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INTRODUCTION:

During the past few years, there is a rapid growth in the development of transactions associated with E- Commerce which has emerged as a unique concept with borderless market transactions that engages more than 2 billion people worldwide through internet.[i] However, it is a complicated process which employs various legal issues. The issues which arises in cases of E- contracts is “when” and “where” such contracts shall be concluded, issues of choice of law privacy and intellectual property, etc.[ii]

As the nature of the internet consists of various linked networks, striking jurisdiction with traditional common law and its application has resulted in complexities in identifying the choice of forum and the governing law in the online contracts.[iii]

Thus, the concept of cyber jurisdiction exists which may be defined as[iv]

“Cyber jurisdiction is the extension of principles of international jurisdiction into the cyber space which grants authority and competency to entertain suits”. Therefore, for such issues one must stick to the concept of private international law or conflict of law which is a body of rules and principles for the Courts to consider the online disputes to achieve uniformity related to private individuals. Therefore, to identify the governing law, one must look at the closest connecting factor affecting the parties.

Moreover, to identify choice of law, some countries decide it on the basis of jurisdiction at first instance and then the applicable law based on jurisdiction such as in Europe. In Europe, the jurisdiction is confined to Article 17 Brussels Convention and Article 23(2) of Brussels Regulation which grants the court with exclusive jurisdiction where the parties have agreed to it in writing or if any other durable record shall be considered equivalent to writing with respect to choice of law clause/jurisdiction clause. The US courts have applied the concept of minimum contracts which describes the personal jurisdiction of courts over a foreign defendant where the US Supreme Court developed principle for the states to function with fairness and flexibilities.[v] The other general basis of the determining the jurisdiction is based on the connecting factors and cause of action which maybe on the basis nature of the commercial activity, quality and its impact over the concerned locality and in cases of company.[vi]

According to Indian law, the jurisdiction associated with online disputes comes under the ambit of various provisions. The Code of Civil Procedure lays down basic principles based on the residence of the defendant and place of cause of action under Section 20 of the Code which is indeed a domestic law but can be applied to international transactions as well.[vii] Not only this, Section 13 and Section 44- A of CPC provides for the enforcement of foreign judgments and the same can be enforced in other countries too. [viii] On the other hand, Section 13 of the IT Act provides with the issues relating to time and place of the dispatch of electronic records. Moreover, the provisions under the Contract Act, IPC and The Consumer Protection Act provide remedies to the consumer against seller with respect to choice of forum and governing law.[ix]  The parties can also incorporate arbitration clause in the online contracts to decide an appropriate forum and choice of law to save the risks associated with litigation.

However, such judgments can only be enforced, if passed by reciprocated countries and if it is passed by a non-reciprocated country, then a fresh suit is required to be filed before the court.[x]

Thus, there are various issues associated with E- commerce and to tackle down such issues, the laws have clearly provided with remedies to resolve online disputes.

LITERATURE REVIEW:

The literature review for the present study is as follows:

R.K. Singh[xi] in his book explains the concept of private international law in identifying the law in E- commerce contracts with respect to US, Europe and India. He determines the issues pertaining jurisdiction in forming choice of law with the help of the doctrines and the laws developed by various nations.

Shazanah Khan[xii] analyzes the concept of choice of law in Europe, Malaysia and Singapore. The article talks about various laws and conventions opted by the countries that help the parties to choose a legal system to govern the contract by concluding that EU has the best legal system which protects the consumers from abusive buyers.

Tatina BalaBan[xiii] in her research avers that choice of law in E- commerce contracts is determined on the basis of the connection and the closest factors to the party. The research analyzes the validity of choice of law and jurisdictional issues in expressed and implied conditions in the context of US, Europe and China.

Jyoti Thapa[xiv] in her research analyzes the issues of choice of law with respect to Europe and India. The article avers that Indian courts have applied limited scope of jurisprudence in ascertaining the legal system in E- contracts. Last but not the least, it deals with jurisdictional issues and the laws applied for the enforcement of such judgments.

