Jurisdiction: Building Confidence in a Borderless Medium
July 26-27, 1999
Threat to Internal Market in E Commerce by Adoption of Brussels Regulation
Mike Pullen, Associate
Dibb Lupton Alsop, Brussels
13 July 1999
To [ ]
Member of the European Commission
U R G E N T
COMMISSION MEETING 14 JULY 1999
THREAT TO INTERNAL MARKET IN E COMMERCE BY ADOPTION OF BRUSSELS
We understand that on the agenda for the next meeting of the Commission
is the adoption of a regulation which incorporates the amended Brussels
Convention into the Aquis Communitaire pursuant to new powers granted under
Article 65 of the Amsterdam Treaty ("Regulation").
We set out our substantive objections to the adoption of the Regulation
in a letter sent to you and your colleagues dated 6 July 1999 (attached).
We have been asked to give further details of our arguments in relation to
this issue, which you will find set out below. We trust you will find these
considerations useful in your discussions in the Commission.
We understand that the Council decided on the organisation for the
revision of the Brussels Convention and the Lugano Convention ("Convention")
at its meeting on 4 and 5 December 1997. It established an ad hoc working
party composed of representatives of the member states and the Lugano states
(Norway, Iceland and Switzerland) set priorities for the working party and
asked that preparations be made for the commencement of discussions in
January 1998 with a view to concluding by the beginning of 1999.
The working party held nine meetings between January 1998 and 23 April
1999. It examined detailed proposals for amendments to the Convention
submitted by the member states and the Commission. This resulted in a new
amended draft of the Convention.
It is our understanding that on the 12 March 1999 the Council agreed to
freeze work on the adoption and ratification of the Convention on the
assumption that the Commission would put forward a proposal for the
Regulation after the entry into force of the Amsterdam Treaty.
We believe that at no time during the course of the working party's
meetings did it, the Council, the Commission or the member states undertake
any form of consultation process with industry or consumers or undertake any
type of economic impact analysis.
We think that if the member states had proceeded to ratify the amended
Convention outside of the framework of the Aquis Communitaire, they would
have been in breach of their obligations under Article 5 of the Treaty
together with Article 49 (formerly Article 59). This is due to the fact
that Article 15(c) together with Recital 13 of the Regulation completely
undermines the freedom to provide services based on the principles of the
country of origin control and mutual recognition. However, we note that now
the Commission has proposed the Regulation, the member states are prevented
from taking any individual or collective action to ratify the Convention.
We believe that any moves to ratify the Convention by the member states
outside the framework of the Aquis would leave them open to an action
pursuant to Article 226 (formerly Article 169) of the Treaty.
The fact that the Commission is proposing to adopt the Regulation in a
form which mirrors the substantive text agreed by the Council's working
party does not absolve the Commission from its obligations under the Treaty.
In particular, the Commission has an obligation to consult widely before
proposing legislation pursuant to Article 9 of the Protocol on the
Application of the Principle of Subsidiarity and Proportionality annexed to
the Amsterdam Treaty ("Protocol").
We understand that there has been no formal or informal consultation by
the Commission with industry and consumers on the necessity for the
Regulation or its effect and impact on the internal market. Therefore, the
procedure used for the adoption of the Regulation will be open to judicial
review both directly to the European Court of Justice (ECJ) pursuant to
Article 230 (formerly Article 173) of the Treaty and by references from the
National Courts pursuant to Article 234 (formerly Article 177) of the
Treaty. We note that in a press release dated 5 July UNICE stated that if
necessary the Regulation would be challenged before the ECJ.
Furthermore, now that a proposal for the adoption of the Regulation and
its detrimental impact on the internal market in E Commerce has become
widely known by European industry, the debate is becoming very political in
the member states. Therefore we do not believe that this issue should be
dealt with by a "caretaker" Commission.
In light of the above, we urge you to remove the discussion of the
Regulation from the agenda until the Commission has fulfilled its obligation
to consult widely as required by the Protocol.
DIBB LUPTON ALSOP