Jonathan Adamu

8/6/2019 Jonathan Adamu

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DISPUTES ARISING FROM INTERNATIONALDISPUTES ARISING FROM INTERNATIONALEE--COMMERCE CONTRACTS,COMMERCE CONTRACTS,WHERE TO RESOLVE THEMWHERE TO RESOLVE THEM

JONATHAN KISH ADAMUJONATHAN KISH [email protected]@linkserve.com


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FOCUS OF DISCOURSEFOCUS OF DISCOURSE

INTRODUCTIONINTRODUCTIONCLASSIFICATION OF DISCOURSECLASSIFICATION OF DISCOURSENATURE OF JURISDICTIONNATURE OF JURISDICTIONFORUM IN EFORUM IN E- -COMMERCE DISPUTESCOMMERCE DISPUTESTHE POSITION IN THE EUTHE POSITION IN THE EUOTHER PLACESOTHER PLACESCHOICE OF FORUM CLAUSESCHOICE OF FORUM CLAUSESCONCLUSIONCONCLUSION


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INTRODUCTIONINTRODUCTION

The advent of the internet has moved businesses from the usualThe advent of the internet has moved businesses from the usualbrick and mortar environment to an electronic platform, wherebrick and mortar environment to an electronic platform, wherecontracts are consummated at a distance without physical contactcontracts are consummated at a distance without physical contactbetween the contracting parties. This practice is referred to as ebetween the contracting parties. This practice is referred to as e- -commerce and has been variously defined ascommerce and has been variously defined as

The practice of buying and selling goods through on The practice of buying and selling goods through on- -linelineconsumer services on the Internet consumer services on the Internet [1][1]

A transaction formed by electronic messages in which the A transaction formed by electronic messages in which themessages of one or both parties will not be reviewed by anmessages of one or both parties will not be reviewed by anindividual as an expected step in forming a contract individual as an expected step in forming a contract [2][2]

Any form of business transaction in which the parties interact Any form of business transaction in which the parties interactelectronically rather than by physical exchanges or direct physicalelectronically rather than by physical exchanges or direct physicalcontact contact [3][3]


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INTRODUCTION (contd)INTRODUCTION (contd)

It follows from the various definitions that eIt follows from the various definitions that e- -commerce involves thecommerce involves thesale of goods and services, and has the following featuressale of goods and services, and has the following featuresIt is mediated by an electronic platform rather throughIt is mediated by an electronic platform rather throughconventional means of communication.conventional means of communication.It is conducted at a distance such that goods are delivered andIt is conducted at a distance such that goods are delivered andservices provided without the parties necessarily getting to meetservices provided without the parties necessarily getting to meetone another face to face.one another face to face.

Undoubtedly this has increased the pace of commerce and enhancedUndoubtedly this has increased the pace of commerce and enhancedefficiency with a resultant reduction in cost of doing business. Inefficiency with a resultant reduction in cost of doing business. Inbecoming a medium used by hundreds of millions of people, thebecoming a medium used by hundreds of millions of people, theInternet has become an essential tool for commerce. The UnitedInternet has become an essential tool for commerce. The UnitedStates (U.S.) Supreme CourtStates (U.S.) Supreme Court [1][1] provided its impressions of theprovided its impressions of theInternet in 1997, labeling the Internet a unique mediumInternet in 1997, labeling the Internet a unique medium knownknownto its users as cyberspace to its users as cyberspace located in no particular geographicallocated in no particular geographicallocation but available to anyone, anywhere in the world. location but available to anyone, anywhere in the world. [2][2]


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It is this very lack of a particular geographical location or itsIt is this very lack of a particular geographical location or itsborderless nature that has brought the issue of the appropriateborderless nature that has brought the issue of the appropriateforum to resolve online disputes arising from eforum to resolve online disputes arising from e- -commerce acrosscommerce acrossphysical borders to the front burner.physical borders to the front burner.

This problem is further exacerbated by the fact that eThis problem is further exacerbated by the fact that e- -commercecommercedeals with two types of products; physical goods and services anddeals with two types of products; physical goods and services andelectronic material such as software, images, voice and text etc.electronic material such as software, images, voice and text etc.

In the former case the internet mediates and provides theIn the former case the internet mediates and provides theplatform to conclude the contract while in the later case itplatform to conclude the contract while in the later case itbecomes the place of performance of the contract.becomes the place of performance of the contract.

Also in the first case performance takes place outside theAlso in the first case performance takes place outside theelectronic environment, while in the latter, the whole transactionelectronic environment, while in the latter, the whole transactionis initiated and concluded on the internet.is initiated and concluded on the internet.


