Legal Risk Management in Electronic Commerce
- Managing the risk of cross-border law enforcement

Author: Jan Trzaskowski
Webdesign: MERE.INFO

Ex Tuto Publishing, October 2005 (ISBN 87-991018-0-7)
www.legalriskmanagement.net

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Preface
1. Introduction
2. The Internal Market

3. Public Law Enforcement
3.1. Applying Foreign Law
3.1.1. Litigation Capacity
3.2. Recognition and Enforcement of Foreign Judgments
3.2.1. Jurisdiction Under International Law
3.2.2. Dual Criminality
3.2.3. Recognition of Criminal Judgments in Europe
3.2.3.1. European Conventions
3.2.3.2. Cooperation Between the Nordic States
3.2.3.3. Mutual Recognition in the European Union
3.2.3.3.1. The 2005 Framework Decision on Financial Penalties
3.3. The 1998 Injunctions Directive
3.4. Cooperation on Public Law Enforcement
3.5. Conclusion

4. Private Law Enforcement
5. Risk Mitigation
6. Conclusions
7. Literature and References

3. Public Law Enforcement

In the previous chapter, fundamental principles of the Internal Market were discussed. It is clear from the previous chapter that enforcement of national legislation on foreign businesses within the Internal Market can easily constitute a restriction of the free movement of goods, services and/or information society services which, however, may be justified.

The purpose of this chapter is to discuss the possibilities in traditional cross-border public law enforcement across borders. Since the state is the law enforcer under public law enforcement, the applicability of Community law is obvious and not subject to a discussion of the direct effect hereof. Community legislation does not bind states which are not part of the Internal Market, but as demonstrated below, the access to carry out public law enforcement from those states is limited. The Business may under such circumstances invoke the principles of freedom of expression which, however, leave states with a wide margin of appreciation in limiting the commercial freedom of expression with a view to regulate professional conduct.


The starting point is that a state cannot take measures on another state’s territory in order to enforce national law. 'Persons may not be arrested, a summons may not be served, police or tax investigations may not be mounted, orders for production of documents may not be executed on the territory of another state except under the terms of a treaty or other consent given'.1 International criminal law is usually divided into issues of substantive law, procedure and enforcement mechanisms.2

Cross-border law enforcement through the judiciary requires either that the state, in which the Business is established, is willing to apply foreign law under a national procedure, or that that state will recognise a foreign judgment, where foreign substantive law is applied. The area of public law enforcement (criminal and administrative law) in this thesis is confined to sanctions including pecuniary penalties and injunctions since those penalties are most likely to be imposed for offences within unfair competition law. The thesis does notably not deal with custodial penalties, disqualification, confiscation, extradition, community service etc.

There are only a few international agreements on mutual recognition of pecuniary penalties, which are presented and to some extent discussed below. The Treaty establishing the European Union provides for a closer cooperation in criminal and administrative matters. At community level, the 2005 Framework Decision on Financial Penalties and the 1998 Injunctions Directive3 are adopted and of particular importance in this context.


3.1. Applying Foreign Law

When a judgment is entered in the offender’s state, actual enforcement can be carried out within the legal system of that state, since states enforce judgments entered by the state’s own courts. The legislation of the Member States on penalties varies widely,4 The range of application (geographical scope of application) of the criminal law must be considered at a national level.5 National standards on the range of application of national criminal law varies from the restrictive principle of territory to more liberal principles allowing application of foreign criminal law. Because the most important purpose of national legislation is to safeguard national interest, the scope of national criminal law is often widened to an extent that allows for conflicts with the criminal code of other states.6

States are likely to only apply national law (lex fori) in matters relating to public law enforcement.7 International law does not impose an obligation to apply foreign law.8 For example, it follows from section 10 of the Danish Criminal Code that the decision concerning the punishment or other legal consequences of the act shall be made under Danish law if the prosecution takes place in Denmark in accordance with rules of jurisdiction in the Danish Criminal Code. If the act was committed outside the territory of the Danish state, but within the territory recognised by international law as belonging to a foreign state, by a Danish national or a by a person resident in the Danish State, the punishment may not be more severe than that provided for by the law of that state.9 This does not prevent a state from considering public law requirements under private law enforcement,10 as dealt with in the following chapter.

The country of origin principle in the 2000 E-Commerce Directive, as described in the previous chapter,11 provides that each Member State shall ensure that the information society services provided by a service provider established on its territory comply with, in questions which fall within the coordinated field, the national provisions applicable in the Member State.12 The country of origin principle applies to both public and private law requirements. It is clear from the provision that the state must apply national legislation, also in criminal and administrative matters, on a business established within its territory and within the scope of the country of origin principle. An obligation which applies regardless of where the activity is directed and no matter if the activity is illegal under the law of the state(s) where the activity is directed.

The Country of origin principle does on the other hand not necessarily impose an obligation on foreign courts to apply the law of the state in which the Business is established. It follows from article 3(2) that Member States may not restrict the freedom to provide information society services from another Member State. This implies that the state may be barred from applying its own law, but not that it is obliged to apply foreign law.


3.1.1. Litigation Capacity

Private persons will normally have litigation capacity in foreign courts. Public authorities, and private organisations may, however, not be correspondingly recognised by foreign courts. The active capacity to bring an injunction for unfair conduct is a matter which must be determined in accordance with the procedural rules of each country. Generally, legal systems recognise any person who takes part in the market, whose interests are damaged or threatened by the action of unfair competition, including professional and consumer associations, when the interests they are safeguarding are damaged.13 Especially public law enforcers, which are dealt with in this chapter, are normally reduced to asking the local authorities, of the state in which the offender is established, to bring proceedings.14 Those authorities may not be likely to take action if the unwanted activity is not unlawful under the law of that state.


