Tag: Article 17

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The CJEU on consumer signalling with a view to the protected categories, in Wurth Automotive. One or two further specifications of its Gruber, Milivojević, Schrems case-law.

The CJEU last week held in C-177/22 JA v Wurth Automotive. The case concerns the consumer title of Brussels Ia, in particular a refinement of the CJEU  C-630/17 Milivojević and C-28/18  Petruchová case-law (involvement of people with a background in the sector), C-498/16 Schrems (evolvement of use from non-professional to professional or the other way around) and  CJEU C‑464/01 Gruber criteria (dual (non-)professional use).

Applicant in the main proceedings, whose partner is a car dealer and managing director of an online platform for the sale of motor vehicles, was mentioned on the homepage of that platform as the graphic and web designer, without actually having carried out that activity at the time of the facts in the main proceedings. At the request of the applicant in the main proceedings, the partner did some research and contacted the defendant in the main proceedings from his professional email address, in which he indicated a price offer for the purchase of a vehicle. It was stated in that email that the contract of sale was to be concluded on behalf of the applicant in the main proceedings, however a little while after the purchase the partner enquired (but was rebuffed) about the possibility to indicate the VAT amount of the invoice (typically only of interest to business buyers).

Firstly, in applying the consumer title, must account be taken of current and future purposes of the conclusion of that contract, and of the nature of the activity pursued by that person as an employed or self-employed person? As for the latter, the CJEU answer [27] is clearly ‘no’, with reference to Roi Land Investments. As for the former, whether the purpose for the use is current or planned in the future, per Milivojević [88-89], is held by the CJEU not to be of relevance. I would personally add to both Milivojević and Wurth Automotive that any such future use must have been somehow signalled to the business. While the CJEU in Schrems confirmed the possibility to lose the consumer status as a result of subsequent professional use, it has not held (and in my view ought not to) that an initial professional use later changed to non-professional use, may belatedly trigger the consumer section (it has of course supported the later ‘internationalisation’ of the contract per Commerzbank).

Next, what is the burden of proof on whom, and what needs to be proven, when a good or service has been procured for dual professional and non-professional use. Here, the CJEU [30] ff confirms that first of all the professional use or not of the good or service needs to be established on the basis of the objective elements of the file. Only if “that evidence is not sufficient, that court may also determine whether the supposed customer had in fact, by his or her own conduct with respect to the other party, given the latter the impression that he or she was acting for business purposes, such that the other party could legitimately have been unaware of the non-professional purpose of the transaction at issue” [32].

[36] “the impression created by the conduct of the person claiming the status of ‘consumer’….on the part of the other contracting party, may be taken into account to establish whether that person should be afforded the procedural protection laid down in Section 4 of that regulation.”

In the case at issue,

[38] inaction following the presentation of a contract identifying the buyer as a trader, can constitute evidence (but not of singlehandedly determinative value) that the applicant in the main proceedings could have created, on the part of the defendant in the main proceedings, the impression that she was acting for professional purposes;

[39] ditto the sale of the vehicle shortly after the conclusion of the contract and [40] the potential making of a profit, albeit that the latter would in the view of the CJEU ordinarily not be of great impact.

The CJEU finally is not prepared (despite a self-confessed [47] in Wurth Automotive] potential to read same in CJEU Gruber) to read a benefit of the doubt, in inconclusive cases, to the benefit of the alleged consumer, leaving that with reference to CJEU TOTO to national procedural law. Here I think the Court could have held against such benefit on the basis of Brussels Ia itself.

Geert.

EU private International Law, 3rd ed. 2021, 2.231 ff.

 

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ROI Land Investments. The CJEU on letters of comfort and their leading to a qualification as employment cq consumer contract for jurisdictional purposes, and on more generous national rules for the protected categories.

In an interesting judgment, the CJEU yesterday held (no English edition yet) in C-604/20 ROI Land Investments Ltd v FD on protected categories suing a defendant not formally associated with the claimant by a clear contract of employment. That the defendant is not domiciled in the EU is in fact of less relevance to the issues.  I had somehow missed Richard de la Tour AG’s Opinion on same (it happens to the best of us).

