Selling online abroad: applicable law, geoblocking and antitrust law.
The purpose of this article is to provide the reader with ideas for structuring an online sales strategy aimed at foreign markets, taking into account the EU regulations on geoblockingregulations of the countries to which one intends to export and, last but not least, antitrust law.
1. Geoblocking: what is it and when does it apply?
Firstly, one must
analysing the recent European discipline, introduced with Reg.
28 February 2018, No 302/2018in force since 3 September 2018, containing
measures to prevent unjustified geographical blockades (also known as
as "geoblocking").
The geoblocking was introduced by the EU with
to ensure that it is also correctly applied to the market
one of the founding principles of the European Union: free movement
of goods.
The new Regulation, si
therefore proposes to prevent unjustified geographical blockades or other forms of
discrimination based, directly or indirectly, on nationality, place
of residence or establishment of customers.
Article 3 of that regulation states
in fact that:
"A professional [i.e. an entrepreneur/company].
cannot block or restrict through the use of technological tools or
otherwise, a customer's access to its online interface for
reasons related to nationality, place of residence or place of establishment
of the customer."
This article continues:
"A professional
cannot for nationality reasonsplace of residence, or to the
place of establishment of a customer, redirect that client to a version
of its online interface other than the one the customer wanted
log in initiallybecause of the structure of the language used or of
other features that make it specifically intended for customers with
a particular nationality, place of residence or place of establishment, a
unless the customer has explicitly consented thereto. "
From a concrete point of view, the
Rules prohibits the practice whereby a user is prevented, to
French example, to buy a product on an Italian site, as it is redirected
automatically to another site designated to handle French customers.
Warning, this does not mean
intends that the professional may not use different versions of its
interface onlinein order to address customers from
Different Member States[1]
(e.g. the German language version, for the German market, the
French for France, etc.), but requires that the different versions designed for the
different markets, be accessible from all EU countries (a
French, you can see the Italian site and the conditions of sale there).
On this point, Art. 3(2),
point 2 of the Regulation makes it clear that:
"in case of redirection with the explicit
consent of the client, the practitioner's version of the online interface
which the customer initially wished to access must remain easily accessible
to the customer in question."
As a result, the professional will not only be free to use different versions of their interface online to address customers from different Member States, but also to automatically redirect the customer to a certain version of the interface if the user has given his or her explicit consent[2] and provided that the user is still free to access all other versions of the same interface.
2. Does geoblocking mean that I have to sell everywhere?
One point must be clarified: the new Regulation
clears the block, but does not oblige you to sell outside your country.
The geoblocking does not limit the possibility of deciding
to market their products online in certain countries, but prohibits
that if the site only provides for delivery to certain countries (for
simplify, in Italy), the customer from another EU country (Germany) is prevented
to buy online that product if you accept delivery in Italy.[3]
Furthermore, if marketing is envisaged
price differentiation is allowed in several countries to take into account, for example,
of the different costs to be incurred for the delivery of the goods, as long as the choice
does not take place in a discriminatory manner.
In fact, Art. 4(1) of the Regulation
provides that the geoblocking:
"does not prevent traders from offering general terms and conditions, including net selling prices, that differ between or within Member States and that are offered to customers in a specific territory or to specific groups of customers on non-discriminatory basis. "
3. Who do I sell to?
Given that the proposal of
sale entered online on its website implies that it is visible
by all users of the network, in the absence of clarification, it is
would apply the general rule that if the professional directs
its sales activity in a given foreign country, implicitly makes
assume that the sale is also aimed at customers domiciled in that particular
Country.
It follows that if the site is
translated into German it is implied that the sale is directed against Germany,
Austria, Lichtenstein and Luxembourg, as well as if it is translated into English, that the
same is promoted to (almost) the whole world.
Although the choice of 'maximum
opening' may seem very commercially viable, we invite you to evaluate it
prudently, as it has considerable legal repercussions (mainly
related to the law applicable to individual sales contracts and the
violation of any foreign rules), tax (in particular with
reference to the transaction being subject to VAT in the purchaser's country of domicile)
and customs (in the case of non-EU sales).
Therefore, for the avoidance of doubt, once you have assessed which countries you actually intend to sell to, it is advisable to state this directly on the site and in the general terms and conditions of sale.
