Selling Online Across Borders: Legal Pitfalls for Businesses

Selling goods online to consumers in other EU countries presents legal challenges for businesses. While it's common practice to include clauses in terms and conditions that specify the governing law and jurisdiction (often the business's home country), these clauses may not always be enforceable in cross-border consumer disputes.

Consumer Protection in the EU

EU law prioritizes consumer protection, particularly in cross-border transactions. The EU rules that governs jurisdiction in civil and commercial matters, include special provisions for consumer contracts. These provisions often allow consumers to bring disputes before courts in their own country, even if the seller's terms and conditions specify a different jurisdiction.

Jurisdictional Issues

European regulation states that a pre-dispute jurisdictional clause in a consumer contract is only valid if it was agreed to after the dispute arose. This means that a clause in your general terms and conditions specifying your home court may not be binding if a consumer from another EU country decides to sue you in their own country's court.

This is particularly likely if your business directs its commercial activities towards the consumer's country. Factors that indicate such activity include:

• Offering goods or services in that country
• Using an international phone number
• Having a website available in the consumer's language
• Paying for online advertising targeting that country

Choice of Law Issues

Similar rules apply to the choice of law. EU regulation generally favors the application of the law of the consumer's habitual residence in cross-border consumer contracts. While a choice of law clause is possible, it cannot deprive the consumer of the protection afforded by the law of their own country.

Practical Implications for Businesses

Businesses engaging in cross-border e-commerce should be aware that:

• Pre-dispute forum and law clauses may not be enforceable in consumer disputes.
• Consumers may be able to sue in their own country's courts and apply their own country's laws.
• This can lead to uncertainty and additional costs, including the need to hire foreign legal counsel.

Possible Solutions

One solution is to agree on a jurisdiction and governing law with the consumer after a dispute arises. However, there's no guarantee the consumer will agree to this.

Key Takeaways

• Understand the rules: Familiarize yourself with the Brussels I bis Regulation and Rome I Regulation to understand how jurisdiction and choice of law are determined in cross-border consumer disputes.
• Review your terms and conditions: Ensure your terms and conditions are clear, concise, and comply with relevant EU consumer protection laws.
• Consider alternative dispute resolution: Explore alternative dispute resolution methods, such as mediation, to avoid costly and time-consuming litigation.
• Seek legal advice: If you have questions or concerns about cross-border consumer contracts, consult with a legal professional specializing in international trade and consumer law.

By understanding the legal landscape and taking proactive steps, businesses can mitigate the risks associated with selling online across borders.

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