Ryanair v DelayFix. The CJEU dots some i’s on choice of court and unfair terms in consumer contracts; defers to national law on the assignment issue; and keeps schtum on renvoi in Article 25 Brussels Ia.

In C-519/19 Ryanair v DelayFix, the CJEU held yesterday. The case echoes the facts in Happy Flights v Ryanair at the Belgian Supreme Court.

Following inter alia  CJEU Jana Petruchova, the (absence of) impact of substantive European consumer protection rules on the consumer section of European private international law is now fairly settled. The separation between the two sets of laws seems quite clear for the application of the consumer section itself.

However under A25 BIa, EU consumer law might still play a role in those circumstances where the conditions of the consumer Section are not met (dual-use contracts, contracts for transport (such as here) etc.) yet where one of the parties may qualify as a consumer under substantive EU consumer protection law.

A core issue of contention is the consideration of the EU unfair terms in consumer contracts Directive 2019/2161 and its predecessor Directive 93/13 , which was applicable in Ryanair v DelayFix. Via Article 25’s lex fori prorogati rule on substantive validity for choice of court, the Directive plays an important role.

In the case at issue at the CJEU, Passenger Rights, now DelayFix, a company specialised in the recovery of air passengers’ claims under the EU Regulation on air passenger rights, has requested the courts at Warsaw to order Ryanair,  to pay EUR 250 in compensation, a passenger on the relevant flight having assigned DelayFix their claim with respect to that airline.

The CJEU first of all looks at the issue from the limited extent of what is actually materially regulated by A25: the requirement of ‘consent’ (as well as the formal expression of that consent. It holds, not surprisingly, that in principle of course a jurisdiction clause incorporated in a contract may produce effects only in the relations between the parties who have given their agreement to the conclusion of that contract (referring ex multi to Refcomp).  In the case at issue,  a jurisdiction clause incorporated in the contract of carriage between a passenger and that airline cannot, in principle, be enforced by the latter against a collection agency to which the passenger has assigned the claim.

However, at 47, there is a gateway for the choice of court nevertheless to extend to third parties, namely when the third party not privy to the original contract had succeeded to an original contracting party’s rights and obligations, in accordance with national substantive law. At 49, referring to A25(1), that law is the lex fori prorogati. Here: Irish law.

Recital 20 BIa in fact instructs to include the lex fori prorogati’s conflict of laws rules (in other words: an instruction for renvoi) to be part of the referral. In the aforementioned Belgian SC ruling in Happy Flights, renvoi was simply ignored. Here, the CJEU does not mention renvoi, even if it does not expressly exclude it.

The CJEU does point out that Directive 93/13 on unfair terms in consumer contracts of course is part of the Irish lex fori prorogati, as it is of all the Member States. In making that reference it would seem to have answered in the negative the question whether the ‘consent’ provisions of that Directive have not been superseded in the context of the ‘consent’ requirements of Article 25 Brussels Ia, as recently discussed obiter in Weco Projects.

Per previous case-law, the capacity of the parties to the original agreement at issue is relevant for the application of the Directive, not the parties to the dispute.  Further, a jurisdiction clause, incorporated in a contract between a consumer and a seller or supplier, that was not subject to an individual negotiation and which confers exclusive jurisdiction to the courts in whose territory that seller or supplier is based, must be considered as unfair under Article 3(1) of Directive 93/13 if, contrary to requirement of good faith, it causes significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. Reference is made in particular to Joined Cases C‑240/98 to C‑244/98 Océano Grupo (at 58).

It will be up to the national courts seised of a dispute, here: the Polish courts, to draw legal conclusions from the potential unfairness of such a clause (at 61). DelayFix therefore are not quite yet home and dry.

Geert.

European Private International Law, 3rd ed. February 2021, Chapter 2, para 2.240.

Team Y&R v Ghossoub. Choice of court and third parties.

