A boutique blog and legal practice on niche areas of the law. Recent developments in conflict of laws; international economic law; environmental law.
A brief note on domicile and time of assessment: the CJEU held a few weeks back in C-98/20 mBank, holding that for the application of the relevant protected categories title under Brussels Ia, a consumer’s domicile needs to be determined at the time the action is brought. Once again therefore predictability for the business side in a B2C contract is considered less relevant than the protection or rather procedural comfort for the consumer.
Geert.
It is not per se unheard of for European conflict of laws developments to be referred to in other jurisdictions. In Bauer v QBE Insurance [2020] WADC 104 however the intensity of reference to CJEU authority and EU conflicts law is striking and I think interesting to report.
The context is an application to serve out of jurisdiction – no ‘mini trail’ (Melville PR at 20) therefore but still a consideration of whether Western Australia is ‘clearly an inappropriate forum’ in a case relating to an accident in Australia following an Australian holiday contract, agreed between a German travel agent and a claimant resident (see also below) in Germany but also often present in Australia – which is where she was at the time the contract was formed. Defendant contests permission to serve ia on the basis of an (arguable) choice of court and governing law clause referring exclusively to Germany and contained in defendant’s general terms and conditions.
Two other defendants are domiciled in Australia and are not discussed in current findings.
In assessing whether the German courts have exclusive jurisdiction and would apply German law, the Australian judge looks exclusively through a German lens: what would a German court hold, on the basis of EU private international law.
Discussion first turns to the lex contractus and the habitual residence, or not, of claimant (who concedes she is ‘ordinarily’, but not habitually resident in Germany) with reference to Article 6 Rome I’s provision for consumer contracts. This is applicable presumably despite the carve-out for ‘contracts of carriage’ (on which see Weco Projects), seeing as the contract is one of ‘package travel’. Reference is also then made to Winrow v Hemphill. Melville PR holds that claimant’s habitual residence is indeed Germany particularly seeing as (at 38)
she returned to Germany for what appears to be significant and prolonged treatment after the accident rather going elsewhere in the world and after only apparently having left her employment in Munich in 2014, is highly indicative of the fact the plaintiff’s state of mind was such that she saw Germany as her home and the place to return to when things get tough, a place to go to by force of habit.
Discussion then turns to what Michiel Poesen has recently discussed viz contracts of employment: qualification problems between contract and tort. No detail of the accident is given (see my remark re ‘mini-trial’ above). Reference to and discussion is of Rome II’s Article 4. It leads to the cautious (again: this is an interlocutory judgment) conclusion that even though the tort per Article 4(3) Rome II may be more closely connected to Australia, it is not ‘manifestly’ so.
Next the discussion gets a bit muddled. Turning to jurisdiction, it is concluded that the exclusive choice of court is not valid per Article 25 Brussels Ia’s reference to the lex fori prorogati.
In final conclusion, Western Australia is not held to be a clearly inappropriate forum. The case can go ahead lest of course these findings are appealed.
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2.
C-500/18 AU v Reliantco was held by the CJEU on 2 April, in the early fog of the current pandemic. Reliantco is a company incorporated in Cyprus offering financial products and services through an online trading platform under the ‘UFX’ trade name – readers will recognise this from [2019] EWHC 879 (Comm) Ang v Reliantco. Claimant AU is an individual. The litigation concerns limit orders speculating on a fall in the price of petrol, placed by AU on an online platform owned by the defendants in the main proceedings, following which AU lost the entire sum being held in the frozen trading account, that is, 1 919 720 US dollars (USD) (around EUR 1 804 345).
Choice of court and law was made pro Cyprus.
The case brings to the fore the more or less dense relationship between secondary EU consumer law such as in particular the unfair terms Directive 93/13 and, here, Directive 2004/39 on markets in financial instruments (particularly viz the notion of ‘retail client’ and ‘consumer’).
