers will have to render certain basic information about their activities ­ such as their name, address, e-mail address, trade register number, professional authorization, VAT number - available to customers and competent authorities in an easily accessible and permanent form. All price information must be indicated clearly and unambiguously.

Commercial communications designed to promote a particular company's goods or services must be clearly identifiable as such. Member states must also ensure that their legal system allows contracts to be concluded by electronic means.

The Directive also harmonizes national rules on the liability of intermediaries, which until now have differed between member states. Intermediaries that are mere conduits for the electronic flow of information are not liable for the information they transmit or store in their networks provided that they comply with certain conditions set out in the Directive. Moreover, the Directive prohibits member states from obliging such intermediaries to monitor information they transmit or store.

To promote the enforcement of existing EU and national legislation on e-commerce, the Directive encourages the development of industry-wide codes of conduct at EU level. It also endorses enhanced cross-border regulatory co-ordination between members states, and provides alternative mechanising for the settlement cross-border on-line disputes. Nevertheless, the Directive does not interfere with existing conventions and private international laws governing jurisdiction for bringing civil proceedings, the recognition and enforcement of judgments in civil cases or the applicable law to contractual obligations which will remain unchanged.

Nadia de Souza and Irina von Wiese

Instant access to all of our content. Membership Options | One Week Trial