Brussels I: A Race to the Top

On November 30, 2000, the European Union passed a law mandating that online sellers be subject to suit in all fifteen EU states when they sell over the Internet. The new law is an amendment to the 1968 Brussels Convention. Called Brussels I, it is scheduled to go into effect on March 1, 2002. The new law states that when there is a dispute between a consumer in one EU country and an online seller in another country, the consumer will be able to sue in her own country. The regulation states that when a merchant "pursues commercial or professional activities in the Member State of the consumer's domicile, or by any means, directs such activities to that Member State," the country in which the consumer resides will have jurisdiction over the dispute.1 The idea for Brussels I sprang from a concern by European justice ministers that e-commerce was lagging in Europe. The European Commission attributed the dearth of online purchases to consumer fear, an opinion about which they have been very forthright in press statements as well as at the debates over the law.2 Given that consumer groups in Europe have been pushing for the right to sue companies in the consumer's home country, the EU ministers hope that the elasticity of the new jurisdictional regulation will spur e-commerce by bolstering consumer confidence. Many business owners, however, see Brussels I as a direct attack on small- to medium-sized companies. Spokespeople for this business community argue that large corporations are already subject to suit in each of the fifteen countries that constitute the EU, because they maintain offices in each country. Therefore, those affected by the law will be fledgling startups and small stores that are trying to establish a presence throughout the EU or are simply trying to grow their businesses. These small companies may be driven offline by the possibility of the high insurance and litigation costs that Brussels I will produce. The main argument against the new law is that its effects will be counterproductive. Harris Miller, President of the Technology Association of America, argues that the EU's belief that Europeans don't buy online because of a lack of consumer confidence is nonsense: "The reason that e-commerce is not taking off in Europe is not because of consumer confidence. The reason is ... because it's too expensive for consumers to get online."3 If Miller is correct, Brussels I will only exacerbate the problem by raising the costs for small businesses to operate-costs which those companies will then have to pass along to consumers. Brussels I creates fifteen separate legal markets in which a company can be sued. This contradicts what many thought was the purpose of the EU: "[It) means we will still have fifteen separate markets in the EU, rather than one unified internal market, which I thought was the aim," says Mike Pullen, a lawyer based in Brussels.4 The matter is further complicated because it preempts the Hague Convention discussions on the subject of a global charter, which is meant to address cross-border disputes.5 The proactive measures taken by the EU essentially pull the rug out from under the Hague Convention's planners, who want narrower protections such as granting jurisdiction only when a web site specifically targets a country. Representatives negotiating the new Hague Convention stalled on these points and met again in June 2001 to work further on a solution. In the meantime, the European Commission has been considering the Rome II Green Paper ("Rome II"), a document similar to Brussels I, but which affects more than jurisdiction. Rome II directly contradicts several pieces of legislation,6 including the EU's e-commerce directive which dictates that the substantive law of the country of origin should apply. Rome II would take precedence over this "country of origin" principle, which currently governs e-commerce within the EU.7 The effect of the new EU regulations will be that e-tailers will have to comply with the laws in all fifteen EU member states-even if an e-tailer has not specifically targeted a country. …