3.2. Recognition and Enforcement of Foreign Judgments

Traditional judicial cooperation in criminal matters is normally characterised by a principle of request which implies that one sovereign state makes a request to another sovereign state which the requested state may consider.15 Until recently most criminal codes contained a principle that foreign penal judgments could not be enforced, based on the assumption that the enforcement would be contrary to the sovereignty of states.16 The criminal law of the member states of the Council of Europe is governed, with a few exceptions, by the classical concept of national sovereignty, which means that the effect of judicial decisions does not in general extend beyond the state's frontiers.17 It is generally accepted that sovereign states are not obliged to recognise foreign judgments unless they have agreed to do so.


3.2.1. Jurisdiction Under International Law

States have both legislative jurisdiction and enforcement jurisdiction.18 The enforcement jurisdiction is the power to take executive action in pursuance of or consequent on the making of decisions or rules.19 There is no essential distinction between the legal base for and limits to legislative and enforcement jurisdiction. The latter jurisdiction may be considered as a function of the former, which gives that if a state has legislative jurisdiction, the state will also be allowed to exercise enforcement jurisdiction within its own territory.20 These powers are as a starting point territorial, but a base of extra-territorial jurisdiction rules, which are relevant for determining criminal jurisdiction over foreign natural or legal persons, has evolved within international law.21 The principles of jurisdiction recognised by international law may be subdivided in various manners.

Jurisdiction is generally based on either territory or nationality, and requires a genuine link between the subject matter and the source of the jurisdiction. Jurisdiction should not, unless established by treaty, be considered to be exclusive in the way that only one state can exercise jurisdiction over the same act.22 Six bases of jurisdiction seem to be generally accepted,23 which are 1) subjective territoriality, 2) objective territoriality ('effects jurisdiction'), 3) nationality, 4) protective principle, 5) passive nationality and 6) universality. The purpose of this part of the thesis is not to provide an extensive discussion of the separate bases of jurisdiction, but merely to introduce the principles behind extraterritorial jurisdiction, since such jurisdiction is necessary in the context of this thesis to provide a judgment which may be recognised in the state in which the Business is established. This is also related to the inconvenience imposed on the Business, if it has to defend itself in a foreign state.

The territorial principle is universally recognised, and provides that the courts of the place where a crime is committed may exercise criminal jurisdiction. The territorial principle is recognised to apply in both cases where the crime is commenced in the state but is completed abroad (subjective application) and when any constituent element of a crime is consummated in the forum state (objective application).24 It is the objective application of the territoriality principle ('effects jurisdiction') which is most likely to be applied in the context of this thesis. The effects jurisdiction's connection to the territoriality principle has also been recognised by the European Court of Justice in connection to the competition law laid down in the EC Treaty.25 Other relevant bases of jurisdiction include the passive nationality principle, which provides jurisdiction for acts abroad which are harmful to nationals of the forum and the protective or security principle, which may be applied to exercise jurisdiction over aliens for acts done abroad and which affect the security of the forum state.

The nationality principle provides that jurisdiction can be exercised over extra-territorial acts if the indicted person has the nationality of the forum state. The nationality principle may also be relied upon if the indicted person is a resident of the forum state or have other connections as evidence of allegiance.26 These requirements are not fulfilled in the situations dealt with in this thesis. In some situations, jurisdiction may be justified in matters which can be said to contravene with 'international public policy'.27 This can be in situations where the courts of the state where the crime was committed refuse to prosecute the perpetrator or in situations where the offence is carried out by stateless persons in areas not subject to the jurisdiction of any state. A similar principle of 'universality' is found for crimes under international law such as war crimes.28


It is argued that the separate principles apart from the universality principle are generalisations of numerous legislations and that the principles can be boiled down to a principle of genuine link between the crime and the forum state.29 It should be mentioned that the jurisdiction under criminal law may have consequences in connection with civil claims related to the crime in question which are dealt with under ancillary procedures in the following chapter.30


3.2.2. Dual Criminality

The principle of dual criminality ('double criminal liability') is fundamental in recognition of foreign criminal decisions. It follows from this principle that recognition can only be carried out if the underlying actions are an offence in both the state entering the decision and the state in which recognition is sought. In the 1970 Hague Convention,31 as dealt with below, the principle of dual criminality is brought in by stating that 'the sanction shall not be enforced by another contracting state unless under its law the act for which the sanction was imposed would be an offence if committed on its territory and the person on whom the sanction was imposed liable to punishment if he had committed the act there'.32

A tendency of partially abandoning the principle of dual criminality is found in acts adopted under Title VI (provisions on police and judicial cooperation in criminal matters) of the Treaty establishing the European Union. The first act under these provisions to depart from the principle of dual criminality is the 2002 Framework Decision on the European Arrest Warrant.33 An area that falls outside the scope of this thesis. The approach adopted in this context is interesting since it constitutes an approach towards mutual recognition which is also applied in other areas.34 This approach is pursued in the 2005 Framework Decision on Financial Penalties35 as presented below.36

In this thesis, it is assumed that the Business is complying with the legislation of the state in which it is established. Thus, the dual criminality principle will not be satisfied and recognition of foreign criminal judgments is not likely to be carried out to the extent dual criminality is required. Mutual recognition is less likely to take place in situations where the state entering the judgment is applying extra-territorial jurisdiction and the state in which recognition in sought, is the state of the Business. Except for acts adopted under the Treaty Establishing the European Union, only the Nordic approach seems to depart from the principle of dual criminality in connection with mutual recognition of pecuniary penalties.37


As mentioned in the previous chapter,38 a departure from the dual criminality principle is also entailed in the country of origin principle since it requires a state to apply national law to activities targeted at foreign states even though the activity is not illegal under the law of that state.