In [2017] EWHC 2401 (Comm) Team Y&R v Ghossoub, Laurence Rabinowitz QC discussed a number of issues, most particularly anti-suit in the context of an exclusive jurisdictional clause (anti-suit not granted). He summarised the applications as follows:

‘The first application, brought by the claimants to the anti-suit claim, is for an interim injunction seeking to restrain Mr Ghossoub, the defendant to those proceedings, from pursuing related proceedings commenced by him in Hong Kong against four of those claimants until the trial of the anti-suit claim. The second application, brought by Mr Ghossoub as defendant to the anti-suit claim, seeks to set aside two orders made by the Court related to service on him of the anti-suit claim. The first, made by Phillips J dated 20 May 2015, granted permission to serve the anti-suit claim out of the jurisdiction. The second, made by HHJ Waksman QC sitting as a High Court judge dated 8 September 2016, granted permission to serve the claim form and other documents by an alternative method of service. The third application, brought by Mr Ghossoub as defendant to the defaulting shareholder claim, in effect mirrors his application in the anti-suit claim to set aside the service out and service by an alternative method orders.’

Anti-suit would be aimed at courts ex-EU hence the Brussels I antimony against them (per Gasser, among others) does not apply. Incidentally, I do not think that necessarily needs to exclude any EU /CJEU grip on the substantive issue at all: in the current, Recast Regulation, neither party needs to be domiciled in the EU for choice of court to be made in favour of a court established in the EU. This does create an EU interest in the issue of third-party impact of choice of court, and consequently on the use of anti-suit to support or reject such impact.

Now, at para 78 ff Mr Rabinowitz considers the issue of third parties. Not at issue is whether choice of court is binding upon, or may be invoked by such parties (in EU law considered eg in Refcomp, Profit Sim, Assens HavnLeventis). Rather, whether an exclusive jurisdiction clause should be understood to oblige a contractual party to bring claims relating to the contract in the chosen forum even if the claim is one against a non-contracting party. This would support the idea of ‘one-stop shopping’ which is prevalent eg in English law albeit mostly vis-a-vis the various litigious relations between two and the same parties.

One can see merit in obliging parties bound by choice of court, to bring all related claims to one and the same court. Except of course, as Mr Rabinowitz points out, third parties are quite likely to be in a position to be able to bring the case before a different court, thus putting the contractual party at a disadvantage; moreover, even if the contractual party does bring the claim to the courts at England, these may not in fact have jurisdiction: in such circumstances, insisting on third-party proceedings to be brought before the English courts becomes silly. (My words, not Mr Rabinowitz’).

Taking these and also the entire contractual context into account, the High Court holds that choice of court in the contract at issue does not extend to claims against non-contracting third parties, and dismisses anti-suit.

Take your time to read the judgment: it gives very good context to what to some might seem like a very awkward starting point.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.

Assens Havn. Privity of choice of court in insurance contracts.

The European Court of Justice held last week in C‑368/16, Assens Havn. It confirmed privity of choice of court in the event of subrogation of the victim in the rights of the insured. The victim is not bound by choice of court between insurer and tortfeasor:

At 41: ‘The extension to victims of the constraints of agreements on jurisdiction based on the combined provisions of Articles 13 and 14 of Regulation No 44/2001 could compromise the objective pursued by Chapter II, Section 3, thereof, namely to protect the economically and legally weaker party.

That the CJEU confirms privity of contractual choice of court is no surprise: see most recently Leventis. In the case of insurance contracts the issue is slightly less obvious for unlike in the case of consumers and employees, the legal presumption of weakness often does not represent commercial reality.

Whether the subrogated party can make use of the choice of court clause in the underlying contract was not sub judice in the judgment.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2.

 

Leventis. CJEU confirms principle of privity of choice of court under Brussels I.

Yesterday in Case C-436/16 Leventis the Court of Justice summarily confirmed the principle of privity of choice of court under the Brussels I Recast. I have looked at this issue before e.g. when I discussed Refcomp and Profit Sim. The tos and fros between the various parties in the case meant they were acquainted with each other in the courtroom and in arbitration panels. It also meant that actions, settlements etc. between one of them and a third party necessarily impacted commercially on the other.

However the Court of Justice essentially held that such a close, voluntary or not, relationship between the two parties does not mean that a jurisdiction clause in a contract between two companies can be relied upon by the representatives of one of them to dispute the jurisdiction of a court over an action for damages which aims to render them jointly and severally liable for supposedly tortious acts carried out in the performance of their duties. The Court simply noted that the referring national court had given no indication of choice of court made between the parties as to the latter issue, employing the classic (now) Article 25 set of criteria.

Of note is that unlike other cases such as Goldman Sachs v Novo Banco, there did not seem to be any kind of theory in relevant national law which would have led to imputability (or potential to call upon) choice of court to a third party under the given circumstances.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.7.