Claimant in the main proceedings is FD, domiciled in Germany. Defendant is not his current employer and is not domiciled in a Member State. Yet by virtue of a letter of comfort it is directly liable to the employee for claims arising from an individual contract of employment with a third party. The gist of the case is whether an employee can sue this legal person under the employment title if the contract of employment with the third party would not have come into being in the absence of the letter of comfort.

The slightly complex three part construction, transferring relationships of employment, essentially is one of tax optimisation via Switserland. FD used to be employed by ROI Investment, a Canadian corporation, before his contract was transferred to R Swiss, a Swiss SPV created for the very purpose of the operation. ROI Investment via a letter of comfort effectively guaranteed the outstanding wages due to FD. FD’s contract with Swiss was ended, a German court held this to have been done illegally and ordered Swiss to pay a substantial sum whereupon Swiss went into insolvency. FD now wishes to sue the Canadian ’employer’.

CJEU Bosworth is the most recent case which extensively discusses the existence of ’employment’, referring to CJEU Shenavai and Holterman. In ROI Land the CJEU [34] instructs the national court in particular to assess whether there is a relationship of subordination between individual and corporation, even if subordination is actually only one of the Shenavai /Holterman criteria.

Erik Sinander has already noted here (his post came in as I was writing up mine) that this is a different emphasis from the AG: he had suggested a third party who was directly benefitting from the work performed by the employee (“un intérêt direct à la bonne exécution dudit contrat”) should be considered an employer. That to my mind is way too large a criterion and the CJEU is right to stick to the earlier ones.

[35] the CJEU suggests relevant circumstances in the case most probably confirming the relationship of subordination hence of employment: the activities which FD carried out for his two respective employers stayed the same, and the construction via the  SPV would not have been entered into by FD had it not been for his original employer’s guarantee.

The forum laboris in the case at issue is then I assume (it is not discussed quite so clearly in the judgment) determined by the place of habitual performance of the activities for the third party, the formal (now insolvent) employer, not the activities carried out for the issuer of the letter of comfort: for there are (no longer) such activities.

[37] ff the Court entirely correctly holds that more protective national rules cannot trump Brussels Ia’s jurisdictional provisions for the  protected categories: both clear statutory language and statutory purpose support that  conclusion.

[52] ff the CJEU entertains the subsidiary issue raised in the national proceedings as to whether the contract may be considered a consumer contract. It holds that the concept of ‘a purpose outside (a natural person’s) trade or profession’ does not just apply to a natural person in a self-employed capacity but may also apply to an employee. [56] seeing as FD would not have signed the new employment agreement without the letter of comfort, the employment agreement cannot be considered to be outside FD’s profession. Therefore it cannot qualify as a consumer contract.

Geert.

 

 

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G I Globinvestment. A jurisdiction finding with core shortfalls on Brussels Ia.

In G I Globinvestment Ltd & Ors v VP Fund Solutions (Luxembourg) SA & Ors [2022] EWHC 1872 (Comm) wealthy Italian investors seek to recover losses which they suffered when investments they had made plummeted in value at the outset of the COVID pandemic. Defendants are in various jurisdictions. Most have accepted jurisdiction, two of them, one based in Luxembourg, the other in Liechtenstein, challenge jurisdiction.

The claim against the Liechtenstein defendant is subject to common law rules, the country not being a party to Lugano. I will leave that further undiscussed here, suffice to say the challenge was unsuccessful.

The claim against the Luxembourg based defendant was issued before Brexit implementation date and subject to Brussels Ia. It claims there is an A25 exclusive choice of court clause in the investment fund’s general subscription terms, and Vineall DJ discusses it with reference to the general A25 outline in PIFSS v Piqtet.

Parties are agreed [64] – wrongly, nota bene, that on formal validity, the question is whether there has been an actual consensus between the parties, clearly and precisely demonstrated, and on material validity, the question is whether the dispute between the parties arose or originated from the particular legal relationship in connection with which the clause was concluded. That is the kind of agreement which would see my students fail a Brussels Ia question.

[65] a further major error is made with the parties seemingly agreeing that ‘whether the claim falls within the scope of the [clause], that question is to be answered according to Luxembourg law’.

