Both the British Retail Consortium (BRC) and the Confederation of British Industry (CBI) are concerned that businesses trading online will be adversely affected by the proposals.

The contract legislation, known as Rome 1, is up before the European Parliament for debate this week. In a nutshell, the rules would mean that if a Spanish consumer bought something online from a British business and was dissatisfied with the item, they would be able to take legal action against the firm under Spanish law in a Spanish court.

Alistair Gray from the BRC said:

"If the law is passed in its current form, Internet sales across European borders would, at best, be seriously stifled and, at worst, killed off completely, especially for small businesses.

"This would damage both retail entrepreneurs looking to expand and consumers, who have benefited from the increased choice and competition that free and open Internet trade has brought so far."

The CBI's John Cridland said:

"Businesses will have three choices: spend time and money getting to grips with the varied and conflicting legal regimes of each member state they trade with; chance their arm that their processes will meet the required standards; or, most worryingly, stop trading with some countries altogether."