Wednesday, 28 January 2015

Financial Services Purchased from a Third Party and Jurisdiction - CJEU judgment in case C-375/15 Kolossa

Today the CJEU handed down its judgment in the Kolossa case (have a look at the blog entry about the AG's opinion as the CJEU followed its AG in all points). The Austrian resident Kolossa had purchased financial instruments issued by the British Barclays Bank. After the bearer bonds had lost all their value, Mr Kolossa filed a lawsuit against Barclays in front of an Austrian court which asked the CJEU for an interpretation of the Brussels I Regulation.

The CJEU holds that Art 15 Brussels I Regulation is not applicable to a case where a consumer purchased a financial instrument not directly from the issuer but from a professional intermediary. There has never been a contractual relation between Mr Kolossa and Barclays and a chain of contracts through which certain rights and obligations of Barclays are transferred to Mr Kolossa is not sufficient.

Regarding Art 5(1), the CJEU holds that - in contrast to the requirement laid down in Art 15 - the conclusion of a contract is not a condition for its application. It is nevertheless essential that a legal obligation freely consented to by one person towards another can be identified since the place of performance of this obligation determines jurisdiction. Although Barclays had certain obligations towards Mr Kolossa, there was no such legal obligation freely consented to by Barclays. 

The Austrian court wanted to know if its jurisdiction could then be based on Art 5(3). The claim for damages was based, among others, on the liability for the prospectus and breaches of other legal information obligations towards investors. Art 5(3) points at the 'place where the harmful event occurred'. This is either the place of the event giving rise to the damage (which in this case was where Barclays has its seat) or the place where the damage occurred. In the specific circumstances the damage occurred on Mr Kolossa's Austrian bank account, which is why Austrian courts have jurisdiction for these non-contractual claim.   

Finally, the CJEU held that in the context of determining the international jurisdiction under the Brussels I Regulation, a national court does not have to conduct a comprehensive taking of evidence in relation to disputed facts that are relevant both to the question of jurisdiction and to the existence of the claim. The court can, however, examine its international jurisdiction 'in the light of all the information available to it, including, the allegations made by the defendant'.  

PhD vacancy in European Private Law in Amsterdam

There is currently a PhD vacancy in European Private Law within the Centre for the Study of European Contract Law at the University of Amsterdam. Closing date for applications: 31 March 2015. Link to more information: see here.


"Project description 

The researcher will work within the overarching project ‘The Architecture of Post-National Rule-making: Public International Law, European Public Law, and European Private Law’ jointly led by professor Martijn Hesselink, professor Deirdre Curtin and professor André Nollkaemper. The project aims to provide new reflections and insights into the discussion on the legitimacy of post-national rule-making starting from three distinct but in the project uniquely combined legal perspectives. The main objective is to relate perspectives from public international law, European public law and European private law on post-national rule-making and to examine through a new lens any legitimacy concerns that may arise from the new arrangements.
The successful candidate will benefit not only from committed research supervision by a distinguished expert in the area of European private law and its theory, but also from the mentorship of leading professors in European public law and international law in the lively and supportive intellectual environment of the University of Amsterdam that has long enjoyed a strong, international reputation for critical innovation in legal research. At the core of the project lies a close multi-disciplinary dialogue between senior and junior researchers that crosses the normal boundaries of the three sub-disciplines of law.
Applicants are asked to submit a research proposal of approximately 1000 words, which should include a section on methodology and fits within the broader conceptual theme of the project. They are invited to formulate an innovative specific research question (or hypothesis) within the general theme of the project, and with a specific focus on European private law. We are open not only to descriptive and analytical questions but, in particular, also to normative questions, including questions relating to the legitimacy of post-national rule-making and the justice of post-national rules in the area of private law."

Monday, 26 January 2015

The Passenger Name Record proposal reloaded

In the wake of the recent Paris terrorist attacks, anti-terror measures of all kinds have of course gained renewed momentum. In particular, the EU Passenger Name Record (PNR) Proposal will be once again under the attention of the European Parliament, whose Civil Liberties committee had already voted against it in 2013. The current climate makes the upcoming discussion much more topical, also due to the fact that, in the meantime, the ECJ has annulled the Data Retention Directive. According to the PNR proposal's rapporteur, Timothy Kirkhope (ECR, UK), the EU rules are needed to prevent criminals exploiting gaps in the EU due to different national rules. 
The directive would make the collection of data concerning the identity of passengers flying to and from outside the EU (and possibly also within its borders) more widespread and systematic. 
More information on the proposal, the state of the debate and existing PNR agreements with third parties can be found on the EP's information page.

Conference: Where is law going if not behavioral?

Last Thursday and Friday, many of this blog's authors got together at the European University Institute in Florence to take part in the conference 'Where is law going if it is not going behavioral?'. In my presentation I gave an overview on the different groups of supporters and critics of behavioral analysis of law and offered three explanations to the question of why behavioral analysis of law polarizes so strongly. Many of the workshop's speakers highlighted the fact that behavioral analysis of law is not sufficiently distinguished from the political concept of libertarian paternalism and the regulatory tool of nudging, which causes confusion. In contrast to the US, behavioral analysis of law is only at its beginnings in Europe. Hopefully, the conference has given a boost to this development!