The conclusions are [88] that there is no [forum clause] in the in the Subscription Agreement, although there is choice of law clause; 88.2. There is no EJC in the Offering Document; The Offering Document wrongly asserts that there is a jurisdiction clause in the Subscription Agreement; That is insufficient to establish a clearly and precisely demonstrated consensus; no consensus as to jurisdiction is demonstrated: the result of the conflicting documents is a muddle; therefore there is no exclusive jurisdiction clause on which VP Lux can rely.

I have not got the kind of access to the file to say the outcome is factually wrong – the route to it certainly is and simply wrong in law.

The judge also [89] concludes that whether one of the claimants is a consumer who can sue in England and Wales need not be decided:  ‘That issue does not seem to me to be entirely straightforward and since it is not necessary to resolve it in the light of my conclusions about [choice of court] I prefer not to decide it’: why not?: VP Lux contest jurisdiction and it is the judge’s task under Brussels Ia to assess the existence of jurisdiction on any of the Brussels Ia grounds.

Had the judgment been issued in exam season it would have been obvious material for ‘spot the Brussels Ia errors’.

Geert.

 

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Deane v Barker. Foreign law is fact leads to interesting comparative discussion on statutory interpretation (and the Spanish language).

In Deane v Barker & Ors [2022] EWHC 1523 (QB) concerns the frequent and upsetting scenario of falls in rented holiday accommodation. Claimant is habitually resident in England, proceedings were issued in December 2019, and subject therefore to Brussels Ia. Any jurisdictional challenge would have been tricky (but not impossible, seeing as 2 of the defendants are based in Spain; one of them one presumes is sued in E&W on the basis of BIa’s insurance title, the other (the Spanish company which manages the property) on the basis of the anchor mechanism or perhaps forum contractus). At any rate, there is no jurisdictional objection.

The owners of the villa, like the claimant, are domiciled in England and they are being sued on the tort of negligence which, per A4(2) Rome II, makes English law in principle the applicable law to most of the claim (there is also an additional contractual claim against the property manager, said to be subject to Spanish law per the cascade of A4 Rome I; and a claim in tort subject to Spanish law per A4(1) ).

Issues such as the standard of care and breach of duty viz the main claim will be informed by whether the staircase complied with Spanish law safety standards – CTE: that is the result of A17 Rome II. The issues for this preliminary discussion, are [21]

Issue 1 Whether the works conducted at the villa and/or on the staircase were refurbishment works (such as to trigger the application of the CTE) or merely maintenance works (such as not to trigger the application of the CTE)? Issue 2 Whether the villa (and the staircase within it) was for general or public use (such that the material provisions of the CTE would presumptively apply) or for restricted use (such that the same provisions would not apply)? Issue 3 Whether, if the material provisions of the CTE apply, this would in principle give rise to a breach of duty in English and Spanish law?

Issue 1 and 2 depend on the interpretation of foreign law which, in common law courts, is fact and must be proven. The discussion here seems to have turned on lengthy debate on the exact meaning of definitions. That this should be discussed so intensely does not surprise me (unlike the judge who suggested it was unusual): if a definition is of great relevance to the outcome of the case, why should it not be extensively discussed.  The debate also engages the methods of interpretation by the Spanish courts: this leads [38ff] to expert views and discussion that are  interesting with a view to comparative statutory interpretation, and will be of relevance to those with an interest in languages and law.

Geert.

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Clarke v Kalecinski. On rules of safety and conduct under Rome II, but also on the implications of marketing language for duty of care.

Update 20 April 2022 Daniel Clarke reviews the issue of proof of foreign law here.

Clarke v Kalecinski & Ors [2022] EWHC 488 (QB) concerns a claim for damages for personal injury sustained during cosmetic surgery undergone by claimant on 7 January 2015. Claims is against the surgeon (domiciled and habitually resident in Poland; but also registered with the UK General Medical Council) who performed the breast and thigh procedures in Poland, and against the Clinic (a company incorporated in Poland in which  the surgeon and his wife are the sole shareholders and directors), where the operations were carried out and she received pre-and post-operative treatment. Claimant also sues the insurer of the Clinic.