3.2.3. Recognition of Criminal Judgments in Europe

A judgment is recognised in the state in which the judgment was rendered, but no state is by default obliged to recognise foreign judgments, since it is found to be contrary to the concept of sovereignty.39 Treaties containing provision on the treatment of foreign penal judgments were introduced in the 19th century, including inter alia a treaty still in force between the Rhine states concerning shipment on the river Rhine.40 Pursuant to the treaty, the Rhine-States41 are recognising judgments from other Rhine-states based on reciprocity and limited to fines. Other conventions have been adopted later, some of which are dealt with below.

A foreign penal judgment may have both negative and positive effect. The negative effect prevents prosecution at the defendant's home court in the same case, whereas the positive effect refers to the measures the home court can or must legally take. The more a state confines the scope of its own criminal law, the more readily it will be to recognise a foreign penal judgment.42 Most states have deliberately avoided to treat the negative and positive effects of foreign penal judgments. Most often, states allow renewed domestic prosecution without recognising foreign penal judgments, though some states have rules that to some (limited) extent exclude renewed prosecution after a valid foreign judgment has been executed.43

One of the most important European conventions on mutual recognition in criminal matters is the 1970 Hague Convention on the International Validity of Criminal judgment,44 which notably is based on the principle of dual criminality. An extensive work under the Treaty establishing the European Union seems to be taking over the stage of providing principles for mutual recognition of criminal decisions, including in particular the newly adopted 2005 Framework Decision on Financial Penalties as dealt with below.


3.2.3.1. European Conventions

The 1970 European Convention on the International Validity of Criminal judgments45 is ratified by 15 of the Council of Europe’s 45 members.46 11 EU Member States have signed47 the convention, but only five have ratified it.48 Numerous reservations have been entered by most of the contracting parties with respect to the convention’s implementation.49 The convention deals with the enforcement of sanctions involving deprivation of liberty, fines, confiscation and disqualifications. Sanctions are only to be enforced upon request from the rendering state and a judgment must not be enforced unless the act for which the sanction was imposed would be an offence if committed on its territory, and the person on whom the sanction was imposed liable to punishment had he committed the act there (the principle of dual criminality).

The 1991 Brussels Convention50 is signed by eight Member States.51 Since it has never been ratified by any of the Member States, the convention is not in force.52 The 1991 Brussels Convention is drafted by the member states of the European Communities in order to strengthen judicial cooperation in view of the creation of a European area without internal frontiers. The potential value of this convention has disappeared in the wake of the ongoing work under the Treaty establishing the European Union.


Article 4 of the 1991 Brussels Convention provides that the transfer of a sentence involving a pecuniary penalty or sanction may be requested where a) the sentenced person is a natural person which is permanently resident in the territory of the administering State or has realisable property or income in its territory or b) the sentenced person is a legal person having its seat in the territory of the administering State or having realisable property or funds in its territory. Transfer of enforcement requires that the judgment is final and enforceable and that the act would constitute an offence within the scope of the convention in the administering state if the act were committed there (dual criminality).53 If the administering state cannot comply with the request on account of the fact that the pecuniary penalty is related to a legal person, the administering state may by virtue of bilateral agreements indicate its willingness to recover the amount under civil procedure.54


The 1968 Benelux Treaty on the Enforcement of judgments in Criminal Matters55 is another European convention which never entered into force.56 This convention is also based on dual criminality.


3.2.3.2. Cooperation Between the Nordic States

In the Nordic States,57 there is a long tradition for cooperation in legal matters. A cooperation agreement58 between those states has lead to the adoption of identical or at least similar rules allowing the authorities of one signatory state to recognise and enforce judgments entered by authorities in other signatory states.59 It is provided, in section 1(1) of the Danish law implementing the agreement,60 that fines imposed in the other signatory states can be enforced in Denmark. Section 2 provides that similar Danish decisions can be enforced in the other signatory states. The agreement is not based on dual criminality, and enforcement is, as a starting point, to be carried out without verification on the substance.61 It goes without saying that public policy considerations may be invoked in exceptional situations. Enforcement is based on request,62 and requires enforceability of the decision in the rendering state.63 The Nordic approach is built upon the geographical proximity of these states, their historical, cultural, legal and linguistic ties64 and their shared political and economic interests.65 Denmark, Iceland, Norway and Sweden have also ratified the above-mentioned 1970 Hague Convention.


3.2.3.3. Mutual Recognition in the European Union

Article 31(1)(a) of the TEU provides that common action on judicial cooperation in criminal matters is to include 'facilitating and accelerating cooperation between competent ministries and judicial or equivalent authorities of the Member States...'.66 Mutual recognition of decisions in criminal matters is not mentioned directly, but in an action plan on how to implement the provisions on freedom, security and justice,67 it is mentioned at point 45(f) that measures should be taken to initiate a process with a view to facilitating mutual recognition of decisions and enforcement of judgments in criminal matters.

The European Council has endorsed the principle of mutual recognition in both civil and criminal matters within the European Union, and has asked the Council and the Commission to adopt a programme of measures to implement the principle of mutual recognition.68 Article III-270 of the draft Treaty Establishing a Constitution for Europe69 provides similarly that judicial cooperation in criminal matters in the Union shall be based on the principle of mutual recognition of judgments and judicial decisions.