4. By what law is the sale regulated?
If sales are only aimed at
to a market (e.g., to simplify, Italy), with delivery of the goods
in the territory of that country and the purchaser is a consumer domiciled in a different
country (e.g. Germany), which requires the delivery of the goods to take place in
Italy, such a sale will be governed by Italian law, without the need to worry about
to provide in the general terms and conditions of sale for compliance with any regulations
imperative provided by Germany. [4]
A different matter, however, if the order originates in Germany and the delivery of the goods takes place on German territory, in which case the law applicable to the contract of sale will be German law and, if the end user is a consumer, this may not be derogated from, even with the written consent of the parties.[5]
5. Violation of information obligations and foreign regulations.
If the site provides for the sale
also in countries other than Italy, it will be necessary to organise it by ensuring
that:
- the general sales conditions respect the obligations of
consumer information, as referred to in Art. 6, para. 1 of the Directive
2011/83/EU;[6] - the general terms and conditions of sale comply with any mandatory regulations
of the countries to which they intend to export, different and/or additional to those
provided for by Italian law; - commercial information required by the
State of export.
With reference to the above
disclosure obligations, it should be noted that:
- the restriction on delivery of the goods must be clearly stated
since the beginning of theprocedure leading to the conclusion of the contract, formerly Art. 8(3) of the
Directive 2011/83/EU;[7] - must be in the language of the consumer (Art. 8 para. 1 of the Directive
provides for the obligation to 'inform the consumer in plain and intelligible language').[8]
The penalty in case of
breach of consumer information obligations consists in the extension of
of the right of withdrawal from fourteen days to twelve months and fourteen
days.[9]
In addition to the risk of such a sanction, in some European countries there is also the risk of being subject to a warning and, in the most serious cases, an injunction action before the competent court: German law, for example, provides that in the case of ineffective clauses in the general terms and conditions of sale and violation of consumer protection rules, the warning and/or injunction action may be brought not only by the consumer, but even by a competitor, i.e. a consumer protection association.[10]
6. Can distributors and retailers sell online?
In the event that the manufacturer also makes use of third-party distributors and resellers to market its products, it is worth briefly recalling what are the powers of control over these entities, referring, for further details, to the section antitrust of this blog.
The Vertical Sales Regulation 330/2010 and recent judgments of the European Court of Justice[11] provided that a manufacturer may not prohibit its distributor/reseller from sell purchased products through their own websitenor market through the digital platforms of third parties.
The only way to limit this possibility by third parties is (for high-end, luxury and technically developed products) to create a selective distribution networkin which the distributors and resellers undertake to sell the contract goods only to distributors selected on the basis of objective criteria of a qualitative nature established indiscriminately and non-discriminatorily for all persons belonging to the network.
In that case, according to the most recent case law of the Court of Justice,[12]a manufacturer is authorised to impose a clause on its distributor allowing it to sell products via internet, but on condition that such sales activity online is realised through an 'electronic shop window' of the authorised shop and that the aura of luxury and exclusivity of these products is thereby preserved (on this point, see the Amazon Case e The mixed system: when the manufacturer chooses to adopt both exclusive and selective distribution).
[1] Compare recital 20
of the Regulation on geoblocking.
[2] Consent, once given, may be considered valid
even for subsequent visits by the same customer to the same interface
online, provided that the customer is given the opportunity to revoke it when he or she considers
appropriate. On this point, see recital 20 of the Geoblocking Regulation.
[3] On this point, see Stefano
Dindo, E-Wine, Legal-economic aspects of wine communication and distribution
online, G. Giappichelli Editore, p. 41, 2018.
[4] According to Art. 6(1),
(a) and (b) of Regulation 593/2008.
[5] See previous footnote.
[6] Directive 2011/83/EU of
european parliament and the council of 25 october 2011 on the rights of
consumers. Importantly, since this is a Directive (and not a Regulation), the
it must be transposed by national laws, while leaving the
Member countries free to choose the most appropriate regulatory path to achieve the
objectives set therein; it follows that each country is free to insert
information obligations in addition to those set out in the directive itself.
