[Ecommerce] Australia: ACA Hague commments

[James Love]

Louise Sylvan was kind enough to forward the Australian 
Consumers Association comments to the Australian AG,
on the proposed Hague Convention on Jurisdiction and
Foreign Judgments.  Jamie

International Electronic Commerce - Proposed Hague Jurisdiction and
Judgments Convention

Issues Paper 3 - Commonwealth AG's Department

Comments of the Australian Consumers' Association (ACA)

Introduction

The Australian Consumers' Association welcomes the opportunity to
comment on the issues raised by the Proposed Hague Convention on
Jurisdiction and the Recognition and Enforcement of Foreign Judgements
in Civil Matters.  We appreciate the open consultation procedures
adopted by the Attorney General's Department and the preparation of
summary issues papers to assist in the consultation process.

The ACA, established in 1959, as a fully independent consumer
organisation, is known throughout Australia as the publisher of CHOICE
magazine as well as for its advocacy on behalf of consumers.  The ACA
accepts no commercial sponsorship or donations, no advertising in its
publications, and no ongoing government funding.  Our support is derived
from our membership and the sale of published materials.

The comments below are addressed in particular to the consumer contracts
section of the Issues Paper and respond directly to the questions posed
on page 21 of the document.  The numbering refers to the paragraphs of
the Issues Paper.


Geographic Location (3.1, 3.2)
Although there can be some difficulty in determining the geographic
location of parties in an electronic transaction, this problem is
increasingly irrelevant due to technological developments and the fact
that, in many transactions, the location of the consumer is evident due
to the need for a delivery address. 

CONSUMER CONTRACTS 

Article 7 and targeting issues (5.4 - 5.7, 5.18)
The ACA favours the retention of Article 7.  We believe that it is
essential for the development of trust in electronic commerce, to assure
consumers of redress in the event of a dispute.

We do not accept the argument made by some of the business lobbies that
a protective jurisdiction provision is unnecessary since the Internet
has changed the power balance in business-to-consumer transactions. 
Despite the enhanced extent of comparative information which can be
accessed by consumers through websites, the problems inherent in any
business-to-consumer contract remain just as relevant in the online
world as offline.  Neither businesses nor consumers have suddenly
transformed themselves in terms of relative power simply because they
are engaging in commerce through an electronic medium.  It appears to us
as self-evident that the average consumer is still less powerful in a
market transaction than Microsoft for example, or even a small business
supplier.

If a business publishes a website on which a consumer can conduct a
transaction, then in our view that business had made a decision that
they are operating in the consumer's jurisdiction.  If a business does
not wish to do so, then it can indicate that it does not sell in a
particular jurisdiction, as many websites and prospectuses for example
already do.  Multinational companies have little excuse for arguing that
they would be disadvantaged by having to deal with consumers in a
variety of jurisdictions - they already do.  Smaller businesses will
potentially encounter some difficulties, but they can expand their
business Internet activities overseas (either quickly or slowly
depending on their capacity) with the able assistance and advice of
their industry associations; in fact, modern technology and a plethora
of websites have made this information quite affordable and accessible
for businesses, large and small.

It is particularly important that Article 7 be retained given that there
is no protection for consumers from the use of "jurisdictions of
convenience" - in other words, jurisdictions nominated as the choice of
forum in a business-to-consumer contract which basically offer little or
no regime of consumer protection.  Furthermore, Consumers International
in its first research study of consumer shopping online
(consumers@shopping.com - An international comparative study of
electronic commerce, Consumers International, September 1999, available
at www.consumersinternational.org) found that the location in which the
consumer was shopping could actually change during the course of
completing a transaction - which would be visible only to the more
perceptive or technologically-literate of consumers - thus making it
imperative that consumers know that they are basically "shopping from
home", in other words from their own jurisdiction.

More broadly, the ACA opposes any business-to-consumer contract which
contains a so-called "choice of court" and/or "choice of law" clause. 
Basically, there is no choice involved in these contracts so the term is
a misnomer.  These contracts are contracts of adhesion and should form
no part of proper business-to-consumer relationships.  Such clauses are
entirely appropriate to business-to-business transactions and should
remain in that sphere.  In addition, we strongly oppose the possibility
of consumers being able to "contract out" of the special jurisdiction
conferred by article 7 as has been proposed by some of the business
groups.  The argument that suppliers from large economies would be
unwilling to deal with consumers in relatively small distant economies
like Australia is not especially persuasive; competition and economic
policy are the realms in which that potential problem should be
addressed and not through contracts that deny Australian consumers ease
of seeking redress.

