Are contract summary templates transparent? - feedback opportunity

The European Commission asks for feedback on the draft contract summary template, which all consumers must receive from e-communication service providers. Commission aims to make this template 'clear and understandable' and to facilitate comparison of services of different providers, thus transparency is definitely one of the key points that should be considered during the evaluation. Feedback may be submitted until 9 September on this website.

Public call for information on online choice architecture for consumers

The Dutch Authority for Consumers and Markets (ACM) has published a call for information on online choice architectures for consumers. The questionnaire may be found on this website, with the deadline for submitting information being set at August 16. The gathered information is to be used in preparation of the 'Guidelines regarding online choice architectures'. Through these guidelines ACM intends to advice traders, which online behavioural persuasive practices could e.g. be assessed as unfair (deceptive or coercive) commercial practices, and which examples of online persuasion could be seen as exemplary.

When the going gets tough - the need for insolvency protection of travel organisers

As today's UK news bring about information about two major holiday providers (Super Break and Late Rooms) going into administration (Super Break and Late Rooms holiday firms go into administration), the scope of consumer protection measures is again at the forefront of many travellers' minds. Already the previous Package Travel Directive (Directive 90/314/EEC) required the Member States to ensure that package travel providers had sufficient insolvency protection, but these rules have been further specified and strengthened in the new Directive 2015/2302 on package travel and linked travel arrangements. The UK has implemented the new Directive in the Package Travel and Linked Travel Arrangements Regulations 2018.

At the moment, the European Commission is reviewing whether the Member States have completely and properly implemented provisions of Directive 2015/2302 into their national laws. What happens to travellers who have booked their holidays with Super Break and Late Rooms will be a good example, on which to check how effective the UK protection against the insolvency of the package travel organiser is. However, even if the insolvency protection has been properly arranged many customers of Super Break and Late Rooms are likely to end up dissatisfied. Why? 

Well, first: they may not have concluded a package travel or a linked travel arrangement contract, which means that they would not benefit from insolvency protection.

Travellers who have been inconvenienced and do not have a separate travel insurance (as then it is best to contact the insurance company), should then first check whether their holidays are a package holiday or a linked travel arrangement, as in both cases insolvency protection had to be assured. Generally, this means that the traveller booked at least two different types of travel services (accommodation, travel, vehicle rental, etc.) for the purpose of the same holiday with either the same trader or through a linked booking process. If only accommodation was booked, without travel or vehicle rental, then the question whether a booking of another travel service makes it a package holiday depends on the value and importance of the provision of this additional travel service in the overall context of the package travel contract. 

Second, even if they fall within the scope of protection, their holiday has likely been ruined.

In case of package travel holidays or linked travel arrangements, travellers may at least expect the full refund of the payments they have made for the purchase of the package (but not additional payments that e.g. have been made after the package has already been concluded - e.g. to purchase additional attractions at their destination) and repatriation, in case they were already on holidays. Unfortunately, it is unlikely that they will be able though to enjoy their holidays as the insolvency insurance does not have to ensure the possibility of travellers continuing with their travel plans.

CJEU in Fashion ID (C-40/17): some consequences of embedding social plugins

Yesterday, the CJEU published its judgment in Fashion ID, a case concerning mainly the notion of "controller" under EU data protection law.

The facts of the case are relatively simple: Fashion ID had placed a "like" button on its website which was connected to Facebook. What Fashion ID's customers may not realise is that - even if they did not use it - the button's presence meant that information concerning them was being transmitted to Facebook. In the proceedings it was uncontested that this information qualified as personal data.

Verbraucherzentrale NRW, a consumer association, brought an injunction against Fashion ID demanding that it abandon such practice. The question whether Fashion ID has any obligations in connection with the data processing - including the duty to inform consumers that their data are being collected and/or require their consent - depends on whether the website is to be considered a data controller.

The referring court doubted whether this is the case since the website operator has no control over the processing of the data transmitted to the plugin provider (para 37).

The Court, in essence, answered that the operator of the website acts as a controller, and is thus responsible for informing the consumer or collecting their consent, insofar as the collection of information and transmission to Facebook is concerned. In particular concerning the collection of the user's consent, the court highlighted that it would not be in line with efficient and timely protection of the subject's rights if the consent would be given only to the second controller, which is involved at a later stage (para 102). Even more strongly, when a customer is not a Facebook user, their data will be processed by the social media operator without them having any direct connection to the latter- which makes the responsibility of the other provider all the greater (para 83).