First up is the consumer title under Brussels Ia: Must A17(1) BIa be interpreted as meaning that a natural person who under a contract concluded with a financial company, carries out financial transactions through that company may be classified as a ‘consumer’ in particular whether it is appropriate, for the purposes of that classification, to take into consideration factors such as the fact that that person carried out a high volume of transactions within a relatively short period or that he or she invested significant sums in those transactions, or that that person is a ‘retail client’ within the meaning of A4(1) point 12 Directive 2004/39?
The Court had the benefit of course of C-208/18 Petruchová – which Baker J did not have in Ang v Reliantco. It is probably for that reason that the case went ahead without an Opinion of the AG. In Petruchová the Court had already held that factors such as
are, as such, in principle irrelevant to determine the qualification as a ‘consumer’. In Reliantco it now adds at 54 that ‘(t)he same is true of a situation in which the consumer carried out a high volume of transactions within a relatively short period or invested significant sums in those transactions.’
Next however comes the peculiarity that although AU claim jurisdiction for the Romanian courts against Reliantco Investments per the consumer title (which requires a ‘contract’ to be concluded), it bases its action on non-contractual liability, with applicable law to be determined by Rome II. (The action against the Cypriot subsidiary, with whom no contract has been concluded, must be one in tort. The Court does not go into analysis of the jurisdictional basis against that subsidiary, whose branch or independent basis or domicile is not entirely clear; anyone ready to clarify, please do).
At 68 the CJEU holds that the culpa in contrahendo action is indissociably linked to the contract concluded between the consumer and the seller or supplier, and at 71 that this conclusion is reinforced by A12(1) Rome II which makes the putative lex contractus, the lex causae for culpa in contrahendo. At 72 it emphasises the need for consistency between Rome II and Brussels IA in that both the law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract and the court having jurisdiction to hear an action concerning such an obligation, are determined by taking into consideration the proposed contract the conclusion of which is envisaged.
Interesting.
Geert.
(Handbook of) EU private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.
Jonathan Hutchinson v MAPFRE and Ice Mountain (OBeach) Ibiza [2020] EWHC 178 (QB) like all cases involving serious accidents, cannot be written about without the greatest sympathy for claimants having suffered serious physical damage. The case concerns the horror scenario of either a fall or a dive in a pool leading to head and spinal injury. Mr Hutchinson (represented by Sarah Crowter QC) is a former Birmingham City football player who visited an Ibiza club owned by a fellow Brit – those interested in the background see here.
Defendants are the club (ICE Mountain, Spain registered) and their insurers, MAPFRE (ditto). Clearly to sue in England the case needs to involve either a protected category (consumers; insureds) or a special jurisdictional rule (contract; tort).
Andrews J is right in calling jurisdiction on the consumer title against ICE Mountain straightforward. The Pammer /Alpenhof criteria are fulfilled; that claimant’s purchase of a ticket was not the result of the directed activities is irrelevant per CJEU Emrek; (at 21 she dismisses an argument to try and distinguish Emrek on the facts, which argued that claimant had entered the pool via the VIP area to which his ‘standard’ ticket did not actually give access).
The further discussion involves the insurance title of Brussels Ia, which reads in relevant part (Article 13):
(1). In respect of liability insurance, the insurer may also, if the law of the court permits it, be joined in proceedings which the injured party has brought against the insured. (2). Articles 10, 11 and 12 shall apply to actions brought by the injured party directly against the insurer, where such direct actions are permitted. (3). If the law governing such direct actions provides that the policyholder or the insured may be joined as a party to the action, the same court shall have jurisdiction over them.
The claims against Ice Mountain in tort or for breach of statutory duty are halted by Andrews J. The question here is whether the ‘parasitic’ claim under A13(3) requires the issue to ‘relate to insurance’ (recently also discussed obiter in Griffin v Varouxakis), an issue already discussed in Keefe, Hoteles Pinero Canarias SL v Keefe [2015] EWCA Civ 598 (referred to in Bonnie Lackey), sent to the CJEU but settled before either Opinion of judgment. The same issue is now before the CJEU as Cole and Others v IVI Madrid SL and Zurich Insurance Plc, pending in anonymised fashion before the CJEU it would seem as C-814/19, AC et al v ABC Sl (a wrongful birth case).
