European Law Threatens E-Commerce Growth

A draft European Union law would seriously stunt the growth of electronic commerce and could lead to a damaging trade dispute with the United States, industry experts say.The legislation, if finalized, would allow disgruntled Internet shoppers to sue e-commerce firms in their own national courts regardless of whether the company had actively sought to sell its product in the consumer's country or not. At the moment, unhappy online shoppers can often only seek redress in the country where the e-business is based. But, provided the offending company's Web site could be seen in the EU, an e-commerce firm could, in the future, find itself facing lawsuits in any one of the 15 countries. The bill could be ratified by EU justice and home-affairs ministers as early as December, and e-commerce firms have begun a fierce lobbying campaign to derail it. Already approved by the European Commission, the content of the new law was unanimously agreed by justice ministers in May. Ministers must now formally ratify the bill, also unanimously, after a period of consultation with the European Parliament. If that happens, legislation dealing with civil and commercial matters called the Brussels Convention would then be updated to take account of the flourishing e-commerce sector, which, according to some estimates, will be worth more than $1 trillion by 2003. But, according to the Union of Industrial and Employers' Confederations of Europe (UNICE), the bill has been rushed through and would place an unacceptably heavy burden on business. ""There has been a lack of transparency, consultation, and impact assessment,"" Dirk Hudig, UNICE's secretary-general, told a Brussels conference this week. ""Compliance with the laws of many different countries would impose tremendous, even unbearable, costs for small-and medium-sized enterprises,"" he warned. There was also a risk, according to Michael Pullen of Dibb Lupton Alsop, a key figure in the lobby opposing the bill, that the law could spark a new transatlantic trade dispute. ""If this goes through it could create another transatlantic trade war,'' Pullen told Reuters today, adding that the EU should not over-regulate e-commerce if it hoped to emulate U.S. success in this area. ""It creates legal uncertainty, which will deter businesses from selling over the Internet and will not protect consumers because the cost of seeking legal redress will be too high,"" he added. But European consumer body BEUC disagrees and has urged the EU to adopt the revised Brussels Convention. ""To deprive consumers of access to their own courts and the core protections of their own laws will mean a return to the full force of Ö the law of the jungle,"" Jim Murray, BEUC's Director, told the conference. Source: © 1999 Reuters Limited. All rights reserved