Jurisdiction is not disputed. Both surgeon and clinic are being sued under the consumer title of Brussels Ia. The insurance company is being sued under CJEU Odenbreit: subject to the applicable law of the tort and the existence under same of a direct right of action against an insurer, section 3 BIa gives claimant a right to sue in claimant’s domicile.

Claimant sues both surgeon and clinic, both in contract and in tort. She seeks to hold the clinic either directly or vicariously liable for the failures of the surgeons who treated her – one other Polish surgeon was involved in her care – and the nurses who cared for her at the clinic in Poland. Total potential liability for the insurance company, under the indemnity of the clinic (they do not insure the surgeon) is limited to approximately £38,500.

Proper law of the contract is English law, per A6(1) of the consumer title of Rome I. This is not disputed. It had been anticipated by claimant until trial that it was also a matter of agreement that the proper law of the claim in tort was Polish law, per Rome II. However in its skeleton argument, for the first time, the insurer raised an issue about the adequacy of claimant’s pleading arguing they had failed to plead the Polish law upon which they relied, so the proper law of the tortious claim was by default, English law.  That was rejected by the judge on the basis of the exchange between parties.

At [104] ff Foster J discussed the application of A17 Rome II: the judge must take into account as a matter of fact, the rules of safety and conduct in force at the place and time of the event, i.e. Poland. However [107] the judge insists on the importance of the English standard of care

where it is a term of the contract that the first defendant would operate to the same standard as a UK surgeon, skilled in this specialism, and registered with the GMC, it is that standard, that applied to the activities in issue here. The care offered by the clinic likewise. [emphasis in the original]

Those terms of the contract were deduced by the judge [77]:

[claimant] does not allege that she signed any contract or document, save for a consent form which the court has not seen. However, in my judgement the substance of the representations on the website upon which Ms Clarke clearly relied, were incorporated into the contract between her and the clinic together with Mr Kaleciński. In my judgement this was one contract but involving both parties: the surgeon and all the other care givers at the clinic, by means of the clinic (Noa Clinic Uslugi Sp. z o.o), those incorporated representations were to the following effect. The first defendant would carry out the surgery and he would carry it out to the standard to be expected of a GMC registered surgeon proficient in plastic surgery.

This emphasis by the judge imparts once again the relevance of language, no doubt for marketing purposes, for the consequential legal obligations. Foster J moreover holds [108]

That standard applies to the tortious duty also by reason of the  representations made to which reference is made above.

and [109] she holds

the findings of [the expert] are couched in such stringent terms that they cover any surgical and indeed clinical practice whether governed by local Polish customs or not. The conclusions of [the expert] put paid to any subtlety of distinction between local custom and English practice that might … in other circumstances be considered relevant. What took place fell so far below acceptable standards I cannot accept the contention that local standards or practices might have rendered the egregious failings in this case acceptable as a matter of contractual or tortious obligation.

The judge’s findings on A17 Rome II are interesting. Yet I find her conclusions on website representations even more relevant.

Geert.

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Milis Energy: CJEU confirms inapplicability of ECT in intra-EU relations, shields volatile energy subsidies from property rights, freedom of enterprise assault.

In Case C-306/19 Milis Energy the CJEU addresses on of the elephants in the energy transition room namely the support measures given by Member States to renewable energy installations, in particular photovoltaic energy, and the legality of reducing those support measures (a phenomenon which is to be expected seeing as the variety of energy transition measures gradually make renewable energy move from an infant industry to a mature industry).

As readers will know, reduced support and the sometimes capricious development of national energy subsidies has landed many an EU government in court, including in investor-State dispute settlement. Those latter cases often involve the controversial Energy Charter Treaty (ECT), and in current case the CJEU, not unexpectedly given its Komstroy case-law, holds that Milis, being incorporated in Italy, cannot call upon the ECT in its dispute with a Member State.

Articles 16 (freedom of enterprise) and 17 (property rights) of the EU Charter of Fundamental Rights were held not to protect Milis. With respect to Article 17, the CJEU emphasised that Member States enjoy a wide margin of discretion in the context of renewable energy subsidies and that both EU law and Italian law being subject to such volatility, an economic operator active in the sector necessarily must assume a regulatory and subsidy environment subject to frequent change, hence ruling out the qualification of enviseaged State subsidies in the sector as being a ‘good’ protected by Article 17 [41 ff]. With respect to Article 16, the Court emphasises the great discretion State enjoy to regulate economic enterprise [54 ff].