At any rate, the non-contractual claims against Ice Mountain were stayed until the CJEU has answered the questions referred to it by Judge Rawlings in Cole.
A late [but that in itself does not matter: lis alibi pendens needs to be assessed ex officio (at 36)] challenge on the basis of A29-30 lis alibi pendens rules was raised and dismissed. The other proceedings are criminal proceedings in Ibiza. The argument goes (at 37) that there are ongoing criminal proceedings in Spain arising out of the accident which led to Mr Hutchinson’s injuries, and because Mr Hutchinson has failed to expressly reserve his right to bring separate civil proceedings, the Public Prosecutor is obliged to bring civil proceedings on his behalf within the ambit of those criminal proceedings. For that reason, Ice Mountain contend that the Spanish court is seised of any civil claim arising from the same facts as are under investigation in the Spanish criminal proceedings, and has been since 2016, long before these proceedings were commenced.
This line of argument fails to convince Andrews J: ‘Through no fault of his own, Mr Hutchinson has never been in a position knowingly to take any formal steps to reserve his position in Spain to commence separate civil proceedings against anyone he alleges to be legally liable for his injuries. Yet, if Ice Mountain is right, he will have been deprived of any choice in the matter of where to bring his civil claim merely because, without his knowledge or consent, a doctor in the hospital filed a report which triggered a criminal investigation into the accident, of which he was never told.’ Quite apart from this unacceptable suggestion, the criminal proceedings in Ibiza have been closed, and (at 59) ‘there is no ongoing criminal action leading to trial, to which any civil action would attach.’
For the claims against Mapfre, Mrs Justice Andrews held that the court has jurisdiction on two alternative basis:
Firstly, the provision in the contract of insurance upon which Mapfre seeks to rely as demonstrating that there is no good arguable case against it on the merits cannot be relied on, as that would substantially undermine the protection to the weaker party specifically provided for in the insurance provisions of Recast Brussels 1.
In essence, Mapfre accepts that under Spanish law, there would be a direct right of action against it as Ice Mountain’s liability insurer if it were liable to indemnify Ice Mountain under the policy, but it contends that Mr Hutchinson does not have a good arguable case that Mapfre’s policy of insurance covers Ice Mountain’s liability to him under a judgment given by an English court. The policy would, however, cover Ice Mountain’s liability to him for the same accident, based on the identical cause (or causes) of action, under a judgment given by a Spanish court. (ICE Mountain agree, therefore also acknowledging it is uninsured in respect of any claims which the English consumers who are its targeted customers might bring in the courts of their own domicile pursuant to A17-18 BIa). If this were right, this would mean a massive disincentive for the consumer to sue in his jurisdiction: at 66 (a devilish suggestion): If he wins and the uninsured defendant is not good for the money, he would be left without a remedy, whereas if he sued in Spain, the same defendant would be insured in respect of the same liability, and he would recover from the insurer up to the policy limits.
At 67: if a party who owes contractual duties to consumers ‘does insure, and a direct of action exists against the insurer under the law which governs the insurance contract, then ‘Recast Brussels I does not contemplate that he should be permitted to contract with the insurer on a basis that acts as a disincentive to consumers to exercise their rights to sue him (and his insurer) in the courts of their own domicile or which renders any rights of suit against the insurer in that jurisdiction completely worthless by using the exercise of those rights as grounds for avoiding the insurer’s obligation to indemnify him.‘
The Spanish law experts called upon to interpret the provisions of the territorial scope title in the insurance policy, differed as to exact meaning. However the issue was settled on the basis of EU law, with most interesting arguments (and reference ia to Assens Havn): summarising the discussion: a substantial policy clause limiting liability to awards issued by Spanish judgments, in practice would have the same third party effect as a choice of court clause which B1A does not allow (see A15: The provisions of this Section may be departed from only by an agreement… (3) Which is concluded between a policyholder and an insurer, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same member state, and which has the effect of conferring jurisdiction on the courts of that state even if the harmful event were to occur abroad, provided that such agreement is not contrary to the law of that Member State….”
