| Rome I - 23/02/06 |
|
I.-Introduction In the last decades, the distance selling sector has evolved from a purely mail driven business (i.e., mail order) to a multi-channel sector encompassing on-line media in their communications with consumers (Internet, interactive television, SMS or any other interactive means of communications) as well as telephone and printed documents such as catalogues, mailings… The integration of new on-line communication techniques by distance selling companies during the last years has helped the sector to grow and the emergence of new sectors such as distance selling of food items, airline and railway tickets. In recent years, sales over the Internet have increased rapidly, multiplying by five in some countries since 2000. In 2004 online sales accounted for more than 35% of the €68.5 billion of total distance sales. The potential of e-commerce to jumpstart distance sales both in country and cross-border is huge. The development of information technologies has potentially provided small companies the means to open new markets so far only accessible to bigger companies. Legislation can either act as a driving force for the realisation of this potential or as a brake to the economy in general. To this respect, the Commission proposal for a Regulation on the law applicable to contractual obligations (Rome I) is key. It is for this reason that EMOTA[1], as the representative association for the distance selling sector, would like to comment on the proposal and specifically on the rules established by the text in relation to cross-border consumer contracts. II.- The lack of an impact assessment In the proposal’s explanatory memorandum, the Commission indicated the “limited impact of the proposal” and that “the proposal does not set out to establish a new set of rules” as the main reasons for the lack of an impact assessment on the proposed Rome I Regulation. Nevertheless, the Commission contradicts itself on this point by talking in the proposal about “modernising” certain provisions of the Rome Convention, “changes of substance” and the proposal of a “new conflict rule”. The current legal framework for consumer contracts in cross-border cases, set up by the Rome Convention, establishes the general principle of the freedom of choice of the parties with regard to the applicable law to the contract. Nevertheless, in the case of consumer contracts the convention departs from this general principle if the contract has been preceded by “a specific invitation” addressed to the consumer in another country. In this case the law of the country of the consumer would be applicable[2]. The present Commission’s proposal considerably changes the existing situation. Although article 7 of the Rome Convention establishes that “effect may be given to the mandatory rules” (e.g. consumer protection legislation) “of the law of another country with which the situation has a close connection” (e.g. the law of the country of the consumer), this is different from systematically applying the law of the country of the consumer. This would have a strong negative impact on the development of distance selling and especially in relation to small and medium sized companies, which would probably decide to limit its activities to those consumers established in its own country. As a result, consumers would see reduced their choice of goods and services. Since companies would not, even passively, conclude contracts with consumers from other countries actively looking for the best available offer (see comments of point 3 on Article 5 of the proposal). Moreover, the Commission justifies the choice to widen the scope of application of the law of the country of the consumer saying that “a consumer will make cross-border purchases only occasionally whereas most traders operating across borders will be able to spread the cost of learning about one or more legal systems over a large range of transactions”[3]. Companies invest significant legal and financial resources to ensure that they comply with their respective domestic laws, application and interpretation of EU laws and case law at national and EU level. This is quite a significant demand on any business but especially for new market entrants, SMEs and those operating young businesses that do not have a large number of clients/transactions and who are precisely those to benefit more from the opportunities offered by the new means of communication. It is important to remember the important role of small and medium-sized enterprises in the EU’s economic development. This has been repeatedly highlighted by the Commission, which has also called for broad policy action in favour of SMEs[4]. EMOTA believes that the Commission should respect its own commitments and carefully asses the impact that these changes may have on the development of cross-border distance selling, especially in relation to e-commerce, as well as on companies and consumers. In line with the Commission principles and guidelines on better regulation outlined by the communication on “Better Regulation for Growth and Jobs in the European Union” (COM (2005) 97) solid data regarding the economic advantages and drawbacks and the effects of a future Regulation on Rome I should be provided before further proceeding with the proposal. III.