Geert.

 

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Forever chemicals, and suing 3M for PFAS pollution in Europe. A flag on applicable law.

Update autumn 2022 my article on A7 Rome II has now been published: Lex ecologia. On applicable law for environmental pollution, a pinnacle of business and human rights as well as climate change litigation.

On Friday, together with my learned colleague at both Bar and Faculty Isabelle Larmuseau, I was asked to put my environmental law hat on at the Flemish Parliament. I was heard  on the current scandal hitting Flanders following PFAS (‘forever chemicals’) emissions by 3 M at the port of Antwerp. For background to PFAS see here.

Isabelle’s slidedeck for same is here (updated at 09:28 on 31 August to correct earlier pdf which contained an earlier version of the slides), and mine here. Both are in Dutch, with Isabelle’s focusing on the Flemish environmental law angle (albeit with strong EU law influence, necessarily) and mine on the EU and international law context).

Focus of the debate is on environmental /public health law however for my conflicts followers there is a treat. A civil law suit by Belgian and /or other [the port of Antwerp is very close for instance to the Dutch border. Emissions in air, water and soil (for the latter, particularly if exported) clearly impact Dutch citisens, say] claimants against 3M’s Belgian corporate presence is easily pursued both in Belgium (Article 4 Brussels Ia) and in other Member States (Article 7(2) locus damni). Residual private international law in all these States would fairly straightforwardly allow for the suit to be extended to 3M’s corporate mother, based at St Paul, Minnesota.

The more exciting bit is applicable law. The impact of common US (State) law on forever chemicals suits is well documented. Despite EU courts not willing to apply the punitive damages elements of these suits, an application of the other elements of US tort law may well be very attractive to claimants here. Those US laws are certainly within reach of claimants, using Article 7 Rome II. There is no question the damage ‘arises out of’ environmental damage (unlike the hesitation in Begum v Maran). There is certainly merit in the suggestion that locus delicti commissi is in St Paul, Minessota. Like with its fellow manufacturers and industrial users of PFAS, 3M’s worldwide grip on corporate communication and legal strategy on the issue is tight. More importantly, the decision tree on the manufacture, use and emissions of PFAS is arguably equally located at holding level. Reference here can be made to the relevance of Shell’s holding policy in lex causae determination in the recent climate ruling.

Clearly, via A17 Rome II, Flemish and of course European environmental law would play a role (cue Isabelle’s slidedeck for an excellent starter).

A collective action procedure in say The Netherlands in my view would be an ideal strategy to test these most murky waters.

Geert.

EU Private International Law, 3rd. ed. 2021, Chapter 4, Heading 4.6.3 (4.54 ff).

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Weco projects: on Yachts lost at sea, anchor jurisdicton (that’s right), lis alibi pendens, carriage, ‘transport’ and choice of court.

In Weco Projects APS v Piana & Ors [2020] EWHC 2150 (Comm),  Hancock J held on a case involving Brussel Ia’s consumer title, including the notion of contract of ‘transport’, Article 25’s choice of court regime, and anchor jurisdiction under Article 8(1) BIa.

The facts of the case are complex if not necessarily complicated. However the presence of a variety of parties in the chain of events led to litigation across the EU. Most suited therefore to be, as WordPress tell me, the 1000th post on the blog.

For the chain of events, reference is best made to the judgment itself. In short, a Yacht booking note, with choice of court and choice of law was made for the Yacht to be carried from Antigua to Genoa. Reference was also made to more or less identical standard terms of a relevant trade association. A clause was later agreed with the identity of the preferred Vessel to carry out the transfer, followed by subcontracting by way of a Waybill.

The Yacht was lost at sea. Various proceedings were started in Milan (seized first), Genoa and England.

At 21, Hancock J first holds obiter that express clauses in the contract have preference over incorporated ones (these referred to the trade association’s model contract), including for choice of court. Readers will probably be aware that  for choice of law, Rome I has a contested provision on ‘incorporation by reference’, although there is no such provision in BIa.

