Market Activities Constituting Jurisdiction or Applicable Law in Electronic Service Contracts with International Connection

State: completed by Alessandra Macri

Embedded in a larger research effort towards an automated determination of jurisdiction and applicable law for service contracts in the Internet, this thesis adopts a comparative PIL (Private International Law) analysis approach combined with a dedicated focus on technical implications. This means that identifying, categorizing, and assessing those market activities of a contract party—presumably rather the activities of a service provider than those of a service customer—that may give sufficient reason to connect a considered contract or service delivery to a legal domain or its laws is a fundamental, but not the only part of this thesis. This thesis’ key topic, thus, bases on a PIL-comparative perspective and consists in determining technology-driven challenges and potential strategies to mitigate them.

Figure 7 in [1] depicts an example PIL that has been modeled for the question of jurisdiction as a UML2 activity diagram. The diagram reflects provisions of the EU Brussels I regulation (and its parallel convention, the Lugano convention). As can be seen in decision input b21, Brussels I foresees an influence of a service provider’s market activities on the respective statements on jurisdiction covered by actions b20, b40, and b49. Brussels I, hence, is a PIL source which considers market activities as a potential fact to constitute jurisdiction. Figure 1 visualizes that market activities may only have an impact on a contract’s attributable jurisdiction in case such contract is a contract with a consumer (a person that uses a service for private, non-commercial purposes; see b11) and if a service provider is active in that market the involved consumer has domicile in.

In full detail, article 15 of the Brussels I regulation states: "In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, [...], if:
(a) [...]
(b) [...]; or
(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities."

When analyzing the cited article, it becomes apparent that the term market activity is not mentioned explicitly. Instead, market activities represent here what is referred to as a person’s commercial or professional activities. Thus, it must be noted that market activity is figuring as a collective term. Other PIL sources might use a different terminology (or might not consider market activity as a connecting factor at all). Even though this might appear to be a detail in the first place, the value of a collection and a substantiated discussion of basic terminology applied in different PILs may not be underestimated. In the end, this determines an important basis for all further investigation into market activities, their respective impact and mitigation strategies. Consequently, a detailed notion of what market activities mean in specific jurisdictions is developed within the scope of this thesis.

In addition to these terminology-oriented considerations of market activities, Brussels I determines to what extent activities constitute a valid connecting factor by stating: "[...], by any means, directs such activities to [...]". Of note here are two things. First, not only is it important to know what market activities are per se, but it is important to know the set of jurisdictions to which market activities are directed. In other—less formal, instead interpreted—terms, this means, a service provider’s target markets need to be known.

Furthermore, "any means" refers to an embracing understanding of activities. According to Brussels I, thus, an activity that a service provider performs in a Brussels member state (in which the involved consumer has domicile) or targets to such a state might give sufficient reason to attribute jurisdiction to that state—irrespective of the means used to become active or to target that state. This implies that, for example, an on-street marketing campaign advertising a service is handled the same way as a campaign for the same service managed by an on-line advertiser company. While Brussels I addresses market activities in a technology-neutral manner, it is important to note that there are technical implications to be tackled in the on-line advertisement example given. Most importantly, geographic location information of Internet users is not easily obtained. There are means to approximate a geographic location to an IP address, but the respective methods used are prone to error and less likely to deliver a user’s exact and correct location than in the on-street campaign where locations of posted bills are known. Even though this represents a single example only, the key generalizable message here is that there is potential technical impact caused by legal requirements on market activities to be studied.

In summary of these different observations made with respect to market activity and jurisdiction/applicable law, this thesis aims to answer a number of challenging questions as follows:

[1] M. Waldburger, B. Stiller: Automated Contract Formation for Electronic Value-added Services in the Internet—The Case of Bandwidth-on-Demand Contracts in Europe; 37th Research Conference on Communication, Information and Internet Policy (TPRC 2009), pp. 1–30, Arlington (VA), USA, September 2009.

Final Report

Supervisors: Prof. Dr. Burkhard Stiller

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