RESEARCH METHODOLOGY:

The research methodology incorporated for the present study is doctrinal research. The doctrinal research is a library based research which examines the legal concepts and doctrines. The present research is based on secondary data and qualitative in nature. The sources of secondary type of data encompass books, published articles, journals, websites, judgments etc. The author in its research shall employ articles written by various scholars which deal with the concept of choice of law with respect to the issues of jurisdiction. The research shall include books on E- Commerce, IT law written by Indian authors and judgments delivered by various courts related to the present study.

DISCUSSION:

Concept of Choice of Law in E- Contracts:

Formation of E- contracts is an essential requirement in the online transactions in order to save the parties from any uncertainties arising in the future as the parties might be situated in two different countries. The formation of E- contracts incorporates basic requirements of a traditional form of contract but in cases of international transaction, imposing the principles of traditional common law to the borderless transaction is a challenging task.

Open networks cause great difficulty for E- commerce transactions as the buyers and sellers do not have any prior dealings and therefore, it might be difficult to identify the parties.[xv] To solve such issues, the party to the contract specifically includes the clause pertaining to the choice of law and jurisdiction which is governed by the concept of private international law.[xvi] However, the intention to form such clause of choice of law and jurisdiction shall be bona fide in nature and if such intention is not expressly mentioned in the contract, then there can be no inference drawn and in such cases, the court shall make efforts to ascertain the most suitable legal system for the disputed transaction which has the most real connection[xvii].Such clause can be invalidated by the Court if it appears to be ambiguous and unconscionable in nature with respect to substantial and procedural aspects.[xviii]

The concept of private international law raises new complexes for consumer protection which are based on geographical factors, domicile of the parties, place of establishment or the performance, etc. Once, the jurisdiction of borderless transaction is decided, the choice of law of that particular jurisdiction shall be automatically applied in the case. Such connecting factor helps the parties to determine the closest appropriate forum to resolve the disputes. Thus, the main objective of the choice of law is to select a suitable governing law which provides convenience and justice to the parties.  Moreover, the applicability of the modern theory of Conflict of Laws with respect to private international law provides that the court having the jurisdiction of the case must have intimate contact with the disputes of the case.[xix]

Therefore, the issues pertaining to choice of law can be tackled by applying the principles of private international law in international transactions.

Jurisdictional Issues and Online Arbitration Agreements:

In order to determine choice of law, the courts in most of the countries take into consideration the jurisdiction of the parties and then applying the laws of such jurisdiction. In USA, the doctrine of minimum contract is applied in which a person can only be brought before the court if he has a minimum contract and it does not affect the principles of substantial justice. The courts have developed several tests to determine jurisdiction such as ‘effect test’ to identify the impact caused on the parties.[xx] In Europe, Art. 17 of Brussels Convention is applied which provides that if the parties have decided the jurisdiction, then such court shall have an exclusive jurisdiction in the dispute. The English court shall look into the circumstances which are most real with respect to the factors such as expense and convenience, place where the parties reside or carry their business.[xxi]

For determining the governing law in India, the court exercises the jurisdiction based on in personam which should be carefully exercised. Section 20 of CPC, 1908 is taken into consideration coupled with Sec. 3, 4, 5 and 28 of ICA, 1872 in most of the cases. Though it states the jurisdiction must arise in the local limits, however, it can be treated in the cases of private international law. Thus, determining jurisdiction is based on the forums decided by the parties or through the provisions of CPC or with the help of private international law. Considering the enforcement of such judgments, Section 44- A of CPC provides the enforcement of decrees of Indian Courts in the countries notified by CG. Moreover, Sec. 13 of the IT Act resolves the issues of time and place where the electronic record is said to be dispatched when it reaches the computer resource and is not under the control of originator. On the other hand, such records tend to be received if it reaches the place of the addressee.

