Draft Criminal Justice (Electronic Commerce) (Amendment) (EU Exit) Regulations 2021

Alex Chalk Excerpts

Tuesday 29th June 2021 General Committees

[The Parliamentary Under-Secretary of State for Justice (Alex Chalk)]

I thank the hon. Gentleman for his point, which I think added significantly to the proceedings. I thank him very much indeed.

The draft regulations do not create new policy or change the nature of the related offences. Instead, they are a technical measure to fix deficiencies in retained EU law arising from the withdrawal of the United Kingdom from the European Union. This statutory instrument addresses reciprocal jurisdictional rules linked to the internal market contained in article 3 of the e-commerce directive. Although the directive was largely retained in UK law, the rules—more commonly referred to as the country of origin principle—rely on reciprocal application and therefore no longer operate as intended. The removal of the provisions from Ministry of Justice legislation is therefore the object of the proposed instrument.

Similar statutory instruments have already been brought forward to remove the country of origin principle from other legislation and, if time had allowed, the Government would have brought forward the regulations before the end of the transition period. However, as we are not aware that the rules in question have ever been relevant to a prosecution for the offences to which the draft instrument relates, we prioritised other more urgent legislation to be laid before the end of last year. Now that such other more important legislation is in force, it is necessary that we address any remaining deficiencies in retained EU law.

Turning now to the detail, the rules apply to organisations operating online that meet the definition of an information society service or ISS, which can be summarised as a service that is normally provided for payment at a distance by electronic means and at the request of the recipient of the service. That covers, among other things, online retailers, video-sharing sites, search tools, social media platforms and internet service providers.

The country of origin principle aims to make it easier for organisations to operate online across borders by making them subject only to the law of the country in which they were established when operating across the European economic area. For relevant offences, therefore, ISSs would need to comply only with one set of laws, rather than deal separately with each state in which they operate.

For example, a British bookshop selling online in various EEA states may have unknowingly sold a book that was banned in one of those countries. If the rules were applied to the offence of selling the prohibited book, the shop would be liable only under UK law, not under the local laws banning the book, except in exceptional circumstances. Although entirely hypothetical, I hope that example serves to highlight how the system was intended to make online operations across many jurisdictions and across the single market simpler for a business.

The system, however, worked between jurisdictions, so ISSs established in the EEA, but operating in the UK, were not fully liable under UK law. As I said, those provisions, which limited the liability of EEA-based ISSs operating in this country under UK law, no longer function as intended. This is because the EU no longer has reciprocal rules of this nature in place with regard to the United Kingdom, and could even put British businesses at a disadvantage, as I will set out further in a moment.

Implementation of the country of origin principle rules for the offences for which the MOJ is responsible has two strands. First, it made ISSs based in any EEA state subject to the law of that state for their conduct across the EEA. Secondly, it created a procedural bar restricting prosecutions of ISSs based in the EEA for their conduct in another country, on the basis that they would have been prosecuted by the state in which they are established.

The instrument removes both aspects of this implementation in the UK, removing an inconsistency where UK ISSs operating in the EEA were liable under UK law in a way that is not the case when operating in other foreign countries. It also means there will no longer be a procedural bar restricting prosecutions of EEA-based ISSs operating in the UK, meaning proceedings against them would operate in the same way as for domestic or other foreign ISSs. To put all that in plain English, what it means is that at the moment we have a lopsided arrangement whereby a UK-based ISS is liable for action in EEA countries, but the EEA ISS is effectively shielded from prosecution in the UK—and that is a lopsided arrangement that we need to put right.

This instrument was first considered by the European Statutory Instruments Committee back in March, and the Government accept the Committee’s recommendation to put it under the affirmative procedure, ensuring that it receives the scrutiny of Parliament. However, I would like to take the opportunity to reassure the Committee and address its concerns about the effect of this instrument. These rules—the country of origin principle—were never intended to contribute to the wider regulation of publication of illicit materials internationally. They apply only to organisations meeting the definition of information society service, to just a small range of offences and to activity in the EEA. They were part of heart of the wider e-commerce directive that aimed to remove obstacles to organisations offering cross-border online services.

Although there are some situations in which it is advantageous to be able to prosecute UK offenders for their conduct abroad or online, the Government’s view is that generally criminal offending is best dealt with by the criminal justice system of the state in which the offence took place. If UK-established ISSs need to be held accountable for any conduct abroad, that should be done in a way which produces the same effect in every country, not limited to the EEA. In other words, treat all countries the same.

Finally, the Government believe that these regulations are necessary irrespective of whether parallel offences exist. Where parallel offences do exist, failing to make the amendments means UK ISSs could be dually liable; in other words, facing prosecutions in the EEA state in which any offending took place as well as in the UK. As I indicated before, that is a lopsided arrangement. It would be unfair, and would place an unreasonable burden on British companies. It could also potentially put them at a competitive disadvantage when operating abroad. Where parallel offences do not exist, failing to make these amendments could result in proceedings being brought against conduct that was legal in one state, but not in the other. Again, that could put British companies operating abroad at a competitive disadvantage.

Overall, removal of the country of origin principle will mean that UK ISSs operating in the EEA are treated in the same way under our law as when operating in other foreign countries. In light of the UK’s withdrawal from the European Union and the end of the reciprocal arrangements, it is necessary in the interests of fairness and clarity that these laws are revoked, and I hope the Committee will join me in supporting the regulations.

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[Alex Chalk]

I thank the hon. Gentleman for his points and his support for the provisions. As he indicates, the SI is necessary to address a lopsided arrangement and I am delighted to have the support of the Opposition in that regard.

On the issue of timing, I have been very clear that, if time had allowed, the Government would have brought forward the regulations before the end of the transition period, but, as I have indicated already, we are not aware that the rules in question have ever been relevant to a prosecution. In other words, there is no sense in which this has impeded justice in any way. It was important to prioritise the most urgent legislation, but now that the other more important legislation has been passed, we recognise it is right that we attend to this and do so in short order. That is precisely what we have done.

As I indicated earlier, the instrument is necessary to remove rules based on reciprocity that no longer exist. It is a function of our departure from the European Union and it is important that our statute book should function correctly. On that basis, I commend the draft instrument to the House.

Question put and agreed to.