[7] Art. 3 Directive 2011/83/EU:
"E-commerce sites shall indicate clearly and legibly, at the most
late at the beginning of the ordering process, if restrictions apply
delivery and which means of payment are accepted."
[8] Attention! These parameters
language must also be complied with for the application of the provisions
of the GDPR. On this point, see Recital 20 of that Regulation.
[9] Art. 10 para. 1 of Directive 2011/83.
[10] Cf. Robert Budde, E-Wine,
Legal-economic aspects of online wine communication and distribution, G.
Giappichelli Editore, p. 51 ff., 2018.
[11] See judgment of the Court of
Justice in the Pierre Fabre case C-439/09.
[12] Judgment of 6 December 2017, C-230/16 Coty Germany GmbH.
The law applicable to the international agency contract.
When operating in the field of international contract law, certainly the first aspect to be analysed is to understand by which law the contractual relationship is governed.
As is well known, the regulation of applicable law, in the European context, is dictated by the European Regulation Rome I, No 593/2008 on the law applicable to contractual obligations.
Article 3 of the Regulation gives the parties the freedom to choose to which law to subject the contractual relationship:
"...the choice is express, or clearly follows from the provisions of the contract or the circumstances of the case"
In the event that the parties have not chosen to which jurisdiction the contract shall be subject, the following shall apply Article 4 of the Regulation, which sets out the criteria for identifying the law applicable to the relationship. Specifically, Article 4(1)(B) of the Regulation prescribes that contracts relating to the provision of services, which also includes agency contracts, are governed by the law of the country in which the service provider (the agent, therefore) is habitually resident. This implies that all agency relationships between a foreign principal and an Italian agent, for which the parties have not (expressly) chosen the applicable law, will be governed by the law of the country in which the agent has its habitual domicile, i.e. normally by Italian law.
It can therefore be said that the Italian law is applicable to the international agency contract in the following cases:
- in the case of choice of parts (Art. 3 Rome I Regulation);
- at absence of choice of the parties, in all cases where the agent has its habitual residence on Italian territory (Art. 4 Rome I Regulation);
- in the event that the parties decide to submit the contract to foreign law, the Italian rules shall apply ".internationally imperative"or "necessary application" (Art. 9 Rome I Regulation).
With reference to this last point, which certainly constitutes one of the most complex and critical profiles of international trade law, it is deemed necessary to briefly elaborate.
As is well known the freedom given to the contracting parties to choose how to regulate a contractual relationship encounters limitsIn all legal systems there exist mandatory rules intended precisely to limit the freedom of the parties in order to ensure the observance of certain principles. Applying this principle in the sphere of international contracts is not easy, precisely because one is obliged to deal with the mandatory rules of two or more jurisdictions: the one chosen by the parties and the one which, in the absence of choice, would apply pursuant to Art. 3 of the Rome I Regulation.
How, then, does the right granted to the parties to choose the applicable law fit in with the principle that the mandatory rules applicable in the absence of choice must be respected?
In principle, it may be said that the choice of a particular law entails the total derogation of the rules of a particular legal system (including mandatory rules) in favour of those of another legal system. This implies that, normally, if the parties choose to subject their contract to another legal system, their contract will have to comply with the mandatory rules of that system, but not those of the system derogated from through their choice.
However, it should be noted that, in particular cases, national legislators may decide to attribute to certain standards an even more binding valuesuch as to make them mandatory even at the choice of the parties: these rules are defined as "internationally imperative"or of 'necessary application' and are thus distinguished from those that are 'merely mandatory'.
In the European context, this principle is governed by Article 9 of the Rome I Regulation, which defines the rules of necessary application as:
"... provisions compliance with which is regarded as crucial by a country for the safeguarding of its public interests, such as its political, social or economic organisation, to such an extent as to require their application to all situations falling within their scope, whatever the law applicable to the contract under this Regulation."
The European Court of Justice intervened to interpret the scope of this rule in the Unamar case: in this ruling, the Court stated that the national court may apply the most protective rules of its own law (instead of the law chosen by the parties)
"...only if the court before which the case is brought makes a detailed finding that, in the context of that transposition, the legislature of the State of the forum considered it crucial, within the legal system concerned, to afford commercial agents protection additional to that provided for by that directive, taking account, in that regard, of the nature and purpose of those mandatory provisions.
