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Issues of jurisdiction are important to online traders, not least because of the transnational character of many internet contracts.

Private international law (also known as conflict of laws) is the legal subject concerned with jurisdictional questions – i.e. questions of where court proceedings may be brought.

Private international law is international inasmuch as it is concerned with cross-border legal disputes, but – because there are no real private international courts – it must be considered from particular national perspectives.

This post is intended to introduce some of the issues of private international law in the context of internet contracts from the perspective of English law.  It is not intended to be comprehensive: it does not consider the perspectives of other countries’ courts; and it does not consider other causes of action (e.g. tort).  Indeed, because of the complexity of the law in this area, it only touches upon the main issues of English private international law relating to disputes about online contracts.  If you need specific advice on this subject, you should always speak to a suitably qualified lawyer.

The question of where court proceedings are brought is conceptually distinct from the questions of governing law (see Internet contracts and applicable law) and the enforcement of a judgment issuing from court proceedings.  In other words, proceedings may in principle be brought in one jurisdiction and a judgment issuing from those proceedings may be enforced in another.

Sources of law

The main sources of English law on this subject:

• Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (aka the Brussels Regulation).
• The Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
• English common law.
• The Civil Procedure Rules.

Applicability

The rules that the English courts will apply in considering questions of jurisdiction in relation to a contractual dispute depend upon the domicile of the defendant.

• Contractual disputes involving a defendant domiciled in the EU will be subject to the Brussels Regulation.
• Contractual disputes involving a defendant domiciled in the EFTA (excluding Lichtenstein) will be subject to the Lugano Convention.
• Contractual disputes involving other defendants will be subject to the rules of English common law.

Default jurisdiction under the Regulation and Convention

Where the Brussels Regulation or the Lugano Convention applies, then the defendant may usually only be sued in: (a) the courts of his domicile; or (b) in the courts of the place of performance of the obligation in question (presumed to be the place or intended place of the delivery of goods or the supply of services in a contracting state).

There are however a number of exceptions to this general rule, including where:

• the dispute is subject to a contractual jurisdiction clause;
• the dispute concerns a contract classes as a consumer, insurance or employment contract.

I consider contractual jurisdiction clauses below; such clauses aside, the most important exception relates to consumers.

Under the Regulation and Convention a consumer contract is subject to special rules where:

“(a) it is a contract for the sale of goods on instalment credit terms; or

(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or

(c) in all other cases, the contract has been concluded with a person who 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 or to several States including that Member State, and the contract falls within the scope of such activities.” (Article 15(1), Brussels Regulation; there is a parallel provision in the Lugano Convention).

Irrespective of contractual jurisdiction clauses, consumers under such contracts can sue, and can only be sued, in the state of their domicile (generally speaking).

But when does a person pursue “commercial or professional activities” in a particular Member State?  When does a person by “any means” direct “commercial or professional activities” to a Member State or to “several States including that Member State”?  The answers to these questions are not at all clear.

A website published by a UK publisher in Italian and advertised in Italian media selling goods in Euros may obviously be considered to be directed at Italy.  On the other hand, a website published by an Italian publisher in Italian and not marketed in any way in the UK selling goods in Euros would probably not be considered to be directed at the UK.  (Note, however, that there are different interpretations of Article 15.)

Ways to reduce the risk of becoming subject, under the Regulation or Convention, to the jurisdiction of a particular country’s courts, may include: using national flags to indicate to whom a website is directed; limiting the currencies and languages used on a website; and using technical filtering to prevent consumers in the relevant jurisdiction from using the website or purchasing the products and services offered on the website.

Common law

Where an English claimant wants to bring proceedings against a person domiciled overseas in a non-EU, non-EFTA jurisdiction, the usual method is to obtain permission to serve proceedings out of the jurisdiction (there are other ways).

In order to obtain permission to serve out, the claimant wishing to bring proceedings for breach of contract will need show, first, that the claim is permissible under the Civil Procedure Rules.  Rule 6.20(5) provides:

“…a claim form may be served out of the jurisdiction with the permission of the court if … a claim is made in respect of a contract where the contract –

(5) (a) was made within the jurisdiction; (b) was made by or through an agent trading or residing within the jurisdiction; (c) is governed by English law; or (d) contains a term to the effect that the court shall have jurisdiction to determine any claim in respect of the contract.