However, the website operator is not responsible vis à vis the data subjects for any other uses that Facebook itself will make of the data, nor for collecting their consent in that respect (para 102).

While the website has no control on the use of the transmitted data, the purpose of such collection is in part related to the website's benefit as it allows better promotion of its products (para 77-81).

As concerns the collection of data without the subject's consent - ie data that is necessary for the pursuit of a legitimate interest - the court importantly clarified that where both the website and the provider of the social plugin are controllers, they must both be pursuing a legitimate interest for the ground of processing to apply (para 96).

The decision interprets relevant provisions in the "old" Data pProtection directive, which has meanwhile been replaced by the GDPR - but the concepts that it deals with have been kept in the Regulation, so the decision can be transposed to the new rules.

Quite unsurprisingly, the Court rejected Fashion ID's claim that consumer associations would not be entitled to bring any claims under data protection rules - while article 80(2) of the GDPR quite

famously invites MS to set collective enforcement mechanisms, nothing in the previous directive, which only contained general indications on enforcement, can be seen to stand in the way of Member States allowing consumer associations to bring such claims (see in particular paras 57-62).

The Court seems to be aware of the potentially high-profile nature of this case and has accompanied the publication of its decision with a press release. 

Consequences of sub-optimal re-routing - CJEU in Rusu (C-354/18)

The Court of Justice came out of its summer break yesterday and published a judgment in the case Rusu (C-354/18), further clarifying the application of Regulation No 261/2004 on air passenger rights.

Mr and Mrs Rusu were supposed to fly with Blue Air airlines from Romania to the UK, but they were denied boarding due to a last minute change of an operating aircraft, which resulted in fewer seats and overbooking. They have then been re-routed on another flight, which only took place 5 days later. Blue Air first offered the passengers a free flight ticket as compensation, which offer has been rejected as not fully compensating their loss. Subsequently, they have been offered compensation from Regulation No 261/2004 - 400 Euro each. As the passengers experienced loss that was not covered by this amount of compensation, they filed a claim for further compensation to be paid out to them. This was to cover both material damages - having lost part of their earnings as they were not able to report to work on agreed time - and non-material damages - loss from having experienced a threat of being fired from their job. Blue Air claimed that further compensation should not be awarded to the passengers, as they have agreed to the proposed offer of re-routing, without explicitly emphasising the need to be re-routed on an earlier date, perhaps by another air carrier.

As a reminder, Art. 7(1) Regulation No 261/2004 awards passengers a right to compensation, which has been determined in CJEU's case law and scholarship to compensate passengers for the standardised loss of time (amount of compensation is dependant on the distance of the flight) (para. 30). Additional individual losses may be compensated further based on the provisions of national law, on the basis of Art. 12(1) of this Regulation, which provision also allows national courts to deduct the amount of compensation paid out pursuant to Art. 7(1) from the compensation awarded pursuant to Art. 12(1).

The CJEU indicates explicitly that the loss of earnings by the passengers is a clear example of an individualised loss, which is not covered by the standardised amount of compensation pursuant to Art. 7 Regulation (para. 32-34) and thus can be recovered on the basis of Art 12. It is then up to national courts to determine the individual damage, as well as whether the national requirements for recovering it have been fulfilled (para. 40). Whether the national court decides to deduct from it the amount of compensation paid out pursuant to Art. 7 of the Regulation is left to them to decide on the basis of applicable national or other international law, as well, as Art. 12(1) 2nd sentence provides for such a possibility but not an obligation of deduction (para. 44).

As the operating air carrier raised an issue of the passengers not explicitly emphasising the need to reach their destination as soon as possible, by the best/fastest re-routing possible, the CJEU also considered the scope of air carriers' obligations related to arranging the re-routing on the basis of Art. 8(1) Regulation No 261/2004. The CJEU highlights that this provision places the obligation on the operating air carrier not only to provide the passenger with the choice of reimbursement of their flight tickets or re-routing, but also with all appropriate information to make the choice between these options (para. 53-55). It is, therefore, not expected that the air passengers would actively seek any of the information that the operating air carrier is supposed to provide - e.g. on best re-routing options. As Art. 8(1)(b) of the Regulation requires that the re-routing takes place at the earliest possibility, it is up to the operating air carrier to prove that the proposal made by them to passengers complied with this requirement (para. 61). When putting together a re-routing proposal the air carrier should clearly  consider whether the re-routing proposal would transport passengers under similar conditions and at the earliest possibility based on its own resources, or whether it would require a help of another air carrier, in appropriate circumstances, depending on their available seats (para. 60).

