E-Commerce Directive

The EU adopted in June 2000 Directive 2000/31/EC
(the ‘E-Commerce directive’) requiring its Member States to
harmonise certain aspects of their laws on buying and selling
online. The directive is designed to reduce the regulatory
burdens for businesses wanting to enter this market (such as
the adoption of the ‘country of origin principle’ and the
prohibition of prior authorisations). It also includes measures
to encourage consumer confidence.

The European Commission initiated the
E-Commerce Directive following its view that electronic
commerce should be facilitated to the greatest extent
possible, in order to promote employment, economic
growth, and investment in the EU. Although e-commerce in
the EU is set to account for 340 billion Euro in on-line
transactions by 2003, Europeans are regarded as lagging
behind their counterparts in the US and other
jurisdictions in terms of doing business on the

The Directive applies to both
businesses and consumers, and is intended to set down a
coherent structure of rules to be observed by entities
doing various kinds of online business to ensure a high
level of consumer protection.

The most contentious issue regards the

liability of online service providers

. The Directive establishes an exemption from liability
for intermediaries where they play a passive role as a
"mere conduit" of information from third parties and
limits service providers' liability for other
"intermediary" activities such as the storage of

The Directive also clarifies that the
internal market principle of
mutual recognition of national laws

and the principle of the country of origin must be
applied to information society services.

Other central issues:

  • Place of establishment

    : The Directive defines the place of establishment as
    the place where an operator actually pursues an
    economic activity through a fixed establishment,
    irrespective of where web sites or servers are situated
    or where the operator may have a mailbox.

  • Transparency

    : The Directive requires Member States to oblige
    information society service providers to make available
    to customers and competent authorities (in an easily
    accessible and permanent form) basic information about
    their activities (name, address, e-mail address,

  • Online contracts

    : The Directive requires Member States to remove any
    prohibitions or restrictions on the use of electronic
    contracts. In addition, it ensures legal security by
    imposing certain information requirements for the
    conclusion of electronic contracts in particular in
    order to help consumers avoid technical errors.

  • Commercial communications

    : The Directive defines commercial communications (such
    as advertising and direct marketing) and subjects them
    to transparency requirements.

  • Implementation

    . The Directive strengthens mechanisms ensuring that
    existing EU and national legislation is enforced. This
    includes encouraging the development of codes of
    conduct at EU level, stimulating administrative
    co-operation between Member States and facilitating the
    setting up of effective, alternative cross-border
    online dispute settlement systems.

The Electronic Commerce Directive was approved in
second reading by the European Parliament on 4 May 2000.
The E-Commerce Directive was adopted by the Council on 8
June 2000 and published in the Official Journal on 17
July 2000.

Union of Industrial and Employers' Confederations
of Europe (UNICE)

believes that the global nature of the information society
cannot be over-emphasised and therefore sees worldwide
cooperation as absolutely crucial to the development of the
information society. Consequently, while it acknowledged
the need to consider the functioning of the internal
market, it urged the Commission to take an international
perspective and to cooperate closely with the EU's main
trading pa rtners. In conclusion, UNICE states that the
Commission's proposal is a commendable step towards setting
up a framework for electronic commerce but that the current
proposal falls short on some important issues.

  • The Commission will undertake continuous monitoring
    of the application of this directive in the Member
  • The Directive has been implemented in 12 Member
    States (exceptions: France, the Netherlands and
    Portugal); five of the ten future Member States have
    already written the Directive into national law (as of:
    Nov. 2003).

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