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The internet does not really bring any thing new.The internet does not really bring any thing new.It does not a change the people neither does itIt does not a change the people neither does itchange the law. What it does however change ischange the law. What it does however change isthe way we do things and how long establishedthe way we do things and how long established

principles of law are applied to new situationsprinciples of law are applied to new situationsarising from the peculiar nature of the internet.arising from the peculiar nature of the internet. the questions raised by [Internet] conduct are the questions raised by [Internet] conduct areindeed different, and more difficult, than theindeed different, and more difficult, than theanalogous questions raised by its real spaceanalogous questions raised by its real spacecounterpart, and we [cannot] resolve thecounterpart, and we [cannot] resolve the

jurisdictional dilemmas by applying the jurisdictional dilemmas by applying the traditional legal tools developed for similar traditional legal tools developed for similarproblems in real space problems in real space [1][1]


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For most paper based contracts the rules are For most paper based contracts the rules areclear and the applicable law is certain. This is notclear and the applicable law is certain. This is notso for eso for e- -contracts which are conducted overcontracts which are conducted overdistances. Thus the certainty necessary fordistances. Thus the certainty necessary for

smooth business relationship is lacking. This issmooth business relationship is lacking. This isnot helped by the fact most webnot helped by the fact most web- -basedbasedbusinesses will normally specify which law willbusinesses will normally specify which law willapply to the transaction using hyperlinks whichapply to the transaction using hyperlinks whichare often not read by the consumer of onlineare often not read by the consumer of onlinegoods and services. The consumer is thereforegoods and services. The consumer is therefore

most often left in the dark as to what law willmost often left in the dark as to what law willgovern the transaction. For even when such lawsgovern the transaction. For even when such lawsare specified the parties are not too sure that theare specified the parties are not too sure that thecourts will honor such choice of law or choice of courts will honor such choice of law or choice of forum forum [1][1] ..


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CLASSIFICATION OF ECLASSIFICATION OF E- -COMMERCECOMMERCE

G enerally eG enerally e- -commerce can be classified into 4 categoriescommerce can be classified into 4 categories [1][1] ..B usiness to B usiness ( B 2 B ) transactions involvingB usiness to B usiness ( B 2 B ) transactions involvingperformance against payment or performance againstperformance against payment or performance againstperformance.performance.

B usiness to Consumers ( B 2C) transactions involving theB usiness to Consumers ( B 2C) transactions involving thepurchase of products by individuals outside their trade orpurchase of products by individuals outside their trade orprofession or Eprofession or E- - retailing.retailing.

B usiness to Administration. This involves commercialB usiness to Administration. This involves commercialactivities between companies and public bodies.activities between companies and public bodies.

Consumer to Administration. The consumer toConsumer to Administration. The consumer toadministration category has only recently emerged e.g.administration category has only recently emerged e.g.welfare payments or tax matters.welfare payments or tax matters.


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CLASSIFICATION OF ECLASSIFICATION OF E- -COMMERCE (CONTD)COMMERCE (CONTD)

The most important are the first two. US retail EThe most important are the first two. US retail E- -commerce sales for the fourth quarter 2005 showcommerce sales for the fourth quarter 2005 showa figure of $22.9 billion, an increase of 3.3%a figure of $22.9 billion, an increase of 3.3%from the third quarter 2005 figure. Compare thisfrom the third quarter 2005 figure. Compare thisto a 0.3% rise for retail sales for the sameto a 0.3% rise for retail sales for the sameperiod.period.The fourth quarter figure for 2005 represent anThe fourth quarter figure for 2005 represent anincrease of 23.0% against the correspondingincrease of 23.0% against the correspondingperiod in 2004 compared to a growth figure of period in 2004 compared to a growth figure of only 6.0% for retail salesonly 6.0% for retail sales [1][1] in the sane period.in the sane period.The corresponding statistics for the EU and otherThe corresponding statistics for the EU and otherregions may show similar growth patterns.regions may show similar growth patterns.


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CLASSIFICATION OF ECLASSIFICATION OF E- -COMMERCE (CONTD)COMMERCE (CONTD)

For most B 2 B contracts the transaction is consummatedFor most B 2 B contracts the transaction is consummatedover time and may involve a series of correspondenceover time and may involve a series of correspondenceleading to the formation of a contract where you haveleading to the formation of a contract where you haveperformance against performance or performance againstperformance against performance or performance againstpayment.payment.