While dealing with the question of choice of law, an issue with respect to arbitration agreements also arises, this issue came into attention in the landmark judgment by English SC. In E- contracts, where the arbitration agreement contains foreign element then either the governing law of contract or arbitration maybe applied or the law which provides the procedural powers and the conduct of arbitration.[xxii] In English Law, such agreement shall be governed by the law chosen by the parties. In case where the parties fail to express their choice, then the arbitration agreement shall be governed by the closest factor and the governing law present in the contract. However, in India, where there is no choice of law for arbitration, choice of governing law shall be considered to be proper. However, when there is no choice of law for the contract or arbitration agreement, a presumption which is rebuttable in nature may arise that the law of such chosen seat shall be the governing law of arbitration agreements.[xxiii]

Choice of Law With Respect to Private International Law Followed by US, EU and India:

In USA, the choice of law clauses is generally considered to be valid irrespective of unequal bargaining power between the parties which can only be invalidated if it is against public policy having bad faith. It adopts a pragmatic approach where consumers are provided less protection against big business firms. However, such choice of law shall be based on reasonable grounds which are substantive in nature. The law where the contract was performed concluded or the place which had any personal relation between the parties shall be applicable. However, a reasonable ground of choice can also be mentioned by the consumer which may offer any other foreign choice of law.[xxiv] The courts in US first decide the applicable law and then on such basis, the jurisdiction is determined.[xxv]

However, Europe follows its Rome I Regulation where the consumers can challenge the validity of the contract which governs the functioning of the international contracts and identify the applicable law in the disputes. It is a universal law which provides a mechanism to treat the validity and nullity of the contract and identifies the laws on the basis of the place of performance of contract and the rights of the creditors in case of defective performances.

In India, the choice of law is governed on the basis of principles of justice, equity and good conscience which maybe expressed or implied by the parties.[xxvi] In E- contracts, the law shall be applicable on the basis of arbitration clause comprising of jurisdiction set by the parties and n absence of any law, the Indian judiciary relies on the traditional rules of common law. In Re Missori S.S. Co[xxvii], there was an exemption clause which was invalid according to US law but the Indian law accepted it as it was justified in English Law and was not contrary to the contract. The SC even clarified that while dealing with E- contracts based on international transactions stating that any legal system can be taken into consideration even if it is not the part of the contract.[xxviii] The SC in another case stated that the courts must decide the law in accordance with the Indian laws but if it consists of international transaction, the law of foreign element must also be considered for the consideration of justice and public policy.[xxix]

Moreover, most of the international organizations like “Hague Conference on Private International Law UNICTRAL” have provided a guideline that directs the countries to follow a particularistic approach for the legal regulations for online contracts by enforcing private judgments and injunctive relieves for such disputes.

Therefore, the choice of law shall be based on the closest factor which provides business efficiency to both the parties and shall not be contrary to domestic law.

CONCLUSION AND SUGGESTIONS:

E- Commerce is a new mode for the people to conduct their business worldwide. The issue of choice of law is a challenging task with respect to the implementation of a particular law in E- contracts. The international jurisdiction is a challenging task to the jurisdictional powers and sovereignty of a country. These disputes are unique in nature and may block the way of E- Commerce. Therefore, concept of private international law raises three issues such as the choice of forum and law and the problem of judgment enforcement.

After analyzing the choice of law concept followed by various countries, it can be concluded that while deciding the applicable law, the courts take connecting factors into consideration which are based on location, place of performance, etc. However, parties want such laws to be applied on the basis of convenience but such factor cannot resolve the jurisdictional and choice of law issues. Since there is no uniform law, most of the countries have formed their own rules to tackle such situation and function on the theories of traditional contract. Considering the status of India, the courts have delivered several judgments to determine the jurisdictional issues on the basis of the place of buyer and applying the doctrine of minimum contracts.[xxx] The legislations also provides consumer protection for E- Commerce disputes by adoption Consumer Protection Act, 2019.

Thus, there are still ambiguities arising with respect to choice of law in transactions between parties arising out of the internet. Therefore, from the present research it is suggested that as E- Commerce is filled with complexities, it is the duty of the legislature to adapt such changes with respect to international and domestic laws of the country offering strong consumer protection. It should be aware of the new challenges arising from the cyberspace and make independent rules which harmonize with the international convention and agreements. Not only this, most of the consumers are unaware about their rights in online contracts. Therefore, proper sensitization programmes shall be held at school and college levels with respect to IT, Contract and Consumer laws.

[i] Tatiana Balaban, Choice of Law and Jurisdiction in E- commerce Contracts, European Central University, (March 6,2020, 4:15 PM), file:///C:/Users/HP/Downloads/balaban_tatiana.pdf .

[ii] Aashit Shah, Legal Issues in E- Commece, Nishith Desai Associates, (March 5, 2021, 4;12 PM), http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Legal_issues_in_eCommerce.pdf .

[iii] Id.

[iv] Vakul Sharma, Information Technology Law and Practice, 385, (17th Ed., 2011)

[v] International Shoe v. Washington, 1993 AIR 998: 1992 SCR (3) 106.

[vi] Zippo Manufacturing v Zippo Dot Com., 2007 NY Slip Op 27081.

[vii] Waxida Rahman, E-commerce Laws and Regulations in India: Issues and Challenges Article, (March, 6,2021, 5:15 PM), file:///C:/Users/HP/Downloads/E-commerceLawsandRegulationsinIndiaIssuesandChallengesFullPaper-converted.pdf .

[viii] M Ali Nasir, Legal Issues Involved in E-Commerce, (March 7, 2021 4:56 PM), https://dl.acm.org/doi/pdf/10.1145/985610.985607 .

[ix] R.K. Singh, Law Relating to Electronic Contract, 200-212, (2nd Ed, 2016).

[x] Sachin Mishra, Determining Jurisdiction over E-Commerce disputes in India,(March 6, 2021, 5:40 PM), http://docs.manupatra.in/newsline/articles/Upload/FE4BA350-DBEF-49DA-97D4-09E54ED8B813.pdf .

[xi] Spra at Note 9.

[xii] Shazanah Binti Sarwar Khan, Evaluating Issues on Choice of Law in E-Commerce Consumer Transactions in Malaysia, Singapore and Thailand, 35, World Applied Science Journal, 1574, 1575-1576 (2017).

[xiii] Supra at Note 1.

[xiv] Jotika Thapa, Jurisdictional Issues in Cross border e-Commerce Disputes: A Critical Study, (May 5, 2021, 5:16 PM), file:///C:/Users/HP/Downloads/Joshika%20Thapa.pdf

[xv] Aristotle G. Mirzaian, Esquire, Y2K …Who Cares? We Have Bigger Problems:
Choice of Law in Electronic Contracts, ( May 6,2021, 4:12 PM), http://jolt.richmond.edu/jolt-archive/v6i4/article3.html#f33

[xvi] Supra at Note 1.

[xvii] National Thermal Power v Singer Company, 1993 AIR 998, 1992 SCR (3) 106

[xviii] Specht v. Netscape [222] 306 F.3d 17 2d Cir.

[xix] Id.

[xx] Calder v. Jones, 465 U S 783 (1984).

[xxi] Spiliada Maritime Corp v. Cansulex Ltd (The Spiliada)[1987] AC 460

[xxii] Enka v. Chubb,  [2020] UKSC 38.

[xxiii] Supra at Note 17.

[xxiv] William v. America Online Inc., [2201] WL 135825 Mass. Super.

[xxv] UK Essays, E-  commerce and rules of private international law, (May 4, 2021, 5:15 PM), https://www.essay.uk.com/free-essays/international-relations-politics/conflict-of-laws.php

[xxvi]  Vita Food Product Inc v Unus Shipping Co.Ltd, [1939] UKPC 7.

[xxvii] Re Missori S.S. Co, S. S. Co., 48 F. (2d) 115 (C. C. A. 2d, 191)

[xxviii] Modi Entertainment Network & Anr vs W.S.G.Cricket Pte. Ltd, 2003 (4) SCC 341.

[xxix] Satya v. Teja Singh, 1975 AIR 105, 1975 SCR (2) 97

[xxx] World Wrestling Entertainment, … v. M/S Reshma Collection & Ors, 2014 (58) PTC 52 (DEL).

Author Bio

Gauri Sharma is a law student pursuing B.B.A LLB from Symbiosis Law School, Hyderabad and a corporate law enthusiast. She is a thorough academician who wishes to gain experience in the field of Law who has participated in various external moots and ADR competitions. She has various research articles View Full Profile

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