At 84:
‘If a clause which has that effect can be relied on against a person such as Mr Hutchinson it would drive a coach and horses through the special rules on insurance laid down under Section 3 of Chapter II. It would provide every liability insurer (not just Spanish insurers) with the simplest means of depriving the injured party of the choice of additional jurisdictions conferred upon him by Articles 11 to 13 of Recast Brussels 1. It would be the easiest thing in the world for an insurer, as the economically strongest party, to include a standard term in the policy that he is only liable for claims that have been brought against the policyholder in the courts of the policyholder’s and/or the insurer’s own domicile.’
This part of the judgment is most interesting and shows the impact jurisdictional rules and their effet utile may have on substantive law (at the least, third party effect of same).
Alternatively, even if the analysis above is wrong, ‘on the basis of the expert evidence on Spanish law that is currently before the Court, at this stage of the proceedings the Claimant has established at the very least a plausible evidential basis for finding that the clause in question (the one which effectively limits pay-outs to judgments issued in Spain) is not binding upon him as a third party to the contract, and therefore is ineffective to prevent MAPFRE from being directly liable if his claim is otherwise well-founded on the merits. He has therefore established a good arguable case that the jurisdictional gateway under Article 13(2) of Recast Brussels 1 applies.’
Most relevant and interesting.
Geert.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 Heading 2.2.11.2
I have waited a little while to discuss (I had tweeted it earlier) [2019] EWHC 1028 (QB) Bonnie Lackey v Mallorca Mega Resorts. It is a good case for an exam essay question and that is what I used it for this morning (albeit in simplified form, focusing on the consumer title).
Defendant is domiciled in Spain, and is hereafter referred to as ‘the Hotel’. Claimant was one of a group of friends who went on holiday to Magaluf in Mallorca, Spain. The booking was made in May 2017 by Ms Donna Bond, who was one of the party and a friend of Bonnie Lackey. The Agency’s Booking Conditions stated
‘references to “you” and “your” include the first named person on the booking and all persons on whose behalf a booking is made …’.
Section A, applicable to all bookings stated:
“By making a booking, you agree on behalf of all persons detailed on the booking that you have read these terms and conditions and agree to be bound by them”.
In my exam question I have left the agency out of the factual matrix. Its presence is immaterial for the case for the agency acts, well, as an agent: contract is between clients and the hotel direct.
The group were staying at the site owned and operated by the Hotel. It is agreed between parties that the Agency’s and Hotel’s marketing meets with the Pammer Alpenhof criteria, in other words that they direct their activity at England. Claimant, Ms Lackey, who is domiciled in England, was seriously injured in the ‘wave’ pool and is now tetraplegic. Damages application is for £9 million given the high cost of care for the now 41 year old claimant.
A first discussion concerned the insurance section (not part of the exam essay)(15 ff). Generali (of Spain) were the hotel’s insurers and had already accepted jurisdiction for the English courts. Their liability though was capped at an absolute max of 0.45 Million Euros – far off the claim. Claimant’s hope was that Article 13(3) Brussels Ia as Clyde point out, might be used for a claim anchored unto Generali. Here, the High Court followed the authority of Hoteles Pinero Canarias SL v Keefe [2015] EWCA Civ 598, see references to EU law there. That case went up to the Supreme Court and thence to the CJEU where it was taken off the roll following settlement. In any event, following Keefe, Davison M in Bonnie Lackey held that jurisdiction was conferred on the English courts by Articles 11 and 13 BIa, (contained in Section 3) which permit a claim here against the insurer and the joinder of the hotel to that claim. Master Davison rejected suggestions for the need of a CJEU reference among others because he also upheld jurisdiction under the consumer title. The essential question here was whether there is a need for complete identity between the consumer referred to in Article 17(1) and the consumer referred to in Article 18(1) BIa.
Davison M suggests there need not, referring in particular to the Regulation’s aims to protect the weaker party, and to rule out as much as possible the risk of irreconcilable judgments.
