The controversial draft Regulation sets out which laws apply in non-contractual cross-border disputes, such as cases of defamation and product liability. Where, for example, a consumer in France buys a defective product from a seller in England, the draft Rome II Regulation provides that the consumer could sue under French law. This principle is known as “country of destination”.
However, the E-commerce Directive, which is due to be implemented in all EU Member States by 17th January 2002, takes a different approach. Under the Directive, information society services are subject to the law of the country in which they are established, a principle known as the country of origin. This principle has the advantage for businesses that they need only comply with the laws of their own state. Under the country of destination approach, they have the burden of complying with the laws of every state where they think the damage might occur.
Internal Market Commissioner Frits Bolkestein is reported to have demanded that the draft Rome II Regulation be amended so as to be consistent with Internal Market policy. It now seems he is winning his argument. The latest draft, a copy of which was today leaked to OUT-LAW.COM, contains wording which would avoid conflict with EU laws based on country of origin, i.e. the E-commerce Directive. Article 23 of the leaked draft (translated from French) provides:
“This regulation will not affect the application of [EU laws] which… in particular matters, subject the services to a legal regime of a Member State in which the person providing a service is established.”
According to Phil Murphy of the Rome2Group, a body formed specifically to lobby against the proposed Regulation, there is still disagreement among Commissioners. Murphy told OUT-LAW.COM, “I understand that the German Government is especially unhappy about the fact that anything covered under the E-commerce Directive will be excluded.” Further, “Diana Wallis MEP has indicated that she will sponsor a Public Hearing on the issue, but the Commission is unwilling at present to release a draft document for discussion at a hearing.”