- Article 5: Consumer Contracts As we mentioned before, the current Rome Convention establishes the general principle of freedom of choice of the parties with regard to the law applicable to contractual obligations. Only in the case where the professional specifically and actively targets the consumer in another country the law of the country of the consumer would apply. The draft Commission text proposes to systematically apply the law of the country of the consumer no longer retaining as connection factor the active or passive attitude of the operator. The Commission’s guidelines on Vertical Restraints[5] clearly differentiate between active and passive sales and specify that “general advertising or promotion in media or on the Internet that reaches customers in other […] territories […] are passive sales. […] Insofar as a web site is not specifically targeted at [a group of] customers [from another territory], […] for instance with the use of banners or links […] specifically available to these exclusively allocated customers, the web site is not considered a way of active selling”. It adds that “if a customer [without being previously actively targeted by the company] visits the website of a distributor and if such contact leads to a sale, including delivery, then that is considered passive selling”. We have to keep in mind that websites are not pushed to consumers but instead are pulled proactively and at the free will of the user. In the same way that a Belgian consumer going to a retail shop in Spain would expect Spanish law to apply to any purchasing contract, it would also be reasonable to expect that in the case of a consumer ordering from a website which is clearly targeted to Spanish consumers or, wishing to order from a clearly identifiable Spanish catalogue, Spanish law would also apply. A web site is no other than a virtual window shop, as such fully comparable with a traditional window shop. The consequence of the new wording of the Commission’s proposal would be that even on-line contracts concluded after a consumer has visited a website without having been proactively targeted or invited to do so beforehand, would systematically be ruled by the law of the country where the consumer is established. This would incentive companies to discriminate against non-domestic EU consumers and to refuse orders from consumers residing in other countries and create competitive distortions on the market place between those selling goods online and offline. The new wording of the text would clearly place a disproportionate compliance burden on those companies using new media as distribution channel, a burden not placed on those who offer these services and carry these same transactions online. A shop does not have to change the terms of its contracts depending on the nationality of the consumer that walks in. In addition to the negative impact on the development of on-line and mail-order services, this will also result in consumers not being able to benefit from better offers from other countries. We strongly question whether the Commission proposal would be in the interest of European consumers, given its inherent disincentive to European companies based in one EU Member State to accept order from consumers established in other EU countries. This would clearly appear to negate many of the potential consumer benefits of an EU internal market in terms of access to maximum information on the available range of goods and services, the ability of consumers to make informed comparisons and choices about quality/service, price and to benefit from the best available offer. We should not forget that the interests of consumer are already protected by the existing consumer acquis. EU companies, including distance selling companies, are already required to comply with the full range of EU-level consumer protection laws (Distance Selling Directive (97/7), Unfair Commercial Practices (2005/29), Guarantees Directive (99/44)…), which although establishing a common framework may vary in the practical details and interpretation in the various Member States, e.g.: the exact way to provide the information to the consumer (some laws even establish a specific text to be provided), obligations as to the language the information has to be provided, etc. IV.- Conclusions a) If the Commission wishes to propose any changes to the current wording of the convention, it should respect its own commitments and carry out an impact assessment before further proceeding with the proposal. More if we take into account the negative effect the proposal may have in the further development of distance selling. b) The Commission should create a legal environment that encourages the development of e-commerce and boost economy rather than discourage companies to profit from the opportunities provided by new media and to extend their activities to other countries. To this respect a country of origin approach would be the best option. This would not be to the detriment of consumers who already benefit from a high degree of protection. On the contrary, the country of origin would be the best way to guarantee consumers’ access to information on goods and services existing in the Internal Market and their ability to benefit from the best available offer. c) Alternatively and in line with the wording of the existing Rome Convention, the “proactive targeting of a consumer” should be kept as the sole basis for the application of the law of the country of the consumer in the case of cross-border contracts. °°°°°°°°°°°°°°°°°°°°° Brussels, 23 February 2006 - MOU [1]The European Distance Selling Trade Association (EMOTA).comprises 22 national associations from 21 countries: 18 from the European Union (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Poland, The Netherlands, Slovakia, Slovenia, Spain, Sweden and the UK) as well as Norway, Russia and Switzerland. EMOTA’s member associations represent more than 2,000 companies employing about 200,000 permanent staff. More than 200,000 are indirectly employed at postal and telecom companies, printers, fulfilment houses and other specialised services. [2]Article 5.2 of the Rome Convention on consumer contracts states: “2. Notwithstanding the provisions of Article 3, a choice of law made by the parties shall not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the country in which he has his habitual residence:
[3]Page 6 of the proposal [4]See http://europa.eu.int/comm/enterprise/entrepreneurship/index_en.htm [5]OJ C122 of 23.5.2002, paragraph 51 |