Enforcement of the Law PDF

65 6. Enforcement of the law 66 Starting an E-Commerce Business in Austria After having studied all the many legal requirements and restrictions someone setting up an online shop has to consider and to comply with, Selma and Sebastian are rather desperate. Many of the requi...

65 6. Enforcement of the law 66 Starting an E-Commerce Business in Austria After having studied all the many legal requirements and restrictions someone setting up an online shop has to consider and to comply with, Selma and Sebastian are rather desperate. Many of the requirements and restrictions they understand and endorse, but others (including some of the information and similar duties as well as some restrictions following from data protection and copyright law) they find rather unnecessary and overreaching. Shouldn’t the State be grateful if young people accept the challenge and start a business, rather than make things difficult for them? OK, they want to become lawyers and should therefore obey the law in any case, but … they are still wondering what would happen if they simply ignored some of the rules. In contrast to social, moral or religious standards, law is characterised by the fact that it will be enforced by the State’s institutions. While in reality, the law will never be enforced in full, the gap between law and its enforcement (the ‘enforcement gap’) should never grow too big, for otherwise the rule of law—as a foundational principle our society and legal system is built upon—would be undermined. However, there are different mechanisms of enforcement, notably public enforcement, private enforcement, and other forms of enforcement. Typically, an area of the law is dominated by one or the other type of enforcement. 6.1. Public enforcement Public enforcement means the law is enforced as such and on the initiative of the State in the exercise of sovereign power. Criminal law is the paradigm case for an area that is dominated by public enforcement. State authorities will normally initiate criminal investigations by themselves (i.e. even where the victim does not complain) for the majority of judicial crimes as well as administrative offences (Offizialdelikte). This is without prejudice to the You will study criminal law in fact that, in practice, authorities will often learn about a BA CM 8 (Criminal Law and crime only upon a complaint. Procedure). For some crimes, such as unlawful access to a computer system (‘hacking’), the victims need to give their authorisation (Ermächtigungsdelikte). However, in a number of cases, the legislator felt that the decision should be entirely in the hands of the victim and that, in the absence of the victim’s initiative, the crime will not be prosecuted. These so-called private prosecution offences (Privatanklagedelikte) include, e.g., most infringements of IP rights or competition offences. Proceedings are, however, still criminal proceedings, e.g. a fine will normally be paid to the Treasury and not to the victim. If the victim wants damages, they have to resort to remedies under private law. Also most other public law is dominated by public enforcement. This includes, e.g., public security law (including product safety law), tax law or social security law. While any violation of such laws may indirectly give rise to, or facilitate the substantiation of, private claims (e.g. for damages) under private law, authorities will normally enforce those laws in their own right. Details are complex and differ from area to area of the law. 6.2. Representative and competitor enforcement When they hear this, Selma and Sebastian are not too concerned. After all, while infringement of many of the standards would constitute an administrative offence, they have never heard of authorities enforcing consumer protection law or similar law on a broad scale. Plus, since 2019, administrative authorities in Austria have started a new initiative ‘Advising instead of Punishing’ (‘Beraten statt Strafen’), so when an offence is not really serious, and in particular with microenterprises, authorities  Enforcement of the law 67 would normally support traders in being compliant rather than impose a fine (or worse) when non- compliance occurs for the first time. Selma and Sebastian remain a little confused, though, because they remember friends telling them about very minor mistakes these friends had made on their trading websites, and that this turned out to be really expensive … Also economic administrative law is subject to public enforcement. This includes the majority of requirements and restrictions addressed in these preparatory materials, such as following from trade regulation law, e-commerce law, telecommunications law, media law, but also—at least as far as violations may be prosecuted as administrative offences—much of consumer contract law, such as information and related duties under distance sales law. There are supervisory authorities for each of these areas whose role it is to take action whenever there is a violation of the law. While this is established practice in some areas (e.g. telecommunications law), enforcement in other areas has largely been delegated to other players and other enforcement mechanisms. Representative action under the KSchG A long list of statutes or statutory provisions (see §§ 28, 28a KSchG) has been qualified as serving consumer Representative actions will be protection. This includes, inter alia, e-commerce law, addressed in various modules, distance sales law, information duties under the services including BA CM 9 and CM 10 act, information duties on ADR and ODR, rules on unfair (Civil Law and Private contract terms and consumer warranty law. Any International Law), BA CM 11 infringement of such law that is contrary to the collective (Business Law) and MA CM 4 interests of consumers (e.g. because it might occur (Law of Civil Procedure) repetitively) is subject to an action for injunctive relief (Unterlassungsklage). The injunction may be sought by qualified entities representing the interests of affected stakeholders, such as recognised consumer representative bodies (e.g. the Verein für Konsumenteninformation, VKI) or trader representative bodies (e.g. the Austrian Chamber of Commerce, WKÖ). An injunction may result in enjoining the cessation and prohibition of an infringement (where appropriate by way of summary procedure), publication