Posts Tagged Consumer protection
Jurisdiction re prospectus liability. CJEU reiterates Universal Music in Löber v Barclays. Unfortunately fails to identify the exact locus damni and leaves locus delicti commissi unaddressed.
I reviewed Advocate-General Bobek’s Opinion in C-304/17 Löber v Barclays here. The following issues in particular were of note (I simply list them here; see the post for full detail): First, the AG’s view, coinciding with mine, that the CJEU’s finding in CDC that locus damni for a pure economic loss, in the case of a corporation, is the place of its registered office, is at odds with precedent (he made the same remark in flyLAL). Next, on locus delicti commissi, the AG suggests that despite Article 7(2)’s instruction, a single ldc within the Member State in the case at hand cannot be determined. Further, for locus damni, I disagree for reasons explained in the post with the AG’s suggestions.
The Court held on Wednesday. At 26 it immediately cuts short any expectation of clarification on locus delicti commissi: ‘In the present case, the case in the main proceedings concerns the identification of the place where the damage occurred.’
The referring court’s questions were much wider, asking for clarification on ‘jurisdiction’ full stop. Yet the Court must have derived from the file that only locus damni was in dispute. A missed opportunity for as I noted, Bobek AG’s views on that locus delicti commissi are not obvious.
On locus damni then, I may be missing a trick here but the Court simply does not answer the referring court’s question. As the AG notes, Ms Löber in order to acquire the certificates, transferred the corresponding amounts from her current (personal) bank account located in Vienna, to two securities ‘clearing’ accounts in Graz and Salzburg. Payment was then made from those securities accounts for the certificates at issue. The Court refers to Kolassa and to Universal Music, to reiterate that the simple presence of a bank account does not suffice to establish jurisdiction: other factors are required, such as here, at 33,
‘besides the fact that Ms Löber, in connection with that transaction, had dealings only with Austrian banks, it is furthermore apparent from the order for reference that she acquired the certificates on the Austrian secondary market, that the information supplied to her concerning those certificates is that in the prospectus which relates to them as notified to the Österreichische Kontrollbank (Austrian supervisory bank) and that, on the basis of that information, she signed in Austria the contract obliging her to make the investment, which has resulted in a definitive reduction in her assets.’
The Court concludes that ‘taken as a whole, the specific circumstances of the present case contribute to attributing jurisdiction to the Austrian courts.’
That however was not seriously in doubt: the more specific question is which one: Vienna? (which had rejected jurisdiction) Graz and /or Salzburg? Article 7(2) requires identification of a specific court (which the AG had identified in his opinion: I may not follow his argumentation, but it did lead to a specific court): not merely a Member State, and the Oberster Gerichtsthof had specifically enquired about the need for centralisation of the claim in one place.
All in all a disappointing judgment which will not halt further questions on jurisdiction for prospectus liability.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168.7
Jurisdiction re prospectus liability (misrepresentation) before the CJEU again. Bobek AG in Löber v Barclays.
Even Advocate-General Bobek has not managed to turn jurisdictional issues re prospectus liability into the prosaic type of analysis which many of us have become fond of. His Opinion in C-307/17 Löber v Barclays is a lucid, systematic and pedagogic review of the CJEU’s case-law on (now) Article 7(2)’s jurisdiction for tort in the context of ‘prospectus liability’ aka investment misrepresentation. Starting with the direct /indirect damage distinction; and focusing of course on the determination of pure economic loss.
Ms Helga Löber invested in certificates in the form of bearer bonds issued by Barclays Bank Plc. In order to acquire those certificates, the corresponding amounts were transferred from her current (personal) bank account located in Vienna, Austria to two securities accounts in Graz and Salzburg. Payment was then made from those securities accounts for the certificates at issue.
Note immediately that the jurisdictional discussion is a result of Article 7(2) not just identifying a Member State: it identifies specific courts within that Member State. Here: claimant brought her claim before a court in Vienna, the place of her domicile. This is also where her current bank account is located, from which she made the first transfer in order to make the investment. The first- and second-instance courts in Vienna however decided that they did not have jurisdiction to hear the case. The case is now pending before the Oberster Gerichtshof (Supreme Court, Austria). That court is asking, in essence, which of the bank accounts used, if any, is relevant to determine which court has jurisdiction to hear the claim at issue.
Close reference is made to Kolassa. In my posting on that case at the time, I noted that the many factual references which the Court built in in its decision, gave it dubious precedent value. Bobek AG in Löber necessarily therefore distinguishes many factual situations. The almost sole focus lies on 7(2): unlike in Kolassa, contracts neither consumer contracts are an issue.
Here are a few things of note:
First, in his review of the existing case-law the AG at 38 points out like I did at the time of the judgment, that the CJEU’s finding in CDC that locus damni for a pure economic loss, in the case of a corporation, is the place of its registered office, is at odds with precedent (he made the same remark in flyLAL).