The Commission has proposed basic guidelines for mutual recognition of final decision in criminal matters.70 Since mutual recognition71 of criminal decisions requires mutual trust in the concerned foreign states, harmonisation is required to ensure inter alia the rights of the indicted,72 including agreeing to principles as found in the 1950 European Convention on Human Rights in particular articles 5 to 7.73

It is said that the abolishing of the principle of dual criminality is a logical consequence of the principle of mutual recognition, whereby a foreign decision is recognised without review.74 Even though the abolition of dual criminality can be compared to the Internal Market principle, it is argued that this analogy is false, because the Internal Market rules require at least a minimum degree of underlying comparability between the host and home state’s rules, while the abolition of dual criminality is intended to achieve the entirely opposite result and precludes such a comparability test.75


It has been argued that the requirement of dual criminality is only acceptable in the form of the system established within the Internal Market, whereby a certain level of harmonisation or comparability of the substantive law is required before decisions of other Member States can be accepted.76 It should be noted that the internal market principles not always require harmonisation and that there seems to be a trend towards establishing principles of mutual recognition extending further than what is in fact harmonised, as is the case with the country of origin principle in the 2000 E-Commerce Directive.

It was noted that the executing state in principle loses some of its sovereign power over the full control of the enforcement of criminal decisions on its territory,77 and that sovereign states are free to take different views as to what should be criminalised and to what extent in accordance with different cultures and national identities.78 This is not different from the losing of sovereign powers under the principles of the Internal Market, whereby states are limited in the enforcement of national law.


The approach adopted in the 2002 Framework Decision on the European Arrest Warrant79 departs from the principle of dual criminality in certain specified areas, but keeps the principle in connection with other areas.80 Recognition may also be denied where the European arrest warrant relates to offences which a) are regarded by the law of the executing Member State as having been committed in whole or in part in the territory of the executing Member State or in a place treated as such or b) have been committed outside the territory of the issuing Member State and the law of the executing Member State does not allow prosecution for the same offences when committed outside its territory.81

A state is considered to exercise extraterritorial jurisdiction when none of the components of the offence are located on its territory, which avoids obliging a Member State to execute a European arrest warrant for an offence committed entirely on its territory but not classified as such by its own law.82 In the situation dealt with in this thesis, it is clear that a Member State, even though the dual criminality principle is departed from in specific areas, maintains the possibility (but notably not an obligation) to refuse execution. The criterion to be taken into account is the definition of the offence in the substantive criminal law and not the question of the jurisdiction of the state in which execution is requested. This means that execution can be refused under this article only if the offence does not exist in the state in which execution is requested.83


3.2.3.3.1. The 2005 Framework Decision on Financial Penalties

The 2005 Framework Decision on Financial Penalties84 deals with mutual recognition of financial penalties in the European Union. The framework decision applies to final decisions requiring a financial penalty to be paid by a natural or legal person. A decision, imposing a financial penalty, may be adopted either by a court or by an administrative authority, provided that the person concerned was given the opportunity to have the case heard by a court whose jurisdiction includes criminal matters.85 The criminal liability of legal persons is not an accepted concept in all Member States, and Member States are not required to introduce criminal liability for legal persons, since the act also covers administrative liability.86 In the framework decision, the terminology of 'issuing state' and 'executing state' covers the EU Member State in which a decision was delivered and the EU Member State to which a decision was transmitted for the purpose of enforcement respectively.

A financial penalty is an obligation to pay 1) a sum of money on conviction of an offence imposed in a decision, 2) compensation imposed in the same decision for the benefit of victims, where the victim may not be a civil party to the proceedings and the court is acting in the exercise of its criminal jurisdiction, 3) a sum of money in respect of the costs of court or administrative proceedings leading to the decision or 4) a sum of money to a public fund or a victim support organisation, imposed in the same decision. A financial penalty does notably not include orders which have a civil nature and arise out of a claim for damages and restitution and which are enforceable in accordance with the 2000 Brussels Regulation on jurisdiction in and recognition of judgments in civil and commercial matters.87

It is provided in article 3 that the framework decision is not amending the obligation to respect fundamental rights and fundamental legal principles as enshrined in article 6 of the TEU.88 As mentioned above, the framework decision follows the approach of departing the principle of dual criminality for a number of offences listed in article 5(1). The law of the issuing state is to be applied to determine whether the act in question falls under one of the categories listed in article 5(1). For offences not on this list, the executing state may make the recognition and execution of a decision subject to the condition that the decision is related to conduct which would constitute an offence under the law of the executing State, whatever the constituent elements or, however, it is described. This is notably not an obligation.


The list in article 5(1) includes in particular fraud, computer-related crime, racism and xenophobia, illicit trafficking in cultural goods, swindling, racketeering and extortion, counterfeiting and piracy of products, forgery of administrative documents and trafficking therein, illicit trafficking in hormonal substances and other growth promoters, infringements of intellectual property rights and offences established by the issuing state and serving the purpose of implementing obligations arising from instruments adopted under the EC Treaty or under Title VI of the EU Treaty.89


It is important to note that the principle of dual criminality is departed from in obligations arising from the EC Treaty, including those relating to unfair competition law. It should be noted that EC measures do not in practice require criminal liability to be imposed.90

It follows from article 9 that the enforcement of the decision as a main rule must be governed by the law of the executing state in the same way as a financial penalty of the executing state, and that the authorities of the executing state alone shall be competent to decide on the procedures for enforcement and to determine all the measures relating thereto, including the grounds for termination of enforcement. It is emphasised in article 9(3) that a financial penalty imposed on a legal person is to be enforced even if the executing state does not recognise the principle of criminal liability of legal persons.91

The starting point is that the competent authorities in the executing state must recognise a decision which has been transmitted in accordance with the described procedure, without any further formality being required and it must take all the necessary measures for its execution. The requirement applies without a certain maximum penalty for the offence in question.


