| With recent polls showing that Canada ranks a paltry 11th internationally
for on-line shopping, experts ponder why a nation that ranks
second for high-speed Internet service, boasts wired schools
from coast-to-coast and enjoys one of the world's cheapest
Net access rates, has yet to see a boom in consumer e-commerce.
At the root of the problem may lie the "chicken or
egg" dilemma as both consumers and businesses wait
for much needed legal certainty before fully embracing e-commerce.
For consumers, legal rules are needed to ensure that they
enjoy the same protections on-line as they do off-line.
For businesses, rules are needed to ensure that their liability
is both foreseeable and limited, since the prospect of being
hauled into court is enough to make many think twice about
investing in a sophisticated on-line operation.
Canada has taken steps to address consumer e-commerce privacy
concerns, but until recently the jurisdictional questions
posed by the Internet created uncertainty. That may be about
to change as the Consumer Measures Committee (CMC) has just
released a draft proposal on jurisdictional rules for consumer
e-commerce transactions.
The CMC, a federal-provincial-territorial working group
that brings together consumer ministers to develop harmonized
consumer laws in Canada, first stepped onto the e-commerce
stage in May, 2001, when it developed a country-wide template
for consumer e-commerce protection.
The template, or a group of standard clauses, addressed
issues such as credit-card chargebacks, contract formation,
as well as information provision. It is now ready for implementation
at the provincial and territorial level. On the heels of
the template, comes the CMC jurisdiction draft, which advocates
the implementation of a targeting-based approach as a method
of balancing the need for business certainty while also
providing consumers with effective protection.
Consumer jurisdictional issues actually raise two concerns.
First, the question of choice of forum, or which court should
assert jurisdiction in disputes between consumers located
in one province and sellers situated in another. Second,
the question of choice of law, or which law should be applied
to such disputes. Although the two issues are distinct,
the draft correctly notes that both raise many of the same
considerations.
Many business groups support a "rule of origin"
approach that would establish the laws and courts of the
business as those that would hear the dispute. But this
would require consumers to travel to the jurisdiction where
the business is located in order to sue, thereby undermining
consumer protection and confidence.
Consumer groups favour a "rule of destination"
approach that would ensure that consumers always have the
right to sue in their own local jurisdiction under their
own laws. Businesses object to this approach because they
would be forced to respond to lawsuits worldwide without
the ability to limit their potential liability.
Between these two perspectives, several alternatives have
emerged. Some have argued for contractual clauses to determine
the governing law or jurisdiction, while others have suggested
that a rule of origin approach should apply, so long as
the law provides consumers with an adequate level of protection.
A third alternative is the targeting-based approach, which
assumes that if a seller specifically targets a consumer
in their home jurisdiction, the consumer's jurisdiction
should govern.
The CMC favours the targeting approach, citing growing
support for it worldwide. It notes that the European Union
has adopted targeting within its consumer jurisdiction policies,
as has the Hague Conference on Private International Law.
Targeting has also found favour in Canada as similar rules
are found in the Quebec Civil Code and this approach was
the chief recommendation in a jurisdictional study completed
for the Uniform Law Conference of Canada last year.
If approved, the rules would provide Canadian businesses
and consumers with much needed e-commerce jurisdictional
certainty. Businesses would be able to identify their risks
in advance and govern themselves accordingly. Similarly,
consumers would enjoy consistent protection both on-line
and off-line. While the new rules do not assure Canada of
a consumer e-commerce spending boom, failure to establish
uniform standards is certain to leave us lagging behind.
Michael Geist is a law professor at the University of Ottawa
Law School.
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