(6) a claim is made in respect of a breach of contract committed within the jurisdiction.”

Many contractual claims will be able to surmount this hurdle.  In an internet context, of course, the questions of where a contract was made, and where it was breached, may be contentious.

Second, the claimant will have to show that England and Wales is the proper place to bring the claim (i.e. the forum conveniens).  This involves balancing the suitability of England and Wales against the suitability of the other potential forum or forums.  Consequently, the English courts will usually have more discretion to refuse jurisdiction in the case of a defendant domiciled outside Europe.

Choice of jurisdiction

In a contractual dispute it is common for the parties to have elected for disputes to be subject to the jurisdiction of the courts of a particular state.

The parties to a B2B contract are generally free to choose in which jurisdiction a dispute may be litigated (although there are a few exceptions).

Where the Brussels Regulation or Lugano Convention applies, consumer contracts (as defined in the Regulation and the Convention) are different.  Under the Regulation and the Convention, jurisdiction clauses can only add to consumers’ rights to litigate, not subtract from them.  So, if a consumer has a right to bring proceedings against a supplier under the rules discussed above, that right cannot be removed by means of a contractual jurisdiction clause.  Similarly, where a supplier is obliged to bring proceedings against a consumer in the consumer’s jurisdiction of domicile, then that obligation cannot be altered by a choice of jurisdiction clause.

The Consumer Protection (Distance Selling) Regulations 2000 (the “Distance Selling Regulations”) came into force on 31 October 2000.  They implemented into English law the main provisions of Directive 97/7/EC of the European Parliament and the Council of 20 May 1997 on the protection of consumers in relation to distance contracts.

This post focuses upon the information that must be disclosed by a website operator where the Distance Selling Regulations apply.  I will cover the details of the right of cancellation under the Regulations in a future post.

The Distance Selling Regulations apply to “any contract concerning goods or services concluded between a supplier and a consumer under an organised distances sales or service provision scheme run by the supplier who, for the purposes of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded” (Regulation 3(1)).

However, there are certain classes of contract that always fall outside the Regulations in whole or part.

The following types of contract are entirely exempted from the Regulations: contracts for the sale or other disposition of an interest in land except for a rental agreement, contracts for the construction of a building where the contract also provides for a sale or other disposition of an interest in land on which the building is constructed, except for a rental agreement; contracts relating to financial services (these are subject to a separate set of regulations); contracts concluded by means of an automated vending machine or automated commercial premises; contracts concluded with a telecommunications operator through the use of a public pay-phone; and concluded at an auction.

In addition, the following types of contract are exempted from most of the provisions of the Regulations (including the disclosure provisions): timeshare agreements; contracts for the supply of food, beverages or other goods intended for everyday consumption supplied to the consumer’s residence or to his workplace by regular roundsmen; and contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period.

These exemptions are quite narrow, and most contracts made between suppliers and consumers via a website for the supply of goods or services will be subject to the Distance Selling Regulations.

Regulations 7 and 8 of the Distance Selling Regulations set out the disclosure requirements.  There are slightly different rules affecting disclosures required under the different Regulations.

Under Regulation 7, in good time prior to the conclusion of the contract to which the Regulations apply, the supplier should provide to the consumer the following information:

- the identity of the supplier and, where the contract requires payment in advance, the supplier’s address;

- a description of the main characteristics of the goods or services;

- the price of the goods or services including all taxes;

- delivery costs where appropriate;

- the arrangements for payment, delivery or performance;

- the existence of a right of cancellation (except excluded cases);

- the cost of using the means of distance communication where it is calculated other than at the basic rate;

- the period for which the offer or the price remains valid; and

- where appropriate, the minimum duration of the contract, in the case of contracts for the supply of goods or services to be performed permanently or recurrently

Also under Regulation 7, and also in good time prior to the conclusion of the contract, the supplier should: inform the consumer if he proposes, in the event of the goods or services ordered by the consumer being unavailable, to provide substitute goods or services (as the case may be) of equivalent quality and price; and inform the consumer that the cost of returning any such substitute goods to the supplier in the event of cancellation by the consumer would be met by the supplier.

