Litigation Committee conference session, Buenos Aires, May 2023: Hot topics in e-commerce

Kosuke Tsunashima
Anderson Mori & Tomotsune, Tokyo

On 4 May 2023, the IBA’s Litigation Committee held an interactive session which touched on various topics involving e-commerce. The panel was chaired by Andreas Frischknecht of Chaffetz Lindsey acting as moderator along with experts from different jurisdictions, namely Karina Goldberg (Attorney-at-law, Ferro Castro Neves Daltro & Gomide Advogados, São Paulo), Antoine Laniez (Attorney-at-law, NautaDutilh, Luxembourg City), Francisco Javier Muñoz (Legal counsel, Mercado Libre, Buenos Aires) and Lucinda Orr (an employed barrister with Enyo Law, London). 

Francisco Javier Muñoz initiated the discussions by describing how e-commerce had developed in Argentina in the last three to four years. Mr. Muñoz underlined that the recent rapid growth of e-commerce was linked to the Covid-19 pandemic, noting the importance for businesses to prepare for disputes stemming from such a new business model. Building on this point, Mr. Muñoz recommend resorting to artificial intelligence tools, such as chatbot. That being said, Mr. Muñoz added that the impact of the growth of e-commerce in Latin America had remained minimal, the rationale behind this observation being that e-commerce is not yet predominant overall, with online service providers having only captured 15% of market share so far, against physical marketplaces accounting for the remainder. 

The session then moved on to address current legal issues involving e-commerce. Karina Goldberg first introduced procedural issues arising in the context of cross-border consumer litigation in Brazil. According to Ms. Goldberg, Brazilian courts have taken a consumer-protective approach by (i) recognizing personal jurisdiction in Brazil provided the consumer is domiciled in Brazil and (ii) setting aside general terms and conditions unfavourable to consumers. Ms. Goldberg also addressed hardships faced by domestic consumers when suing overseas suppliers in relation to international service and enforcement. 

Antoine Laniez then provided some input on jurisdiction from the European perspective. Mr. Laniez described the recent efforts from the European Commission to promote consumer dispute resolution, introducing, inter alia, online dispute resolution (ODR), which provides consumers with an easy and cost-effective means of resolving disputes concerning cross-border e-commerce. 

The discussions then touched on the grounds to trigger the direct liability of online marketplaces in each jurisdiction. Mr. Laniez explained the recent change in the EU’s stance towards regulating dominant online marketplaces, referring to recent European legislation, including the Digital Services Act, which will be enforced in 2024 and predominantly governs online services. Mr. Laniez also highlighted a decision from the Court of Justice of the European Union issued last year, in which Amazon was held liable for trademark infringement in connection with advertisements made by a third party of counterfeited Louboutin shoes. Mr. Laniez opined that the case was a shift for online marketplaces located in the European Union suggesting that the traditional principle that a marketplace is exempted from direct liability should no longer be relied upon. Building on this point, Mr. Muñoz introduced a decision from the Supreme Court of Argentina that internet service providers should be liable for content in their search engines which infringes personal rights of a third party if they are notified of the infringement but do not take any measures to remove the offending content. 

An interesting debate followed on the direct liability of online marketplaces from different perspectives, ie, the business perspective versus the consumer perspective. Mr. Laniez adopted a rather consumer-protective approach underlining the inability for consumers to be knowledgeable about the many features of the goods sold. By contrast, Ms. Muñoz took a business perspective on the issue on the grounds that a company will be unable to monitor millions of listings to see if the sellers comply with the various local regulations. Mr. Muñoz also questioned why online marketplaces should be held liable when physical marketplaces, on the other hand, such as shopping malls are not liable in Latin America for goods sold through retail stores.

Next, Lucinda Orr provided specific examples and cases to illustrate legal issues arising from online auctions. Ms. Orr first defined the term 'auction', which might differ depending on the relevant jurisdiction, by referring as an example to eBay’s Buy It Now listings. Ms. Orr also described a common issue arising from delays in bidding, that is, when a bid cannot be registered before the auctioneer hammers down due to an insufficient internet connection. In this case, the bid would fail under the general terms and conditions of the auction. Ms. Orr then introduced a well-known story about a Banksy’s artwork which was automatically shredded right upon the bid closing at $1.4 million in 2018. The validity of the sale was questioned, but the buyer eventually accepted the sale and re-sold the artwork for $25.4 million in 2021. Ms. Orr also introduced a recent case, in which a British seller, having withdrawn a listing of a vintage 1970s tape recorder prior to the closure of the auction, was ordered by a German court to pay to the highest bidder £7,551 plus cost on the grounds that a contract had been formed. The court superseded eBay’s general terms and conditions which permitted withdrawing the listing. 

The panel also discussed mass actions involving e-commerce transactions. Andreas Frischknecht first provided a perspective from the US, where consumer mass litigations or class actions are becoming increasingly less common given that consumers easily waive their rights to sue and agree to arbitrate under general terms and conditions. Karina Goldberg then provided insights on Brazilian practices. According to Ms. Goldberg, such terms and conditions have never been enforced in Brazil based on consumer-protection grounds. Under the Brazilian Consumer Code, civil associations may initiate collective actions on behalf of a group of consumers whereby consumers need not identify themselves or pay any court or legal fees. Ms. Goldberg noted that the number of collective actions has been increasing in Brazil, and, as a result, companies must be well-prepared to respond to those claims. 

Ms. Orr led the last segment of the panel on fraud in a cross-border context. Fraud may frequently occur on both sides, involving both sellers and buyers, as it may be committed easily, with prosecution hardly able to reach across jurisdictions. Ms. Orr introduced and explained the various types of fraud frequently observed for e-commerce transactions, which include: (i) classic credit card fraud, such as small purchase fraud and chargeback fraud; (ii) phishing; and (iii) triangulation fraud. Ms. Orr noted that remedies are problematic in the event of cross-border sales. Mr. Muñoz mentioned another way of stealing credit card and online banking data, namely through stolen cell phones. Both panellists confirmed and explained the importance for consumers to take appropriate measures to prevent and protect themselves from fraud at large.