Posts Tagged Consumer protection
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 18.104.22.168.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 22.214.171.124.
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 126.96.36.199.
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.
Mr Kolassa, as a consumer, through the Austrian bank direktanlage.at AG, invested just under Euro 70,000.00 in X1 Global EUR Index Certificates. The certificates were issued by Barclays Bank, registered in the UK, with a branch in Frankfurt. At the time of the issue of the certificates, Barclays distributed a base prospectus, ia in Austria. The portfolio was to be established and administered by X1 Fund Allocation GmbH, to which Barclays Bank had entrusted the investment of the money raised from the issue of the certificates. Most of that money has been lost.
The certificates were sold to institutional investors who sold them on, in particular, to consumers. In the present case, direktanlage.at ordered the certificates to which Mr Kolassa wished to subscribe from its German parent company, DAB Bank AG, with its seat in Munich (Germany), which in turn acquired the certificates from Barclays Bank. In each case, the orders were placed and carried out in the name of the respective bank. Direktanlage.at fulfilled Mr Kolassa’s order in accordance with its general terms and conditions ‘in securities account’, meaning that direktanlage.at holds the certificates as covering assets in its own name at Munich, on behalf of its clients.
Mr Kolassa sues Barclays in Vienna, on the basis of contractual, precontractual, tortious or delictual liability. Jurisdiction in Vienna in his view is present on the basis of Article 15 JR (consumer contracts), 5(1) (contract) or 5(3) (tort). Application of Article 15 JR is dismissed by the ECJ on the basis of there being no contract whatsoever between Barclays and Mr Kolassa. (Judgment in Maletic distinguished given that the consumer in that case was from the outset contractually linked, inseparably, to two contracting partners). Application of Article 5(1) is in some ways more flexible because there need not be proof of a contract between the two parties: what is required, though, is proof of a legal obligation freely consented to by one person towards another and on which the claimant’s action is based. (For otherwise there is no ‘obligation’ which constitutes the connecting factor under Article 5). No such legal obligation ‘freely consented’ was apparent from the case hence Article 5(1) was dismissed, too.
That left Article 5(3). Per Kronhofer (also referred to in the Hoge Raad’s referral in Universal), the mere fact that the applicant has suffered financial consequences does not justify the attribution of jurisdiction to the courts of the applicant’s domicile if, per Kronhofer, both the events causing loss and the loss itself occurred in the territory of another Member State. On the basis of the facts of the case, the ECJ dismisses Austria as the locus delicti commissi: the decisions regarding the arrangements for the investments proposed by Barclays Bank and the contents of the relevant prospectuses, were taken in the Member State of Barclays’ seat, i.e. the UK.
The locus damni, the place where the loss occurred, is the place where the investor suffered it (at 54). ‘The loss occurred where the investor suffered it’ sounds like an abstract definition however the ECJ emphasises that that conclusion is fact-related, that is to say: it is a result of the that, first, the certificates’ loss of value was due, not to the vagaries of the market, but to the management of the funds in which the money from the issue of those certificates had been invested. Second, the actions or omissions alleged against Barclays with respect to its legal information obligations took place before the investment made by Mr Kolassa and were, in his view, decisive for that investment (at 51). If ‘the loss occurred where the investor suffered it’ is not an abstract but a fact related criterion, that puzzlingly may mean that there must be an alternative general criterion for purely financial loss if these are due to the ‘vagaries of the market’.
The Court further invites distinguishing by holding at 55 that ‘The courts where the applicant is domiciled have jurisdiction, on the basis of the place where the loss occurred, to hear and determine such an action, in particular when that loss occurred itself directly in the applicant’s bank account held with a bank established within the area of jurisdiction of those courts’. (Emphasis added).
Finally, the ECJ clarifies as much at it could, the balance between plaintiff’s allegations, and defendant’s rebuttal, at the jurisdictional level: what extent of evidence does the seized court need to review with a view to establishing its jurisdiction? The court holds ‘the national court seised is not, therefore, obliged, if the defendant contests the applicant’s allegations, to conduct a comprehensive taking of evidence at the stage of determining jurisdiction, it must be pointed out that both the objective of the sound administration of justice, which underlies Regulation No 44/2001, and respect for the independence of the national court in the exercise of its functions require the national court seised to be able to examine its international jurisdiction in the light of all the information available to it, including, where appropriate, the defendant’s allegations. (at 64). That of course is a thin line however I do not see how the ECJ can instruct otherwise.
In my view Kolassa invites further specification especially on the exact relevance of banks and bank accounts in cases of purely economic loss: Universal provides one such immediate opportunity.
The ECJ held in Vapenik some time ago (December 2013) and interprets Article 6(1) d of the European Enforcement Order (EEO) Regulation, Regulation 805/2004. This allows the Court faced with an uncontested claim in a consumer contract, with the consumer as debtor, to attach an enforcement order to its judgment, only if that court is the court of the domicile of the consumer.
The Regulation does not further specify whether the creditor in this relationship has to be a ‘business person’ (sic) , acting in his commercial capacity, or whether relations between two persons, both acting in their ‘consumer’ capacity, might suffice. The long and the short of this discussion is that the EEO Regulation does not include the paraphernalia for ‘consumer contracts’ which both the Brussels I and the Rome I Regulation do include. (And which have been the subject of extensive case law – see tag ‘consumer’ on this blog). The ECJ justifiably refers to the need to interpret the EEO and the Brussels I Regulation coherently on this point. Justifiably: for both the Brussels I-Regulation and the EEO Regulation concern the same stage of conflict of laws: enforcement (with in the case of Brussels-I jurisdiction thrown in precisely to assist enforcement).
