The Legal Implications of on-line trading

By Edward Black (ebb@dentonwildesapte.com), Partner and Jean Hughes (jyh@dentonwildesapte.com), Senior Solicitor, Denton Wilde Sapte.

In an ideal world, on-line trading would be promoted throughout the European Union by the creation of a level legal and regulatory playing field. In the real world, however, there is a tension between the approaches adopted in different areas. On the one hand, the EU Investment Services and Banking Directives apply the principle of mutual recognition and provide that a financial services institution which is authorised in its home country (the “home state”) has the right to carry on business in another European country (the “host state”) without requiring authorisation. On the other hand, there are exceptions to this principle which enable EU member states to require compliance with their own business rules and consumer protection legislation. These variations in regulatory standards create uncertainty for business and barriers to e-commerce.