The E-commerce has become the norm in B2C transactions worldwide as many consumers prefer online shopping instead of direct purchases through local stores or retailers. However, a legal issues related to the Internet transactions can arise when the consumers in EU sue the Korean business entities in the EU courts—the issue being whether or not the forum courts in Europe can exercise the personal jurisdiction over the foreign defendants. It is important for the Korean corporations to understand the EU rules on the Internet personal jurisdiction such as the Brussels Regulation so that they can anticipate whether or not their business activities can be subject to lawsuits in EU and plan their corporate activities accordingly.
First, defendants who are domiciled in an EU member state can be sued in the courts of their domiciles. In B2B transactions, the defendant can be sued not only at its domicile Member State but also at the place of performance of contractual obligation. The EU widely expanded the scope of the Internet personal jurisdiction with respect to consumer contracts because a consumer in B2C contracts can sue a defendant not only at the defendant’s domicile but also at the consumer’s domicile. The Brussels Regulation provides that personal jurisdiction over a defendant will be proper if the contract has been concluded with the defendant 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.
With the conclusion of the Brexit, it remains to be seen whether the UK will continue along the same line with the EU in terms of E-commerce and jurisdiction or take a new approach by establishing its own case laws. However, it appears that the UK will continue the strong stance in exercising E-commerce personal jurisdiction because of its aggressive consumer protection policy and of its intent to pursue continuity in following the EU’s approach in E-commerce.
The US courts, in order to exercise personal jurisdiction, first examines whether the defendant had a “minimum contact” with the forum state and at the same time considers the “reasonableness” factors. And the US currently is employing the “targeting” approach regarding E-commerce personal jurisdiction in which the courts review whether the defendant purposefully or deliberately directed his online activity in a substantial way to the forum state.
The “target” approach seems to be a better and fairer approach than the “pursuing or directing” test because first it closely examines the real intent and purposes behind the online business activities of the defendant corporations, and secondly the EU test of “pursuing or directing” activities seems to be so broad in its application that a lot of website activities—although they may not be intentional and deliberate—can be subject to the Internet jurisdiction of the EU which can hamper the E-commerce transactions in the EU market.
Even though the EU recognizes forum selection clauses, it does not allow the forum selection clause in a B2C contract to be enforced unless such agreement is entered into after the dispute arises.
The Korean businesses need to be mindful that the concept of “pursuing or directing” activities toward the EU Member States can be interpreted to be broad, making it difficult to be free from the imposition of personal jurisdiction in B2C transactions. Thus, it is more realistic to make efforts to reduce the lawsuits in a specific jurisdiction that the Korean companies wish to avoid by minimizing any online business activities that can be considered as “pursuing or directing” in the EU.