Transnational Notes

 A recent Irish High Court decision involving the Terms of Use of the Ryanair website (an international airline) has held that a party may enter into a binding jurisdiction clause by simply browsing a website, possibly without realizing that they have entered into such an agreement. Such ‘click wrap’ or ‘browse wrap’ agreements are increasingly common in the era of e-commerce, and most large scale commercial websites contain similar fine print underlying their websites’ use. In determining that a party can enter into a jurisdiction clause agreement by browsing and using another’s website in certain circumstances, the Irish High Court relied exclusively on the provisions of the Brussels I Regulation (Article 23) which provides for party autonomy in choosing the forum that is to resolve the dispute. This short post attempts to highlight the significance of this Irish High Court decision, and how the decision has provided further guidance as to the interpretation of Article 23 of the Brussels I Regulation in its application to more modern methods of contracting.

Council Regulation (EC) No 44/2001[1] (more commonly known as “Brussels I Regulation”) was introduced to provide certainty and predictability on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. It came into force in 2002, replacing the Brussels Convention which had preceded it. The Brussels I Regulation provides a set of rules that apply to most European Union member states and which aim to ensure that no matter where court proceedings are first instituted, the application of these rules will always point to the state that is to have exclusive jurisdiction over the dispute.

Article 23 of the Brussels I Regulation sets out rules relating to prorogation of jurisdiction. These rules provide that parties to a contract may agree that a particular court of a Member State is to have jurisdiction in settling any disputes that have arisen or may arise in connection with the parties’ contract. This means that parties to an international contract, concluded over the Internet, may choose a particular Member State to have jurisdiction over their legal relationship should either party later wish to resort to litigation.

Such a dispute arose in the Irish High Court case of Ryanair Limited v. On the Beach Limited.[2] Ryanair was arguing that the defendant, On the Beach Limited, an online travel agency based in England, had contravened the “Terms of Use of Ryanair’s Website” by allegedly “screen scraping” data from Ryanair’s website. Screen scraping is a computer software technique for extracting information from websites through the creation of an automated tool which interrogates the operator’s website. Such improper data extraction was a breach of Clause 3 of the Terms of Use which prohibits the “use of any automated system or software to extract data from [the] website…for commercial purposes”. Ryanair’s claims against the defendant included breach of contract, misrepresentation, passing off, infringement of registered trademarks and infringement of Ryanair’s database rights.

Before the High Court was able to begin determining the merits of the substantive issue in the case, the defendant argued that the Irish courts did not have jurisdiction in this matter, and that in accordance with Article 2 of the Brussels I Regulation which states that “persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State”, the defendant should be sued in the English courts. However, the Terms of Use of Ryanair’s website contained a clause providing that “it is a condition precedent to the use of the plaintiff’s website…that any such party submits to the sole and exclusive jurisdiction of the Courts of the Republic of Ireland and to the application of the law in that jurisdiction”. It further provided that this applies to any party accessing such information or facilities on their own behalf or on behalf of others. These Terms of Use could be accepted by a party in two possible ways: clicking a box agreeing to the Terms of Use (click wrap agreement), or by actually using the Ryanair website where these Terms of Use were available by hyperlink on each page of the website (browse wrap agreement).

The defendant attempted to argue that there was no contract between itself and Ryanair as the defendant was only acting as agent for the ultimate consumer who was purchasing the flights. It was on this basis that the defendant attempted to argue that in the absence of a contract in accordance with the Terms of Use of Ryanair’s Website, there could be no choice of jurisdiction agreement as contained in that challenged contract. The Court was quick to dismiss this argument, relying exclusively on the test laid down by the European Court of Justice in Benincasa v. Dentalkit Srl.[3] Here, the European Court of Justice held that the Brussels I Regulation serves a procedural purpose, and that the legal certainty that the Brussels I Regulation seeks to secure could easily be jeopardized if one party to the contract could frustrate that rule of forum selection by arguing that the whole of the contract is void on grounds derived from the applicable substantive law. It is therefore the case that a jurisdiction clause may still be valid, even if one of the parties is challenging the very existence of the contract in which the jurisdiction clause is contained. This point also illustrates how any person could become bound by the jurisdiction clause simply by using the Ryanair website, without having to purchase flights or enter into any other contract.

 In determining whether the jurisdiction clause, viewed separately from the contract as a whole, is valid and enforceable, the High Court looks to the provisions of Article 23 of Brussels I Regulation providing for prorogation of jurisdiction. Of most relevance is Article 23(1)(c) which provides that an agreement conferring jurisdiction shall be valid if it is “in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned”. The Court relies on the European Court of Justice case of Mainschiffahrts-Genossenschaft eG (MSG) v. Les Gravieres Rhénanes SARL[4] which provided that Article 23(1)(c) encompasses three hurdles that must be overcome in order for the choice of forum clause to be valid and binding.

