EU proposals on e-trade will hurt online business

Proposed European Union (EU) legislation which would allow consumers to take companies to court under the laws of the country...

Proposed European Union (EU) legislation which would allow consumers to take companies to court under the laws of the country where a product or service was purchased would damage online trade, the UK business community has warned.

The Rome II proposal, which is currently open to consultation, states that as a general rule for "double locality cases" the applicable law is that of "the country where the loss is sustained".

The proposed laws fly in the face of the recently-implemented E-commerce Directive, which introduced a country-of-origin principle, meaning that UK online service providers would operate under UK law in most cases, irrespective of the country the service was offered in.

In the initial responses received by the EU during consultation, businesses said the Rome II proposals would be unworkable.

Amazon.com said the laws would create serious problems for online operators. "The fact that an individual Web site can be accessed simultaneously from around the world would mean the introduction of multiple layers of additional and conflicting legal requirements which would simply be impossible to meet in practice," the online retailer said.

The Financial Services Authority (FSA), meanwhile, said that overriding the country-of-origin principle would create too many ambiguities.

"Financial services transactions can often be complex, abstract and involve several stages," the FSA said in its response.

"It can be hard to specify unambiguously the relevant geographic location of the supplier or the transactions and its parts.

"In the light of this, it would often be difficult in practice to assess the respective locations of what the draft regulation refers to as the 'loss' or the 'harmful event' causing it."

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