Defendant’s reference to Schrems was considered immaterial. At 39: ‘Plainly, the consumer bringing the claim must be a beneficiary of the consumer contract or at least within its ambit. That does not mean that she personally must have concluded it. To borrow again from the judgment of Gloster LJ in Keefe, there would be no linguistic or purposive justification for such a restrictive interpretation.’ I am not sure I agree, not at any rate without proper discussion of ‘within its ambit’. The CJEU’s case-law on the protected categories does evidently aim to protect weaker categories and interpretation of same must serve that purpose. However the CJEU at the same time also emphasises the fact that these sections are an exception to the general rule and therefore must not be applied too widely, either.
Master Davison cuts short too extensive a discussion of the ‘ambit’ issue, by referring to the General Terms and Conditions – GTCS: the consumer who booked, accepted these GTCS ‘on behalf of all persons detailed in the booking’. At 40: ‘The hotel deployed no evidence of any kind to displace the effect of these terms, (which, I would add, are standard terms to be expected in a contract of this kind). A person who contracts through an agent has still “concluded” a contact. Thus, all argument about the need for complete identity between the consumer referred to in Article 17.1 and the consumer referred to in Article 18.1 is redundant. In each case it was the claimant, Ms Lackey.’ Whether counsel should have made more noise about this issue I do not know, however I would have expected discussion here of the general respect the Regulation has for privity of contract (which I discuss repeatedly on the blog).
I do not think this case will settle the matter. Its outcome evidently is positive (particularly considering that for Ms Lackey it will really not be straightforward to attend trial in Spain). However its legal reasoning cuts a few corners.
I would expect my students to discuss the need for effective protection of consumers ‘v’ the exceptional character of the section; and privity of contract which the CJEU flags on several occasions. Each with proper case-law references.
Geert.
Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.
Update the merits were held today in Ang v Reliantco Investments Ltd [2020] EWHC 3242 (Comm)
As noted, I have come up for some air after a few hectic weeks – next case to report on is [2019] EWHC 879 (Comm) Ramona v Reliantco, held 12 April. (A similar case is pending with the CJEU against Reliantco as Case C-500/18).
Defendant (‘Reliantco’) is a company incorporated in Cyprus offering financial products and services through an online trading platform under the ‘UFX’ trade name. Claimant, Ms Ang, is an individual of substantial means who invested in Bitcoin futures, on a leveraged basis, through the UFX platform. She claims, essentially and primarily, that Reliantco wrongfully blocked and terminated her UFX account and should compensate her for the loss of her open Bitcoin positions, or at a minimum should refund her cash value invested. She also makes claims for relief in respect of what she says have been breaches of data protection obligations owed by Reliantco in connection with her UFX account.
The judgment does not concern the merits of Ms Ang’s claims but rather an application by Reliantco challenging jurisdiction. Reliantco contends that Ms Ang is bound by its standard terms and conditions, clause 27.1 of which provides that the courts of Cyprus are to have exclusive jurisdiction over “all disputes and controversies arising out of or in connection with” her customer agreement. Reliantco therefore relies on Article 25 Brussels Ia.
Ms Ang says that clause 27.1 is ineffective to require her to bring her claim in Cyprus, either because she is a consumer within Section 4 of Brussels (Recast) or because clause 27.1 was not incorporated into her UFX customer agreement with Reliantco in such a way as to satisfy the requirements of Article 25. Ms Ang says, in the alternative, that her data protection claims may be brought here notwithstanding Article 25 Brussels Ia even if Article 25 applies to her primary substantive claims.
All in all a nice set of jurisdictional issues and no surprise to have prof Jonathan Harris QC involved as counsel.
At all times material to her claim, Ms Ang was not employed or earning a living in any self-employed trade or profession (unless, which is contentious between the parties and considered below, her activity as a customer of Reliantco via the UFX platform is itself to be so classified). Ms Ang worked in money markets for two months as a trainee, observing US$/DM currency swaps. Other than that, she has no professional currency trading or money market experience (again, that is, unless her use of the UFX platform to invest in Bitcoin futures itself counts as such).
