Jurisdiction on the Internet
European Convention

By Agne Lindberg and Abridged by Devashish Bharuka
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The author attempts to describe how different international conventions apply when introducing the Net as a new tool for international transactions. There are basically two jurisdictional issues regarding international transactions over the Net -- Jurisdiction to Prescribe and Jurisdiction to Adjudicate.

The following are the five most important Europe based international conventions concerning jurisdiction:

Jurisdiction to Prescribe - The Lugano Convention
Article 1 of the convention makes it applicable to civil and commercial matters thus making it possible for the convention to be applied in electronic commerce over the Net as well. The underlying principle of the convention is that the state where the person is domiciled is entitled to assert jurisdiction over that person. Whether the person in question is domiciled within the member state or not will be decided upon according to the internal law of the state where he is sued. There are several exceptions from this principle like, in contracts cases, a person may be sued in the courts of the country where the obligation should be performed. Consumer matters have been dealt with very liberally. A consumer can sue in the state where he is domiciled. Also, prorogatory agreements rule has been altered so that the consumer provision cannot be departed by from by means of such agreements.

Choice-of-Law - The Rome Convention
The main principle of the convention is the parties freedom to choose which law shall apply to the agreement entered between them. In the absence of any valid agreement regarding choice of law, the law shall of that country shall apply, which is most closely connected to the agreement. Which country the agreement is most closely connected to will be assessed on the basis of the where the characteristic performance of the agreement shall be effected -- presumably the delivery being the characteristic performance. In case of immovable property, the applicable law is that of the country where the property is situated. In or contracts regarding the carriage of goods law is that of the country where the carrier has his principal place of business. There are no specific rules relating to electronic commerce.

Internet Trade Between Entrepreneurs
Right to Prescribe: The EC conventions on jurisdiction and choice-of-law do not pose major difficulties to trade on the Internet as long as the parties to the transaction are domiciled in the convention states. However, a present problem with websites is that they seldom present the legal domicile of the party. Therefore, the physical domicile of entrepreneurs acting on the Internet will still be the determining factor when it comes to deciding which are the competent courts and which is the applicable law within the EC countries. We might encounter interpretative difficulties in areas like performance of a contractual obligation, occurrence of a harmful event causing damage and a branch being the basis of jurisdiction. The author opines that these problems are merely of an interpretative nature. Consequently, when it comes to trade between entrepreneurs the present conventions will suffice when completed with interpretative answers by the European Court of Justice. Still there is an obvious problem that the contracting parties might not know where the counterpart is domiciled.
Choice-of-Law Issues: Similarly to the Lugano Convention, the Rome Convention is well suited for dealing with Internet transactions. Likewise interpretative problems might arise. The Rome Convention might cause problems like characteristic performance of a contract which constitutes the closest connection to the country in question. A problem posed by the author is whether a server could constitute ‘another place of business’.

Consumer Internet Transactions
Furthermore when it comes to consumer Internet transactions within the EU, Internet will not again give rise to any specific questions which could not be solved on the basis of existing conventions. The consumers do almost always have the possibility to claim their rights under the law and in the courts of the country where they reside. Admittedly this causes a problem for entrepreneurs marketing goods towards EC customers, since they avail themselves to any national courts or laws of the member states, but this is not either an exclusive Internet problem.

The existing conventions -- with interpretative problems -- suffice as the basis of assessing Internet jurisdiction and choice-of-law due to the simple fact that the conventions merely concern themselves with the physical location of the contracting parties, which is not altered due to the Internet but rather renders Internet shopping similarities to conventional mail-order shopping.

The author suggests certain solutions of jurisdictional problem on the basis of domain name registration country, the IP-number, physical location of the serve, and lastly, on the basis of International Conventions. Self-Regulatory Measures have also been suggested by establishing an international domain name administrative authority. Question of law can be solved by making use of the UN Convention of the International Sale of Goods, disputes can be solved by arbitration and the awards can be enforced under the New York Convention. However, in the end, it is suggested that the only way of solving these issues is to enter into an international convention regulating the choice-of-law and the jurisdiction.