Whose law applies to international Internet transactions?
In this article, I’m going to take a very brief look at jurisdiction and governing law as they apply to Internet transactions.
Terminology
Jurisdiction refers to the country whose courts will hear a dispute.
Governing law refers to the country whose law will apply.
They are not necessarily the same country.
Jurisdiction
Within the EU
Business to business (B2B) disputes
A business will be sued either :
- in the country where the business has its registered office (not the country where it has its server, if different); or
- in the country where the obligation should have been performed (e.g. the place where the user has access to an online service; the place of delivery of goods).
This complication can be avoided by agreeing jurisdiction in the contract, which two businesses are entitled to do.
Business to consumer (B2C) disputes
If the website is “directed” towards another country (e.g. part of the website is written specifically in the country’s language, or the marketing specifically targets the country) rather than simply being accessible from another country, then:
- consumers who are suing are allowed to choose jurisdiction in their home state or the country where the website’s owner is registered;
- consumers who are being sued, must be sued only in their home state.
The above cannot be overridden in the contract.
Outside the EU
International law in relation to websites is complex and often open to challenge. It is strongly advised to agree jurisdiction in the contract.
This may nevertheless be overridden by certain exceptions, as for example in the case of a copyright or defamation action, where jurisdiction must be that of the country in which the harm occurred.
Governing law
Within the EU
Business to business (B2B) disputes
The parties are free to agree on the governing law in the contract, and subject to a few exceptions, this is usually the best course to take.
If there is no contractual agreement concerning governing law, then the default situation is:
- the law of the country where the business that is selling goods/providing services has its registered office applies.
Business to consumer (B2C) disputes
The law of the country of the consumer’s habitual residence will govern the contract, provided the website was “directed” to that country.
For copyright disputes, whether B2B or B2C, the governing law is generally that of the country in which the relevant damage occurred.
Outside the EU
Always agree the governing law in the contract, to avoid complexities and challenges.
Online Dispute Regulations
These came into force on 9 January 2016 and may prove to be a source of quick resolution of online disputes between businesses and consumers.
Consumers can now submit their dispute to a dedicated ODR portal from anywhere in the EU and they will be linked to an approved national alternative dispute resolution supplier: ODR Europe.
VLT LEGAL provides intellectual property law solutions to SMEs and can assist with IP and data protection audits and due diligence, all types of agreements, copyright and trademark advice and registration, website compliance, and more. Please contact victoria@vltlegal.co.uk or 07887 810020 for a free initial consultation.