Here parties will generally have a physical presence in aHere parties will generally have a physical presence in aparticular place and identifying their domicile for theparticular place and identifying their domicile for thepurpose of applying the rules as to forum is not toopurpose of applying the rules as to forum is not toodifficult.difficult.Again in such cases most parties will have well in advanceAgain in such cases most parties will have well in advance

agreed on forum and the law to govern the transaction.agreed on forum and the law to govern the transaction.Later on we shall look at the issue of choice of forum andLater on we shall look at the issue of choice of forum andsee whether the courts will respect such choice of lawsee whether the courts will respect such choice of lawagreements. Unlike B 2 B transactions deciding the rightagreements. Unlike B 2 B transactions deciding the rightforum for adjudication of a B 2C dispute; which involveforum for adjudication of a B 2C dispute; which involveconsumers ordering for goods and services online becomesconsumers ordering for goods and services online becomesa lot more complex.a lot more complex.


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NAT URE OF JURISDIC T IONNAT URE OF JURISDIC T ION

The rules of jurisdiction can be divided into the followingThe rules of jurisdiction can be divided into the followingcategoriescategories [1][1] ::the jurisdiction to prescribe (or legislative jurisdiction);the jurisdiction to prescribe (or legislative jurisdiction);

the jurisdiction to adjudicate (or judicial jurisdiction); andthe jurisdiction to adjudicate (or judicial jurisdiction); and

the jurisdiction to enforce (or enforcement jurisdiction).the jurisdiction to enforce (or enforcement jurisdiction).

For court in a country to exercise jurisdiction over a case, thatFor court in a country to exercise jurisdiction over a case, thatcountry must have the capacity to legislate on the issue, itcountry must have the capacity to legislate on the issue, itmust have the capacity to adjudicate or try the matter andmust have the capacity to adjudicate or try the matter andthirdly it must the power to enforce its decision. It is tritethirdly it must the power to enforce its decision. It is tritelaw that a court must not act in vain. This is why courtslaw that a court must not act in vain. This is why courtsdecline jurisdiction on the basis of forum non conveniens decline jurisdiction on the basis of forum non conveniens where it concludes that it is not the right forum towhere it concludes that it is not the right forum toadjudicate.adjudicate.


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FORUM I N EFORUM I N E--COMMERCE DISPU T ESCOMMERCE DISPU T ES

G enerally, especially in the commonwealth and commonG enerally, especially in the commonwealth and commonlaw countries, forum is determined by the place of law countries, forum is determined by the place of performance of the contract and the domicile of theperformance of the contract and the domicile of thedefendant. In Nigeria under the uniform procedure rulesdefendant. In Nigeria under the uniform procedure ruleswhich apply in most parts of the country the rules providewhich apply in most parts of the country the rules providefor forum as follows:for forum as follows:

All suits for specific performance, or breach of contract, All suits for specific performance, or breach of contract,shall, where the contract ought to have been performed, orshall, where the contract ought to have been performed, orwhere the defendant resides or carries on business in thewhere the defendant resides or carries on business in theFederal Capital Territory, be commenced and determined inFederal Capital Territory, be commenced and determined inthe High Court of the Federal Capital Territory, Abuja the High Court of the Federal Capital Territory, Abuja [1][1]

[1][1] Order 9 Rule 3 High Court of the Federal CapitalOrder 9 Rule 3 High Court of the Federal CapitalTerritory Abuja Civil Procedure Rules 2004Territory Abuja Civil Procedure Rules 2004


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FORUM I N EFORUM I N E--COMMERCE DISPU T ES (CO NT D)COMMERCE DISPU T ES (CO NT D)

Thus forum in Nigeria is determined by the following;Thus forum in Nigeria is determined by the following;Where the contract was made orWhere the contract was made orwhere the contract ought to have been performed orwhere the contract ought to have been performed orWhere the defendant resides.Where the defendant resides.

Under these provisions however, it is difficult in anUnder these provisions however, it is difficult in aninternational einternational e- -commerce transaction to decide the venuecommerce transaction to decide the venueto try a dispute.to try a dispute.

-- How do you determine the place of formation of contract inHow do you determine the place of formation of contract incyberspace?cyberspace?

-- What is the place of performance in the case of a softwareWhat is the place of performance in the case of a softwaredownload as in the example given above?download as in the example given above?

Therefore a Nigerian court will only assume jurisdiction if theTherefore a Nigerian court will only assume jurisdiction if thedomicile of the defendant can be shown to be Nigeria. It isdomicile of the defendant can be shown to be Nigeria. It isexpected that the draft Electronic transactions B ill whenexpected that the draft Electronic transactions B ill whenpassed into law will address some of this jurisdictionalpassed into law will address some of this jurisdictionalproblems.problems.