of the decision, and possibly sentencing defendants to pay a fine in case of future infringements. A qualified entity will often not go to court right away but approach the infringing business first with a warning notice (Abmahnung), requesting the business to sign a declaration to cease and desist (Unterlassungserklärung) under a contractual penalty. Representative and competitors’ action under the UWG Similar rules apply where a business has engaged in a defined range of unfair commercial practices within the meaning of the UWG, such as misleading or aggressive practices. According to § 14 UWG largely similar qualified entities as mentioned in the KSchG have the right to file an action for injunctive relief under the UWG. This goes beyond consumer protection as action may be taken also against business practices that harm primarily the interests of competitors, or the public at large. Under § 14 UWG, also competitors of the infringing business can request an injunction under largely the same conditions as qualified entities. As competitors are not able to rely on §§ 28, 28a KSchG, it is particularly important to note that the infringement of a broad range of laws may amount to unfair competition under § 1 UWG (Rechtsbruchtatbestand) not least because, by saving on compliance costs, the infringing business might obtain a competitive advantage. Therefore, also competitors 68 Starting an E-Commerce Business in Austria can enforce largely the same provisions, ranging from e-commerce law to unfair contract terms law, by way of injunctions, and they will often do so. For relying on § 14 UWG a competitor will normally not go directly to court but first send a warning notice and request the infringing business to sign a declaration to cease and desist (see above p. 67), combined with a request to pay for the lawyer’s fees accrued. Even in rather simple cases and for rather minor infringements, fees of around EUR 1,500 are not unusual. Collective redress Injunctive relief does not mean that those whose rights have been infringed in the past are compensated. Therefore, businesses often do not have sufficient incentives for complying with the law, as they can usually trust that only a small part of those whose rights have been infringed will enforce their claims. In order to improve both compliance with consumer law and protection of consumer rights, a new Directive on representative actions for the protection of the collective interests of consumers has been passed (whose implementation into national law is overdue), under which not only injunctive measures, but also redress measures (e.g. payment of damages) can be claimed by way of representative action. Currently, similar effects are being achieved by consumers assigning their claims to a consumer organisation that will then sue in its own name or by granting powers of attorney to such organisation (‘Österreichische Sammelklage’). 6.1. Private enforcement Selma and Sebastian are wondering where private law claims by individual customers would fit in that equation …. Private enforcement means that parties other than the State (but including public bodies where they are acting as market participants, e.g. buy goods from a trader) have Private enforcement will be certain rights (subjektive Rechte) under the law, together addressed in various modules, with remedies (Rechtsbehelfe), such as termination of a including BA CM 9 and CM 10 contract or a claim for damages, to enforce these rights (Civil Law and Private where they are infringed. However, it is a fundamental International Law), BA CM 11 principle of the law that no one may normally use any (Business Law) and MA CM 4 kind of force or duress to actually enforce the remedies (Law of Civil Procedure) against the infringing party by way of self-help (Selbsthilfeverbot, cf. § 19 ABGB), but has to rely on the State’s institutions instead. This means, at least typically, that the party whose rights have been infringed must file a claim in a civil law court if the infringing party fails to comply with their obligations. Litigation in civil and commercial matters might sometimes be expensive and time-consuming. Each party must, in the first place, bear its own costs. These include costs for the court (e.g. court fees, witness fees, fees for experts and interpreters), and, if applicable, lawyer's fees and pre-litigation costs such as for preserving evidence. If a party cannot afford this, the court may, upon application, grant legal aid (Verfahrenshilfe) to enable also poorer persons to conduct legal proceedings. The party that loses the case in its entirety must reimburse the winning party for all costs incurred for the litigation as far as these were necessary (‘loser-pays-principle’), e.g. the lawyer’s fees according to the statutory fee schedule. Details are decided by the court. It is in particular for low-value cases that persons whose rights have been infringed will often refrain from taking action, which is one of the reasons why the legislator promotes ODR for consumer disputes arising from e-commerce (see above p. 38).  Enforcement of the law 69 Recently, there has been a shift from putting the focus on direct enforcement of the law to ensuring compliance with the law by way of a variety of different ‘soft’ mechanisms, many of which can be described as ‘nudging’. Already today, online shops may be more afraid of negative customer ratings in online reputation systems than of law enforcement in the proper sense. Such mechanisms may therefore be more effective than traditional enforcement mechanisms. However, each of these mechanisms creates new legal problems (such as fake or abusive customer ratings), and additional costs created must be carefully weighed against the prospective gain. Selma and Sebastian are now convinced that compliance from the outset is much cheaper than having to worry about all sorts of things later. They also believe it is really important for them to understand more thoroughly how the legal system has developed into what it is today, and how to interpret and apply the law. At the end of the day, they might also have a suggestion or two for how to improve the law … … but for the time being they are mainly determined to make enough money with their newly established e-commerce business, and to really enjoy the five years of student life in Vienna that are lying ahead of them!