Wednesday, 21 January 2015

Unfair terms assessment in mortgage cases in line with EU law - CJEU judgment in cases Unicaja Banco and Caixabank

Today, the Court of Justice of the EU delivered its judgment in a number of joined cases (C-482/13, C-484/13, C-485/13 and C-487/13) on the judicial assessment of general terms and conditions applying to Spanish mortgage contracts, involving the Unicaja Banco and Caixabank. 

In line with Advocate-General Wahl's opinion in the case (on which we reported earlier), the CJEU found Spanish law to be compatible with EU law, provided that certain conditions were met.

The Court ruled:

Article 6 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as not precluding a national provision under which the national court hearing mortgage enforcement proceedings is required to adjust the amounts due under a term in a mortgage-loan contract providing for default interest at a rate more than three times greater than the statutory rate in order that the amount of that interest may not exceed that threshold, provided that the application of that national provision:
–        is without prejudice to the assessment by that national court of the unfairness of such a term and
–        does not prevent that court removing that term if it were to find the latter to be ‘unfair’, within the meaning of Article 3(1) of that directive.
See also the Court's press release.

Saturday, 17 January 2015

Conference regarding upcoming implementation of the ADR directive in Germany

Renowned scholars discussed the current plans of the German government (see draft) regarding the implementation of the ADR directive at Humboldt University Berlin last Friday (see conference program).

The ADR directive whose implementation is due by July 2015 sets out minimum requirements for ADR bodies in the European Union. These include: no/low fees for consumers, no need to involve lawyers, fast and purely written procedures. Germany in essence plans to follow these criteria. Whereas the Directive allows for schemes where the decision-maker is “employed or remunerated exclusively by the individual trader“ under certain additional conditions, Germany opted out of this option. This does, of course, not exclude for such bodies to exist. However, they cannot be part of the new consumer ADR network. The directive, furthermore, leaves various options as to how binding the results of such dispute resolution can be made. According to the draft document Germany decided against a system of binding awards. The consumer can always go to court, too. Whereas consumers incur no (or only low) fees, traders may be charged. The overarching ADR network will be provided for any dispute involving a European consumer against a German trader. The individual boards can go further than that in their scope. They could, for instance, also offer settlement in cases that are initiated by traders against consumers or traders against traders and relax the requirement of German residence. The participants questioned in how far ADR will be successful in Germany given a rather well-working court system even for small claims. 

The consultation phase for the draft document is soon to expire after which a final legislative proposal will be produced that then needs to go through the parliamentary process.

Thursday, 15 January 2015

ECJ: Also lawyers have to abide the Unfair Terms Directive ...

Today, the ECJ delivered its decision in Case C‑537/13, Birutė Šiba v Arūnas Devėnas.
The case concerned a series of non-negotiated contracts concluded by the parties and concerning legal assistance to be provided in the context of a series of court proceedings concerning Ms Šiba's private life. 
Later on, some controversy arose regarding the fees to be paid for such assistance and the matter ended up in a series of court decisions. In challenging the Appelate Court's decision in cassation,
Ms Šiba (or, we guess, her new lawyer!) argued that the previous courts failed to take into account her consumer status, which would have required the contracts to be interpreted to her advantage. 

Hence the questions raised by the referring court, which the ECJ summarised as follows:
whether Directive 93/13 must be interpreted as applying to standard-form contracts for legal services, such as those at issue in the main proceedings, concluded by a lawyer with a natural person who is acting for purposes outside his trade, business or profession.
 The Court concluded that the Directive is applicable, as no specific characteristic of the legal profession requires that contracts between lawyers and "client-consumers" (para 23) are exempted from unfair terms control. Except when such characteristics suggest otherwise, "[it] is [...] by reference to the capacity of the contracting parties, according to whether or not they are acting for purposes relating to their trade, business or profession, that the directive defines the contracts to which it applies" (para 21).
The lawyer herself renounces to this line of argument when she decides to "use standard terms which do not reflect mandatory statutory or regulatory provisions within the meaning of Article 1(2) of Directive 93/13" (para 27).
In particular, although the fact is not clearly spelled out in the decision, it seems likely that Mr Devėnas had argued that the confidential nature of the lawyer-client relationship stands against the disclosure of contracts for legal advice before a court (see para 31). The Court finds this defence ulikely to have a meaning, since "contractual terms which have not been individually negotiated, in particular those which are drafted for general use, do not contain, as such, personal information relating to lawyers’ clients, disclosure of which might undermine the confidentiality of the legal profession." (ibidem). Should such terms be specific to a particular client, there would be reason to consider them as negotiated terms- which would in turn make them exempt from control.

As such, however, the terms are generally subject to scrutiny.

This new decision joins Asbeek Brusse in expanding the reach of Directive 93/13 beyond its more straightforward domain of application- consumer sales and commercial services- into less explored domains. It will be interesting to see whether the ECJ's stance will influence consumer's attitudes to contracts for legal assistance- especially considered that this would require lawyers to challenge the terms adopted by some of their colleagues...

