Internet Intermediary Liability Reloaded – The New German Act on Responsibility of Social Networks and its (In-) Compatibility with European Law

The underlying rationale of the country of origin principle refers to the goal of harmonizing the legal framework for all information society providers in the EU, given the global character of the Internet. The EU clearly stated that goal in Recitals 1, 3, 5 and 10 of the E-Commerce-Directive.  [5] Moreover, Recital 22 point out that:

„(22) Information society services should be supervised at the source of the activity, in order to ensure an effective protection of public interest objectives; to that end, it is necessary to ensure that the competent authority provides such protection not only for the citizens of its own country but for all Community citizens; in order to improve mutual trust between Member States, it is essential to state clearly this responsibility on the part of the Member State where the services originate; moreover, in order to effectively guarantee freedom to provide services and legal certainty for suppliers and recipients of services, such information society services should in principle be subject to the law of the Member State in which the service provider is established.“

Once again, the E-Commerce-Directive lays stress on the „freedom to provide services” and on „legal certainty” for providers, guaranteed by the country of origin principle. The Court of Justice of the EU took the same stance in the eDate advertising decision:  [6]

„66 In relation to the mechanism provided for by Article 3 of the Directive, it must be held that the fact of making electronic commerce services subject to the legal system of the Member State in which their providers are established pursuant to Article 3(1) does not allow the free movement of services to be fully guaranteed if the service providers must ultimately comply, in the host Member State, with stricter requirements than those applicable to them in the Member State in which they are established.

67 It follows that Article 3 of the Directive precludes, subject to derogations authorised in accordance with the conditions set out in Article 3(4), a provider of an electronic commerce service from being made subject to stricter requirements than those provided for by the substantive law in force in the Member State in which that service provider is established.”

Hence, it is not overemphasized to qualify the country of origin principle as one of the cornerstones of the E-Commerce-Directive.

The country of origin principle applies to the so-called „coordinated field” which is defined by Art. 2 h). The proposed German act provides obligations for providers to install complaint management systems, to establish in Germany a person who could be held responsible, to report periodically about the state of the complaints, and to remove illicit content in a prescribed way. Thus, the planned obligations clearly fall under the coordinated field, in particular requirements concerning behaviour of the service provider.

Hence, the envisaged act on enforcement of social networks has to comply with the country of origin principle – which is confirmed indirectly by the official reasoning of the German government which states that there is no conflict with Art. 3 of the E-Commerce-Directive by invoking the exception of Art. 3 (4).  [7]

Crucial for the evaluation of the proposed act is thus the compatibility with the country of origin principle, in particular with the exceptions which Art. 3 E-Commerce-Directive provides in Art. 3 (3) and Art. 3 (4). Whereas it is evident that Art. 3 (3) and the Annex cannot justify the planned act on social networks as no legal area or activity mentioned in the Annex is being covered the German government concentrates on Art. 3 (4). As this provision is crucial for the legal assessment it shall be cited here:

„Member States may take measures to derogate from paragraph 2 in respect of a given information society service if the following conditions are fulfilled:

(a) the measures shall be:

(i) necessary for one of the following reasons:

- public policy, in particular the prevention, investigation, detection and prosecution of criminal offences, including the protection of minors and the fight against any incitement to hatred on grounds of race, sex, religion or nationality, and violations of human dignity concerning individual persons,

....

(ii) taken against a given information society service which prejudices the objectives referred to in point (i) or which presents a serious and grave risk of prejudice to those objectives;

(iii) proportionate to those objectives;

(b) before taking the measures in question and without prejudice to court proceedings, including preliminary proceedings and acts carried out in the framework of a criminal investigation, the Member State has:

- asked the Member State referred to in paragraph 1 to take measures and the latter did not take such measures, or they were inadequate,

- notified the Commission and the Member State referred to in paragraph 1 of its intention to take such measures.”

The German government contends in particular that the act would comply with the requirements of Art. 3(4) as the act would concern „a specific information service provider”. However, the reasoning misunderstands Art. 3(4) E-Commerce-Directive as this exception in Art. 3(4) applies exactly to a specific case, for instance procedures against one social network (judicial or administrative) etc. The exception in Art. 3(4) does not refer to a whole group of information service providers  [8] – in contrast to the proposed act which covers all kinds of social networks or other services such as E-Mail-providers  [9] and does not refer only to one specific case.

That Art. 3(4) does not refer to entire classes of information society providers is also reflected by Art. 3(4) b) i which requires the recipient state which wants to take action to ask beforehand the state of the origin of the service provider to take care of the (specific) provider. This procedure is clearly related to other uses of the country of origin principles enshrined, for instance, in financial markets Directive, such as the Market for Financial Instruments Directive (II).  [10] The procedure addresses the coordination between supervising authorities in order to guarantee the free flow of services in the European Union, to avoid establishing national barriers to services coming from another EU member state (European Pass). However, this procedure is not related to legal acts addressing whole class of service providers.

This interpretation of Art. 3(4) E-Commerce-Directive is affirmed if we take into account the general exceptions to Art 3(1) by Art. 3(3) E-Commerce-Directive referring to the annex. This annex contains exceptions referring to legal areas such as intellectual property rights or contractual consumer protection – and not specific cases. Such an annex would rather be unnecessary if Art. 3(4) could be applied to whole classes of information service providers as member states could easily invoke one of the exceptions grounds provided for in Art. 3(4). This can also clearly be demonstrated if we look at the exceptions for consumer: Whereas Art. 3(3) and the Annex state an exception for all contractual protections concerning consumers, Art. 3(4) once again refers in general to consumer protection – the repeated (and extended) reference would not make any sense if Art. 3(4) could be understood in a way that whole classes or groups of cases are embraced by Art. 3(4).  [11]

Moreover, the French version clearly indicates that all exceptions are related to just one service provider rather than to a class of them:

„4. Les États membres peuvent prendre, à l'égard d'un service donné de la société de l'information, des mesures qui dérogent au paragraphe 2 si les conditions suivantes sont remplies:”

The French version (and all other romanic versions) makes it more clear than the German or English version that a singular is being used and only one specific case is being addressed.