The European arrest warrant may be issued for acts punishable by the law of the issuing Member State by a custodial sentence or a detention order for a maximum period of at least 12 months or, where a sentence has been passed or a detention order has been made, for sentences of at least four months.92 Concerning the framework decision on the execution of orders freezing property or evidence, the departure of the principle of dual criminality applies only to the listed offences insofar as the offence is punishable in the issuing state by a custodial sentence of a maximum period of at least three years.93


Article 7 provides a list of grounds for non-recognition or non-execution which may be invoked by the competent authority. The list includes the principle of ne bis in idem94 and financial penalties below 70 euros or the equivalent hereof.95 It is clear from the list that the defendant's failure to appear cannot be invoked if the defendant was properly informed.96

An important, in the context of this thesis, ground for non-recognition and non-execution is, similar to the 2002 Framework Decision on the European Arrest Warrant, if the decision relates to acts which are regarded by the law of the executing state as having been committed in whole or in part in the territory of the executing state or in a place treated as such.97 A similar principle is found in the 1970 Hague Convention where enforcement can be refused if the act was committed outside the territory of the requesting state.98 In the Danish implementation of the framework decision, it is made mandatory for Danish courts to refuse recognition if the act was committed in whole or in part on Danish territory, provided the act is not punishable under Danish law.99 It is most likely that the state in which the Business is established will consider the offence to have been committed, at least partially, in that state, which is also in accordance with the territoriality principle.100

If the act in question was not carried out within the territory of the issuing state, the executing state may decide to reduce the amount of the penalty enforced to the maximum amount provided for acts of the same kind under the national law of the executing state, when the act falls within the jurisdiction of that state.101 In the Danish implementation, this requirement is construed to mean that the amount must be reduced to the amount which would normally be applied to similar acts under Danish law.102

This means that an attempt of public cross-border law enforcement, as dealt with in this thesis and under this framework decision, in most cases will leave the possibility of non-recognition. Non-recognition is likely to be applied in situations, such as the one dealt with in this thesis, where the principle of dual criminality is not satisfied. In situations where recognition is provided for under the 1970 Hague Convention or another instrument, states have to recognise decisions according to that convention even though an exemption in the framework decision is applicable.


The 2005 Framework Decision on Financial Penalties does not preclude the application of bilateral or multilateral agreements or arrangements between Member States in so far as such agreements or arrangements allow the prescriptions of this framework decision to be exceeded and help to simplify or facilitate further the procedures for the enforcement of financial penalties.103 This means that other instruments, such as in particular the agreement between the Nordic States, still apply to the extent they provide for a more far-reaching recognition of pecuniary penalties.


3.3. The 1998 Injunctions Directive

The purpose of the of the 1998 Injunctions Directive104 is to ensure that qualified entities may bring proceedings before national courts requiring the cessation or prohibition of any act contrary to particular directives listed in the annex of the directive as transposed into the internal legal order of the Member States and which harms the collective interests of consumers.105 The qualified entities may be either independent public bodies and/or (private) organisations whose purpose is to protect the interests of consumers.106 The 1998 Injunctions Directive may thus apply to both private and public law enforcement as defined in this thesis.

The 1998 Injunctions Directive107 provides certain qualified bodies108 with litigation capacity to seek injunctions in the home court of the offender. The directive builds upon a principle of prior consultation, meaning that the party who intends to seek an injunction is firstly to consult the defendant, and, if prescribed by the enforcing state, also a qualified entity in the state in which injunction is sought. If the cessation of the infringement is not achieved within two weeks after the request for consultation is received, the party concerned may bring an action for an injunction without further delay.109

It follows from article 1(2) that an 'infringement' is any act contrary to the listed directives as transposed into the internal legal order of the Member States. The 1998 Injunctions Directive does, however, not determine the applicable law.110 It is noted that the rules of private international law, with respect to the applicable law normally lead to the application of either the law of the Member State where the infringement originated or the law of the Member State where the infringement has its effects.111 The reference to private international law may be a bit deceptive since it is not unlikely that an injunction is sought under the directive by a public law enforcer based on a provisions punishable under criminal liability.

As mentioned above,112 it is unlikely that a state will apply foreign public law, whereas it is more likely to happen under civil procedure as dealt with in the following chapter.113 In that chapter, it is also established that a number of the qualified entities under the 1998 Injunctions Directive may benefit from the tort forum in order to sue the Business in a foreign court, and not in the court of the Business as provided for in the 1998 Injunctions Directive.

Since most of the activities carried out by the Business fall under the coordinated field of the country of origin principle in the 2000 E-Commerce Directive,114 the courts of the state in which the Business is established is all the more less likely to apply foreign law. It should, however, be emphasised that the choice of law in this context only concerns a harmonised area, and that differences only may occur when a Member State is utilising a minimum clause in one of the listed directives.


3.4. Cooperation on Public Law Enforcement

A number of initiatives have been taken to promote and enhance cooperation between states in order to improve mutual assistance. These initiatives are of a practical nature and do not oblige states to recognise foreign criminal decision or apply foreign criminal law. The reluctance to apply foreign criminal law in combination with the fundamental principle of dual criminality makes it most unlikely that the state in which the Business is established will take actions against the Business if the activity is not unlawful under the law of that state.


A number of agreements have been drawn up, including in particular the 2000 Regulation on Consumer Protection Cooperation,115 the 2000 Convention on Cybercrime,116 the 2003 agreement on mutual legal assistance between the European Union and the United States of America117 and the 2003 OECD Guidelines for Protecting Consumers from Fraudulent and Deceptive Commercial Practices Across Borders.118 The mutual assistance dealt with in these agreement is of a more practical nature and does not oblige states to take actions against activities which are lawful under their national law.