Next, on locus delicti commissi, the AG suggests that despite Article 7(2)’s instruction, a single ldc within the Member State cannot be determined. The relevant point in his view is the moment from which the prospectus can, by operation of law, start influencing the investment behaviour of the relevant group of investors. In the present case, and considering the national segmentation of the capital market regulation at issue, that relevant group is made up of investors on secondary markets in Austria. At 65: once it became possible to offer the certificates on the Austrian secondary market, that possibility was immediately available for the whole territory of Austria. ‘The nature of the tort of misrepresentation at issue does not allow for the identification of a location within the national territory because once the author of the tort is allowed to influence the given national territory, that influence immediately covers the whole territory, irrespective of the actual means used for the publication of a specific prospectus.’ As we know from CDC, the Court does not readily accept that a single ldc cannot be determined.
Further, for locus damni, the AG suggests (at 78) ‘The place where…a legally binding investment obligation is factually assumed… The exact location of such a place is a matter for the national law considered in the light of available factual evidence. It is likely to be the premises of a branch of the bank where the respective investment contract was signed, which may correspond, as in the Kolassa case, to the place where the bank account is held.‘ That in my view first of all is not a warranted outcome. The investor in Löber is not a consumer within the protected categories of the Regulation. Suggesting the place of conclusion of the obligation leaves room for the claimant to manipulate the forum of any future suit in tort. This is exactly what the Court objected to in Universal Music. Moreover, note the reference to ‘the national law’. It is quite unusual to suggest such a role for lex fori in light of the principle of autonomous interpretation. Unless the AG in fact means the ‘lex contractus’, presumably to be determined applying Rome I.
In summary there are quite a few open questions here – not something of course which I would necessarily object to.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.7
Update 14 November 2018 Hearing took place yesterday – Opinion AG scheduled for 28 February 2019.
A quick flag to those of you following consumer protection and the Directive (2002/58) on privacy and electronic communications. In Case C-673/17 Planet49 the Court of Justice is being asked to clarify to what extent a website which pre-ticks boxes in general terms and conditions (here: to share relevant personal data) is compatible with relevant EU laws.
File of the case here (in Dutch only).
Postscript 16 May 2018 Tanya Monestier article re same here.
Thank you Stephen Pittel for flagging 2017 SCC 33 Douez v Facebook Inc. Stephen also discusses the forum non conveniens issue and I shall leave that side of the debate over to him. What is interesting for comparative purposes is the Supreme Court’s analysis of the choice of court clause in consumer contracts, which it refuses to enforce under public policy reasons, tied to two particular angles:
- ‘The burdens of forum selection clauses on consumers and their ability to access the court system range from added costs, logistical impediments and delays, to deterrent psychological effects. When online consumer contracts of adhesion contain terms that unduly impede the ability of consumers to vindicate their rights in domestic courts, particularly their quasi-constitutional or constitutional rights, public policy concerns outweigh those favouring enforceability of a forum selection clause.’ (emphasis added)
Infringement of privacy is considered such quasi-constitutional right.
- ‘Tied to the public policy concerns is the “grossly uneven bargaining power” of the parties. Facebook is a multi-national corporation which operates in dozens of countries. D is a private citizen who had no input into the terms of the contract and, in reality, no meaningful choice as to whether to accept them given Facebook’s undisputed indispensability to online conversations.’
With both angles having to apply cumulatively, consumers are effectively invited to dress up their suits as involving a quasi-constitutional issue, even if all they really want is their PSP to be exchanged, so to speak. I suspect however Canadian courts will have means of sorting the pretended privacy suits from the real ones.
A great judgment for the comparative binder (see also Jutta Gangsted and mine paper on forum laboris in the EU and the US here).
As I noted at the time, the long and the short of the case is whether the concept of ‘consumer’ under the protected categories of Brussels I (and Recast) is a dynamic or a static one; and what kind of impact assignment has on jurisdiction for protected categories.
On the first issue, Mr Schrems points to his history as a user, first having set up a personal account, subsequently, as he became the poster child for opposition to social media’s alleged infringement of privacy, a Facebook page. Each of those, he suggests, are the object of a separate contract with Facebook. FB suggests they are part of one and the same, initial contractual relationship. This one assumes, would assist FB with its line of argument that Herr Schrems’ initial use may have been covered by the forum consumentis, but that his subsequent professional use gazumps that initial qualification.