From this ruling, it follows that in order to prevail over the law of another country based on the same directive, it is not sufficient that the rules chosen provide for a higher level of protection and attribute to them the character of internationally mandatory rules, but that it must also be shown that this choice is of crucial importance for the system in questionin view of the nature and purpose pursued by the rules in question.
Jurisdiction in the international sale of movable property.
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Often the parties, who enter into an international contract of sale of movable goods, omit for various reasons to decide and define which court is competent to decide on a possible dispute concerning the contract itself.
In the absence of such a choice, it is necessary to identify the parameters dictated by the Regulation 44/2001. The same provides that:
- the court where the defendant has its residence is competent to decide (Art. 2.1);
- "a person domiciled in the territory of a Member State may be sued in another Member State" and specifically, in the case of the sale of goods, "the place, situated in a Member State, where the goods were delivered or should have been delivered under the contract" (Art. 5.1(b)).
E.g. An Italian company sells goods to a Swedish company. The parties agree that the goods are to be delivered to a dealer based in Spain. The Swedish company delivers the goods on time, but the Swedish company fails to perform.
The Swedish company wants to take legal action and turned to a lawyer for clarification.
Ex .art 2,1 reg. 44/2001 in this case (in the absence of choice of the parties) the competent jurisdiction is that of the defendant, i.e. the Swedish Jurisdiction.
In any case, theArticle 5.1(b) provides as a special forum, in the alternative, the court of the place where the goods were delivered or should have been delivered (Spain).
Therefore, the Italian seller (to his surprise) will have no right of action in Italy to demand payment for his goods.
It is important to emphasise that according to a United Sections of the Supreme Courtthis principle is also applicable where the seller intends to sue for the mere payment of the consideration.
On this point, the Supreme Court stated that 'on the subject of the international sale of goods, Article 5(1)(b) of the EC Regulation No. 44/2001 of 22 December 2000, is to be interpreted as meaning that, in contracts of sale, the obligation relied on in the action is to be understood as meaning not the obligation relied on by the plaintiff but the obligation characterising the contract and, therefore, in contracts for the sale of goods, that of delivery of the goods; Therefore, even in the case of an action relating to the mere payment of the consideration, the place to be considered, for the purposes of jurisdiction, is the place of delivery of the goods, which, if not established in the contract, will have to be identified with reference to the principles already affirmed by the ECJ, the place being determined according to the conflict rules of the court seised."[1]
ABSTRACT
in the absence of choice it is competent to adjudicate also on questions concerning the payment of consideration:
- the court where the defendant has his residence (Art. 2. reg. 44/2001)
- the court where the goods were to be delivered (Art. 5 reg. 44/2001)
- even in the case of an action relating to the mere payment of consideration, the place to be considered, for the purposes of jurisdiction, is the place of delivery of the goods
[1] Civil Cassation 2009 No. 3059 Giust. civ. Mass. 2009, 3, 479
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Choice or non-choice of applicable law
[:en]One of the first steps in drafting an international contract is choice of applicable law. Only after such an assessment can a contract be correctly drafted, as only in this way can the parties draft a contract on the basis of the normative dictates of the chosen legal system.
This element is often 'snubbed' or put in second place.
plan by the uninitiated, believing this to be a mere formality.
Usually, parties wishing to start a collaboration in the international sphere insert into a contract what they usually insert into national contracts, sometimes using contracts they have already used to regulate national relations.
In reality, a lack of choice can lead to unpleasant surprises on the part of one or more contractors.
Case 1
For ease of understanding, it is considered necessary to give two classic examples of problems related precisely to a failure to choose the applicable law.
An Italian principal enters into an agency contract with a French promoter. The parties do not choose the applicable law, as they consider it to be entirely superfluous. After an employment relationship of four years, the Italian principal stops production. The French agent therefore requests an indemnity equal to two years' commissions, based on the rules of French law. In this case, in the absence of choice, the agent's law, i.e. French law, applies. The principal, following a discussion with his lawyer, realises that under Italian law the severance payment is much lower (ex Article 1751 of the Civil Code "the amount of the allowance may not exceed a figure equivalent to an annual allowance...) .
