[Federal Register Volume 66, Number 15 (Tuesday, January 23, 2001)]
[Notices]
[Pages 7491-7492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2046]


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FEDERAL TRADE COMMISSION


Public Roundtable on Dispute Resolution for Online Business-to-
Consumer Contracts

AGENCY: Federal Trade Commission.

ACTION: Notice announcing Public Forum.

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SUMMARY: The Federal Trade Commission (the ``FTC'') will hold a 
roundtable discussion on (1) recommendations by business and consumer 
groups on alternative dispute resolution (ADR) for online consumer 
disputes; and (2) a proposed provision in the Preliminary Draft 
Convention on Jurisdiction and Foreign Judgments in Civil and 
Commercial Matters being negotiated by the Hague Conference on Private 
International Law that provides special jurisdiction rules for 
international consumer contracts.

DATE AND LOCATION: The roundtable will be held on Tuesday, February 6, 
2001, beginning at 9:30 a.m., at the Federal Trade Commission, Room 
432, 600 Pennsylvania Avenue NW., Washington, DC. Registration is not 
required. Requests for participation as a panelist should be directed 
to Maneesha Mithal, Attorney, Bureau of Consumer Protection, Federal 
Trade Commission, phone: (202) 326-2771, facsimile: (202) 326-3392, e-
mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Maneesha Mithal, Attorney, Bureau of 
Consumer Protection, Federal Trade Commission, phone: (202) 326-2771, 
facsimile: (202) 326-3392, e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The electronic marketplace, which has opened the door to 
international business-to-consumer transactions on an unprecedented 
scale, provides enormous benefits. For consumers, it offers 24-hour 
access to sellers around the globe; for businesses, it offers access to 
a worldwide market. For both business and consumers, it offers 
tremendous efficiencies. This online marketplace also has created 
challenges; among them, how best to resolve disputes involving cross-
border consumer transactions. Consumers must be confident that they 
will have access to redress for problems arising in the online 
marketplace. In many instances, consumers face unique difficulties in 
resolving problems arising out of online transactions, such as language 
and cultural differences, inconvenience and expense that may result 
from the distance between the parties, and problems with litigation, 
including difficulties in establishing jurisdiction, determining the 
applicable law, and enforcing judgments. In addition to facing similar 
burdens, businesses must determine where they could be subject to 
jurisdiction and which laws might apply to them, which could 
significantly increase the cost of doing business online.
    The FTC has held two workshops on these and related issues. The 
first, in June 1999, explored questions related to core consumer 
protections; online disclosures that consumers need to feel safe when 
shopping online; jurisdiction; applicable law; and the roles of the 
private sector and international bodies in addressing consumer 
protection issues. The findings from this workshop informed the OECD 
voluntary Guidelines on Consumer Protection in Electronic Commerce, 
which were issued in December 1999. The Guidelines encouraged industry, 
government and consumers to work together to develop inexpensive, easy-
to-understand and acceptable ADR mechanisms. The FTC's Bureau of 
Consumer Protection issued a report on this first workshop in September 
2000, which can be found at http://

[[Page 7492]]

www.ftc.gov/bcp/icpw/lookingahead/lookingahead.htm>. The second 
workshop, on ADR for online consumer transactions, was sponsored 
jointly with the Department of Commerce in June 2000. A summary of that 
workshop can be found at http://www.ftc.gov/bcp/altdisresolution/index.htm>.
    A consensus emerged at these workshops about the need to develop 
and implement ADR programs to resolve online consumer disputes. 
Outstanding issues include whether ADR programs should be governed by 
minimum legal standards for fairness and effectiveness, whether ADR 
programs should be binding and/or mandatory for the consumer, whether 
results of particular ADR programs should be confidential, and what 
rules of decisions should apply to ADR programs. At our workshops, 
certain private sector organizations, including the TransAtlantic 
Consumer Dialogue and the Global Business Dialogue on Electronic 
Commerce, have made specific recommendations on these issues.
    Although ADR programs will reduce the number of online disputes 
that result in litigation, some litigation is inevitable. Such cases 
will likely raise the question of which court has jurisdiction over a 
dispute. Currently, in cases involving contractual disputes, U.S. 
courts generally allow consumers to sue out-of-state businesses in 
consumers' home courts; however, in some domestic consumer contract 
cases, courts have upheld choice-of-forum clauses designating the 
business' home court as the applicable forum. It is unclear how U.S. 
courts would treat a clause designating a foreign forum in a consumer 
contract, as U.S. courts have not directly addressed this issue.
    For several years, FTC staff has expressed concerns about the use 
of choice-of-forum clauses in consumer contracts concluded over the 
Internet. At the same time, FTC staff recognizes industry's legitimate 
concerns about the potential for increased costs associated with 
litigating disputes around the world.
    The Preliminary Draft Convention on Jurisdiction and Foreign 
Judgments in Civil and Commercial Matters, which is currently being 
negotiated by the Hague Conference on Private International Law, offers 
one possible international resolution of this jurisdiction issue. The 
Convention, if ratified, would create jurisdictional rules governing 
international lawsuits and provide for recognition and enforcement of 
judgments by the courts of signatory countries. Article 7 of the draft 
Convention contains jurisdiction rules for international consumer 
contracts. It provides that:
    1. A plaintiff who concluded a contract for a purpose which is 
outside its trade or profession, hereafter designated as the consumer, 
may bring a claim in the courts of the State in which it is habitually 
resident, if
    (a) The conclusion of the contract on which the claim is based is 
related to trade or professional activities that the defendant has 
engaged in or directed to that State, in particular in soliciting 
business through means of publicity, and
    (b) The consumer has taken the steps necessary for the conclusion 
of the contract in that State.
    2. A claim against the consumer may only be brought by a person who 
entered into the contract in the course of its trade or profession 
before the courts of the State of the habitual residence of the 
consumer.
    3. The parties to a contract within the meaning of paragraph 1 may, 
by an agreement which conforms with the requirements of Article 4, make 
a choice of court--
    (a) If such agreement is entered into after the dispute has arisen, 
or
    (b) To the extent only that it allows the consumer to bring 
proceedings in another court. For disputes arising from cross-border 
consumer contracts, the court in the consumer's home country will have 
jurisdiction over the foreign business, regardless of the court 
designated in a choice-of-forum clause.
    At this point, it appears that significant competing policy 
interests are involved, which warrant further study of Article 7.

The Public Forum

    The morning discussion will focus on recommendations on ADR for 
online consumer transactions proposed by the TransAtlantic Consumer 
Dialogue and Global Business Dialogue on Electronic Commerce. The 
purpose of this session is to foster a dialogue between business and 
consumer groups and work toward finding common ground on outstanding 
issues related to ADR.
    The afternoon discussion will focus on Article 7 of the Preliminary 
Draft Hague Convention as it relates to cross-border business-to-
consumer disputes arising from online transactions. The purpose of this 
session is to inform U.S. Government views on Article 7 of the 
Preliminary Draft Hague Convention in preparation for several upcoming 
meetings, including an electronic commerce experts committee meeting in 
Ottawa, Canada at the end of February, and the upcoming two-part 
Diplomatic Conference during 2001-02 to finalize the draft Convention.

Related Documents

    For further information on these issues, please refer to the 
following documents: FTC Bureau of Consumer Protection Report, Consumer 
Protection in the Global Electronic Marketplace: Looking Ahead 
(September 2000) (located at http://www.ftc.gov/bcp/icpw/lookingahead/lookingahead.htm>) FTC Bureau of Consumer Protection Report, Summary of 
Public Workshop: Alternative Dispute Resolution for Consumer 
Transactions in the Borderless Online Marketplace (November 2000) 
(located at http://www.ftc.gov/bcp/altdisresolution/summary.htm>) 
TransAtlantic Consumer Dialogue Recommendations on Alternative Dispute 
Resolution (February 2000) (located at http://www.tacd.org/ecommercef.html#adr>) Global Business Dialogue on Electronic Commerce 
Recommendations on Alternative Dispute Resolution (September 2000) 
(located at http://www.gbde.org/adr2000.html>) Hague Conference on 
Private International Law, Preliminary Draft Convention on Jurisdiction 
and Foreign Judgments in Civil and Commercial Matters (located at 
http://www.hcch.net/e/workprog/jdgm.html>)

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 01-2046 Filed 1-22-01; 8:45 am]
BILLING CODE 6750-01-M