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CML - WS 9 - E-Commerce
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Commercial Law - Workshop 9 - E-commerce - Study guide
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WS 9 – E-CommerceCHOICE OF JURISDICTION AND LAW
Jurisdiction means the courts which would hear the dispute.
Choice of law obviously means choosing which law would apply to the contract.
The basic principle is that if the parties choose the law and jurisdiction which they wish to cover the contract
then that choice prevails.
EU Regulation 593/2008 (Rome I) deals with choice of law.
choice of jurisdiction is dealt with by the recast Brussels I Regulation (Regulation 1215/2012) which replaces
Regulation 44/2001
BRUSSELS I – REGULATION 1215/2012 – (PAGE 172)
This Regulation deals with jurisdiction. It applies, generally, where defendants are domiciled in Member States,
or the parties have chosen a court or courts of a Member State to govern the contract.
The basic rule is that the defendant is sued in the courts of his home country, subject to the other provisions of
the Regulation (Article 4).
If the dispute is a contract matter then there is the option of suing the defendant in the Member State where
the contract should have been performed (Article 7(1)(a)).
In the case of a sale of goods contract, it is presumed that the ‘place of performance of the obligation in
question’ is the Member State where the goods were delivered, or should have been delivered (Article 7(1)(b)).
Thus, for sale of goods contracts, there is only one ‘place of performance of the obligation in question’ for the
whole of the contract.
Car Trim GmbH v KeySafety Systems Srl [2010] - ruled that the place of delivery (and therefore performance)
was the place where the physical transfer of the goods took place, giving the purchaser actual power of disposal
over those goods.
Exclusive jurisdiction
Under Article 24 of Regulation 1215/2012, there are situations in which certain courts are regarded as having
particular expertise and so are given exclusive jurisdiction. This overrides the normal rules on general and special
jurisdiction. The main instances are:
(a) proceedings concerning rights in rem in immovable property, or tenancies of immovable property: the
Regulation normally gives exclusive jurisdiction to the courts of the Member State in which the property is
situated;
(b) proceedings concerning the constitution or dissolution of companies: the Regulation gives exclusive
jurisdiction the courts of the Member State in which the company has its ‘seat’ (in the UK this will usually be
the registered office); and
(c) Proceedings concerning the registration or validity of registered IP rights: the Regulation gives exclusive
jurisdiction to the courts of the Member State in which the right is registered, or in which registration has
been applied for.
Special rules for insurance, consumer contracts and employment contracts
- In order to redress the balance, the rules on jurisdiction are shifted in favour of the ‘weaker’ party. Generally he
can be sued only in his own courts, but is given the choice as to whether he sues the other party in his own
courts or in the other party’s courts.
- This can mean that an Internet business could be sued in any jurisdiction in which its website happens to be
accessible to potential customers.
Contracting out: express choice of jurisdiction
- Article 25 allows the parties to override the rules on general and special jurisdiction by agreeing that the courts
of a specified Member State are to have jurisdiction. The Article lays down the formal requirements for such an
agreement.
- Generally, it must be in writing.
FIRST TO FILE
, WS 9 – E-Commerce
The court which is first involved in the proceedings (first seised) will generally have jurisdiction.
Any other court may decline jurisdiction, or stay proceedings if the actions are related (Article 29).
OUTSIDE THE EU/EFTA – P.174 - 175
Suing in England
There are three circumstances in which the English courts may have jurisdiction to hear a claim:
1. if a claim form is served on the defendant whilst he is physically present within the jurisdiction (however
briefly);
2. if the defendant submits to the jurisdiction of the English courts; or
3. If the courts authorise service of a claim form out of the jurisdiction.
Being sued abroad
Apart from the Brussels Regulation and Lugano Conventions, England is not a party to any other convention on
jurisdiction. The question of whether an English defendant can be sued in a foreign country depends on that
country’s jurisdiction rules.
ROME I – REGULATION 593/2008
This Regulation applies to Member States of the EU. It deals with the choice of laws, that is, the question of
which law applies to the contract
Article 3(1) allows the parties to choose the law of the contract, either expressly or impliedly. If they have
done so, then that is the applicable law that governs the contract
If no such choice has been made then the rules in Article 4 apply. Typically, in a sale of goods contract, this
means that the law of the country where the seller has his habitual residence will apply, unless the buyer is a
consumer, who cannot be denied the use of laws which cannot be derogated from in his own jurisdiction.
Article 4(1) sets out a list of different types of contract, and states whose law will apply to each type of contract.
Looking at the contracts that we have covered in the preceding chapters:
(a) In a sale of goods contract, the law of the country where the seller has his place of habitual residence is the
law that will apply (Article 4(1)(a)).
(b) In a contract for the supply of services, the law of the country where the service provider has his place of
habitual residence is the law that will apply (Article 4(1)(b)).
(c) In a franchise agreement, the law of the country where the franchisor has his place of habitual residence is
the law that will apply (Article 4(1)(e)).
(d) In a distribution agreement, the law of the country where the distributor has his place of habitual residence
is the law that will apply (Article 4(1)(f )).
Local mandatory rules – page 176
These local law provisions are the ‘mandatory rules’ which are referred to in Article 9 of the Regulation.
These are ‘rules’ which cannot be derogated from
BREXIT
If the European Union (Withdrawal) Bill is enacted, as EU Regulations, both Rome I and Brussels I will remain
in place immediately post-Brexit.
Given the uncertainty, it is therefore essential that the parties should attempt to future-proof their contracts
as far as possible by including express clauses setting out whose law will govern the contract and which
courts will have jurisdiction in the event of a dispute.
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