Consumer Measures Committee
c/o David Clarke
Office of Consumer Affairs
Industry Canada
Room 911A, CD Howe Bldg
235 Queen St.
Ottawa, Ont. K1A 0H5
Dear Mr. Clarke:
Comments on “The Determination of Jurisdiction in Cross-border Business-to-Consumer Transactions”
Thank you for the opportunity to comment on this important issue, as set out in the above-titled consultation paper. PIAC is a federally incorporated non-profit organization with members and clients from across the country. PIAC has been representing the residential consumer interest in marketplace issues for over 25 years. We have been particularly involved in consumer protection issues arising from the emerging online marketplace, both nationally and internationally. In particular, we have been actively involved, on behalf of Consumers International as well as ourselves, in the Hague Conference negotiations to complete an international Convention on Jurisdiction in cross-border commercial transactions.
PIAC’s position statement of February 2001 on the preliminary draft Hague Convention is attached, and is also posted on the PIAC website at Also attached is the Consumers International position statement on point.
We have reviewed the consultation paper and offer the following comments.


The proposed rules constitute an appropriate basis for a workable regime for determining applicable law and forum in cross-border litigation between consumers and businesses – one that strikes a fair balance between the interests of consumers and businesses. However, they fail to provide adequate certainty in the case of online merchants who take no steps to limit the jurisdictions in which they contract with consumers. Such certainty can and should be achieved through amendments that clearly place the onus on online businesses to take reasonable measures to limit the jurisdictions in which they conduct transactions, if they wish to limit their exposure to certain legal systems.

Underlying Principles

It is important that any rules regarding jurisdiction reflect the reality that consumers (both offline and online) suffer from tremendous information asymmetries and unequal bargaining power vis-à-vis sellers. It would be unrealistic and unfair, for example, to establish rules based on the presumption that ordinary consumers read, appreciate, and agree to contractual clauses specifying applicable forum and law in the case of disputes, every time they transact with businesses. In fact, consumers have no choice in the matter, as they are presented with non-negotiated “take it or leave it” terms of contract, drafted by the business in the business’s self-interest. For this reason, it is essential that rules be established to limit the ability of businesses to restrict by contract consumer rights to legal redress.
It is also important to recognize the asymmetries between consumers and businesses in terms of financial ability and incentive to pursue cross-border litigation. As repeat players, businesses have a strong incentive and financial interest in pursuing cross-border litigation with consumers in order to ensure favourable precedents, or to avoid unfavourable precedents. On the other hand, individual consumers rarely have the time, energy or financial resources to pursue litigation, even where they have a strong case and even where the dispute is within their own jurisdiction. If legal redress is to be made available to ordinary consumers in any practical sense, it must be available via their own courts. Similarly, if consumer protection laws are to be effective, they must be available to consumers who transact from within the jurisdiction in question.
Choice of forum and choice of law clauses in consumer contracts, which clauses have the effect of limiting the consumer’s right to redress, should never be enforceable. Like other “fine print” in standard form contracts, such clauses are invariably imposed on unwitting consumers. They are not the result of conscious negotiation between two relatively equal parties. The only “choice” involved in such clauses is that of the business. No one, least of all the business using such clauses, expects the ordinary consumer to address her mind to such clauses at the time of the transaction. No one should therefore expect consumers to be bound by such clauses.
Even where such a clause is brought to the attention of the consumer at the time of the transaction, it is unfair and unrealistic to expect the consumer to appreciate its implications. Choice of jurisdiction and law in the case of disputes cannot be considered a true choice by the consumer unless it is made after the dispute has materialized, when the consumer can fully understand and appreciate its implications.
Will adoption of the proposed rules as general principles provide guidance and greater legal certainty for online consumer transactions conducted within Canada?
It is unclear what is meant by “adoption of the proposed rules as general principles” (emphasis added). Certainly, adoption of these rules would provide some guidance and greater legal certainty for cross-border consumer transactions within Canada. Specifically, the rules regarding applicable law and forum would be clear in the case of offline transactions, and online transactions where the business either took reasonable steps to avoid transacting with consumers in a given jurisdiction, or actively sought to conclude transactions with consumers in the other jurisdiction.
However, the rules would not be clear in the case of online merchants who neither actively solicit business in the consumer’s jurisdiction, nor actively seek to avoid concluding transactions in the consumer’s jurisdiction. Most commercial websites currently fall into this category: they neither actively target specific jurisdictions, nor seek to avoid their geographic exposure. It is highly desirable, therefore, that the rules provide more clarity as to how such cross-border transactions with such online businesses would be treated.

Would the application of the rules work in the offline environment?