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In most commonwealth and common law countries jurisdictionIn most commonwealth and common law countries jurisdictionto enforce is dependent on the courts ability to bring ato enforce is dependent on the courts ability to bring adefendant within its boundaries. In Nigeria, a defendantdefendant within its boundaries. In Nigeria, a defendantoutside jurisdiction (outside Nigeria) can be served a writ of outside jurisdiction (outside Nigeria) can be served a writ of summons or notice of a writ of summons in a commercialsummons or notice of a writ of summons in a commercialdispute under the following circumstances.dispute under the following circumstances.

the subject matter is land within jurisdictionthe subject matter is land within jurisdictionthe defendant is domiciled or ordinarily resident in Nigeriathe defendant is domiciled or ordinarily resident in Nigeriathe contract is made within jurisdictionthe contract is made within jurisdictionthe contract was made by an agent trading or residingthe contract was made by an agent trading or residing

within jurisdiction on behalf of a principal residing out of within jurisdiction on behalf of a principal residing out of the jurisdictionthe jurisdictionthe contract is governed by Nigerian lawthe contract is governed by Nigerian law [1][1]


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Under Order 21 a defendant in a foreign nation who meetsUnder Order 21 a defendant in a foreign nation who meetsthe above criteria can be brought within the jurisdiction of the above criteria can be brought within the jurisdiction of the court if it is a convention country. Under the Foreignthe court if it is a convention country. Under the ForeignJudgments (Reciprocal Enforcement) Act, Nigeria accordsJudgments (Reciprocal Enforcement) Act, Nigeria accordsrecognition to judgments obtained in foreign countries on arecognition to judgments obtained in foreign countries on areciprocal basisreciprocal basis [1][1] ..

Applying this ruling in a typical eApplying this ruling in a typical e- -commerce transaction acommerce transaction aNigerian court will assume jurisdiction where it canNigerian court will assume jurisdiction where it canestablish the domicile of the defendant as Nigeria. It willestablish the domicile of the defendant as Nigeria. It will

however be difficult to establish the place of formation of however be difficult to establish the place of formation of the contract or the place of performance. It can be arguedthe contract or the place of performance. It can be arguedthat the courts here may assume jurisdiction under thethat the courts here may assume jurisdiction under the

minimum contacts rule. bb minimum contacts rule. bb


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Also inAlso in F enn v. MLeads Enterprises, Inc.,F enn v. MLeads Enterprises, Inc., 103103P.3d 156 (Utah Ct. App. 2004)P.3d 156 (Utah Ct. App. 2004) where a Utahwhere a Utahappellate court held that sending one email to aappellate court held that sending one email to aresident of Utah was a sufficient "contact" toresident of Utah was a sufficient "contact" tosatisfy the longsatisfy the long- -arm statute and minimumarm statute and minimumcontacts requirement of due process for a claimcontacts requirement of due process for a claimarising from the email. The appellate court foundarising from the email. The appellate court foundthat MLeads purposely directed its activities atthat MLeads purposely directed its activities atUtah residents and should have reasonablyUtah residents and should have reasonablyanticipated being hailed into court wherever itsanticipated being hailed into court wherever its

emails were received. Moreover, the courtemails were received. Moreover, the courtdetermined the interests of Utah and Fenndetermined the interests of Utah and Fennoutweighed the burden on MLeads of defendingoutweighed the burden on MLeads of defendingin the statein the state


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THE POSITION IN THE EU (CONTD)THE POSITION IN THE EU (CONTD)

From a narrow perspective, the B russelsFrom a narrow perspective, the B russelsconvention gave jurisdiction to the place of convention gave jurisdiction to the place of domicile of the consumer on these conditionsdomicile of the consumer on these conditionsThat the contract is predicated or a specificThat the contract is predicated or a specificinvitation addressed to the consumer invitation addressed to the consumer That he acted in response to an advertisementThat he acted in response to an advertisementcarried out in the state of the consumers domicilecarried out in the state of the consumers domicileThat he took steps in that state necessary forThat he took steps in that state necessary for

the conclusion of the contract itself self the conclusion of the contract itself self


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These provisions while they could work in the brick andThese provisions while they could work in the brick andmortar environment are faced with difficulty of applicationmortar environment are faced with difficulty of applicationwith online business.with online business.

-- How do you interpret the term addressed to him? Is it whenHow do you interpret the term addressed to him? Is it whenan ean e- -mail enters the consumers inbox or when hemail enters the consumers inbox or when he

downloads it?downloads it?-- What if he downloads the eWhat if he downloads the e- -mail from a server that is notmail from a server that is notlocated in his country of domicile?located in his country of domicile?

Secondly the expression advertisement carried out in theSecondly the expression advertisement carried out in thestate of the consumers domicile is difficult to apply whenstate of the consumers domicile is difficult to apply when

dealing with edealing with e- -commerce. This is because of the nature of commerce. This is because of the nature of the World Wide Web. An advertisement on the internetthe World Wide Web. An advertisement on the internetcould be placed by a company in the U.S on a server incould be placed by a company in the U.S on a server inG ermany and accessed by a consumer surfing the internetG ermany and accessed by a consumer surfing the internetin the UK. How would such a provision assist a consumer inin the UK. How would such a provision assist a consumer indetermining the right forum to sue?determining the right forum to sue?


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The B russels convention of 1968 fails to addressThe B russels convention of 1968 fails to addressthe challenges posed by the internet and thethe challenges posed by the internet and thedetermination of forum for the purpose of determination of forum for the purpose of resolving international eresolving international e- - commerce disputes.commerce disputes.

Having identified this mischief, how has the EUHaving identified this mischief, how has the EUlawmaker addressed the problem?lawmaker addressed the problem?The Council Regulation on Jurisdiction and theThe Council Regulation on Jurisdiction and theRecognition and Enforcement of Judgments inRecognition and Enforcement of Judgments inCivil and Commercial Matters ( B russels ICivil and Commercial Matters ( B russels IRegulation)Regulation) [1][1] under Article 16 has given theunder Article 16 has given theconsumer the right to take legal action either inconsumer the right to take legal action either inthe domicile of the plaintiff or in the domicile of the domicile of the plaintiff or in the domicile of the defendant. Undertakings on the other handthe defendant. Undertakings on the other handmay bring action against consumers only in themay bring action against consumers only in thecourt of the consumers domicilecourt of the consumers domicile


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However for a party to enjoy the benefits of Article 16, theHowever for a party to enjoy the benefits of Article 16, thecontract must fall within the ambit of under Article 15(1) contract must fall within the ambit of under Article 15(1) which provides thatwhich provides that

In all other cases the contact has been concluded with a In all other cases the contact has been concluded with aperson who pursues commercial or professional activities inperson who pursues commercial or professional activities inthe member state of the consumers domicile or, by anythe member state of the consumers domicile or, by anymeans, directs such activities to that member state or tomeans, directs such activities to that member state or toseveral countries including that member state, and theseveral countries including that member state, and thecontract falls within the scope of such activities. contract falls within the scope of such activities.

So in the EU under this provision the most importantSo in the EU under this provision the most importantconsideration for assuming jurisdiction is the domicile of theconsideration for assuming jurisdiction is the domicile of theconsumer. It can be safely assumed that in the EU once itconsumer. It can be safely assumed that in the EU once itcan be established that there is some activity directed atcan be established that there is some activity directed atthe consumers place of domicile then the court in thethe consumers place of domicile then the court in theconsumers domicile can still assume jurisdiction to try.consumers domicile can still assume jurisdiction to try.


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Article 15(2) states thatArticle 15(2) states that Where a consumer enters into a contract with a party who Where a consumer enters into a contract with a party whois not domiciled in the Member State but has a branch,is not domiciled in the Member State but has a branch,agency or other establishment in one of the Memberagency or other establishment in one of the MemberStates, that party shall, in disputes arising out of theStates, that party shall, in disputes arising out of the

operations of the branch, agency or establishment, beoperations of the branch, agency or establishment, bedeemed to be domiciled in that State deemed to be domiciled in that State

Furthermore, examples exist where a persons tenuousFurthermore, examples exist where a persons tenuousconnections to a state have given rise to the jurisdiction of connections to a state have given rise to the jurisdiction of the courts of that state. Inthe courts of that state. In South India shipping v Bank of South India shipping v Bank of KoreaKorea , the defendant Korean bank had a small branch, the defendant Korean bank had a small branchlocated in England. This branch, while having no connectionlocated in England. This branch, while having no connectionwith the legal dispute that had arisen between its parentwith the legal dispute that had arisen between its parent(the B ank of Korea) and South India Shipping, was(the B ank of Korea) and South India Shipping, wasnonetheless served with an English writ.nonetheless served with an English writ.


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This provision accords with the ruling in a US case,This provision accords with the ruling in a US case,U nknown v. Sharman Networks Ltd.,U nknown v. Sharman Networks Ltd., (C.D. Cal. 2003).(C.D. Cal. 2003).Kollmorgen Corp. v. Yaskawa Electric Corp.,Kollmorgen Corp. v. Yaskawa Electric Corp., 1999 U.S.1999 U.S.

Dist.. LEXIS 20572 (W.D. Va. 1999)Dist.. LEXIS 20572 (W.D. Va. 1999)

For the purposes of Article 15(2) a service provider will beFor the purposes of Article 15(2) a service provider will beconsidered to be domiciled in a member state if it has aconsidered to be domiciled in a member state if it has abranch, agency or some other establishment in the memberbranch, agency or some other establishment in the memberstate. So undertakings stand a clear possibility of beingstate. So undertakings stand a clear possibility of beingsued in the EU no mater how low the activity directed atsued in the EU no mater how low the activity directed atthe EU state may be. A question that arises is how thethe EU state may be. A question that arises is how thecourts will deal with a service provider whose website iscourts will deal with a service provider whose website isbasically passive in view of the above provision.basically passive in view of the above provision.

A US court seems to be of the view that jurisdiction cannotA US court seems to be of the view that jurisdiction cannotbe assumed in such a case.be assumed in such a case.


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In Zippos caseIn Zippos case [1][1] a Pennsylvanian court ruled as follows;a Pennsylvanian court ruled as follows; This sliding scale is consistent with well developed personal This sliding scale is consistent with well developed personal

jurisdiction principles. At one end of the spectrum are jurisdiction principles. At one end of the spectrum aresituations where a defendant clearly does business over thesituations where a defendant clearly does business over theInternet. If the defendant enters into contracts withInternet. If the defendant enters into contracts with

residents of a foreign jurisdiction that involve the knowingresidents of a foreign jurisdiction that involve the knowingand repeated transmission of computer files over theand repeated transmission of computer files over theInternet, personal jurisdiction is proper. E.g.Internet, personal jurisdiction is proper. E.g. C ompuserve,C ompuserve,Inc. v. PattersonInc. v. Patterson , 89 F.2d 1257 (6th Cir. 1996). At the, 89 F.2d 1257 (6th Cir. 1996). At theopposite end are situations where a defendant has simplyopposite end are situations where a defendant has simplyposted information on an Internet Web site which isposted information on an Internet Web site which isaccessible to users in foreign jurisdictions. A passive Webaccessible to users in foreign jurisdictions. A passive Web

site that does little more than make information available tosite that does little more than make information available tothose who are interested in it is not grounds for thethose who are interested in it is not grounds for theexercise personal of jurisdiction. E.g.exercise personal of jurisdiction. E.g. Bensusan Restaurant Bensusan Restaurant C orp., v. KingC orp., v. King , 937 F.Supp. 296 (S.N.D.Y. 1996)., 937 F.Supp. 296 (S.N.D.Y. 1996).


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The middle ground is occupied by interactive Web sites where a userThe middle ground is occupied by interactive Web sites where a usercan exchange information with the host computer. In these cases,can exchange information with the host computer. In these cases,the exercise of jurisdiction is determined by examining the level of the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of interactivity and commercial nature of the exchange of information that occurs on the Web site. E.g.information that occurs on the Web site. E.g. M aritz, Inc. v.M aritz, Inc. v.Cyb ergold Cyb ergold , Inc., 1996 U.S. Dist. Lexis 14976 (E.D.Mo. Aug. 19,, Inc., 1996 U.S. Dist. Lexis 14976 (E.D.Mo. Aug. 19,

1996).1996). [2][2]Apart from the necessity for uniformity of law, the B russelsApart from the necessity for uniformity of law, the B russels

Regulation I, is influenced by the formation of new technologiesRegulation I, is influenced by the formation of new technologiesnot existing under the former legal regime in 1968.not existing under the former legal regime in 1968.

The B russels Regulation I maintains the rule that allows aThe B russels Regulation I maintains the rule that allows adefendant in one of the member states can be sued in his place of defendant in one of the member states can be sued in his place of domicile. (Article 2).It also goes further for contracts outside adomicile. (Article 2).It also goes further for contracts outside atrade or profession as in consumer contracts to give the plaintiff trade or profession as in consumer contracts to give the plaintiff the choice of suing either in the defendants domicile or thethe choice of suing either in the defendants domicile or thedomicile of the plaintiff. What the B russels Regulation I appears todomicile of the plaintiff. What the B russels Regulation I appears todo is to give more protection to the consumer, such thatdo is to give more protection to the consumer, such that

jurisdiction in the EU is determined by the domicile of the jurisdiction in the EU is determined by the domicile of theconsumer.consumer.


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A problem that arises is how to determine the domicile of theA problem that arises is how to determine the domicile of thedefendant. Where the defendant is domiciled in a third country,defendant. Where the defendant is domiciled in a third country,say outside the EU, then the domicile of the plaintiff becomes thesay outside the EU, then the domicile of the plaintiff becomes theappropriate forum (Article 4?).appropriate forum (Article 4?).

