“Where Can We Be Sued?”- The Implications Of The New Jurisdiction Rules Under The Brussels Regulation For Online Consumer Contracts

The terms and application of the new Regulation:

The Brussels Regulation (the "Regulation") takes effect on 1st March 2002, replacing the Brussels Convention of 1968 (the "Convention") which sets out the rules for determining which EU court will have jurisdiction over a dispute in relation to a commercial contract and facilitates the recognition and enforcement of judgements between member states. It is intended that the Regulation should increase uniformity between the member states in their application of the rules of jurisdiction contained in the Convention and take into account the development of e-commerce. The Regulation will apply in all member states of the EU, other than Denmark. The relations between Denmark and the other member states will continue to be governed by the Convention.

The Regulation makes important changes to the jurisdiction rules that apply to consumer contracts. When considering the question "Where can we be sued?", suppliers who sell to consumers in other EU member states may unwittingly find themselves subject to the jurisdiction of foreign courts in the event of a dispute brought by a consumer. Online consumer e-commerce businesses should, therefore, review their foreign sales efforts and identify those territories where their activities could lead to unfavourable jurisdiction rulings under the Regulation. A prudent review in advance of the introduction of the Regulation will at least give those businesses advance warning of the effect of the new Regulation on their foreign activities.

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Brussels Convention v Brussels Regulation:

The Regulation follows the principle of the Convention that the parties should be free to include an express choice of jurisdiction clause (Article 23). Where it is unclear whether a particular choice of jurisdiction is exclusive or non-exclusive it will be presumed to be exclusive, although non-exclusive agreements are enforceable.

In the absence of express agreement on jurisdiction it remains the case that a defendant can be sued only in the courts of his home country (the 'home courts rule'). The Regulation expressly states that nationality is not relevant to determine which courts have jurisdiction to hear a case. The determining factor is domicile.

Article 60 of the Regulation introduces a test for the domicile of companies and unincorporated businesses, an issue previously left to the laws of the member state in question. It defines the domicile of a company or other...