Consumers buying goods and services in Europe were given new rights on Friday when a law governing where court cases should be heard came into force.
The law, encapsulated in changes to the Brussels Convention, has implications for both consumers and companies. It means that in the event of a dispute over goods or services bought in Europe, the case must be heard in the country where the consumer lives. Sales to other companies are not necessarily covered. With the rise of e-commerce, the changes will be particularly poignant.
In a report into e-commerce published just over one year ago, the UK's Better Regulation TaskForce -- an independent and unpaid body supported by a team of officials at the Cabinet Office -- identified the issue of trading across national boundaries as the most acute concern among businesses.
While the new law is expected to be a boon for consumers, who otherwise could be reticent about taking legal action in a foreign country, it is expected to create headaches for online retailers who will now have fight lawsuits in foreign courts. And if a retailer wants to take a buyer to court, they will have to do so in the buyer's home country.
Not every online retailer will be caught by the act, according to legal experts: only those companies that "direct" their activities at a particular states. Legal news site Out-law.com said there is little guidance on the meaning of this term. "However, a site is likely to be covered if it fulfils orders to consumers in particular states or offers a choice of languages or relevant currencies," it said. "If a business only intends to sell within the UK and its Web site reflects this, it is less likely to be sued abroad."
Out-law.com said companies selling to other companies can protect themselves if thie standard contract says that in the event of any dispute the English, Scots or Northern Ireland courts will have jurisdiction.
The law applies to all EU member states except Denmark, but is extended to some non-EU states: Iceland, Lichtenstein, Norway, Poland and Switzerland.