Diana Wallis Liberal Democrat Member of the European Parliament for Yorkshire and the Humber

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Speech to the Meeting of the Hague Conference on International Law 27/03/2001

26 Feb-2 March 2000 Chairman, firstly I should thank you for inviting someone from the European Parliament’s Legal Affairs Committee to be present at your deliberations. Our two groups have much in common in the work that we do and I am privileged to be here on behalf of the Committee on which I sit. Last year when I came here as the Parliament’s Rapporteur on the Brussels Regulation I was slightly uneasy, in that I probably was - and am today - the only politician here amongst a group of experts. It just happens that, like a number of my colleagues on the Legal Affairs Committee, I was a practicing lawyer before my election. However, I am here as a politician and would not claim to have the expertise of some of you around this table. I want to give you a view or a perspective from the European Parliament now that we have our Brussels regulation on Jurisdiction (and e-commerce) - the EU equivalent of what you are working on in a global context. I can speak from detailed and unique experience when I say that it is not an easy thing to take the sort of document you are drafting here on an expert intergovernmental basis through the democratic process, as I had to do through the European Parliament. You will know that our discussions tended to be dominated by the issue of consumer contracts, which is one of the many issues that are dealt with in the document. Ultimately I think we achieved a consensus on the basis of certain shared goals rather than by an attention to the detail. Unfortunately for you, those goals maybe rather peculiar to the EU with its Internal Market – not a vision you can easily transpose to a global plane. Our goals were and remain: a. the creation of an area of freedom and justice where the citizen can gain access to justice in another member State as easily as in their own b. the further enhancement of the Internal Market through e-commerce by creating a setting of confidence in which our consumers can buy over the web. For example, it is still the case that the majority of British consumers, when they shop on the web outside of the UK, turn to the USA and not to other EU member states. That is not good for the Internal Market. So by common goals within Europe we were able to bring some consensus to the fraught questions of consumer contracts and jurisdiction. Last year I reported to you the discussion we were having on the particular issue of jurisdiction or choice of forum clauses in B to C contracts. As I predicted, that option was finally rejected by Parliament on the basis of a recent ECJ ruling, but not only that, but also our shared views set out above and additionally the direction in the Treaties that requires all legislation to have a high level of consumer protection. Some of us in the Parliament did try to push the boundaries by allowing a choice of forum clause, in very, very limited circumstances where it was directly linked to ADR with an approved body. This possibility may be pertinent to your discussions here. Ultimately Commission and Council decided to deal with ADR outside of the Regulation itself – to which I will return in a moment. Some of us also fought particularly hard to have included the concept of ‘activities directed at’ so as to throw a lifeline to some SMEs who were worried at inadvertently becoming entangled in a ‘foreign’ court because of the mere accessibility of their web site. This concept of course is in line with your discussions here on activity-based jurisdiction. We did get the concept in, which I believe gives us a less Eurocentric solution and some hope of meshing with the USA. Unfortunately the Commission and Council made the interpretation of this clause the subject of a separate declaration outside of the Regulation. This needs to be widely publicised. Likewise the commitment to ADR sought by the Parliament is outside of the regulation in a similar declaration. It was probably inevitable that ADR could not figure in the Regulation itself given the nature and history of the Convention it replaced, being a private international law agreement, this will be an issue for you too to consider. Nevertheless, the Parliament delivered a strong political signal in favour of ADR as a neutral way of answering the vexed question of whose jurisdiction will apply. There can be no doubt that the Commission is taking ADR seriously and there are various initiatives ongoing, which I will deal with later. However, finally in relation to the Regulation I can say that it has been given a 5 years review period – Parliament would have preferred a shorter period – the new technology is fast advancing and it could have been co-ordinated with the review of the E-commerce directive. My view is that we have a potential problem with B to C Ecommerce, but we have no idea of the size of the problem or indeed if it really exists at all. Such evidence as does exist is of a very limited tiny number of cross border consumer claims basically because as we know the procedures are too complicated and too expensive to be used except by the most determined and well-off consumer. If we are both to reassure business and assist consumers we desperately need to get some really reliable data about the level and nature of cross border consumer claims. My own country is as much as fault as any other, the DTI and LC department tried to assist me, but ultimately it was no more than informed guesswork. We need to do much better than this in this crucial policy area in order to allow for better regulation in the future. If your organisation, or individually those of you here today, can do anything to take this forward it would be a worthwhile achievement. The common problems that consumers face are in the main either non-delivery or late delivery of goods. To deal with this should require very little - no more than a well functioning customer complaint service in the first instance. However there are also times when a more sophisticated system may be needed, especially when in the European context we consider the likelihood of consumers buying high value financial services via the Internet. The Commission proposal for giving European consumers cross-border access to ADR is the so-called EEJ Net (European Extra-Judicial Network). Basically we already have a Commission Recommendation on ADR bodies setting out the criteria to which they must conform, their conformity is guaranteed bu their Member State. Then under the EEJNet proposal each Member State has a ‘clearing house’ which will advise consumers with a cross-border problem and take up their complaint with their corresponding ‘clearing house’ in the other Member State, which may ultimately direct the problem through the appropriate ADR system in their State. Some States have already designated the Euro Guichet, existing providers of euro advice to consumers and others, to be their clearing house. Others are setting up new bodies whilst in the UK we are using the existing CAB network which is well known and high profile, but not unfortunately in relation to the euro or cross border advice. I have taken advantage of recent travels to visit the Euro Guichet in Dublin and Stockholm and, of course, the CAB in my own country to discuss these proposals in connection with which I am the parliament’s rapporteur. Sometimes I think that when we do not really know the size or shape of the problem, then this informal practical network maybe the right first step. On the other hand, there are days when I think it is almost a joke, a totally inadequate response: under funded, under publicised and under-resourced. Apart from which the Commission seems reluctant to take seriously any co-ordinating role to ensure coherence and a basic level of service provision. There is a vast difference between the level of preparedness and commitment in the various Member Sates, which is of concern. All this is part of a bigger discussion in Europe about governance – on which subject the Commission is coming forward with a White Paper – about how we do Europe. In one sense, it is the old discussion about legislation or regulation. ADR is not in the Brussels Regulation because this is hard law, legislation, whereas the soft law, co-regulatory approach is represented by the EEJNet. It maybe that such an approach will mesh better internationally. Globally we will be faced with a vast and differing array of ADR schemes; some very questionable, some backed by large insurers or other interested parties. This sort of jungle is going to require very good quality control if consumers are to get a worthwhile service. The EEJNet is a horizontal initiative and there is no reason why it should not extend beyond the EU, indeed it should without question extend to EEA and the applicant states. Yet we also have sectoral initiatives, for example, the FIN Net recently launched by the Commission, in relation to financial services. Might not all this just end up being extremely confusing to the consumer citizen because at least he or she knows where their local courthouse is? Might we end up blurring the divide between the judicial and the extra-judicial? Are we privatising our system of civil justice? Thus I have some reservations about whether these proposals take us nearer Europe’s goal of an area of freedom and justice, where the Greek from Thessalonica can bring an action in Helsinki as though he were at home. I hope I have given us some points for discussion. Thank you.

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