Lionel Stanbrook of the Advertising Association discusses the implications of the Brussels Convention on e-commerce in the UK and EU. Lionel Stanbrook is deputy director-general of the Advertising Association.
In early July 1999, the UK government supported – together with other EU Member States – a European Commission proposal to adopt the amended Brussels Convention on jurisdiction as an EU Regulation according to Article 65 of the Amsterdam Treaty.
The proposed regulation gives the courts of a consumer's country of residence jurisdiction over supplies established in other member states.
Offers for the supply of the goods and services must be directed to the country concerned and this definition, we are told, will now embrace offers made from websites. This means that not only companies that actively target a particular country but also companies whose websites can be accessed in that country will be subject to the jurisdiction of that country.
If the Brussels Regulation is adopted in its current form it will have a disproportionate (and incalculable) effect on the activities of small and medium-size companies because they will need to understand and comply with the various consumer protection laws of each of the 15 member states of the EU.
Understanding these laws is no problem for large and multinational companies, which are already used to the patchwork of liabilities within the so-called single market of the European Union.
But there is an urgent political imperative for government policy in respect of the new media – employment growth can realistically only be sustained by new and smaller companies, able to trade and expand their business by taking the fullest advantage of the considerable market access opportunities afforded by e-commerce via the internet.
The UK Prime Minister appears to understand this point well, and is justifiably concerned to ensure that the UK becomes an international leader in e-commerce by exploiting a business environment that is as lightly regulated as possible.
In the past three months however, a political storm has blown up on this issue, and severe doubt has been cast on the UK government's ability to understand and manage the issue of e-commerce across the departmental board.
For most of the year, the Department of Trade and Industry has been piloting the excellent UK e-commerce bill through Parliament as well as considering the EU e-commerce directive and its various ramifications. The department has been exemplary in its efforts to involve business in its analyses of the issues involved.
"Amsterdamization" meanwhile, has been the preserve of the Lord Chancellor's Department.
In June this year, certain government officials were discounting the fears expressed by the Advertising Association and others about the implications of the revised Brussels Convention.
While many lawyers were initially dismissive of our fears (with the striking exception of those at Dibb Lupton Alsop), we were convinced that the issue had important and potentially damaging consequences and not only for the Government's policy of encouraging e-commerce. These consequences, we believe would also affect key European Union principles sustaining the single market as well as its cornerstones, the principle of jurisdiction at the country of origin, and mutual recognition.
Herein, perhaps, lies an important lesson. Legal practice and public affairs practice are not distinct disciplines and should not operate without reference to each other. Good client representation involves not only the need to provide sound legal advice but also to set this advice unerringly in its political context.
In this case, some of the legal advice to the Government took place, at best, in an environment supremely isolated from its political context.
It is quite clear that the Council Working Party was largely unaware of the significance of its re-definition of the "directed communication" in respect of the way in which e-commerce from websites could and should be developed within the single market.
Worryingly, the affair also shows the very small degree of understanding within government of the key importance of single market principles in the EU.
The parallel controversy surrounding Clause 19 of the Financial Services and Markets Bill is a case in point.
The wording of this clause has caused widespread concern, setting a dreadful precedent in seeking to protect the domestic market from foreign competition.
The clause, like the draft regulation on jurisdiction, runs completely counter to mainline government policy on e-commerce, by asserting that the UK has jurisdiction over all commercial communication "capable of having an effect in the UK".
On 11 December, government representatives will meet to rubber-stamp the draft regulation. If they do, the UK's future e-commerce prospects will have been stifled at birth because of the lack of policy coordination within government and the parallel lack of understanding that the internal market includes "us" as well as "them".