The 1972 European Convention on the Transfer of Proceedings in Criminal Matters119 provides rules for the transfer of proceedings, which could be a situation where the country of destination asks the country of origin to take action against the Business. A transfer of proceedings in criminal matters is a form of international legal assistance, where a state waives its claim to prosecute in order to enable another state to do so instead.120 According to article 6(1), a contracting state may request another contracting state to take proceedings in the cases provided for in the convention. Proceedings may not be taken in the requested state unless the offence in respect of which the proceedings are requested would be an offence if committed in its territory and when, under these circumstances, the offender also would be liable to sanction under its own law (dual criminality).121 Only five Member States122 have ratified the 1972 Convention and five have still not signed it.123


3.5. Conclusion

International law allows for foreign states to regulate and enforce its legislation upon the Business, provided there is a genuine link between the activity and the jurisdiction. The 'effects jurisdiction' is of particular relevance in the context of this thesis. The enforcement of national law must, however, respect the sovereignty of other states, and states may as a starting point not take measures in the territory of other states. In the situations dealt with in this thesis, such measures are necessary and traditional cross-border law enforcement can thus only be carried out with the consent of the state in which the Business is established.

Based on the generally recognised principle of dual criminality, it is highly unlikely that the state in which the Business is established will allow for cross-border law enforcement, when the activity in question is not unlawful in that state. The state of the Business is not likely to accept foreign judgments under public law or apply foreign law under national procedures. These questions are mainly dealt with under national law, and due to the delimitation of this thesis, it cannot be excluded that some states under certain condition may allow for cross-border law enforcement of public law. It depends on the national law of the state in which the Business is established.

The approach adopted by the Nordic Countries departs from the principle of dual criminality, which means that between those states, foreign judgments under public law may be recognised. A trend of departing the dual criminality principle in the European Union was started in connection to the 2002 Framework Decision on the European Arrest Warrant and is also found in the 2005 Framework Decision on Financial Penalties. The latter framework decision departs from the principle of dual criminality within certain areas, but allows for non-recognition if the decision in question relates to acts which are regarded by the law of the executing state as having been committed in whole or in part in the territory of the executing state or in a place treated as such. This means that an attempt of public cross-border law enforcement, as dealt with in this thesis and under this framework decision, in most cases will leave the possibility of non-recognition to be determined by national law, including the implementation of the framework decision.

As demonstrated in the previous chapter, Member States must still observe the free movement of goods and services and the country of origin principle of the 2000 E-Commerce Directive. The country of origin principle in particular, is likely to have the effect, in the situations dealt with in this thesis, that foreign law may not be invoked to the extent it will hinder the free movement of information society services.



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1Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 306.

2Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5 at p. 6.

3Directive 98/27 (19 May 1998) on injunctions for the protection of consumers' interests.

4Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 26.

5In the Lotus case the Permanent International Court of Justice recognised that though the territorial character of criminal law is fundamental, all or nearly all systems of law extend their jurisdiction to offences committed outside their territory, see Publications of the Permanent Court of International Justice, Ser. A, No.10 (1927).

6Dietrich Oehler in Bassiouni, M. Cherif, International Criminal Law, Second Edition, vol 2, Transnational Publishers Inc., 1999, p. 609f.

7Hörnle, Julia, The European Union Takes Initiative in the Field of E-Commerce, JILT 2000 (3), p. 333 at p. 354.

8See Akehurst, Michael, Jurisdiction in International Law, The British Year Book of International Law 1972-73, University Press, Oxford, p. 145 at p. 218f.

9Section 10(2) of the Danish Criminal Code with reference to section 7. See in general Høyer, Gitte, Spencer, Martin and Greve, Vagn, The Danish Criminal Code, DJØF Publishing, 1999.

10Lookofsky, Joseph, International Privatret på Formuerettens Område, 3. udgave, Jurist- og Økonomforbundets Forlag, 2004, p. 14.

11See 2.5.

12Directive 2000/31 (8 June 2000) on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, article 3(1).

13Peidro, L. Marín, Sotomayor, S. Feliu Álvarez De, Giménez, A. Ortega and Sanchez, L. Heredia, Guide on Injunctions in the Electronic Commerce, 7 March 2003, III-6.

14See, however, below in connection to the 1998 Injunctions Directive under 3.3.

15Communication from the Commission to the Council and the European Parliament on Mutual Recognition of Final Decisions in Criminal Matters, COM (2000) 495 final (26 July 2000), p. 2.

16Dietrich Oehler in Bassiouni, M. Cherif, International Criminal Law, Second Edition, vol 2, Transnational Publishers Inc., 1999, p. 618.

17European Convention on the International Validity of Criminal Judgments, Explanatory Report.

18See Akehurst, Michael, Jurisdiction in International Law, The British Year Book of International Law 1972-73, University Press, Oxford, p. 145 and Spang-Hanssen, Henrik, Cyberspace & International Law on Jurisdiction, DJØF Publishing, 2004, p. 243ff.

19Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 298.

20See Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 308f. On enforcement jurisdiction see Spang-Hanssen, Henrik, Cyberspace & International Law on Jurisdiction, DJØF Publishing, 2004, p. 267ff.

21See in general Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 299ff.

22See Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 309f. See similarly Akehurst, Michael, Jurisdiction in International Law, The British Year Book of International Law 1972-73, University Press, Oxford, p. 145 at p. 152.

23See for example Menthe, Darrel, Jurisdiction In Cyberspace: A Theory of International Spaces, 4 Michigan Telecommunications and Technology Law Review, 1998, p. 69, paragraph 6.

