Last week I got a call from the owner of an internet company based in the U.S. I’ll call him “Owner X.”
You see, Owner X was concerned that his company may be the target of a consumer rights lawsuit in the European Union.
Owner X told me that he had an iron-clad forum selection and choice-of-law provision in the contract governing the transaction.
Of course, this provision was drafted to overwhelmingly favor the owner. That is, any dispute arising out of the transaction would be resolved on Owner X’s turf—here in the U.S.
While contractual forum selection and choice-of-law provisions are generally enforceable in the U.S, this is not the case for consumer contracts in the E.U.
Under E.U. E-Commerce Directive 2000/31/EC, consumer contracts in the E.U. may not limit a consumer’s choice of forum or choice of law.
In fact, the rule allows the consumer to sue suppliers in the consumer’s state and under the law of that country.
Without getting into service of process issues, Owner X was not pleased to learn that he may be called to defend a consumer rights lawsuit in the E.U.
So much for that “iron-clad” forum selection and choice-of-law-provision.
In the E.U., anyway.