At 9, a little bit of Bitcoin drame enters the scene: Ms Ang’s husband, Craig Wright, is a computer scientist with cybersecurity and blockchain expertise who works as Chief Scientist for nChain Ltd, a blockchain technology company with a corporate vision “to transform how the world conducts all transactions – using the blockchain’s distributed, decentralised ledger that chronologically records transactions in an immutable way“. As a researcher, he publishes prolifically and has developed innovations for which patent protection has been sought. He is the same Craig Wright who has identified himself publicly as being ‘Satoshi Nakamoto’, the online pseudonym associated with the inventor (or a co-inventor) of Bitcoin. Baker J holds that he need not consider whether that claim is true, and on the evidence for this application I would not be in any position to do so.
Was Ms Ang a ‘consumer’? At 52 ff the arguments of Reliantco are summarised; at 55 ff those of Ms Ang.
CJEU precedent discussed by Baker J is C-89/91 Shearson; C-269/95 Benincasa; C-464/01 Gruber; C-498/16 Schrems; and the pending cases C‑208/18 Petruchová [I reviewed the AG’s Opinion (issued a day before the High Court’s judgment) yesterday] and C-500/18 Reliantco Investments and Reliantco Investments Limassol Sucursala Bucureşti.
Baker J concludes at 34 ‘the ECJ/CJEU has not decided whether contracts entered into by a wealthy private individual for the purpose of investing her wealth, or particular types of such contract, are not (or can never be) consumer contracts.’
Reference is then made to English precedent along the very lines of the precedent dismissed by Tanchev AG in Petruchová: including AMT Futures v Marzillier, and at 35 ff Standard Bank London Ltd v Apostolakis both through the English and the Greek courts – with differing results. At 44: ‘the disagreement between the English and Greek decisions in Apostolakis turns upon and is constituted by a difference of view as to whether investing private wealth for gain, if it takes the form of buying and selling foreign currency, is by nature a business activity so that an individual investing their wealth in that way cannot when doing so be a ‘consumer’ under Brussels (Recast). Longmore J thought there was no such proposition of law; the Greek court took the contrary view.’ German case-law is also discussed.
At 63 Baker J comes to the core of his reasoning: ‘In my judgment, the investment by a private individual of her personal surplus wealth (i.e. surplus to her immediate needs), in the hope of generating good returns (whether in the form of income on capital, capital growth, or a mix of the two), is not a business activity, generally speaking. It is a private consumption need, in the sense I believe intended by the ECJ in Benincasa, to invest such wealth with such an aim, i.e. that is an ‘end user’ purpose for a private individual and is not exclusively a business activity. That means, as was also Popplewell J’s conclusion in AMT v Marzillier, that it will be a fact-specific issue in any given case whether a particular individual was indeed contracting as a private individual to satisfy that need, i.e. as a consumer, or was doing so for the purpose of an investment business of hers (existing or planned).’
And at 65 in fine: the ‘question of purpose is the question to be asked, and it must be considered upon all of the evidence available to the court and not by reference to any one part of that evidence in isolation.’
At 68 he concludes ‘the purpose of her contract with Reliantco therefore was outside any business of hers’.
Baker J notes that he was not asked to defer any decision in C‑208/18 Petruchová. I believe it would have been of help to determine the issue before him. Tanchev AG (as noted, in an Opinion not available to Baker J at the time of his drafting his judgment) suggests that ‘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.’
Obiter, he then reviews Article 25, where CJEU authority discussed is ia Colzanni and Cars on the Web. Ms Ang contended that she was not able to access the standard terms web page at the time she opened her account, and therefore clause 27.1 did not comply with Article 25 B1a. At 78 extensive technical detail is discussed and at 80 Baker J finds that the Cars on the Web criterion of accessibility and durability were met; and at 81 that in any case, the current issue is not one of a click-wrap agreement for a signed hard copy of the GTCs with choice of court in it, had also been sent.
Equally obiter, at 83 ff Baker J summarily discussed the GDPR jurisdictional arguments which would have been more relevant had he not accepted jurisdiction under the consumer title. The brief discussion entirely fulfils my summer 2018 prediction here: Article 79 GDPR will create a lot of issues at the level of jurisdiction.
A very relevant case.