24See in general Shaw, Malcolm N., International Law, Fifth Edition, Cambridge University Press, 2003, p. 579ff.

25See A. Ahlström Osakeyhtiö and others v. Commission of the European Communities, joined cases 89, 104, 114, 116, 117 and 125 to 129/85 (27 September 1988), paragraph 18.

26Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 301f.

27Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 303.

28See also in general Reydams, Luc, Universal Jurisdiction – International and Municipal Legal Perspectives, Oxford University Press, 2003.

29See for example Brownlie, Ian, Principles of Public International Law, Sixth Edition, Oxford University Press, 2003, p. 305 with references.

30See 4.2.1.7.

31Council of Europe, European Treaty Series No. 70 (28 May 1970).

32Article 4(1). If the sentence relates to two or more offences, not all of which fulfil these requirements, the sentencing state must specify which part of the sanction applies to the offences that satisfy those requirements (article 4(2)).

33Council Framework Decision 2002/584 (13 June 2002) on the European arrest warrant and the surrender procedures between Member States.

34See for example the Council Framework Decision 2003/577/JHA (22 July 2003) on the execution in the European Union of orders freezing property or evidence.

35Council Framework Decision 2005/214 (24 February 2005) on the application of the principle of mutual recognition to financial penalties.

36See 3.2.3.3.1.

37See 3.2.3.2.

38See 2.5.3.

39See in general on the recognition of foreign penal judgments Dietrich Oehler in Bassiouni, M. Cherif, International Criminal Law, Second Edition, vol 2, Transnational Publishers Inc., 1999, p. 607f.

40The Revised Act of Navigation on the Rhine, 17 October 1868.

41Belgium, Germany, France, the Netherlands and Switzerland.

42Dietrich Oehler in Bassiouni, M. Cherif, International Criminal Law, Second Edition, vol 2, Transnational Publishers Inc., 1999, p. 610f.

43E.g. Denmark, Greece, the Netherlands, Switzerland and England. See Dietrich Oehler in Bassiouni, M. Cherif, International Criminal Law, Second Edition, vol 2, Transnational Publishers Inc., 1999, p. 610f.

44Council of Europe, European Treaty Series No. 70 (28 May 1970).

45Council of Europe, European Treaty Series No. 70 (28 May 1970). The convention entered into force on 26 July 1974.

46As of 11 July 2003: Austria, Cyprus, Denmark, Estonia, Georgia, Iceland, Lithuania, the Netherlands, Norway, Romania, San Marino, Spain, Sweden, Turkey and Ukraine. See http://conventions.coe.int for reservation and declarations etc.

47Austria, Belgium, Denmark, Germany, Spain, Italy, Luxembourg, the Netherlands, Portugal and Sweden.

48Austria, Denmark, Spain, the Netherlands and Sweden.

49Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 34.

50Convention on the Enforcement of Foreign Criminal Sentences, Convention of 13 November 1991.

51Belgium, Denmark, Germany, Greece, Spain, France, Italy and Luxembourg.

52Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 35.

53See article 5(1)(b).

541991 Brussels Convention, article 9(2).

55The Treaty of 26 September 1968 between Belgium, the Netherlands and Luxembourg on the enforcement of judgments in criminal matters.

56Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 37 with references.

57Denmark, Finland, Iceland, Norway and Sweden.

58The Helsinki Agreement between Denmark, Finland, Iceland, Norway and Sweden of 23 March 1962 which replaced a convention between Norway, Denmark and Sweden (8 March 1948) concerning the recognition and enforcement of judgments in criminal matters.

59See in general Green Paper on the Approximation, Mutual Recognition and Enforcement of Criminal Sanctions in the European Union, COM(2004)334 (30 April 2004), p. 38f.

60Lov 1963-05-31 nr. 214 om samarbejde mellem Finland, Island, Norge og Sverige angående fuldbyrdelse af straf mv., som ændret ved L 1986-06-04 nr. 322, L 1996-04-24 nr. 291, L 2000-05-31 nr. 433 og L 2001-04-25 nr. 280.

61L 5 (som fremsat): Forslag til lov om fuldbyrdelse af visse strafferetlige afgørelser i Den Europæiske Union. Fremsat den 6. oktober 2004 af justitsministeren (Lene Espersen), point 2.2.

62Practical issues are dealt with in a Danish circular. See Cirkulære nr. 220 af 16. december 1963, som ændret ved cirkulære nr. 148 af 3. august 1994.

63See section 17 and 18.

64Except for Finland.

65Green Paper on the Approximation, Mutual Recognition and Enforcement of Criminal Sanctions in the European Union, COM(2004)334 (30 April 2004), p. 38.

66See in general Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004) and Communication on Mutual Recognition of Final Decisions in Criminal Matters, COM(2000) 495 (26 July 2000).

67Action plan of the council and the commission on how best to implement the provisions of the Treaty of Amsterdam on an area of freedom, security and justice (adopted by the Justice and Home Affairs Council of 3 December 1998), OJ 1999/C 19/01 (23 January 1999).

68See Tampere European Council (15 and 16 October 1999), Presidency Conclusions, paragraphs 33 to 37.

69Official Journal C 310 (16 December 2004).

70See Communication to the Council and Parliament on Mutual Recognition of Final Decisions in Criminal Matters. COM(2000)495 (26 July 2000).

71Mutual recognition can appear in the form that the state just enforce the foreign decision or it may be required that the state converts the foreign decision to a national decision which is hereafter enforced.

72Mutual recognition of public law decisions might require harmonisation of both substantial and procedural nature. In EU work was initiated in the wake of the Amsterdam Treaty. See Communication from the Commission to the Council and the European Parliament on Mutual Recognition of Final Decisions in Criminal Matters, COM (2000) 495 final (26 July 2000) and EU programme of measures to implement the principle of mutual recognition of decision in criminal matters (Official Journal of the European Communities, C12/10, 15 January 2001).

