EP amendments to the CESL

As we reported earlier, the proposal for an optional Common European Sales Law received strong backing from the European Parliament in a plenary vote on 26 February. The text including the amendments that the EP approved is now available on the Parliament's website (p 83 ff of the document). 

Some of the most remarkable changes suggested include:

- the focus on distance, online contracts, including contracts for the supply of cloud services (recitals 8, 9 and 17a);

- the extension of the definition of 'consumer' to certain dual-purpose contracts (recital 11a and Article 2(f));

-  the extension of the applicability of the CESL to certain mixed-purpose and linked contracts (Article 6(1));

- an explanation of the meaning of 'good faith' within the CESL (Article 2(fe));

- the extension of unfair terms control to all contract terms supplied by the trader (Annex I, Article 82);

- the addition of a number of new terms to the black list on unfair terms (Annex I, Article 84);

- the remedies available in case of non-conformity of digital content (Annex I, Article 107);

- the inclusion of provisions on commercial guarantees (Annex I, Article 177a);

- detailed provisions on the setting-up of a database collecting national judgments on the CESL, possibilities for alternative dispute resolution, the development of model contracts based on the CESL, and the review of the CESL 5 years after its adoption (Annex I, Articles 186a-d).

Misleading apps

We are living in a digital era which is with every year acknowledged a bit more by the European institutions. The European Commission brainstormed last week with the representatives of large tech companies on how to raise consumer awareness of dangers of using apps. Often, consumers upload potentially 'free' applications for which they then purchase various in-app features. Sometimes consumer's credit card will be charged automatically, so he won't even be aware of having made a particular purchase at a given moment. This could be seen as an unfair, potentially misleading commercial practice, since if the consumer knew in advance that he would need to make these payments to use effectively a certain app he might not have installed it in the first place. One way to prevent such practices would be to prohibit direct debit in these apps through default settings. Another point would be to make them less available to children (or provide them with more clear information). At this moment, the European Commission calls for self-regulation of the industry but it could be expected that certain guidelines on this issue would be given to national enforcement authorities of Unfair Commercial Practices Directive. (Commission and Member States to raise consumer concerns with app industry)

For those of you interested in this post, you may find also this new Eurobarometer (Special Eurobarometer 414) survey of use - E-communications Household Survey and Telecom Single Market Survey.

Harmonisation of insurance contract laws?

Short after the Parliament's first reading vote on the Common European (now, Distance) Sales Law, the Commission might be starting a new contract law harmonisation challenge. 

Last Friday, indeed, the previously appointed Expert Group delivered its report on barriers to cross-border trade in insurance products.

Presenting the report, Commissioner Reding underlined how "only a few customers can buy insurance products in other countries, with just 0.6% of all motor insurance premiums and 2.8% of property insurance premiums offered across EU borders." 

The Group's main finding is that important differences exist in the contract law rules of especially life, motor and liability insurance products, which make it harder- and more expensive- for traders to offer "pan-european" products and for consumers/policyholders to take their insurance with them as they move between European countries. Of course rules outside contract law could also play a role in generating such barriers, but these rules remained beyond the Group's subject of investigation.

Unsurprisingly, the problem is found to be less severe in the large risks segment, where the cross-border dimension has been for a longer time usual business. 

Want to know more? You can take a look at the report.

The ball remains in the Member State's court - CJEU judgment in Case C-470/12 Pohotovost'

More news from the CJEU today, as the Court handed down its judgment in the Pohotovost' case. The question at issue here concerned the (im)possibility for a consumer organisation to join in a case regarding the enforcement of an arbitration award against an individual consumer. Please refer to our earlier post on Advocate-General Wahl's opinion in this case for a more detailed summary of the facts ('Who decides who decides').

The CJEU follows the AG in ruling that the Slovak procedural law applicable to the case does not infringe upon EU law:

'Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, in particular Articles 6(1), 7(1) and 8 of that directive, read in conjunction with Articles 38 and 47 of the Charter of Fundamental Rights of the European Union, must be interpreted as not precluding national legislation which does not allow a consumer protection association to intervene in support of a consumer in proceedings for enforcement, against the latter, of a final arbitration award.'

The Court bases its decision on the fact that the Unfair Terms Directive does not cover the issue of consumer organisations' participation in enforcement proceedings and that, therefore, it is up to national legal systems to provide rules on this, taking into account the principles of equivalence and effectiveness. The principle of equivalence is not infringed upon, as Slovak law does neither allow a consumer organisation to join in enforcement proceedings that are governed by national law nor those involving EU law. The principle of effectiveness, moreover, is not breached, since the Slovak law does not make the application of EU law impossible or excessively difficult by excluding consumer organisations from enforcement proceedings. The Court finds no points of reference in Articles 38 (consumer protection) and 47 (right to an effective remedy) of the EU Charter of Fundamental Rights to alter that conclusion.

Spa patients as hotel guests - CJEU in case OSA (C-351/12) on copyright fees

27 February 2014: CJEU in case OSA (C-351/12)

In this case compliance of Czech law with the Copyright Directive 2001/29 was questioned, since Czech law allowed health establishments (which could include health spas) to transmit music in patients' rooms while they were being provided healthcare, without the need for the health establishments to pay copyright fees. AG Sharpston's opinion in this case (Silence is golden) was that this provision did not seem to fall under the exceptions provided for in the Copyright Directive and was rather covered by the general provision of art. 3(1). By transmitting protected works by means of television and radio sets located in the patients' rooms, a spa carries out a communication of these works to the public, taking into account that just like in any hotel the spa would provide services to many people throughout the year, even if spa patients occupy their rooms on average longer than hotel guests (par. 27-33). The CJEU agreed, therefore, with AG Sharpston that the exemption in Czech law did not comply with the Directive (par. 36, 41). The CJEU also mentions that while it is acceptable that a collecting society of copyright fees would have a monopoly within a given Member State to effectively manage IP rights' protection that does not entitle such a society to abuse its dominant position on the market. It should not, therefore, set copyright fees at a level that is much higher than in other Member States. It is for the national court to determine whether this situation took place in a given case (par. 86-90).

