Regulation 'a necessary nightmare'

It is often painful, but regulation remains a cornerstone. It is a standard by which everything can be measured, but in all cases, regulation and its application need to be examined for their potential impact and message.

It is often painful, but regulation remains a cornerstone. It is a standard by which everything can be measured, but in all cases, regulation and its application need to be examined for their potential impact and message.

The identification and application of common standards have consistently proven to be the springboard to further development, allowing synergy between companies, platforms, systems and so on.

Last week, the European Commission published a plan aimed at developing ecommerce in the financial services sector. It is not particularly relevant to the technology sector, but its coverage will have potentially far-reaching implications for any organisation operating in the ecommerce marketplace.

The proposal, a series of measures designed to enhance consumer confidence and protection, includes harmonisation of national consumer and investor protection rules, the establishment of out-of-court redress and the building of trust in internet payments.

One of the key issues tackled is whether cross-border internet transactions should be governed by the rules in the country where the transaction originated or the country where the transaction was completed.

Currently, the laws of the country of a transaction's origin (the location of the business operating on the web) govern any disputes, yet the Commission is recommending that the laws of the consumers' country should now apply in such a dispute.

This move follows the European Union passing a similar law governing jurisdiction in cross-border disputes which allowed consumers to go to court in their own country.

The argument was that the focus on the consumer was essential to help get ecommerce off the ground in Europe, and therefore this new proposal appears consistent with previous precedent.

Unfortunately, these directly contradict several other pieces of existing legislation including the ecommerce directive passed in 2000 which favours the laws in the country of origin.

The proposal is likely to create legal uncertainty for businesses with an ecommerce model which operate in Europe or on a global basis because they could now become subject to national laws which are quite different from each other, and in some cases even contradictory.

During 2001, the Commission will also consider harmonising and ultimately converging the laws of the various countries, paving the way for a country-of-origin approach to work in practice.

This all sounds very good, except ecommerce that is not just European, it is global, and our good friends across the pond continue to maintain the opposing position.

Good regulation must be sensible and realistic and applied effectively.

But the current message to businesses considering a move into the ecommerce marketplace in Europe is 'heads or tails'. It's not the most inspiring message for businesses or consumers alike.