<a href="http://www.out-law.com/page-11658">http://www.out-law.com/page-11658</a><br clear="all"><div id="headline"><h1>
A .com domain name increases a company's exposure to foreign
lawsuits, rules ECJ</h1></div>
<div id="newsdate">
<p>OUT-LAW News, 10/12/2010</p></div>
<div id="summary">
<p>Companies using a .com or .eu domain name, or displaying
international codes for phone numbers, are more likely to be
'directing' their activities at foreign consumers, affecting where
they can sue or be sued, the Court of Justice of the EU has
ruled.</p></div>
<div id="article">
<p>Consumers can demand that contract disputes are heard in the
courts of their own country if a company in another EU Member State
has directed its business at consumers in that state or all EU
Member States.</p>
<p>The ECJ said, though, that merely operating a website which
foreigners can access is not enough to qualify as a company
directing its activities to other countries.</p>
<p>"It does not follow ... that the words ‘directs such activities
to’ must be interpreted as relating to a website’s merely being
accessible in Member States other than that in which the trader
concerned is established," said the <a href="http://curia.europa.eu/jurisp/cgi-bin/gettext.pl?lang=en&num=79898792C19090144&doc=T&ouvert=T&seance=ARRET&where=%28%29">
ruling</a>. </p>
<p>The ECJ ruled on two cases together which both concerned the use
of the internet to book or reserve services abroad.</p>
<p>In one case, Austrian resident Peter Pammer sought a refund from
German shipping company Reederei Karl Schlüter for a voyage that he
booked but did not take. He argued that the ship did not match the
website's description. The shipping company said his action should
be heard in Germany, not Austria.</p>
<p>In the other case, German resident Oliver Heller booked rooms in
Hotel Alpenhof in Austria but left without paying his bill due to
complaints about the accommodation. The hotel tried to sue him in
an Austrian court and Heller argued that any action should be in
Germany.</p>
<p>An EU Regulation of 2001 on jurisdiction, known as the <a href="http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32001R0044:EN:NOT">
Brussels I Regulation</a>, says that, generally, a consumer can sue
a foreign business either in his own Member State or in the
business's, while a business must sue a consumer in the consumer's
Member State. This consumer protection will apply in most cases,
but only when a trader 'directs' its activities to the EU Member
State the consumer lives in or to several countries including that
Member State.</p>
<p>In the two cases it was claimed that because the consumers used
the internet to access the foreign operators' services, those
services were directed to the consumers' countries. The ECJ was
asked to determine the criteria by which a trader's activity on its
website or on an intermediary's site can be said to be directing
its activity to a Member State.</p>
<p>The ECJ said that the 2001 Regulation on jurisdiction had
loosened the law in response to changing technology so that it
would apply to more businesses.</p>
<p>"This change, which strengthens consumer protection, was made
because of the development of internet communication, which makes
it more difficult to determine the place where the steps necessary
for the conclusion of the contract are taken and at the same time
increases the vulnerability of consumers with regard to traders’
offers," said its ruling.</p>
<p>Having said that the mere fact of having a website does not
count as directing activities to every country from which it is
accessible, the ECJ outlined the factors that do point towards
activity being directed at foreign countries.</p>
<p>"The trader must have manifested its intention to establish
commercial relations with consumers from one or more other Member
States, including that of the consumer’s domicile," said the
ruling. "Clear expressions of such an intention on the part of the
trader include mention that it is offering its services or its
goods in one or more Member States designated by name."</p>
<p>"The same is true of the disbursement of expenditure on an
internet referencing service to the operator of a search engine in
order to facilitate access to the trader’s site by consumers
domiciled in various Member States, which likewise demonstrates the
existence of such an intention," it said.</p>
<p>The ECJ listed factors that, "possibly in combination with one
another," are capable of demonstrating the existence of an activity
'directed to' a consumer's Member State.</p>
<p>"The following features ... would, subject to the relevant
national court ascertaining that they are present, constitute
evidence of an activity ‘directed to’ one or more other Member
States," it said. "The international nature of the activity at
issue, such as certain tourist activities; mention of telephone
numbers with the international code; use of a top-level domain name
other than that of the Member State in which the trader is
established, for example ‘.de’, or use of neutral top-level domain
names such as ‘.com’ or ‘.eu’; the description of itineraries from
one or more other Member States to the place where the service is
provided; and mention of an international clientele composed of
customers domiciled in various Member States, in particular by
presentation of accounts written by such customers."</p>
<p>"If ... the website permits consumers to use a different
language or a different currency, the language and/or currency can
be taken into consideration and constitute evidence from which it
may be concluded that the trader’s activity is directed to other
Member States," it said.</p>
<p>According to the ruling, then, if a company operates websites at
addresses using other country's top level domains, such as .uk when
used by a French company, or if it uses non-geographic top level
domains such as .com, this indicates a directing of activity at
other countries.</p>
<p>The ruling said, though, that the mere presence of " email
address or geographical address, or of its telephone number without
an international code " does not prove that the site is directed
outside of its country's borders because these details are needed
for domestic, as well as international, customers.</p>
<p>The ruling also warned companies that the nature of sites run by
agents or business partners could also determine whether consumers
can force legal action to be taken in their home country.</p>
<p>"The fact that the website is the intermediary company’s and not
the trader’s site does not preclude the trader from being regarded
as directing its activity to other Member States, including that of
the consumer’s domicile, since that company was acting for and on
behalf of the trader," it said. "It is for the relevant national
court to ascertain whether the trader was or should have been aware
of the international dimension of the intermediary company’s
activity and how the intermediary company and the trader were
linked."</p></div><br>