Whilst the Regulation No 261/2004 does not place an obligation on operating air carriers to use services of other air carriers to find best re-routing options for their passengers, the CJEU clarifies that if they choose not to do so, they have to be prepared to pay damages under national law. The scope of these damages and under what conditions they will be awarded will differ amongst the Member States then.

Commission guidance note on Unfair Terms Directive

The European Commission adopted today a guidance note on unfair contract terms. It is intended to ensure that consumer associations and legal practitioners, including judges, will be better equipped to protect EU consumers from unfair contract terms. The guidance note is based on the case law of the EU Court of Justice on Directive 93/13. As a complement to the guidance note, European businesses organisations have drawn up recommendations on how mandatory consumer information as well as terms and conditions can be presented to consumers in a more user-friendly and transparent way.
Both initiatives follow up on the REFIT Fitness Check of EU consumer and marketing law, as announced in the Commission’s Communication on a New Deal for Consumers.

Source: https://www.pubaffairsbruxelles.eu/fighting-unfair-contract-terms-commission-issues-guidance-to-better-protect-consumers-eu-commission-press/ 

Connecting fligts come with air passengers rights - CJEU in České aerolinie (C-502/18)

Last Thursday, on July 11th, the CJEU published the judgment in the case České aerolinie (C-502/18) further interpreting provisions of Regulation No 261/2004 on compensation due in case of a delay of one of the connecting flights. Here, the uncertainty arose from the fact that whilst passengers booked flights from Prague (Czech Republic) to Bangkok (Thailand), they had a connection in Abu Dhabi (UAE), and only the flight Prague-Abu Dhabi was performed by the European air carrier (České aerolinie). The flight Abu Dhabi-Bangkok was operated by Etihad Airways (code-share agreement) and it is that second flight, which was delayed (488 minutes). The question was whether České aerolinie remained responsible for paying air passengers compensation in such a case.

The CJEU recalls its previous findings: that connecting flights subject to a single reservation should be seen as a whole for the purposes of Regulation No 261/2004 (para. 16); that delay at the final destination entitles passengers to compensation from Art. 7(1) Regulation No 261/2004 (para. 19); that it is the operating air carrier who has to pay the compensation (para. 20); that as the connecting flights are perceived as a whole unit, the air carrier operating the first of the connecting flights should bear the responsibility for the improper performance of the second one, even if another air carrier operated the latter (paras. 27, 29); that the air carrier who pays out compensation to passengers may seek recourse from third parties pursuant to Art. 13 Regulation No 261/2004 (para. 31).

This judgment reiterates, therefore, previously established rules. However, the clarification provided by it is important for practice: as European air carriers will not be able to escape liability for flight cancellations and delays by hiding behind code-share agreements with other non-European airlines.

Online traders may choose how to communicate with consumers - CJEU in Amazon EU (C-649/17)

On July 10, the CJEU supported AG Pitruzzella's opinion (Online chats...) in the case Amazon EU (C-649/17) that Article 6 of the Consumer Rights Directive does not place on distance selling traders an obligation to set up the means of communication specified in that provision (phone line, fax, e-mail). Such an interpretation could disproportionately burden especially small businesses (para. 48). Instead, this provision just specifies that the means of communication, which a given trader chooses, should facilitate quick and effective contact with consumers (para. 46).

Who covers for insolvent package tour organisers? States, not air carriers - CJEU in HQ and Others (C-163/18)

Today the CJEU issued a judgment in the case HQ and Others (C-163/18), which we previously discussed as the Aegean Airlines case (Avoiding double claims at all cost...). The CJEU followed the argumentation presented by AG Saugmandsgaard Øe and decided that as long as passengers have a right to claim a reimbursement of their air tickets' costs from a package tour organiser pursuant to the national rules implementing Package Travel Directive, they are prohibited from claiming such costs from an air carrier, as well. Irrespective of whether they are actually able to obtain actual compensation. 