Tobacco Products Directive - not just a smoke screen

I know everyone is fixated now on the success of the proposal for the Common European Sales Law in the European Parliament's first vote, but it should not escape our attention that yesterday the European Parliament also voted on the Tobacco Products Directive (finally!). While the proposal for the CESL regulation will now have to be negotiated through the Council, the Tobacco Products Directive has been adopted yesterday after a long and controversial (see our previous posts, e.g. On lobbying in Brussels) legislative process and we expect the new Directive to enter into force in May 2014 (with the transposition period for the Member States of 2 years and some longer phase-out periods provided for). As we have previously written (One last menthol cigarette?) the new law focuses on improving awareness among smokers of the detriments it brings to their health, decreasing its attractiveness. 

The future packaging of cigarettes will need to be covered with more of both textual and visual health warnings (65% on top and back thereof - placed on the top edge, and 50% on the sides) (New rules for tobacco products), which should increase visibility of this information. With that in mind it has also been determined that a cigarette pack would need to have a cuboid shape and contain minimum 20 cigarettes - the bigger the package, the bigger the warning on it. This means that, e.g., the slim cigarette packs that often appeal to women will be prohibited. Tobacco producers will be prohibited from encouraging their clients to use cigarettes by placing misleading elements on the packs - e.g. references to lifestyle benefits, taste, absence of additives, special offers etc. Similar rules will apply to roll-your-own tobacco products. Some more discretion was given to the Member States as to how to regulate smokeless products, pipe tobacco and cigars. Member States are also allowed to strengthen the protection of the citizens by e.g. allowing plain packaging if it would be justified by public health grounds and would not create hidden barriers to cross-border trade. Quite a revolution for some of the smokers out there would be that menthol cigarettes would be banned after a phase-out period of four years. In general, any flavourings that would disguise the taste of tobacco will be prohibited, however, the additives necessary for the manufacture of tobacco products remain valid to be used. 

The new Directive will also start regulating e-cigarettes which is a new product that slowly starts gaining in popularity on the market. The Directive sets a maximum nicotine concentration level for e-cigarettes and a maximum volume for cartridges (which should be child-proof) as well as also regulates the duties to inform consumers by placing health warnings on the packs together with instructions for use etc.

CESL legislative resolution adopted!

Dear readers, this is it let you know that the European Parliament had just approved the legislative resolution concerning the Common European Sales Law. 

Details concerning the substance of the adopted version will become clearer in the next hours, since some amendments have been adopted and other amendments rejected.
For the moment, it seems that the Parliament restricted the Instrument's scope to distance selling (including, but not limited to, online sales) and that an amendment introducing a notification duty in case of defects has been adopted.
The amendments proposed concerned quite substantive points, so their final "count" might importantly affect the proposal's chance to be approved by the Council during its first reading. Stay tuned!

Tune in on the EP's discussion of the CESL tomorrow

Just a brief update on the plenary discussion and vote on the Common European Sales Law in the European Parliament that has been scheduled for this week. The debate is on the EP's agenda for tomorrow morning and can be followed through the Parliament's website.

United in diversity

Different views on the Common European Sales Law, which will be the subject of European parliamentary debate and a vote this week, may be related to ideas about to what extent a common culture underlies legal harmonisation projects in the EU. A collection of essays on this topic, edited by Kai Purnhagen and Geneviève Helleringer and based on a conference they organised in December 2011 (on which we posted earlier, 'For no man is an island'), has just been published. It takes the following perspective:

'European harmonisation efforts such as a European civil code, European constitutional treaties, European principles, and European fundamental rights are frequently criticised for building on or creating a European legal culture that does not exist; in reality what we have is European legal pluralism. Some have argued that the pluralistic structure of European law hinders the development of a community, which is a necessary requirement for a European legal culture. And if there can be no common European legal culture then there is no basis for harmonising exercises. 

The contributors to this book explore in different legal areas whether in fact the contrary is true. Cultural pluralism might indeed be a distinctive feature of European legal culture. Diversity is not something that is in opposition to, but rather constitutes a new, different understanding of European legal culture. The contributions demonstrate in detail how such an approach inter alia in the areas of private, corporate, administrative and constitutional law furthers understanding of a developing European legal culture, how it offers theoretical and doctrinal insights, and how it adds critical perspective.'

More information and a table of contents is available on the publisher's website.

CESL in the EP

Next week, on 25 February, the European Parliament will debate the pending proposal for an optional Common European Sales Law; the vote will take place on the day after. As Eric Clive observes on the Edinburgh European Private Law News blog:

'This will be a key test for the proposal. As noted in earlier posts, the Legal Affairs Committee is strongly in favour of the proposed optional European sales law and has put forward a number of useful and constructive amendments, taking full advantage of the input of experts, consultees and stakeholders including, notably, the European Law Institute. However, the (rather divided) Internal Market and Consumer Protection Committee was not so keen on the idea of an optional instrument and has put forward amendments designed to convert the proposed optional instrument into a compulsory instrument, something which has little or no chance of proceeding further.'

European consumer organisation BEUC, furthermore, has reinforced its criticism of the CESL in a call on the Parliament to reject the proposal.

The constructive comments that have been put forward by the European Law Institute's working group on the CESL can be found here.

To be continued...