73Principles on 5) Right to liberty and security, 6) Right to a fair trial and 7) No punishment without law.

74Proposal for a Council Framework Decision on the European arrest warrant and the surrender procedures between the Member States, COM(2001)522 (25 September 2001), p. 16. For another opinion see Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5.

75See for a discussion: Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5 at p. 23. The author states that 'the arguments for mutual recognition in criminal matters by analogy with other EU policies must be rejected as clearly invalid'.

76Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5 at p. 34. See this article for a list of harmonisation initiatives at p. 29.

77Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5 at p. 10.

78Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5 at p. 24.

79Council Framework Decision 2002/584 (13 June 2002) on the European arrest warrant and the surrender procedures between Member States.

80See article 4(1).

81Article 4(7).

82Proposal for a Council Framework Decision on the European arrest warrant and the surrender procedures between the Member States, COM(2001) 522 (25 September 2001), p. 16.

83Proposal for a Council Framework Decision on the European arrest warrant and the surrender procedures between the Member States, COM(2001) 522 (25 September 2001), p. 16.

84Council Framework Decision 2005/214 (24 February 2005) on the application of the principle of mutual recognition to financial penalties. See also Green Paper on the Approximation, Mutual Recognition and Enforcement of Criminal Sanctions in the European Union, COM(2004)334 (30 April 2004), p. 23.

85See article 1(a) and Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 23.

86Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 20.

87Regulation 44/2001 (22 December 2000) on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. See 4.2.1.

88Article 6(1) provides that the Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States. See also 2.7.

89The mentioned offences do not cover all of the exhaustively listed offences in article 5(1). According to article 5(2), the Council may decide to add other categories of offences at any time, acting unanimously after consultation of the European Parliament under the conditions laid down in article 39(1) of the EU Treaty. The Council is to consider, in the light of the report submitted to it pursuant to article 20(5), whether the list should be extended or amended.

90Peers, Steve, Mutual recognition and criminal law in the European Union: Has the Council got it wrong?, Common Market Law Review 41, 2004, p. 5 at p. 31.

91Article 6.

922002 Framework Decision on the European Arrest Warrant article 2.

93Council Framework Decision on the execution in the European Union of orders freezing property or evidence, 2003/577/JHA (22 July 2003), article 3(2).

942005 Framework Decision on Financial Penalties, article 7(2)(a).

952005 Framework Decision on Financial Penalties, article 7(2)(h). A similar requirement is not found in the 1970 Hague Convention and states which means that even smaller penalties have to be recognised, provided the other requirements in the convention are fulfilled.

962005 Framework Decision on Financial Penalties, article 7(2)(g)(ii).

972005 Framework Decision on Financial Penalties, article 7(2)(d)(a).

982005 Framework Decision on Financial Penalties, article 6(1)(g).

99L 5 (som fremsat): Forslag til lov om fuldbyrdelse af visse strafferetlige afgørelser i Den Europæiske Union (fremsat den 6. oktober 2004), section 20(1)(2).

100See 3.2.1.

1012005 Framework Decision on Financial Penalties, article 8(1).

102Section 24. See also point 4.3.4 of L 5 (som fremsat): Forslag til lov om fuldbyrdelse af visse strafferetlige afgørelser i Den Europæiske Union (fremsat den 6. oktober 2004).

1032005 Framework Decision on Financial Penalties, article 18.

104Directive 98/27 (19 May 1998) on injunctions for the protection of consumers' interests. See in general Peidro, L. Marín, Sotomayor, S. Feliu Álvarez De, Giménez, A. Ortega and Sanchez, L. Heredia, Guide on Injunctions in the Electronic Commerce, 7 March 2003, Title II.

105See also Koch, Harald, Non-Class Group Litigation Under EU and German Law, 11 Duke J. of Comp. & Int'l L., 2001, p. 355 at p. 356.

1061998 Injunctions Directive, article 3.

107Directive 98/27 (19 May 1998) on injunctions for the protection of consumers’ interests.

108See Commission communication concerning Article 4(3) of Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers' interests, concerning the entities qualified to bring an action under Article 2 of this Directive, Official Journal C 321/26 (31.12.2003).

1091998 Injunctions Directive, article 5.

1101998 Injunctions Directive, article 2 (2).

1111998 Injunctions Directive, recital 6.

112See 3.1.

113See 4.1.

114See 2.5 and 4.1.3.

115Regulation 2006/2004 (27 October 2004) on cooperation between national authorities responsible for the enforcement of consumer protection laws.

116Council of Europe, ETS 185, Budapest, 23 November 2001. The convention has of 11 July 2003 only been ratified by Albania, Croatia and Estonia which mean that the convention has not yet entered into force. See http://conventions.coe.int.

117Official Journal L 181 (19/07/2003), pp. 34 to 42.

118www.oecd.org/document/56/0,2340,en_2649_201185_2515000_1_1_1_1,00.html.

119European Convention on the Transfer of Proceedings in Criminal Matters, Council of Europe, European Treaty Series - No. 73 (15 May 1972).

120See in general Julian Schutte in Bassiouni, M. Cherif, International Criminal Law, 2d ed., vol 2, Transnational Publishers Inc., 1999, p. 643ff.

1211972 European Convention on the Transfer of Proceedings in Criminal Matters, article 7(1).

122Austria, Denmark, the Netherlands, Spain and Sweden.

123Green paper on the approximation, mutual recognition and enforcement of criminal sanctions in the European Union, COM(2004)334 (30 April 2004), p. 28f.

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