There is a significant amount of prospective legislation on the horizon directed squarely at e-commerce.  In addition to the upcoming distance selling legislation, due to arrive in June this year, there are two bespoke items, the UK’s Draft Electronic Communications Bill, published last year, and the amended proposal for a European Parliament and Council Directive on “certain legal aspects of electronic commerce in the Internal Market”.

The UK legislation is now little more than a piece of (rather sensible) facilitating legislation.  It will enable digital signatures to be more widely recognised as a valid means of concluding agreements and it will also reduce the number of types of contract which still have to be executed in hard copy.

The draft Directive is a much more ambitious initiative on which there is still considerable negotiation and general jockeying to be done between the Commission, the European Parliament and the national governments.  The draft Directive contains a wide number of provisions of which three are of particular interest:

  1. It seeks to clarify the extent to which an ISP is liable for illegal acts committed by third parties on and over its service.  There is a school of thought which believes that this clarification may end up being redundant as it applies to a whole series of distinct liabilities (such as the civil wrongs of copyright infringement and defamation and criminal offences such as obscenity) with distinct bases for establishing liability.  Moreover, case law has been  providing reasonably clear precedents in certain areas, defamation for example.
  2. In order to conclude a valid e-commerce contract the supplier will need to send acknowledgement of acceptance to the consumer.  Accordingly, in the EU’s virtual world there are now three stages necessary to create contractual relations: offer, acceptance and acknowledgement.  The draft Directive does not go into real detail about whether and how this last stage of the process affects the creation of a valid contract.
  3. The question of applicable law has effectively been fudged.  Not surprisingly, suppliers are lobbying for the applicable law to be that of the country from which the supply of goods originated.  This clearly benefits the supplier as in the event of a dispute the supplier will be well versed in its own domestic law and the processes of its domestic courts and more particularly it does not have to worry about all the consumer laws in other EU states.  Consumer associations on the other hand are arguing for the applicable law to be that of the country of receipt: clearly advantageous to consumers, who will have the protection of their local consumer regulations and can enforce their rights in their local jurisdiction.  Possibly as  a result of the “irresistible force meeting the immovable object” principle, the Commission has suggested that there should be an EU-wide form of dispute resolution applicable to e-commerce contracts.  Doubtless a sensible concept but probably overwhelmingly difficult to implement in practice.

The draft Directive explicitly states that it will not cover any questions of tax, which is likely to be far and away the most controversial side of any e-commerce legislative programme.  Consider how the doctrine which underpins corporate tax, namely “Permanent Place of Establishment”, will fare in the virtual world and how authorities will collect indirect sales taxes when the activity takes place out of the jurisdiction and there is no paper trail.  In due course, expect tax to become the most hotly debated topic for legislation.

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