Geert.
(Handbook of) EU private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.
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
Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.
The CJEU held last week in C-694/17 Pillar Securitisation (v Hildur Arnadottir), on the Lugano Convention’s protected category of consumers. I have review of Szpunar AG’s Opinion here. The issues that are being interpreted are materially very similar as in Brussels I Recast hence both evidently have an impact on the Brussels I Recast Regulation, too (see in that respect also C‑467/16 Schlömp).
At stake in Pillar Securitisation is the meaning of ‘outside his trade or profession’ in the consumer title. The CJEU at 22 rephrases the case as meaning ‘in essence, whether Article 15 of the Lugano II Convention must be interpreted as meaning that, for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive and whether it is relevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.’
The CJEU notes that Pillar Securitisation claims that Ms Arnadottir acted for professional purposes and is not covered by the definition of a ‘consumer’. However, the referring court has not referred any question to the Court on the purpose of the credit agreement concluded. On the contrary, as is clear from the wording of the question that it did refer, the referring court asks its question to the Court on the assumption that the contract at issue was concluded for a purpose that can be regarded as being outside Ms Arnadottir’s profession. In addition, in any event, the order for reference does not contain sufficient information in order for the Court to be capable, where relevant, of providing useful indications in that regard (not much help therefore to assist with the interpretation of issues such as in Ang v Reliantco, on which I shall be reporting next).
As I wrote in my review of the AG’s Opinion: the issue is how far does material EU law impact on its private international law rules. I referred in my review to the need to interpret Vapenik restrictively, and to Kainz in which the CJEU itself expressed caution viz the consistent interpretation between jurisdictional and other EU rules, including on applicable law and on substantive law.
I am pleased to note the Court itself makes the same observation, and emphatically so: at 35: ‘the need to ensure consistency between different instruments of EU law cannot, in any event, lead to the provisions of a regulation on jurisdiction being interpreted in a manner that is unconnected to the scheme and objectives pursued by that regulation.’ Subsequently establishing the very diffeent purposes of both sets of law, the CJEU rejects impact on one over the other (and also remarks that Pillar Securitisation’s reference to the Pocar report needs to be taken in context: prof Pocar referred to Directive 2008/48 by way of example only).
Conclusion: for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must not be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive, and it is irrelevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.
A good judgment.
Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.
In C-464/18 ZX v Ryanair, the CJEU last week succinctly held on branch jurisdiction (Article 7(5)) and on voluntary appearance under Article 26.
The Court first reminds readers of the exclusion of simple contracts of transport (as opposed to combined tickets /package travel) from the consumer title of the Regulation: see Article 17(3): the consumer title ‘shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation’.
Surprisingly perhaps (and /or due to lobbying), this did not come up for amendment in the recent Recast, despite the massive increase on travel tickets bought online in particular since transport was first carved out from the consumer title in the Brussels Convention. At 160 the Jenard Report explains the carve-out by reference to international agreements – yet these too could probably do with a refit – but I am straying.
The Court also reminds us that the flight compensation Regulation 261/2004 does not contain conflict of laws rules – these remain subject to the general instruments.
To the case at hand then: ZX purchased a ticket online for a flight operated by Ryanair between Porto (Portugal) and Barcelona (Spain). Applicant is neither domiciled nor resident in Spain, defendant has its registered office in Ireland, and has a branch in Girona (Spain). ZX, the passenger, did not justify jurisdiction pro Girona on the basis of forum contractus. Per C‑204/08 Rehder, this would have been place of arrival or departure.
Branch jurisdiction per Article 7(5) featured most recently in C-27/17 flyLAL, and is quite clearly not engaged here: the ticket was purchased online. There is no element in the order for reference indicating that the transport contract was concluded through that branch. Furthermore, the services provided by the branch of Ryanair in Girona appear to be related to tax matters.
That leaves Article 26: how and when may it justify the international jurisdiction of the court seised by virtue of a tacit acceptance of jurisdiction, on the ground that the defendant in the main proceedings does not oppose that court having jurisdiction? The case-file reveals that following the invitation from the registry of that court to submit observations on the possible international jurisdiction of that court, Ryanair failed to submit written observations. The Court finds this does not amount to tacit acceptance.