The information must be provided in a clear and comprehensible manner “appropriate to the means of distance communication used”.  In the context of websites, this means, in my view, that the information should be provided in writing on the website and should be clearly signposted for users.

Under Regulation 8,  the supplier must supply certain additional information to the consumer in writing (or “another durable medium which is available and accessible to the consumer”).  In principle, the information may in some circumstances be supplied after the contract has come into force.  However, in the case of distance contracts entered into via a website, it is difficult to see why it should not alway be supplied before the contract has come into force - particularly as a delay in supplying the information can lead to an extension of the cancellation period for the contract.  If you are a supplier and are considering supplying any of the information listed below after the conclusion of  contracts, you should look closely at the Distance Selling Regulations and take advice as necessary.

In any case, the additional information to be disclosed under Regulation 8 is:

- information about the conditions and procedures for exercising the right to cancel under the Distance Selling Regulations (including where a term of the contract requires (or the supplier intends that it will require) that the consumer shall return the goods to the supplier in the event of cancellation, notification of that requirement; and information as to whether the consumer or the supplier would be responsible under the Regulations for the cost of returning any goods to the supplier, or the cost of his recovering them, if the consumer cancels the contract under regulation; and in the case of a contract for the supply of services, information as to how the right to cancel may be affected by the consumer agreeing to performance of the services beginning before the end of the seven working day period).

- the geographical address of the place of business of the supplier to which the consumer may address any complaints;

- information about any after-sales services and guarantees; and

- the conditions for exercising any contractual right to cancel the contract, where the contract is of an unspecified duration or a duration exceeding one year.

Many contracts, and the vast majority of professionally-drafted contracts, contain what is known as a “choice of law” clause. Choice of law clauses specify the law that will be used to interpret the contract.

Choice of law clauses and choice of jurisdiction clauses (sometimes called choice of forum clauses) must be distinguished. Whilst choice of law clauses relate to the law that will be used to interpret a contract, choice of jurisdiction clauses specify the courts (or other decision making bodies) that will resolve disputes arising under the contract. For example, a contract could specify that it should be interpreted in accordance with English law, whilst at the same time granting exclusive jurisdiction to the courts of Germany to resolve disputes arising under the contract.

Like many other kinds of contractual clause, choice of law clauses are subject to a certain amount of judicial interference.

This note focuses upon the ways in which the English courts will interfere with choice of law clauses.

Some types of law will regulate contractual relations before the English courts irrespective of an express choice of law. For example, the following pieces of legislation may apply in whole or part to contracts which relate to England and Wales but which expressly choose another governing law:

• Competition Act 1998
• Unfair Contracts Terms Act 1977
• Unfair Terms in Consumer Contracts Regulations 1999

The ways in which the English courts will interfere with a choice of law clause depend to an extent upon whether the contract is a consumer contract. For example, the Unfair Contract Terms Act 1977 (UCTA) will apply to contracts that are not governed by English law where it appears to the court that the choice of law clause has been used for the purpose of avoiding the effects of UCTA, or where one of the parties is a UK consumer who took the steps necessary to enter into the contract in the UK. Note, however, that the UCTA rules on excluding and limiting liability do not apply to international supply (of goods) contracts.

National consumer protection measures may also apply more generally by virtue of the Rome Convention (which has been incorporated into English law via the Contracts (Applicable Law) Act 1990). Article 5(2) of the Convention provides:

“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:

- if in that country the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and he had taken in that country all the steps necessary on his part for the conclusion of the contract, or

- if the other party or his agent received the consumer’s order in that country, or

- if the contract is for the sale of goods and the consumer travelled from that country to another country and there gave his order, provided that the consumer’s journey was arranged by the seller for the purpose of inducing the consumer to buy.”

Where there is no express choice of law in a contract, the courts may still determine that there has been an implied choice of law if the circumstances warrant such a finding. For example, where a contract contains a choice of jurisdiction clause but no choice of law clause, then the law of the chosen jurisdiction may be deemed to apply. References to other national laws in a contract may also have an effect.

Where the courts are unable to identify and express or implied choice of law, the usual rule is that the governing law will be that law that is most closely connected to the contract. Article 4(2) of the Rome Convention provides:

“… it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party’s trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated.”

Note, however, that there are a number of exceptions to this general rule.