This is a very literal interpretation of Article 8(2) Regulation 261/2004 (para. 31), which aims to prevent double compensation claims from being raised by passengers (para. 34). However, this interpretation does not help consumers in a situation like in the given case, where the package tour organiser is insolvent and the consumer is left without a recourse. The CJEU indicates that where the package tour organiser did not ensure sufficient insolvency protection pursuant to Article 7 Package Travel Directive, this provision has been improperly implemented and applied in a given Member State (paras. 41-42) and the passenger may claim his damages from the Member State under State liability rules (para. 43). The burden is placed, therefore, on passengers to continue with their search for justice.

CJEU in Kirschstein: the scope of UCPD is broad, but not infinite

Earlier today the Court of Justice delivered its judgment in a very interesting case C-393/17 Kirschstein. As reported in our earlier post on the opinion of Advocate-General, the case concerned the application of the Unfair Commercial Practices and the Services Directives in the sector of higher education. In the judgment issued today the Court agreed with the Advocate-General that the national requirement, according to which only accredited higher education establishments may award certain degrees, does not contradict the analysed directives. The part of Court's reasoning on the UCPD, however, clearly deviates from the arguments of AG Bobek. 

Facts of the case

The defendants were running a higher education institution which organised study programmes, upon the completion of which master's degrees were awarded, despite the lack of an accreditation. The Public Prosecution Service considered this practice to be in breach of Belgian law and initiated legal proceedings. The defendants argued that national legislation criminalising the act of conferring ‘master’s’ degrees, without having obtained the authorisation required for that purpose, was contrary to Directives 2005/29 and 2006/123.

Unfair Commercial Practices Directive

The questions referred by the national court are framed very generally and it is not entirely clear which part of the UCPD is considered to potentially preclude the contested national rules. The most likely argument seems to relate to the UCPD's black list. Indeed, from Plus Warenhandelsgesellschaft onwards, the Court of Justice has consistently found that national prohibitions, which pursue the objectives relating to consumer protection and are not included in the Annex I to the Directive, do not comply with the UCPD.  

The Court, however, did not even get to that stage and focused on the UCPD scope. It recalled the definition of a commercial practice, covering any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product (including services) to consumers (Article 2(d)). However, unlike Advocate-General, who focused on the question whether the provision of higher education qualifies as a service or not, the Court directed its attention towards the aspects of service provision, which fall within the scope of the UCPD. More specifically, according to the Court, a distinction must be made between commercial practices which are closely linked to a commercial transaction involving a product (promotion and sale or supply) and the product (service) itself (para. 42). As a result, a national rule which aims to determine which operators are authorised to provide a service in a commercial transaction, without directly regulating the practices which that operator may subsequently implement to promote or "dispose of the sales of that service", does not qualify as a commercial practice within the meaning of Directive 2005/29 (para. 45). By "disposing of the sales of services" the Court appears to mean "putting into practice the marketing of a service" (following the Dutch version), i.e. the act of supplying the service as such. From this it follows that the UCPD does not apply to national legislation at issue in the main proceedings.

Services Directive

The second part of the judgment, one involving the interpretation of Services Directive, appears to be more aligned with the Advocate-General's opinion (even though again no references are made to the opinion). Similarly to the AG, the Court found that educational services in question can be regarded as neither non-economic services of general interest (Article 2(2)(a)), nor activities which are connected with the exercise of official authority (Article 2(2)(i)), and thus cannot be excluded en bloc from the scope of Directive 2006/123. It then went on to assess whether the authorisation scheme established by national law was compatible with requirements set out in Articles 9 and 10 of Services Directive. According to the Court the analysed framework did not seem to have a discriminatory nature, was justified by an overriding reason relating to the public interest (ensuring a high level of higher education and protecting the recipients of services) and pursued that objective with appropriate means, thus complied with Article 9 of the Directive. As regards Article 10, the Court established that the preliminary reference did not contain sufficient information about the conditions of the authorisation scheme and left the relevant assessment to the national court. 

Concluding thought

Case C-393/17 Kirschstein shows that services in higher education sector are not, by their very nature, excluded from the scope of either UCPD, or Services Directive. However, the judgment delivered today also underlines that not all national rules restricting the provisions of services must be analysed under UCPD. When it comes to the conditions imposed on the service as such - here: determination of the operators authorised to provide such a service - it is Services Directive that provides the relevant benchmark, not the UCPD. In making that distinction the Court put a limit to the overly expansive interpretation of the consequences of the UCPD's black list and brought the focus of the discussion back where it belongs.