From: Bill Stewart <bill.stewart@pobox.com>
Date: Sat, 28 Nov 1998 10:37:24 +0800
To: cypherpunks@cyberpass.net
Subject: European Commission proposal on legal framework for e-commerce
Message-ID: <3.0.5.32.19981126234500.008f8af0@idiom.com>
MIME-Version: 1.0
Content-Type: text/plain



Forwarded from cyberia-l -- The EU's latest attempts to
make electronic commerce convenient while ensuring tax collection
and preventing collapse of governments :-)

========= ====
]] THe text of the new draft is not on line yet, but will probably appear at
]] http://europa.eu.int/comm/dg15/en/index.htm  in the next few days (there is
]] a what's new button on the left hand bar)

>>> Should be on line on Nov 23rd
} Another URL to remember to get acces to european documents 
} concerning Internet law is :
} http://www2.echo.lu/legal/en/labhome.html  and for "what's new :
} http://www2.echo.lu/legal/en/labnew.html

===============

http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/98/999|0|RAPID&lg=EN

IP/98/999

Brussels, 18 November 1998

Electronic commerce: Commission proposes legal framework

A proposal for a Directive to establish a coherent legal framework for the
development of electronic commerce within the Single Market has been put
forward by the European Commission. The proposed Directive would ensure
that information society services benefit from the Single Market principles
of free movement of services and freedom of establishment and could provide
their services throughout the European Union (EU) if they comply with the
law in their country of origin. Such services are defined as those provided
normally against remuneration, at a distance, by electronic means and in
response to the individual request of a customer. The proposed Directive
would establish specific harmonised rules only in those areas strictly
necessary to ensure that businesses and citizens could supply and receive
information society services throughout the EU, irrespective of frontiers.
These areas include definition of where operators are established,
electronic contracts, liability of intermediaries, dispute settlement and
role of national authorities. In other areas the Directive would build on
existing EU instruments which provide for harmonisation or on mutual
recognition of national laws. The Directive would apply only to service
providers established within the EU and not those established outside.

"The Single Market's legal framework, combined with the single currency,
provide the European Union with a unique opportunity to facilitate the
development of electronic commerce", commented Single Market Commissioner
Mario Monti. "Electronic commerce adds a new dimension to the Single Market
for consumers in terms of easier access to goods and services of better
quality and at lower prices. Electronic commerce will promote trade,
stimulate innovation and competitiveness and create sustainable jobs. This
proposal should ensure that the Union reaps the full benefits of electronic
commerce by boosting consumer confidence and giving operators legal
certainty, without excessive red tape."

The global electronic commerce market is growing extremely fast and could
be worth ECU 200 billion by the year 2000. Worldwide, 86 million people
were connected to the Internet by the end of 1996 and by 2000, this is
expected to reach 250 million individuals. Within the EU, it is estimated
that more than 400,000 jobs related to the information society were created
between 1995 and 1997 and that one in four news jobs is derived from these
activities.

Scope

The proposal for a Directive, which was foreseen in the Commission's April
1997 electronic commerce Communication (see IP/97/313), covers all
information society services, both business to business and business to
consumer services, including services provided free of charge to the
recipient e.g. funded by advertising or sponsorship revenue and services
allowing for on-line electronic transactions such as interactive
teleshopping of goods and services and on-line shopping malls. Examples of
sectors and activities covered include on-line newspapers, on-line
data-bases, on-line financial services, on-line professional services (such
as lawyers, doctors, accountants, estate agents), on-line entertainment
services such as video on demand, on-line direct marketing and advertising
and services providing access to the World Wide Web.

Establishment/supervision/transparency

The proposal would define the place of establishment as the place where an
operator actually pursues an economic activity through a fixed
establishment, irrespective of where websites or servers are situated or
where the operator may have a mail box. This definition is in line with the
principles established by the EU Treaty (Article 52) and the case law of
the European Court of Justice. Such a definition would remove current legal
uncertainty and ensure that operators could not evade supervision, as they
would be subject to supervision in the Member State where they were
established. The proposal would prohibit Member States from imposing
special authorisation schemes for information society services which are
not applied to the same services provided by other means. It would also
require Member States to oblige information society service providers to
make available to customers and competent authorities in an easily
accessible and permanent form basic information concerning their activities
(name, address, e-mail address, trade register number, professional
authorisation and membership of professional bodies where applicable, VAT
number).

On-line contracts

For electronic commerce to develop its full potential, it must be possible
for contracts to be concluded on-line unrestricted by inappropriate rules
(such as a requirement that contracts be drawn up on paper). The proposal
would therefore oblige Member States to adjust their national legislation
to remove any prohibitions or restrictions on the use of electronic media
for concluding contracts. In addition, the proposal would ensure legal
security by clarifying in certain cases the moment of conclusion of the
contract, whilst fully respecting contractual freedom. These provisions
would complement the proposal for a Directive on electronic signatures (see
IP/98/423).

Liability of intermediaries

To facilitate electronic commerce, it is necessary to clarify the
responsibility of on-line service providers for transmitting and storing
information from third party (i.e. when service providers act as
"intermediaries").

To eliminate existing legal uncertainties and to avoid divergent approaches
at Member State level, the proposal would establish an exemption from
liability for intermediaries where they play a passive role as a "mere
conduit" of information from third parties and limit service providers'
liability for other "intermediary" activities such as the storage of
information. The proposal strikes a careful balance between the different
interests involved in order to stimulate co-operation between different
parties and so reduce the risk of illegal activity on-line.

Commercial communications

Commercial communications such as advertising and direct marketing, which
are an essential part of most electronic commerce services, would be
subject to clearly defined rules under the proposed Directive. The proposal
defines what constitutes a commercial communication and makes it subject to
certain transparency requirements to ensure consumer confidence and fair
trading. In order to allow consumers to react more readily to harmful
intrusion, the proposal requires that commercial communications by e-mail
are clearly identifiable. In addition, for regulated professions (such as
lawyers or accountants), the proposal lays down the general principle that
the on-line provision of services is permitted and that national rules on
advertising shall not prevent professions from operating Web-sites.
However, these would have to respect certain rules of professional ethics
which should be reflected in codes of conduct to be drawn up by
professional associations.

Implementation

Rather than inventing new rules, the proposal would seek to ensure that
existing EU and national legislation were effectively enforced. The
development of a genuine Single Market based on mutual confidence between
Member States - is stimulated by strengthening enforcement mechanisms. The
proposal would seek to do so by encouraging the development of codes of
conduct at EU level, by stimulating administrative co-operation between
Member States and by facilitating the setting up of effective, alternative
cross-border dispute settlement systems. The proposal would also require
Member States to provide for fast, efficient legal redress appropriate to
the on-line environment and to ensure that sanctions for violations of the
rules established under the Directive were effective, proportionate and
dissuasive.

Mutual recognition/derogations

The proposed Directive would clarify that the Single Market principle of
mutual recognition of national laws and the principle of control in the
country of origin must be applied to information society services so that
such services provided from another Member State are not restricted for
reasons falling within the scope of the proposal which would not cover
taxation, personal data (the free movement of which is covered by Directive
95/46 see IP/98/925), the activities of notaries, representation and
defence of clients before a court, gambling activities. Furthermore, the
proposed Directive would not interfere with the application of the Brussels
Convention on jurisdiction, recognition and enforcement of judgements in
civil and commercial matters and the Rome Convention on the law applicable
to contractual obligations.

The proposed Directive would also allow Member States on a case by case
basis to impose restrictions on information society services supplied from
another Member State if necessary to protect the public interest on grounds
of protection of minors, the fight against hatred on grounds of race, sex,
religion or nationality, public health or security and consumer protection.
However, such restrictions would have to be proportionate to their stated
objective. Moreover, such restrictions could only be imposed (except in
cases of urgency) after:

*  the Member State where the service provider was established had been
asked to take adequate measures and failed to do so and
*  the intention to impose restrictions had been notified in advance to the
Commission and to the Member State where the service provider was
established.
In cases of urgency, the reasons for the restrictions (and the urgency)
would have to be notified in the shortest possible time to the Commission
and to the Member State of the service provider. Where the Commission
considered proposed or actual restrictions were not justified, Member
States would be required to refrain from imposing them or urgently put an
end to them.

The proposal for a Directive on a legal framework for electronic commerce
will be forwarded to the European Parliament and the EU's Council of
Ministers for adoption under the co-decision procedure.


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