Next comes the issue of lis alibi pendens. Of particular note viz A31(2) [‘Without prejudice to Article 26, where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement’] is the presence of two prima facie valid but competing exclusive choice of court agreements. Hancock J proceeds to discuss the validity of the English choice of court agreement in particular whether the businessman whose interest in sailing initiated the whole event, can be considered a consumer.

The judge begins by discussing whether the contract concerned is one of mere ‘transport’ which by virtue of A17(3) BIa rules out the consumer title all together. At 37 it is concluded that the contract is indeed one of transport and at 37(8) obiter that freight forwarding, too, is ‘transport’. Hancock J notes the limited use of CJEU authority, including Pammer /Alpenhof. In nearly all of the authority, the issue is whether the contracts at issue concerned more than just transport, ‘transport’ itself left largely undiscussed.

Obiter at 75, with reference to CJEU Gruber and Schrems, and also to Baker J in Ramona v Reliantco, Hancock J holds that Mr Piana had failed to show that the business use of the Yacht was merely negligible.

Following this conclusion the discussion turns to the impact of the UK’s implementation of the EU’s unfair terms in consumer contracts regulations, with counsel suggesting that the impact of these is debatable, in light of A25 BIa’s attempt at harmonising validity of choice of court. Readers will be aware that A25’s attempt at harmonisation is incomplete, given its deference to lex fori prorogati). Hancock J does not settle that issue, holding at 111 that in any event the clause is not unfair viz the UK rules.

Next follows the Article 8(1) discussion with reference to CJEU CDC and to the High Court in Media Saturn. Hancock J takes an unintensive approach to the various conditions: they need to be fulfilled without the court at the jurisdictional stage getting too intensively caught up in discussing the merits. At 139 he justifiably dismisses the suggestion that there is a separate criterion of foreseeability in A8(1). On whether the various claims for negative declaratory relief are ‘so closely connected’, he holds they are on the basis of the factuality of each being much the same and therefore best held by one court. Abuse of process, too, is ruled out per Kolomoisky and Vedanta: at 143: there is no abuse of process in bringing proceedings which are arguable for the purposes of founding jurisdiction over other parties.

(The judgment continues with extensive contractual review of parties hoping to rely on various choice of court provisions in the chain).

Quite an interesting set of Brussels Ia issues.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, big chunks of Chapter 2.

 

 

 

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Dutch SC applies Nk v PNB Paribas and determines locus damni for Peeters Gatzen suit.

Early July the Dutch Supreme Court followed-up on CJEU C–535/17 NK v BNP Paribas Fortis re the Peeters /Gatzen suit – a judgment I covered here. Roel Verheyden has additional analysis of the SC ruling, in Dutch, here. The SC held that the Dutch courts do not have jurisdiction, identifying Belgium as the Erfolgort per CJEU Marinari and Kolassa. As Roel notes, the SC (other than its AG) attention to potential ‘specific factors’ suggesting The Netherlands as an Erfolgort, is underwhelming and may lead to a general conclusion that Dutch Insolvency practitioners applying the Peeters /Gatzen suit to foreign parties while have to sue these abroad – leading to potential issues in the governing law itself and a disappearance of Peeters /Gatzen altogether.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.

Erfolgsort bij Peeters/Gatzen-vordering

 

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Tanchev AG in C‑208/18 Petruchová. On FOREX traders as ‘consumers’ for jurisdictional purposes.

Update 18 February 2020 see Matthias Lehmann’s additional analysis here, focusing on the distinction with MIFID rules.

Update 20 October 2019. The CJEU on 3 October agreed with its AG.

Tanchev AG Opined mid last month in C-208/18 Jana Petruchová v FIBO Group Holdings, essentially on the issue whether Article 17(1) Brussels Ia is to be interpreted as covering an individual who engages in trade on the international currency exchange market through a third party professionally engaged in that trade.

Or, as the AG himself puts it at 3, whether a natural person which engages in trade on the FOREX market must be regarded as a consumer or whether, by reason of the knowledge and expertise required to engage in that trade, of the complex and atypical nature of the contract at issue, and of the risks incurred, that person cannot be considered a consumer, so that he falls outside the scope of the section affording protection referred to above.