PIAC submits that these rules would work well in the offline environment, where the location of business solicitations can be more easily determined.
Would the rules assist in ensuring that transactions on the Internet are governed by consistent principles – leading to predictable results regardless of the jurisdiction in which a particular buyer or seller resides?
As noted above, the rules would apply in a relatively straightforward manner in cases where the business is either clearly targeting a given jurisdiction or clearly attempting to avoid dealing with a given jurisdiction. However, they would not provide clear guidance in the case of online businesses who neither clearly target nor seek to avoid their geographic exposure. As the majority of online businesses currently fall into this category, it would be preferable if the rules provided more guidance in such cases.
The proposed rules center around whether or not the company engaged in “a solicitation of business in the consumer’s jurisdiction”. Where the vendor “clearly demonstrates that it took reasonable steps to avoid concluding contracts with consumers resident in a particular jurisdiction, it is deemed not to have solicited business in that jurisdiction”. However, where the vender cannot so demonstrate, a determination must be made as to whether it solicited business in the consumer’s jurisdiction.
Assuming that the vendor conducts no advertising other than on its website, but makes its website available to anyone accessing the Internet, and concludes transactions with consumers from a given jurisdiction without making reasonable efforts not to do so, is the vendor “soliciting business” from consumers in that jurisdiction? In other words, does mere website advertising, combined with actual transactions where no reasonable effort is made to avoid such transactions, constitute “soliciting business” under these proposed rules?
In the international context, language and currency would no doubt be relevant factors in a determination of whether the website solicited business in the consumer’s jurisdiction. However, in the Canadian context, there is only one currency, and there are bilingual residents in all provinces. Therefore, neither of these factors would be helpful in determining how the rule would apply.
Any statements by the online vendor suggesting that it does business in the jurisdiction in question would clearly be relevant, but such statements may not exist.
The rules as currently drafted provide little guidance to businesses or consumers in such a scenario. Greater certainty would be achieved by defining the term “solicitation of business”, so as to clearly include the situation posited above (i.e., passive website advertising combined with failure to meet the “due diligence” test set out in s.2 of the choice of forum rules). Thus, the onus would be on businesses to “de-target”- i.e., to take reasonable steps to avoid transacting in those jurisdictions they wish to avoid.
Such an approach is consistent with the principles set out above (asymmetry of information, incentives, and bargaining power). It is also consistent with the rule as drafted, which establishes a “de-targeting” test as a due diligence defence for businesses.
It is important to note that online businesses can easily restrict their geographic exposure. Reasonable steps to avoid such exposure include:

  • clear and conspicuous notices re: limits to geographic availability;
  • a requirement that consumers select the jurisdiction from which they are contracting;
  • the use of technological measures to block transactions with certain jurisdictions;
  • refusal to send goods to addresses in certain jurisdictions; and
  • refusal to deal with consumers whose address is in certain jurisdictions.

A consumer who intentionally or recklessly misrepresents her jurisdiction, in order to circumvent reasonable efforts by a business to limit its exposure, would not be able to benefit from the jurisdictional or applicable law provisions in these rules.

Suggested Revisions

For the above reasons, PIAC suggests that the proposed rule should include a definition of “solicitation of business” that includes all forms of advertising, including passive online advertising via websites.
Such a definition would clarify the rules for both businesses and consumers in the many situations where there is neither any clear “targeting” nor any clear “de-targeting”. It would reduce unnecessary and costly litigation, and would prevent the development of conflicting jurisprudence. It would place the onus on the party most able to bear such onus, by encouraging online businesses to decide which jurisdictions they are comfortable doing business in.
Businesses will no doubt argue against such a rule on the basis that it will reduce the benefits of B2C electronic commerce. Consumer groups, representing the primary intended beneficiaries of such commerce, have however consistently and unanimously taken the position that effective redress is more important to them than greater choice of products and services online. There is substantial choice in the online marketplace already; e-commerce even within a given jurisdiction has substantially increased the options available to consumers. Encouraging businesses to limit their geographic exposure to those jurisdictions in which they are comfortable being subject to consumer protection laws and courts is desirable, from the perspective of consumers.
In addition to the above issue, PIAC would like to mention two minor drafting issues. First, re: choice of forum rules, s.1(b) refers only to the vendor, and does not also specify a vendor’s agent (similar language exists in s.2(b) of the rules re: choice of law). Does the term “vendor” implicitly include agents of the vendor? If there is any doubt about this, the rule should specify “vendor or its agent”, such that the clause reads:
1. In circumstances where:
(b) the consumer’s order was received by the vendor or its agent in the consumer’s jurisdiction; or…..
Second, s.4 of the proposed rules re: choice of forum adopts the language of the Brussels regulation, which is unfortunately unclear on a key point. Specifically, section 4(b) could be read to permit contracting out of the consumer’s right to access her own court system, when this is not the intention. This could be clarified by replacing the term “other than” with the term “in addition to”, so that the clause reads:
“4. The provisions of section 1 may be varied by agreement only if the agreement:
…(b) allows the consumer to bring proceedings in courts in addition to those provided for in section 1.”
Again, we appreciate the opportunity to comment on these proposed rules, and welcome any further consultation you may wish to undertake on this important issue.
Yours truly,
original signed
Philippa Lawson
Senior Counsel