Case 2
An Italian company enters into a contract for the supply of goods with an American company. Nothing is specified in the contract as to the applicable law. In addition, a penalty clause is stipulated that obliges the American seller to pay a penalty of € 10,000.00 in case of delay in delivery of the goods. The goods are shipped more than a month late and yet the American company does not want to fulfil the penalty payment. The company turns to a lawyer to ask for clarification of the coercive methods of payment. To the client's surprise, the lawyer explains to him that the situation varies greatly depending on the applicable law. In fact, the penalty clause is valid unless the court reduces the amount if it is manifestly excessive (Article 1384 of the Civil Code.). In contrast, American law does not provide for the possibility of stipulating penalties (penalty), but only forms of lump-sum fixing of damages (liquidated damages).
One of the first steps in drafting an international contract is choice of applicable law. Only after such an assessment can a contract be correctly drafted, as only in this way can the parties draft a contract on the basis of the normative dictates of the chosen legal system.
This element is often 'snubbed' or put in second place.
plan by the uninitiated, believing this to be a mere formality.
Usually, parties wishing to start a collaboration in the international sphere insert into a contract what they usually insert into national contracts, sometimes using contracts they have already used to regulate national relations.
In reality, a lack of choice can lead to unpleasant surprises on the part of one or more contractors.
Case 1
For ease of understanding, it is considered necessary to give two classic examples of problems related precisely to a failure to choose the applicable law.
An Italian principal enters into an agency contract with a French promoter. The parties do not choose the applicable law, as they consider it to be entirely superfluous. Following a four-year employment relationship, the Italian principal stops production. The French agent therefore requests an indemnity equal to two years of commissions, based on the rules of French law. In this case, in the absence of choice, the agent's law, i.e. French law, applies. The proposer, following a discussion with his lawyer, realises that under Italian law the severance payment is much lower (ex Article 1751 of the Civil Code "the amount of the allowance may not exceed a figure equivalent to an annual allowance...) .
Case 2
An Italian company enters into a contract for the supply of goods with an American company. Nothing is specified in the contract as to the applicable law. In addition, a penalty clause is stipulated that obliges the American seller to pay a penalty of € 10,000.00 in case of delay in delivery of the goods. The goods are shipped more than a month late and yet the American company does not want to fulfil the penalty payment. The company turns to a lawyer to ask for clarification of the coercive methods of payment. To the client's surprise, the lawyer explains to him that the situation varies greatly depending on the applicable law. In fact, the penalty clause is valid unless the court reduces the amount if it is manifestly excessive (Article 1384 of the Civil Code.). In contrast, American law does not provide for the possibility of stipulating penalties (penalty), but only forms of lump-sum fixing of damages (liquidated damages).
[:en]One of the first steps in drafting an international contract is choice of applicable law. Only after such an assessment can a contract be correctly drafted, as only in this way can the parties draft a contract on the basis of the normative dictates of the chosen legal system.
This element is often 'snubbed' or put in second place.
plan by the uninitiated, believing this to be a mere formality.
Usually, parties wishing to start a collaboration in the international sphere insert into a contract what they usually insert into national contracts, sometimes using contracts they have already used to regulate national relations.
In reality, a lack of choice can lead to unpleasant surprises on the part of one or more contractors.
Case 1
For ease of understanding, it is considered necessary to give two classic examples of problems related precisely to a failure to choose the applicable law.
An Italian principal enters into an agency contract with a French promoter. The parties do not choose the applicable law, as they consider it to be entirely superfluous. Following a four-year employment relationship, the Italian principal stops production. The French agent therefore requests an indemnity equal to two years of commissions, based on the rules of French law. In this case, in the absence of choice, the agent's law, i.e. French law, applies. The proposer, following a discussion with his lawyer, realises that under Italian law the severance payment is much lower (ex Article 1751 of the Civil Code "the amount of the allowance may not exceed a figure equivalent to an annual allowance...) .