The first requirement is that the contract in question comes under the head of international trade or commerce. The High Court found this to have been easily met as both plaintiff and defendant are in the business of selling internationally and it was in this context that the defendant utilized and interacted with the Ryanair website. The second requirement provides that there is a practice in the branch of international trade or commerce in which the parties are operating.  This is where the Irish High Court interpreted the reach of the law as extending into the digital age of international online commerce. The Court found that the practice of binding parties to a website’s terms of use through either click wrap or browse wrap agreements was increasingly common in the airline and online travel agency sectors. The Court even noted that it is difficult to see how online trade could be conducted without these devices. It is the online travel agency’s business to scour the Internet and search for the best deals for its customers. The defendant’s own website, like those of most airlines, contains legal notices, waivers and disclaimers which are available through hyperlinks and other click the box icons. Furthermore, many airline companies (British Airways, United Airlines, Air France) contain jurisdiction selection clauses in their terms of use which they bind users of their websites to through either a click wrap or browse wrap agreement. The Court had no hesitation in finding that this evidence proved the existence of such a widely used practice in the online travel industry.

The third requirement provides that if there is found to be a practice of using these click wrap or browse wrap agreements in the branch of trade that the parties are operating in, the parties must have been aware or may be presumed to have been aware of that practice. The European Court of Justice in MSG noted that this requirement includes practices of which the parties ought to have been aware.[5] This presumptive or implicit awareness can be shown by the parties previously having had business relations between themselves, or with other parties in the sector in question, or such practice is generally and regularly followed when a certain type of contract is concluded, with the result that it may be considered as being a consolidated practice. The High Court determined that the defendant was aware of the practice, as it was generally and regularly followed when making bookings with online travel agents and with airlines, and that it may be considered a consolidated practice. This final point illustrates how the defendant was not actually required to have clicked on Ryanair’s Terms of Use to become bound by them, but that constructive knowledge would suffice. This application of Article 23(1)(c) certainly accords with modern business practice, where it is rare that a party will closely examine a website’s terms of use or legal notices, particularly where they do not believe that they may be contractually bound by such terms in the absence of entering into a contract. A party should not be able to argue that the website’s terms of use do not apply, simply because that party neglected to read them or willfully ignored them.

By enforcing the terms and conditions contained in a click wrap or browse wrap agreement, the Irish High Court has allowed the Brussels I Regulation to be construed and understood in a modern light, where a large amount of our daily commerce is conducted through novel methods of communication. Forum selection clauses contained in click wrap and browse wrap agreements deserve exactly the same protection and level of enforcement as any other clauses that would be included in a written contract. Justice Punnett in the Canadian Supreme Court of British Columbia noted that “The evolution of the Internet as an ‘open’ medium with its ability to hyperlink, being key to its success, does not mean that it must function free of traditional contract law. It is simply the manner of contracting that has changed, not the law of contract.”[6] The form that a jurisdiction selection clause takes is unimportant, as long as the same core components stipulated in Article 23(1) are met. Companies conducting much of their business online, with parties all over the world, and possibly entering hundreds of contracts a day, require certainty. That is why such clauses are entered into contracts, and that is why the Brussels I Regulation gives these clauses protection, regardless of the country in which proceedings are first instituted.

Ryanair’s intellectual property, including the mass amounts of data they create and store, can be accessed from anywhere in the world. However, the difficulty that Ryanair would have in protecting that information in jurisdictions with differing and often conflicting laws could be potentially harmful to the growth and encouragement of international trade and commerce. A jurisdiction selection clause that meets the requirements set down in Article 23(1) should be legally valid regardless of the mode of its acceptance or the form in which it was presented. What this High Court decision tells us is that courts are going to be increasingly innovative in their application of the Brussels I Regulation, regardless of whether or not the method used to create such an agreement was in existence at the time the Regulation or the Convention was implemented. A party that engages in international online commerce cannot always expect the protection of their own law, just because they do not physically leave their own jurisdiction. This Irish High Court case illustrates how the Brussels I Regulation is just as effective in ensuring party autonomy and uniformity of result in 2013, as it was when the Convention first came into force.

Daragh Brehony

The author is a Class of 2014 LL.M. student in the International Business Regulation, Litigation and Arbitration program at the New York University School of Law. He obtained his Bachelor in Civil Law degree at University College Dublin, Ireland in 2012, after which he completed the Barrister-at-Law Degree at the Honorable Society of King’s Inns and was called to the Irish Bar in 2013.