Currently, many firms are entering into contracts through the internet to sell and buy goods or services to clients who are domiciled in countries where the businesses are not based. Such contractual agreements comply with international statutes governing jurisdiction, recognition, and enforcement of civil justice and judicial cooperation. Besides, they are universal because the lawful dealings between consumers/purchasers and businesses/vendors are connected to the legal frameworks of many countries. Therefore, it is easy to litigate cross-border issues concerning contracts signed online because of this legal connection. For example, lawmakers can quickly determine which nation’s law should be applied to identify the practical guidelines and mitigation strategies to adopt.

Moreover, in case the convicted party fails to honor its accountabilities under the court ruling, it will be indispensable to delimit the degree to which the terms of the verdict may be imposed across extraterritorial boundaries. That said, this paper discusses the issue of court jurisdiction regarding the mitigation of disputes arising from Internet-based consumer contract. This issue has recently attracted considerable debate in the wake of Brexit. This paper will examine the existing laws governing matters of jurisdiction in incidences where individual or business domiciled in an EU member state is subject to a cross-border contractual dispute arising from financial dealing performed via the internet. Lastly, this paper will assess the proposals put forward by the UK government and Brussels to deal with cross-border contractual disputes after Brexit.

Current EU Rules Dealing with Issues of Jurisdiction arising Internet-based Contracts

There are two primary conventions which contain provisions outlining the steps for solving cross-border disputes generate by online-based contracts. They include the Lugano Convention (1988) and Brussels Convention (1968). The latter describes guidelines for resolving jurisdictional matters arising from EU member states concerning civil and commercial cases. Such issues include consumer contracts among others. The Lugano Convention also addresses these matters. The stipulations of both conventions are similar to consumer contracts. That said, for the sake of relevancy, this section will draw from the provisions of the Brussels Convention to discuss the issue.

Brussels Convention

Article 2(1) of the Brussels Convention necessitates that a defendant shall be sued on the country where he or she is residing. Besides, Art. 5(5), clause 13-15, presumes that the offender is domiciled in contracting state to the convention. However, Article 4 stipulates that the issue of jurisdiction is determined by internal law if the perpetrator is not so domiciled. Even thus, the Brussels Convention permits some nonconformity with the provision in Art. 2(1). One such unconventionality manifests in the principle of party autonomy, which allows conflicting parties to choose the country whose judicial system is competent to solve their dispute. The final jurisdiction is ascertained when the contracting parties come to a consensus. Nevertheless, there exists a variety of other rules in the convention that takes antecedence over such a contract. They include Art. 13 and 15.

Moreover, Art. Fourteen states that, a consumer may file a lawsuit against the other party to a contract either in courts of the contracting state in which that party is residing or in the courts of the contracting state in which the accuser is domiciled. Conversely, a lawsuit may be filed against a consumer by the other party to the contract only in the courts of the contracting state where he/she is residing. However, these stipulations shall not affect the right to bring a counter-claim in the court in which the original claim is unresolved.

Status of Digitized Products. Consumers require protection according to Art. 13(1)(1) and Art. 13(1)(2). Both provisions classify digitized products as goods. However, categorizing digitized products as sounds might cause worry for those sellers who presume that the merchandises cannot be goods because of their intangible nature. Furthermore, in case scanned products are not classified as goods, then consumers of such products will lack protection as stipulated in Arts. 13 and 15 of the Brussels Convention, if the contract fails to meet the requirements contained in Art. 13(1)(3).

The requirement of Sale. For a contract to fall within the purview of Art. 13(1)(3), it must be unique in some way and must be birthed in a designated manner. Internet-based contracts are formulated as any other contract for the supply of goods or services. In the context of electronic commerce (e-commerce), it is essential to deduce the meaning of the expression “supply of goods or service.” Still, there are viable reasons for categorizing the sale and purchase of online products as “supply of goods or services” under Art. 13(1)(3). Besides, Art. 13(1)(3) provides two cumulative requirements for generating a contract. Firstly, the agreement must be preceded by an explicit invite addressed to the purchaser or through advertising in the state of his or her domicile. Besides, the client must first consider the steps necessary to finalize the deal.

Proposals by the EU and the UK Government for Solving Cross-border Contractual Disputes after Brexit

The UK government and Brussels have put forward key recommendations that will improve sureness in cross-border civil judicial cooperation. Both parties will seek an agreement that allows for close and extensive cross-border civic legal collaboration which mirrors the practical principles of assistance under the existing EU framework.

Choice of Law

Recently, the UK government published a paper titled “Providing a Cross-border Civil Judicial Cooperation Framework.” This paper refers to the Rome I and II Regulations which govern the choice of law in votive and non-votive issues. The UK government intends to incorporate these regulations into domestic law because they lack reciprocity. However, this decision implies that the EU Member States will continue to uphold British laws to govern contractual and non-contractual onuses on a similar basis as before. Likewise, the UK judicial system would continue to endorse the choice of law clauses necessitating the use of external rules.

Jurisdiction and Enforcement

The UK government acknowledges the Brussels Recast Regulation containing harmonized rules of administration and enforcement of judgments. However, the shortfall arises from the fact that this regulation necessitates reciprocity. Reciprocity implies that, if the UK government were to enact this legislation into British law, verdicts from the remaining member states would be imposed in England, but the remaining member states would not be required to apply English rulings in their jurisdiction. Therefore, an agreement with the remaining member states to continue implementing the Brussels Recast Regulation would be necessary for such law to remain viable. However, it would be difficult to reach a consensus on the matter because of the need for unanimity among the remaining EU Member States.

Lugano and Hague Conventions

The UK currently a party to the 2007 Lugano Convention and 2005 Hague Choice of Court Convention under being an EU member state. The former forms the foundation of British civil judicial Cooperation with Norway, Iceland, and Switzerland. This convention provides an equivalent legal system of acknowledgment and implementation of court verdicts. However, the paper does not offer comprehensive detail about UK’s future role in the Convention. However, the implication is that the UK might seek an agreement to apply the Lugano Convention to maintain close relations with the remaining Member States, including Norway, Switzerland, and Iceland after Brexit.

On the other hand, the 2005 Hague Convention is fundamental in ensuring the practicality of exclusive choice of court agreements between parties to international commercial transactions. Even so, the UK government recognizes that this convention’s civil and commercial jurisdiction is limited compared to the Brussels Recast Recognition. Hence, there is a possibility of the British government ratifying this convention after UK leaves the EU.

Conclusion

As Brexit talks continue, there looms the potential of a gap remaining in the domain of civil justice and Judicial Cooperation. Therefore, it is necessary for the UK government to make a deal with Brussels to avoid a “no deal” scenario. Such a situation will have negative commercial impacts, especially on individuals and businesses making contracts via the internet. Currently, there exist some EU laws that govern the jurisdiction and enforcement of judgments in public and financial issues. They include Brussels I Recast Regulation 125/2012, Rome I Regulation 593/2008, and Rome II Regulation 864/2007 among others. That said, the UK government and Brussels have proposed some regulations to deal with cross-border contractual disputes after Brexit. For instance, the UK will rejoin the 2005 Hague Convention and 2007 Lugano convention. The UK will also be allowed to apply the provisions of Brussels I Recast Regulation.

 
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