Court Ruling of the Higher Regional Court in Hamburg (Oberlandesgericht) of 9 February 2004.
This case concerns a Dutch company’s internet offer, against whom a German company filed for a preliminary injunction at the Regional Court of Hamburg. The Dutch company sold equipment used for biometrical measurements via its website. The offer was advertised in English. A German competitor claimed that the advertisement was contrary to German “Unfair Competition” laws, as the advertised equipment did not have the CE-certification required by Dutch law. The defendant, on the other hand, argued that the equipment did not require such certification as it was advertised for use by research institutes only and it was made clear that the system was not to be used for diagnostic purposes or treatments.
The crucial question was what law would apply to such a cross-border offer. To our knowledge, this is the first German case published where the so-called “Country of Origin Principle” has been applied.
What is the “Country of Origin Principle”?
Art. 3(2) of the E-Commerce-Directive 2000/31/EC (the “Directive”) provides that Member States shall not “restrict the freedom to provide information society services (as defined in Directive 98/34/EC as amended by Directive 98/48/EC) from another Member State”. At the same time Art. 3(1) of the Directive stipulates that each Member State shall ensure that the service providers established in its territory comply with the national provisions applicable in that State. This so-called “Country of Origin Principle” is aimed at facilitating the provision of cross-border teleservices within the EU. It is sufficient for the providers of such services to comply with their local laws, i.e. even if they sell their products to customers in another EU country, they need not check whether they comply with the laws of that other EU country as well.
The practical use of the Country of Origin Principle (now implemented in the various national laws) has been, and still is, highly debated. For one thing, it remains unclear how to, technically, apply this principle considering that recital 23 states that the Directive “neither aims to establish additional rules on private international law relating to conflicts of law nor does it deal with the jurisdiction of courts”. Conversely, it is questioned whether local courts would not be overstrained by the application of foreign laws when it comes to preliminary injunctions. Such a review of foreign law is required if a claim is filed against a service provider that is established in another EU Member State. According to the Country of Origin Principle, the courts may not, in general, apply a stricter local law if the law in the provider’s country of domicile is more liberal. There are exceptions such as data protection laws, gambling and unsolicited e-mails. Finally, the concept itself has been criticized for “discriminating” local service providers. This is a particular issue in Germany, as German Unfair Competition laws tend to be quite strict compared to other EU Member States. For instance, as a result of this discussion in Germany, the German Laws on Rebates and the Ordinance on Bonuses were abolished, as both laws contained concepts not known in most other Member States.
Application of the Country of Origin Principle by the Higher Regional Court of Hamburg
According to German private international law, the German law on unfair competition generally applies where the infringement takes place in Germany (lex loci delicti comissi). As internet offers can be accessed from anywhere in the world, this law is regularly applied. Even though prior case law tried to narrow this down to internet offers that are “directed” towards the German market, (for instance because the product is sold in Germany, the website is in German etc.), we are not aware of a case where the courts found that German law would not apply.
In this case the Higher Regional Court did not expressly mention the Country of Origin Principle and so it is surprising that the court decided the case on Dutch law alone. The German competitor provided the court with the relevant Dutch law (the Besluit Medische Hulpmiddelen) and literature, which the court found to be sufficient to prove, prima facie, that the advertising would also be prohibited in The Netherlands. Dutch law provides that “medical products” may not be kept or delivered unless CE-certified, the exception being the use for testing of the equipment. The Dutch law does not define the term “medical product” and since it is a direct implementation of EU Directive 93/42/EC, the court reverted to the definition provided by that Directive. It then concluded that the equipment was “medical equipment” as defined by Directive 93/42/EC and that the advertising was misleading as it was not clear on the fact that the equipment could only be used for a limited time for testing and not for diagnostic purposes.
It is interesting that the court, even in a preliminary proceeding, did not hesitate to apply foreign law. Further, it felt competent to interpret the law by itself, since no Dutch precedent existed. In doing so the court ignored a statement that the Dutch Minister of Health had written to the defendant’s in to which he stated that the disclaimer on the website “for clinical testing only” was sufficient to comply with the law.
The decision indicates that we will see more and more cases in the future where national courts will apply foreign law due to the Country of Origin Principle. However, it cannot be ignored that the case in hand was a rather simple one, as the relevant Dutch law provisions were readily available and most of the legal interpretation could be derived from EU law. The application of the Country of Origin Principle will be a much more difficult task where a foreign legal provision must be applied and the judge does not feel competent to apply it in a preliminary proceeding.