Under consideration is inter alia the impact of Rome I and of Directive 2004/39 – the relation in other words between applicable law and jurisdiction, and between substantive law and jurisdiction – see also my review of Pillar Securitisation here.

Ms Petruchová, residing in Ostrava (Czech Republic), and FIBO Group Holdings Ltd (‘FIBO’), a brokerage company established in Limassol (Republic of Cyprus), entered into a contract entitled ‘Terms of Business’ (‘the Framework Agreement’ – with choice of court for Cyprus). The purpose of the Framework Agreement was to enable Ms Petruchová to make transactions on the FOREX market by placing orders for the purchase and sale of the base currency, which FIBO would carry out through its online trading platform.

At 29, the AG suggests in my view correctly (Handbook p.106 2nd full para) that for choice of court under Article 19 B1a to be valid, it must allow the consumer to bring proceedings in courts in addition to those identified by Article 18.

Article 17(1) of the Brussels Ia Regulation applies if three conditions are met: first, a party to a contract is a consumer who is acting in a context which can be regarded as being outside his trade or profession; second, the contract between such a consumer and a professional has actually been concluded; and, third, such a contract falls within one of the categories referred to in Article 17(1)(a) to (c) of that regulation.

The question referred to the Court in the present case relates to the first condition. The AG refers in particular to C-269/95 Benincasa; and C-498/16 Schrems. At 46, referring to these cases: to determine whether a person must be regarded as a consumer, reference must be made to the nature and objective of the contract, not to the subjective situation of the person concerned. 

(at 40) ‘The question before the Court of Justice is whether a person who carries out transactions on the FOREX market may be denied the status of a consumer by reason of the knowledge and the expertise required to engage in such trades, the value of the transaction, the fact that the person is actively placing his own orders, the risks incurred on the FOREX market, and the number and frequency of the transactions carried out.’

In essence therefore, do the sophistication of the market and the intensity of the individual’s voluntary engagement with it, impact on their qualification as a consumer? The AG opines they do not, and I am minded to agree given CJEU authority, in my view most correspondingly C-218-12 Emrek – which the AG does not refer to. In that case the CJEU emphasised the objective charachter of the Pammer /Alpenhof criteria, decoupled from the consumer’s actual introduction to the business via word of mouth rather than the website.

The AG also refers to Schrems, where the Court held that the notion of a consumer is ‘distinct from the knowledge and information that the person concerned actually possesses’.

At 48 the AG finds additional support in Directive 93/13/EECon unfair terms in consumer contracts – although as we know e.g. from Pillar Securitisation, such support has now become less substantial.

At 51 the AG also emphasises the predictability of the Brussels regime – a classic interpretative tool which was bound to make an appearance. At 54 he adds that the risks involved in the conclusion of CfDs cannot preclude classification as a consumer. Quite the reverse: because of the risks, consumers need to be protected. At 59 he rejects [2014] EWHC 1085 (Comm) AMT Futures v Marzillier as relevant (national) precedent, although I do not think that either he or the Commission properly presented Popplewell J’s views on the issue. As I noted in my review at the time, ‘I do not think too much should be read in these examples – more so, the insistence that circumstances of the case do have an impact on the qualification as ‘consumer’.

At 69 on the issue of consumers, the AG concludes that ‘in order to determine whether a person who engages in trade on the FOREX market should be regarded as a consumer within the meaning of Article 17(1) of the Brussels Ia Regulation, no account should be taken of that person’s knowledge; of the value of the contract; of the fact that the person actively places his own orders; of the risks incurred; or of the number and frequency of the transactions.’

That leaves the questions

  • whether A17(1) BIa should be interpreted in a manner consistent with Article 6 Rome I, given that financial instruments such as CfDs are excluded from the scope of the rules applicable to consumer contracts laid down in Article 6(1) and (2) of the Rome I Regulation). Suggested answer: No: per Kainz, and now also I would suggest, Pillar Securitisation; and
  • whether account should be taken of the fact that the person is a retail client within the meaning of Directive 2004/39: for similar reasons: ditto answer.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

 

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