Article 60 establishes the jurisdiction of the domicile of a companyArticle 60 establishes the jurisdiction of the domicile of a companyor legal entity as where it has its statutory seat, centralor legal entity as where it has its statutory seat, centraladministration or principal place of business. This offers littleadministration or principal place of business. This offers littlecomfort, as it is quite difficult sometimes to establish this for webcomfort, as it is quite difficult sometimes to establish this for web- -based companies. It appears that a way out of this is resorting tobased companies. It appears that a way out of this is resorting tothe country code top level domain name e.g. .de, .uk etcthe country code top level domain name e.g. .de, .uk etc

The new rules make no special provision for B 2 B Contracts. AsThe new rules make no special provision for B 2 B Contracts. Assuch the old rules still apply and in such cases whatever thesuch the old rules still apply and in such cases whatever thenationality of the defendant, he shall be sued in his place of nationality of the defendant, he shall be sued in his place of domicile (Article 2). Where he is domiciled in a third country, thendomicile (Article 2). Where he is domiciled in a third country, thenthe national rules of jurisdiction of the state concerned is applied.the national rules of jurisdiction of the state concerned is applied.For companies, Article 60 will apply in defining its domicile.For companies, Article 60 will apply in defining its domicile.


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Article 5 provides for alternative rules whereby adjudication isArticle 5 provides for alternative rules whereby adjudication isbased on the place of performance. Secondly, where it is abased on the place of performance. Secondly, where it is acontract for the sale of goods or the provision of services, it willcontract for the sale of goods or the provision of services, it willbe courts in the state where the goods are delivered or shouldbe courts in the state where the goods are delivered or shouldhave been delivered or where the services were provided or oughthave been delivered or where the services were provided or oughtto have been provided.to have been provided.

For electronic materials, the place of performance still provides aFor electronic materials, the place of performance still provides adilemma. Is it the place where the supplier enters the data in thedilemma. Is it the place where the supplier enters the data in thehardware or the place where the data is downloaded, what if, in ahardware or the place where the data is downloaded, what if, in acontract between two companies, one Dutch and the othercontract between two companies, one Dutch and the otherEnglish, the electronic material is being downloaded from a laptopEnglish, the electronic material is being downloaded from a laptopwhile the person responsible for this activity is on a business tripwhile the person responsible for this activity is on a business tripto G reece? Will this mean that the court of the latter state can tryto G reece? Will this mean that the court of the latter state can trya conflict arising from such a contract? a conflict arising from such a contract? [1][1]In the case analyzed above, the only solution may be choice of In the case analyzed above, the only solution may be choice of forum clause agreed to by both parties, especially where theforum clause agreed to by both parties, especially where thedomicile of at least one party can be determined in advance. Seedomicile of at least one party can be determined in advance. SeeArticle 33Article 33


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OTHER PLACESOTHER PLACES

In China, forum is determined by the place of formation of theIn China, forum is determined by the place of formation of thecontract.contract.

The place of effectiveness of an acceptance shall be the place of The place of effectiveness of an acceptance shall be the place of the establishment of the contract.the establishment of the contract.

If the contract is concluded in the form of dataIf the contract is concluded in the form of data- -telex, the maintelex, the main

business place of the recipient shall be the place of establishment.business place of the recipient shall be the place of establishment.If no main business place, its habitual residence shall beIf no main business place, its habitual residence shall beconsidered to be the place of establishment. Where the partiesconsidered to be the place of establishment. Where the partiesagree otherwise, the place of establishment shall be subject toagree otherwise, the place of establishment shall be subject tothat agreement that agreement [1][1]

Thus is an international eThus is an international e- -commerce dispute it is the domicile of commerce dispute it is the domicile of

the service recipient that is paramount. A court in China willthe service recipient that is paramount. A court in China willassume jurisdiction if it can be shown that the service recipientassume jurisdiction if it can be shown that the service recipienthas its main place of business or its habitual residence has its main place of business or its habitual residence (ordinarily resident in other jurisdictions) is in China.(ordinarily resident in other jurisdictions) is in China.