Finally, and very clearly, the EU-Commission took the same stance in the Communication of 2003 regarding electronic financial services and derogations by member states:

„2.1.2. Concept of "given information society service"

A "given" service is taken to mean here that the Member State of destination may not, under Article 3(4), take general measures in respect of a category of financial services such as investment funds or loans.

To be covered by Article 3(4), the measure must, therefore, be taken on a case-by-case basis against a specific financial service provided by a given operator.

For example, it could be a measure such as a warning or a penalty payment taken by a country of destination against a bank proposing from its place of establishment in another EU country non-harmonised investment services to residents of that country. Such measures could, for instance, be taken on the ground that the bank was not complying with certain rules of conduct designed to protect consumers in the country of destination.

However, a Member State could not, on the basis of Article 3(4), decide that its entire legislation on, say, non-harmonised investment funds was applicable in a general and horizontal fashion to all services accessible to its residents.”  [12]

Thus, the Commission makes it very clear that Art. 3(4) refers to a case-by-case basis. In particular, every case has to be analyzed on grounds of the proportionality test  [13] – and not in a general way. Hence, there is no room for such an interpretation as the German government is undertaking.

Moreover, the German government argues that an instant action is needed to combat hate speech and other criminal actions in the Internet.  [14] However, it is highly questionable that a case for urgency can be construed: The issues at stake has already been known for a longer time, be it at the national or European level. That the US-elections has been influenced by fake news or activities at the social networks is just a prominent emanation of this general trend concerning communication on the Internet and in particular on social networks.

Nevertheless, these issues have been well known for years  [15] – for instance, the author of this expertise also has presented a large legal expertise on personality rights and enforcement problems on the Internet at the Deutsche Juristentag (the German Conference of all legal professions) in 2012.  [16] Hence, it should be out of question that the matter of defamation, hate speech, and fake news were already at stake in the last decade.

As mentioned, Art. 14 of the E-commerce Directive uses explicitly the term „expeditiously”, in the French version „promptement”, in the Spanish version „con prontitud”, in the Italian version „immediatamente”, in the Netherlands version „prompt”, in the German Version „unverzüglich”.

However, the E-Commerce-Directive does not specify what has to be understood by expeditiously – thus, it seems that the E-Commerce-Directive would leave some leeway for member states to specify this term. This perspective seems to be fostered by recital 46 S. 2 of the E-Commerce-Directive which obviously allows the member states to introduce procedures for the removal:

„the removal or disabling of access has to be undertaken in the observance of the principle of freedom of expression and of procedures established for this purpose at national level;”

However, the phrase has to be read carefully: The „procedures established” at national level refer explicitly to „this purpose” which refers to removal or disabling of access. Thus, procedures means ways of how to remove or block an access – but not when (or at which moment in time) a content has to be removed. Recital 46 S. 1 states once again that the removal etc. has to be done expeditiously; S. 2 does not refer or specify this notion but just refers to the removal or disabling of access as such. This is confirmed by the second restriction in Recital 46 S. 2 which requires „the observance of the principle of freedom of expression” – hence, once again a requirement which concerns the removal as such in order not to discourage users from using their freedom of expression, but not the point in time when the removal has to be done.

Furthermore, Member States could argue that Recital 46 S. 3 allows them to specify requirements for removal or disabling information:

„this Directive does not affect Member States’ possibility of establishing specific requirements which must be fulfilled expeditiously prior to the removal or disabling of information.”

However, this part of the recital clearly refers to requirements prior to the removal, hence for the procedure before removing or blocking a content – such as prior information to the owner of the content. For instance, the German High Federal Court introduced such a procedure in the context of injunctions against defamations in blogs, requiring the blog provider to ask the blogger for a statement referring to a complaint and then vice-versa the complainer if he would upheld his complaint in the light of this blogger`s statement.  [21] In contrast, the fixed terms of Sec. 3 (2) of the proposed act do not refer to such a procedure prior to the removal rather than specifies the term „expeditiously”.

In sum, Recital 46 allows to establish procedures for the removal or blocking of content as such but does not allow to specify the notion of „expeditiously” in Art. 14 of the E-Commerce-Directive.

There are also good reasons on the European level not to allow member states too much leeway in specifying Art. 14: Different terms in member states which would concretise the notion „expeditiously” by introducing fixed terms could very soon lead to a scattered landscape of liability privileges in Europe. Thus, whereas Germany provides for fixed terms of 24 hours or 7 days other member states could introduce complete different terms such as 7 hrs. or 48 hrs. etc. or even longer than 7 days. The intention of the E-Commerce-Directive to fully harmonise liability of intermediaries would thus be severely undermined.

The same phenomenon already has been stated concerning different notice-and-take-down procedures in Europe.  [22] Moreover, different terms in Member States have led, for instance, in consumer protection to a review of consumer protection directives and to a new directive in order to stick to fixed mandatory terms for all Member States so that legal insecurity shall be avoided.  [23]

Finally, there is no indication that the notion of „expeditiously” should not be interpreted on the European level by the Court of Justice of the European Union (CJEU) as an autonomous notion of the E-Commerce-Directive.

Secondly, the envisaged German act calculates all terms upon the reception of the complaint. However, Art. 14 (1) S. 2 b) explicitly refers the obligation to act to the „obtaining (of) such knowledge.” This deviation matters in different perspectives: