Back to top
Article

www.interdicts-direct.com?

1 April 01

Concerns about the workability of the Injunctions Directive

by Paul Motion

Silicon Valley. Silicon Glen. Kingston-upon-Thames. Hang on a minute …?

Well it may not be the centre of the universe but the Crown Court at Kingston-upon-Thames this week became the first court in Britain to accept criminal pleas by way of e-mail. This is just another sign that the courts are inching towards a more effective embrace of technology. In Scotland, the Commercial Court of the Court of Session will accept the lodging of Pleadings, Minutes of Amendment, and other steps of process by e-mail. Is it pushing the bounds of credibility too far to suggest that in future we might see ex parte applications such as interdicts and appointments of Provisional Liquidators submitted by e-mail? The Court of Session caveats register is already held in a database and therefore cross checking could become automated. Thinking about it, why not have just one, national, caveat database? As to e-mail applications, the courts could prescribe the architecture they required: pleadings in Word format; supporting documentation scanned into PDF files; and a limit on e-mail size to encourage the use of compression media such as WinZip. All this would need to be subject to proper procedures for authenticating the identity of the sender and verifying the integrity of the materials transmitted. However, “secure courier” type softwares already exist [see www.despatchbox.com, for example] that are capable of achieving such results and in addition providing an audit trail from start to finish of the transmission of any message.

The reason this may become important is the extended classes of party who will shortly become entitled to apply to the courts for interim interdicts under the “Injunctions Directive”. [Directive 98/27/EC (19 May 1998) on Injunctions for the Protection of Consumers interests]. The purpose of the directive is to bring all member states into line in relation to protecting the collective interests of consumers as enshrined in various existing directives.

The directive requires member states broadly to make available court remedies comprising (a) an order preventing or requiring the “Stop” of an infringement; (b) a publication of a decision or statement addressing the issue of the infringement and (c) an order for payment of a fixed daily amount to the public purse if the Defender fails to comply.

What is an infringement? This is defined as an act contrary to the various misdemeanours listed in the annex to the directive. However, the main areas of interest concern consumer credit, purchase of timeshares, and package holidays.

Title to sue is conferred by Article 3 of the directive upon independent public bodies responsible for protecting consumer interests, or organisations whose purpose is to protect consumers’ interests. Publication of a list of qualified entities (on the basis of information provided by member states) is awaited from the Secretary of State.

The Electronic Commerce Committee and the Consumer Law Committees of the Law Society of Scotland, as well as the Scottish Legal Group of E Centre UK have all raised concerns with the DTI about the regulations that have been drawn up to implement the directive. These are the Stop Now Orders (Injunctions Directive) Regulations 2001. Any Qualified Entity prescribed by the Secretary of State will have power under an amended section 35 of the Fair Trading Act 1973 to bring proceedings for infringement of various community directives. The qualified entity is supposed to try and resolve matters with the alleged infringer before going to court. However, there is a derogation from this requirement for consultation “where the Director of Fair Trading directs otherwise”. The draft orders do not say how or in what circumstances this derogation may be exercised. It is not clear what the legislature’s intention is in this respect. Such uncertainty needs to be clarified as soon as possible.

Following consultation (if this takes place) the Qualified Entity can go to court for a Stop Now Order against whichever miscreant business is involved. The court may make a finding that there has been an infringement and require the cessation of or prohibition of certain conduct. What does this mean in practice? Well, it seems quite likely that for example the relevant business may have committed to purchasing advertising space or air time in relation to the products concerned. So a Stop Now Order could have considerable knock-on effects if the conduct is prohibited forthwith, as effectively the business would require to cancel its advertising, presumably attracting substantial cancellation penalties or a claim for damages for breach of contract.

This prospect may not matter quite so much if the business has the opportunity to be heard before the Stop Now Order is made. However, the regulations as drafted afford no reassurance that this will be the case. Pursuant to paragraph 7 of schedule two of the draft regulations the Court must act with all due expediency and may make an interim order “where it would grant an interim injunction (or in Scotland an interim interdict) to a public authority seeking to enforce the law where it has power to do so”. Interim interdicts in Scotland are often granted ex parte so by extension it would appear that this is intended to be the case with interim Stop Now Orders.

All three Committees referred to above have submitted to the DTI that amendments are required to both the Rules of Court of Session 1994 and the Sheriff Courts (Scotland) Act 1907, so as to make it expressly clear that a Caveat directed towards gaining advance notice of ex parte applications for interim Stop Now Orders are both permissible and competent. Ideally, the rules should provide that if a Caveat is activated, the defending party must be heard on the application for a Stop Now Order and that any such hearing should occur not less than 24 hours after activation of the Caveat. Further, the draft Regulations envisage that Stop Now Orders can be granted ex parte in both the Sheriff Court and the Court of Session. The Law Society Committees felt that cross border or international matters ought to be dealt with in the Court of Session. By implication therefore, if a Stop Now Order was sought to prevent activity or advertising on a website, the Court of Session would have exclusive jurisdiction to deal with the matter.

The submission to the DTI on behalf of E Centre UK went somewhat further and flagged up the issue that consumer groups likely to be interested in applying for Stop Now Orders were primarily accountable to their members and not to the affected business. The submission noted that there were no provisions in the draft regulations concerning payment of damages for unjustified or oppressive Stop Now Orders.

The DTI is now considering the submissions it has received, though once again the period allowed for consultation on the draft regulations was dismally short (6-20 March 2001).

Paul Motion is a partner with Ledingham Chalmers Edinburgh