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CHOICE OF FORUM CLAUSESCHOICE OF FORUM CLAUSES

Indeed, it is common for international business contracts Indeed, it is common for international business contractsto specify both the choice of court and law that will apply into specify both the choice of court and law that will apply inthe event of a legal dispute arising out of the contract.the event of a legal dispute arising out of the contract.Where an exclusive jurisdiction clause is provided for in aWhere an exclusive jurisdiction clause is provided for in acontract, common law courts have tended to exercise theircontract, common law courts have tended to exercise theirdiscretion strongly in favour of giving effect to the contractdiscretion strongly in favour of giving effect to the contractagreed by the parties. It can, therefore, be argued thatagreed by the parties. It can, therefore, be argued thatpersons that enter into international business transactionspersons that enter into international business transactionseither:either: (i) have a degree of control over where(i) have a degree of control over wherepotential litigation may arise out of a contractpotential litigation may arise out of a contract(via the use of choice of court/law clauses);(via the use of choice of court/law clauses);and/or (ii) are able to discern, with a level of and/or (ii) are able to discern, with a level of certainty, the potential jurisdictions within whichcertainty, the potential jurisdictions within whichthey may be hailed into court. States that athey may be hailed into court. States that aperson has no connection with, for example, areperson has no connection with, for example, areunlikely to take jurisdiction in a disputeunlikely to take jurisdiction in a disputeconcerning such a person concerning such a person [1][1]


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CHOICE OF FORUM CLAUSES (CONTD)CHOICE OF FORUM CLAUSES (CONTD)

The B russels I Regulation gives recognition to choice of The B russels I Regulation gives recognition to choice of forum clauses contracts. The Hague Conference on Privateforum clauses contracts. The Hague Conference on PrivateInternational Law has come out with the Convention onInternational Law has come out with the Convention onchoice of court agreements dated 30th June 2005. Underchoice of court agreements dated 30th June 2005. Underthe convention, signatory countries have clear rules forthe convention, signatory countries have clear rules fordealing with choice of forum issues in International edealing with choice of forum issues in International e- -commerce disputes.commerce disputes.

Under Article 1.2 the convention defines internationalUnder Article 1.2 the convention defines internationaltransactions as follows;transactions as follows;

For the purpose of chapter II, a case is international unless For the purpose of chapter II, a case is international unlessthe parties are resident in the same contracting state andthe parties are resident in the same contracting state andthe relationship of the parties and other elements relevantthe relationship of the parties and other elements relevantto the dispute, regardless of the location of the chosento the dispute, regardless of the location of the chosencourt, are connected only with the state court, are connected only with the state


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CHOICE OF FORUM CLAUSES (CONTD)CHOICE OF FORUM CLAUSES (CONTD)

Article 2 defines domicile of undertakings to include itsArticle 2 defines domicile of undertakings to include itsstatutory seat, the place of incorporation or formation, itsstatutory seat, the place of incorporation or formation, itsplace of central administration or where it has its principalplace of central administration or where it has its principalplace of business.place of business.Article 4 obligates courts of the state chosen the right toArticle 4 obligates courts of the state chosen the right to

assume jurisdiction, while the state not chosen is obligatedassume jurisdiction, while the state not chosen is obligatedto decline jurisdiction.to decline jurisdiction.It also makes provision for the enforcement of decisionsIt also makes provision for the enforcement of decisionsgiven in accordance with the convention (Article 8)given in accordance with the convention (Article 8)Under Article 19, a state not chosen as forum may refuse toUnder Article 19, a state not chosen as forum may refuse todetermine disputes to which an exclusive choice of courtdetermine disputes to which an exclusive choice of courtagreement applies if, there is no connection between thatagreement applies if, there is no connection between thatstate and the parties or the dispute. Similarly a court willstate and the parties or the dispute. Similarly a court willrefuse to enforce the decision of another state in the samerefuse to enforce the decision of another state in the samecircumstances.circumstances.


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CONCLUSIONCONCLUSION

The issue of enforcement also needs to be addressed. WhileThe issue of enforcement also needs to be addressed. Whilea court may have the power to prescribe and adjudicate ona court may have the power to prescribe and adjudicate ona dispute, it may lack the power to enforce its judgmenta dispute, it may lack the power to enforce its judgmentagainst a non resident.against a non resident.

It is for this reason that nations have to address the issueIt is for this reason that nations have to address the issueof forum on multilateral basis. Most jurisdictional problemsof forum on multilateral basis. Most jurisdictional problemsin ein e--commerce disputes will be avoided if parties insertcommerce disputes will be avoided if parties insertchoice of forum clauses in their agreements.choice of forum clauses in their agreements.For domain name disputes ICAANN has given the WorldFor domain name disputes ICAANN has given the WorldIntellectual Property Organization (WIPO), the jurisdictionIntellectual Property Organization (WIPO), the jurisdictionto adjudicate on domain name disputes.to adjudicate on domain name disputes.Finally most jurisdictions respect and enforce arbitrationFinally most jurisdictions respect and enforce arbitrationclauses as alternative means of dispute resolution andclauses as alternative means of dispute resolution andonline contracts are not excluded.online contracts are not excluded.


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TH ANK YO U F OR YO U R TH ANK YO U F OR YO U R ATT EN T IONATT EN T ION

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Jonathan Adamu