Case 2
An Italian company enters into a contract for the supply of goods with an American company. Nothing is specified in the contract as to the applicable law. In addition, a penalty clause is stipulated that obliges the American seller to pay a penalty of € 10,000.00 in case of delay in delivery of the goods. The goods are shipped more than a month late and yet the American company does not want to fulfil the penalty payment. The company turns to a lawyer to ask for clarification of the coercive methods of payment. To the client's surprise, the lawyer explains to him that the situation varies greatly depending on the applicable law. In fact, the penalty clause is valid unless the court reduces the amount if it is manifestly excessive (Article 1384 of the Civil Code.). In contrast, American law does not provide for the possibility of stipulating penalties (penalty), but only forms of lump-sum fixing of damages (liquidated damages).
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The Rome I Regulation and the applicable law.
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If the parties do not identify the law to which the contractual relationship is subjectthe linking criteria provided for in Article 4 of the Rome I Regulation (593/2008)
Specifically theArticle 4.1 unequivocally identifies which law is to be applied to a series of contracts where the parties have not made the choice (sale, provision of services, franchising, distribution). It reads, in fact, that:
-
a contract for the sale of goods is governed by the law of the country in which the seller has his habitual residence;
-
the contract for the provision of services is governed by the law of the country in which the service provider has his habitual residence;
-
a contract having as its object a right in rem in immovable property or a lease of immovable property is governed by the law of the country in which the property is situated;
-
Notwithstanding (c), the letting of a property concluded for temporary private use for a period of not more than six consecutive months shall be governed by the law of the country in which the owner has his habitual residence, provided that the tenant is a natural person and has his habitual residence in the same country;
-
The franchise contract is governed by the law of the country in which the franchisee has its habitual residence;
-
the distribution contract is governed by the law of the country in which the distributor has his habitual residence;
LArticle 4.2 of the RegulationIt further provides that if the contract does not fall within the categories set forth in Art. 4.1 it shall be governed by the law of the country in which the party to be performed under the contract has its habitual residence;
L'Article 4.3Finally, it provides that if none of these criteria makes it possible to determine the applicable law, the contract shall be governed by the law of the country with which it is most closely connected.
ABSTRACT
In case of no choice check:
- whether the contract falls within the categories covered by Art. 4(1) of the Rome I Regulation
- otherwise, the law in which the party is to perform the characteristic performance applies
- finally, if none of the above criteria allows the determination of the applicable law, the contract is the law of the country with which it is most closely connected
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Jurisdiction under EC Reg. 44/2001.
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A problem that often arises in connection with contracts concluded by parties with residence or seat in different states concerns the choice of jurisdiction, i.e. figuring out which court is called upon to rule when the parties have not explicitly made that choice.
In civil and commercial matters between an Italian subject and a foreigner, one must firstly
distinguish, relations with counterparties in the European area and counterparties in countries outside that area.
- In the first case, the European legislation governed by the Regulation 44/2001 (Lugano Convention)
- In the second case, on the other hand, the general regime of the Act No. 218/1995 on Private International Lawunless the matter is directly regulated by bilateral conventions of the countries in question.
Analysing briefly the general discipline provided for by the European regulation, it is noted that it is provided for in theArticle 2.1 the general rule of jurisdiction of the defendant's court.
Based on this principle, therefore, in the absence of choice, if one of the parties is domiciled in an EU state, it must be sued in the court of that state.
(e.g. Italian plaintiff, Spanish defendant, but domiciled in Belgium, the contracting court is Belgian)
However, Regulation 44/2001 provides in Articles 5, 6 and 22 of the exemptions to this general principle or:
- Articles 5 and 6 reg. allow in a number of cases to sue a person before courts other than those of the domicile;
- Article 22 provides for a number of exclusive, i.e. non-derogable, forums, irrespective of the domicile of the defendant, such as rights in rem in immovable property, validity, nullity and dissolution of companies, registration and validity of patents and designs;
- the parties are nevertheless free to choose an exclusive forum by means of a clause extending jurisdiction (Art. 23).
ABSTRACT
In the absence of choice and if the relationship is between parties in the European judicial area, which State's courts are called upon to decide a dispute?
- Need to look at reg. 44/2001
- Article 2.1 of Regulation 44/2001 regulates the general principle of the jurisdiction of the defendant's court
- Articles 5 and 6 reg. allow in a number of cases to sue a person before courts other than those of domicile
- Article 22 provides for a series of exclusive, i.e. non-derogable, forums, regardless of the domicile of the defendant
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