I disagree though with the Court’s reference to substantive European consumer law, in particular the Directive on unfair terms in consumer contracts. Not because it is particularly harmful in the case at issue. Rather because I do not think conflict of laws should be too polluted with substantive law considerations. (See also my approval of Kainz). Do note that the ‘commercial’ nature of the counterparty to the contract, on which the ECJ ruled in Vapenik, is but one of many complications in consumer contracts under the Brussels I-Regulation. Further need for clarification therefore must not be ruled out (although national courts could take a lead from Vapenik and apply the Brussels I case-law mutatis mutandis).
As tweeted last week, the Court of Justice has clarified the scope of the consumer title of the Brussels-I Regulation in Case C-218/12 Emrek. In Spicheren, a town close to the German border, Mr Sabranovic sells second-hand motor vehicles. He had an internet site on which French telephone numbers and a German mobile telephone number were mentioned, together with the respective international codes. Mr Emrek, who resides in Saarbrücken (Germany) and who learned through acquaintances (not via the internet) of Mr Sabronovic’s business went there and purchased a second-hand motor vehicle.
Subsequently, Mr Emrek made claims against Mr Sabronovic under the warranty before the Amtsgericht (District Court) Saarbrücken. Mr Emrek took the view that, under Regulation No 44/2001, that court had jurisdiction to hear such an action. It was clear from the set-up of Mr Sabranovic’s website that his commercial activity was also directed to Germany. However, it was also clear that the contract that had been concluded was not the result of that direction: Mr Emrek had heard from the business by word of mouth, not the internet. Must there be a causal link between the means employed to direct the commercial activity to the Member State of the consumer’s domicile, namely the internet site, and the conclusion of the contract with the consumer?
The Court held that requiring such causal link would raise questions of burden of proof. Difficulties related to proof of the existence of a causal link would tend to dissuade consumers from bringing actions before the courts of their domicile and would therefore weaken the protection of consumers pursued by the regulation. However if and when that causal link is in fact established, it would constitute strong evidence which may be taken into consideration by the national court to determine whether the activity of the professional trader is ‘directed at’ the Member State of the consumer’s domicile.
The Court’s judgment could have certainly swayed differently. There are – among other textual – reasons for arguing pro requiring a causal link between the activities directed at the consumer’s place of domicile, and the eventual contract. The ECJ pushes out the consumer protection boat yet a little further.
I can’t quite think of a pun to end this posting. I’ll just end it. Geert.
Of rocks and hard stones for national courts – Villalon AG in Mühlleitner: No need for restrictive approach to the protective jurisdictional grounds for consumers in Brussels I
Villalon AG has opined in Case C-190/11 Mühlleitner [Opinion as yet not available in English].
Article 15 of the Brussels I ‘Jurisdiction’ Regulation, offers protective jurisdictional rules for consumers, provided one or two conditions are met. Article 15(1)(c) [statutory law likes its subdivisions) offers the generic criterion for application:
1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if: (…)
(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.’
In Pammer /Alpenhof, Alpenhof had argued amongst others that that its contract with the consumer is concluded on the spot and not at a distance, as the room keys are handed over and payment is made on the spot, and that accordingly Article 15(1)(c) of Regulation No 44/2001 cannot apply. The Court of Justice had answered this with the very paragraph which has now tempted the Oberster Gerichtshof – Austria, into the preliminary review, para 87:
‘ In that regard, the fact that the keys are handed over to the consumer and that payment is made by him in the Member State in which the trader is established does not prevent that provision from applying if the reservation was made and confirmed at a distance, so that the consumer became contractually bound at a distance.’
This paragraph seemed to suggest ‘at a distance’ as the trigger for the application of Article 15(1)(c) which in turn led to the preliminary question:
Does the application of Article 15(1)(c) [ ] presuppose that the contract between the consumer and the undertaking has been concluded at a distance?
Villalon AG replied on 24 May, making specific reference to the history of Article 15, in particular with reference to the old text, under the Brussels Convention. That old provision seemed to imply that where the consumer’s contracting party had encouraged him to leave his Member State of domicile so as to conclude the contract elsewhere, the consumer could not make recourse to the protective regime. Other changes to the relevant title, too, suggested if anything that Council and Commission’s intention with the new provisions was definitely not to limit their scope of application: had they intended to do so, the AG suggests, the Institutions would have limited Article 15’s scope to contracts concluded at a distance. Court of Justice case-law hints at the same need for a wide approach [in particular, Ilsinger, where the Court of Justice held that the scope of Article 15(1)(c) appears ‘to be no longer being limited to those situations in which the parties have assumed reciprocal obligations.’]
The AG concludes with the suggestion that the reference to ‘distance’ in para 87 of Alpenhof refers to a factual circumstance, rather than a condition for application.
To many the conclusion may seem obvious, and the issue covered by acte clair (meaning the national court could have referred to the arguably obvious meaning of the provision, not to have to refer to the Court of Justice). In particular, the COJ has repeatedly emphasised the relevance of the consumer title in the Jurisdiction Regulation. On the other hand, however, the same Court has been quite anxious to give national courts detailled and specific instructions on the application of tiny details in the Regulation, making application of the acte clair doctrine quite difficult: many things one thought were clear, have been answered by the Court in unexpected ways.
National courts therefore are caught between the proverbial rock and the hard stone. Either they refer profusely, thereby feeding the cycle of micromanagement. Or they make extended use of acte clair, thereby risking unequal application of the Regulation (and potentially European Commission irk). On the issue of Article 15(1)(c) at least, the former would seem to prevail: in Slot, Case C-98/12 (hitherto still pending), the German Bundesgerichtshof has asked essentially the same question.