Article 26 requires that the defendant enter an appearance. However what exactly this requires hitherto I believe to quite a degree has been subject to lex fori – particularly the local procedural law. One might have expected a more extensive CJEU consideration e.g. revisiting 119/84 Capelloni v Pelkmans.
A missed opportunity.
Geert.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.7.
The CJEU held in C-630/17 Milivojević v Raiffeisenbank on 14 February. The case in the main concerns Croatian legislation restricting financial services with Banks other than Croatian ones – a free movement of services issue therefore which the CJEU itself explains in its press release.
Of relevance to the blog is the issue of jurisdiction under the consumer title and Article 24(1)’s exclusive jurisdictional rule.
The Croatian legislation at issue, in the context of disputes concerning credit agreements featuring international elements, allows debtors to bring an action against non-authorised lenders either before the courts of the State on the territory of which those lenders have their registered office, or before the courts of the place where the debtors have their domicile or registered office and restricts jurisdiction to hear actions brought by those creditors against their debtors only to courts of the State on the territory of which those debtors have their domicile, whether the debtors are consumers or professionals.
Croatian law therefore first of all infringes Article 25(4) juncto Article 19 Brussels Ia. Their combined application does not rule out choice of court even between a business and a consumer (subject to limitations which I do not discuss here). It moreover infringes Article 25 (and Article 4) in and of itself for it precludes choice of court even in a B2B context.
Next, may a debtor who has entered into a credit agreement in order to have renovation work carried out in an immovable property which is his domicile with the intention, in particular, of providing tourist accommodation services be regarded as a ‘consumer’ within the meaning of Article 17(1) Brussels Ia? Reference is made ex multi to Schrems, emphasising the difficult balancing exercise of keeping exceptions to Article 4’s actor sequitur forum rei rule within limits, yet at the same time honouring the protective intention of the protected categories.
A person who concludes a contract for a dual purpose, partly for use in his professional activity and partly for private matters, can rely on those provisions only if the link between the contract and the trade or profession of the person concerned was so slight as to be marginal and, therefore, had only a negligible role in the context of the transaction in respect of which the contract was concluded, considered in its entirety (per Schrems following C-464/01 Gruber). Whether Ms Milivojević can so be described as a ‘consumer’ is for the national court to ascertain.
Finally, does Article 24(1)’s rule on an action ‘relating to rights in rem in immovable property’, apply to an action for a declaration of the invalidity of a credit agreement and of the notarised deed relating to the creation of a mortgage taken out as a guarantee for the debt arising out of that agreement and for the removal from the land register of the mortgage on a building?
Reference here is made to all the classics, taking Schmidt v Schmidt as the most recent portal to earlier case-law. At 101: with regard to the claims seeking a declaration of the invalidity of the agreement at issue and of the notarised deed related to the creation of a mortgage, these ‘clearly’ (I assume based on the national law at issue) are based on a right in personam which can be claimed only against the defendant.
However at 102: re the request for removal from the land register of the registration of a mortgage, it must be noted that the mortgage, once duly constituted in accordance with the procedural and substantive rules laid down by the relevant national legislation (see indeed my comment above re passerelle of national law), is a right in rem which has effects erga omnes. Such an application does fall within Article 24(1). At 104 the Court again inadvertently or not highlights the potential for a procedural strategy, opening up forum connexitatis hinging unto A24(1) exclusivity: ‘in the light of that exclusive jurisdiction of the court of the Member State in which the immovable property is situated to the request for removal from the land register for the registration of mortgages, that court also has a non-exclusive jurisdiction based on related actions, pursuant to Article 8(4) of Regulation No 1215/2012, to hear claims seeking annulment of the credit agreement and the notarised deed related to the creation of that mortgage, to the extent that these claims are brought against the same defendant and are capable, as is apparent from the material in the file available to the Court, of being joined.’ (idem in Schmidt v Schmidt).
Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6, Heading 2.2.8.2.
gavc law - geert van calster 