Alternative Dispute Resolution 5.8 - 5.10
The consumer movement strongly supports the availability of voluntary
independent complaints handling and dispute resolution systems.  Such
systems, providing they are properly constructed, are transparent and
not dominated by industry interests, can be quite satisfactory and far
less costly in resolving consumer disputes with a trader.  Australia has
been very successful in some areas in establishing excellent
industry-funded alternative dispute resolution mechanisms.  These have
been established in a tri-partite manner with consumer representatives,
government nominees and industry representatives around the table.  The
governing boards of the good schemes also have requirements for equal
consumer and industry representation (eg. Bank Ombudsman), independent
chairs, and often a government nominee who exercises the interests and
supervision of the consumer affairs minister in helping to assure that
the scheme is properly serving consumer interests.

Despite the experience with some excellent schemes, we do not support
inclusion in the proposed convention of any clause which would require
consumers to make use of alternative dispute resolution mechanisms.  If
the ADR systems are good, consumers will use them.  Unfortunately, there
is no established global body, which we would trust, that reviews and
monitors existing ADR schemes and ensures that these are competent and
fair.  In its excellent review of ADR systems globally, Consumers
International found serious limitations and weaknesses in many of these
schemes - while noting the innovative nature of many developments.  But
basically, Consumers International expressed major reservations about
the current situation and certainly opposed mandated ADR on the basis of
the current state of development of these schemes (Disputes in
Cyberspace - Online Dispute Resolution for consumers in Cross-Border
Disputes, December 2000, available at www.consumersinternational.org).

Apart from our opposition to mandated ADR, we are entirely opposed to
the proposition that consumers be required to choose ADR and by so doing
must relinquish their rights to take legal action against a business. 
Very curiously, some industry groups have proposed this as a means for
improving consumer trust in electronic commerce.  It escapes us entirely
how denying individuals their legal rights will improve their trust in
transacting online.

At the same time we would strongly encourage industry groups to develop
effective codes of conduct and to educate their members in relation to
good complaints handling processes, as this will greatly assist in
reducing business-to-consumer disputes.

To reiterate, we do not support the Convention having any requirements
in relation to ADR, but would also encourage the delegations to the
Convention to ensure that it does not prevent consumer recourse to
voluntary alternative dispute methods.

Enforcement of judgments by government regulatory authorities (5.11 -
5.12)
The ACA's view is that a dispute should not be excluded from the scope
of the Convention simply because one of the parties is a Government
agency.  In examining the matter pragmatically, even without a change in
the law, Australia already has a variety of MOUs with a range of
countries in relation to regulatory action arising from business
behaviour on the internet, and has participated in a number of actions -
both requesting enforcement action from regulatory partners abroad and
in bringing actions against Australian businesses at the request of
foreign regulators.

Costs to Australian business (5.29  - 5.31, 5.32)
The increased globalisation of trade as well as the growth of the
Internet has enabled many businesses to expand offshore without
establishing major offices in each country of trade.  While Australian
businesses have been a bit slow about establishing e-commerce trading,
many have done so quite successfully.  As noted above, the Internet
itself has enabled extensive information and education to take place
through industry networks and this includes readily available
information about the laws in various regimes; there is little evidence
that the risk of litigation in overseas countries has prohibited the
growth of e-commerce worldwide or in Australia.  The reticence to
transact online is the consumers', largely because they mistrust the
medium and are unclear how well their consumer rights are protected
including their rights of redress and privacy; in the latest ABS survey,
despite the fact that almost half of Australian consumers have
experience being online, only slightly more than 5% of them are willing
to transact online (actually complete the purchase).  Many consumers
"shop" for products, but will only complete the buying transaction
offline.  This behaviour is also notable in a number of other
countries.  Japanese officials, for example, have advised us that very
little in the way of transactions is being completed online despite all
the shopping activity.

So the issue is not the problems or cost to Australian business, but the
fact that insufficient trust currently exists on the Web that will
enable its growth to continue unless consumer issues are addressed. 
Ensuring redress and that consumers know that they can, as a last
resort, take legal action in their own courts, will help to build that
trust.  If Australian businesses, large and small, want to do business
with other countries, then they need to understand, with the help of
their industry associations, what consumer protections are available to
the consumers in that country.  This is good business practice.  Many
businesses in Australia already have experience in dealing with the
variations in laws across the States and Territories of the Federation,
and can use their experience in applying those skills of differentiation
internationally as well.

Status quo? (5.34 - 5.37)
We do not believe that Australia's position should be simply to allow
the national law of each country to determine whether a court in the
consumer's forum has jurisdiction and whether the judgment obtained by a
consumer from a foreign court is enforced.  This is a worst possible
outcome, throwing complete uncertainty onto the consumer as to what
protections they may or may not have.  It is quite unreasonable to
assume that consumers want to spend their time on the Web trying to
determine whether or not they will have consumer protections, or even
for that matter researching the plethora of seal programs that have now
materialised to try and figure out if the business is bona fide. The
underpinning of our markets is trust built on the back of good consumer
protection regimes. If trust is to be built online, some certainty about
consumer protection needs to be provided, and provided reasonably soon.

Louise Sylvan
Chief Executive
Australian Consumers' Association

February 16, 2001