EU to unveil rules on cross-border disputes

The European Commission will on Friday unveil a watered-down draft of its controversial Rome II law, which will become the reference point within the 15-member European Union (EU) for all cross-border disputes of a noncontractual nature.

The Internet, marketing and publishing industries have all lobbied hard against the proposed law because they argue that it will make cross-border business too risky, and will ultimately fragment the internal EU market in communications.

The law will state that the laws of the country where the consumer is based should apply in a cross-border dispute, rather than the laws of the country where the supplier is based.

For commercial communications, this means a Web site would have to abide by all the most extreme national advertising laws in order to communicate legally with potential customers online. For online news, this would mean that publishers would have to take into account the defamation laws of each EU member country.

Electronic commerce advocates argue that small vendors will be discouraged from taking their businesses online because of the legal uncertainty a consumer-focused Rome II law would entail. Lobbyists for the newspaper publishers have argued that the law would neuter online news.

However, a Commission official said the EU executive body will announce Friday that all online activity should be exempt from this rule. Rome II is expected to defer to the e-commerce directive, which is in the process of being adopted as national law by the member states. The directive states clearly that the laws of the country of origin – the country of he supplier – should apply to all online activity except e-mail.

The Commission will announce a consultation process expected to last six months before it formally adopts the proposal in November.

None of the lobbyists or Commission officials would comment openly on the Rome II draft ahead of Friday’s launch.

The EU executive has changed its mind about how to launch this new law several times. A year ago a Commission official announced that further consultation on Rome II would be “a waste of taxpayers’ money.” In June the Commission changed its position, saying that there would be a consultation after all.

Before that, Rome II changed from a fast-track regulation, which can become enforceable immediately throughout the EU as soon as it is agreed in Brussels, to a Green Paper (a subject for discussion and consultation) and back again.