The Court suffices at 36 with the simple observation that the qualification as a single or dual contract is up to the national court (see inter alia the Gabriel, Engler and Ilsinger conundrum: Handbook, Chapter 2, Heading 126.96.36.199.a and generally the difficulties for the CJEU to force a harmonised notion of ‘contract’ upon the Member States), yet that nevertheless any such qualification needs to take into account the principles of interpretation of Brussels I’s protected categories: in particular, their restrictive interpretation. Whence it follows, the Court holds, that the interpretation needs to be dynamic, taking into account the subsequent (professional or not) use of the service: at 37-38: ‘il y a notamment lieu de tenir compte, s’agissant de services d’un réseau social numérique ayant vocation à être utilisés pendant une longue durée, de l’évolution ultérieure de l’usage qui est fait de ces services. Cette interprétation implique, notamment, qu’un requérant utilisateur de tels services pourrait invoquer la qualité de consommateur seulement si l’usage essentiellement non professionnel de ces services, pour lequel il a initialement conclu un contrat, n’a pas acquis, par la suite, un caractère essentiellement professionnel.’
The Court does add at 39-40 that acquired or existing knowledge of the sector or indeed the mere involvement in collective representation of the interests of the service’s users, has no impact on the qualification as a ‘consumer’: only professional use of the service does. (The Court in this respect refers to Article 169(1) TFEU’s objective to assist consumers with the representation of their collective interest).
On this point therefore the Court unlike the AG attaches more weight to restrictive interpretation than to predictability. (Bobek AG’s approach to the issue of dynamic /static was expressed more cautiously).
As for the assignment issue, the Court sides squarely with its AG: the assigned claims cannot be pursued in the jurisdiction which is the domicile of the assignee. That in my view de lega lata makes perfect sense.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52.
Qualifying ‘consumers’ on social media and in the case of assignment. Bobek AG in Schrems v Facebook.
Bobek AG must have picked up his knack for colourful language at Teddy Hall. His Opinion last week in C-498/16 Schrems v Facebook is a delight and one does best service to it by simply inviting one reads it. Now, that must not absolve me of my duty to report succinctly on its contents – the Court itself I imagine will be equally short shrift with claimant’s arugments.
When I asked my students in the August exam to comment on the case, I simply gave them the preliminary questions and asked them how the CJEU should answer them:
1 Is Article 15 of Regulation 44/2001 to be interpreted as meaning that a ‘consumer’ within the meaning of that provision loses that status, if, after the comparatively long use of a private Facebook account, he publishes books in connection with the enforcement of his claims, on occasion also delivers lectures for remuneration, operates websites, collects donations for the enforcement of his claims and has assigned to him the claims of numerous consumers on the assurance that he will remit to them any proceeds awarded, after the deduction of legal costs?
2. Is Article 16 of Regulation (EC) No 44/2001 to be interpreted as meaning that a consumer in a Member State can also invoke at the same time as his own claims arising from a consumer supply at the claimant’s place of jurisdiction the claims of others consumers on the same subject who are domiciled
a. In the same Member State, b. In another Member State: or c. In a non-Member State,
if the claims assigned to him arise from consumer supplies involving the same defendant in the same legal context and if the assignment is not part of a professional or trade activity of the applicant, but rather serves to ensure the joint enforcement of claims?
The long and the short of the case is whether the concept of ‘consumer’ under the protected categories of Brussels I (and Recast) is a dynamic or a static one; and what kind of impact assignment has on jurisdiction for protected categories.
On the first issue, I expected my students to point to the CJEU’s precedent of applying the Regulation with a view to predictability and legal certainty; specifically for consumers, to Gruber and the burden of proof in cases of dual use; and to the Court’s judgment in Emrek. Other than the last issue, the AG points to all. Predictability points to a static approach: I would suggest the AG is right. Bobek AG does leave the door ajar for a dynamic interpretation: at 39: in exptional cases, a ‘dynamic’ approach to consumer status should not be entirely excluded. This could be potentially relevant in the event that a contract does not specify its aim, or it is open to different uses, and it lasts a long period of time, or is even indeterminate. It is conceivable that in such cases, the purpose for which a certain contractual service is used might change — not just partially, but even completely. Social media contracts may lead to such circumstances, one imagines, however there would be many ifs and buts to such analysis: including, I would suggest, the terms of the contract wich the service provider initially drew up.
On the issue of assignment the AG’s approach is entirely logical and not surprising: evidently Herr Schrems cannot have claims assigned to him and then exercise those claims using any other jurisdictional prerogatives then present in the original claim. While these may allow him to sue in the forum actoris of the original consumer, there is no valid argument whatsoever to suggest he could join them to his own domicile. The arguments made de lege ferenda (need for forum shopping in collective consumer redress) are justifiably rejected.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206.
Thank you Jeffrey Neuburger for flagging Wiseley v Amazon in the US Federal Court of Appeal (9th circuit). Jeffrey has excellent overview and analysis so I will suffice with identifying a few tags: the issue of click-wrap agreements (when does one agree to GTCs contained in pop-ups and hyperlinks and the like); application of a putable law to a contract (the von Munchausen or ‘bootstrap’ principle); comparative dispute resolution law: how would EU law look at the issues? Have fun.