Towards even more transparent air fares - CJEU in C-573/13 (Air Berlin)

15 January 2015: CJEU judgment in case C-573/13 (Air Berlin)

The Court of Justice decided today in another case on price transparency of air fares that originated in Germany. Again, provisions of the Regulation 1008/2008 on common rules for the operation of air services in the Community have been addresses (previously a subject of a judgment in the ebookers.com and Vueling Airlines cases).

The online selling practices of the airline Air Berlin were at issue here. When consumers open a website of this airline they may select their flight destination and a date and then are re-directed to a website showing all possible flight connections fulfilling their requirements in a table. The computerised system automatically pre-selects the cheapest flight connection for the consumer and for that option indicates the air fare, separately surcharges, as well as the total flight price, incl. the service charge. If the consumer selects a different option, then the prices are adjusted to reflect prices of that connection. However, only the final price of the selected flight is showed at any given time.

German consumer organisations questioned this practice on two grounds: 1. they claimed that the Regulation obliges the airlines to indicate the full price for air services when the prices of air services are shown for the first time; 2. they claimed that the Regulation obliges airlines to indicated full price for air services for all possible connections and not only for the connection selected by a consumer.

The CJEU agreed with this interpretation in its judgment today. Article 23 of the Regulation indicates that the final price to be paid must be showed to the consumer "at all times", without a distinction between the moment when the price is indicated for the first time, when the consumer selects a particular flight or when the contract is concluded. (Par. 25) This reasoning is supported by the aim of the Regulation to enable effective price comparison to consumers. (Par. 34)

In practice this should mean that when we are in the future booking flight tickets online we should no longer have to click between different connections offered by the airline to see how the final price would change if we decided to take a different flight than the one recommended by the airline or selected by us (see the picture). Final prices for each and every connection change should be automatically listed from the start, next to that connection. Showing differences among the air fares is insufficient.

Wednesday, 14 January 2015

Contestable notice on contesting jurisdiction

The new Brussels I Regulation (1215/2012) (recast) intends to improve protection granted to weaker contractual parties in cross-border cases by obliging the national courts in Art. 26 Par. 2 to inform, among other weaker parties, the consumer that he has the right to contest the jurisdiction of the court if this is not the court of the Member State in which the consumer is domiciled. This needs to occur before the court assumes jurisdiction due to the consumer's appearance in this court. Alongside with the warning to the consumer, she should receive an information what happens if she enters or doesn't enter an appearance. The European Judicial Network in civil and commercial matters established a (luckily) non-mandatory standard text for this information (may be found here). I sincerely hope that national courts decide not to follow this advisory text, since in my opinion it fails to provide the most important part of this warning: namely inform the weaker party that it may be a weaker party and therefore could question the jurisdiction under rules as outlined above. See yourself:


"You are being sued before the court of a Member State of the European Union under Regulation 1215/2012.
Under Article 26 of this Regulation the court before which a defendant enters an appearance shall - in principle - have jurisdiction even if jurisdiction cannot be derived from other provisions of the Regulation.
This rule, however, does not apply where appearance was entered to contest jurisdiction.
If you are certain that the court has no jurisdiction under the other provisions of the Regulation, you need not respond to the lawsuit in any way. If you have doubts about the issue of jurisdiction, it is advisable that you challenge jurisdiction of the court prior to entering into the subject-matter of the lawsuit.
"

How is the consumer to be certain that the court has no jurisdiction if she is not informed that:
1. special jurisdiction rules apply to consumers;
2. what these rules are?

Are we now assuming that every EU consumer is familiar with Brussels I Regulation (recast) and can understand its provisions?

And even if by chance the consumer had doubts about the jurisdiction, the information on how to challenge jurisdiction is missing from the notice. While short information notices are to be recommended, in the interest of brevity the most important information should not be left out.

Tuesday, 13 January 2015

Press digest




Food

An interesting article in Newsweek on food consumption in the EU, health concerns as well as environmental issues related to our eating habits: Why Europeans Should Be Paying More for Their Food.

Electronic payments

Forbes addresses the opposition of European consumers supported by the American lobby toward the newly agreed on EU plans to cap interchange fees for electronic payment transactions. Apparently, similar laws previously adopted in the US didn't lead to any savings for the consumers but only contributed to raising products' prices: EU's Plan To Implement Interchange Fee Caps Will Raise Costs for Consumers. Interestingly, BEUC supports the change: EU deal struck to curb card transaction fees.

The European Banking Authority published its guidelines on the security of Internet payments in December 2014 (see here) that are to apply at the latest as of 1st of August 2015. Payment Service Providers will have to among other strengthen the consumer authentication process online to prevent fraud. Guidelines to strengthen requirements for the security of internet payments.

Energy efficiency of household appliances

New EU rules on how to save energy on the consumption and use of household appliances started binding as of 1 January. These rules require that household appliances switch to a stand by mode, requiring lower energy consumption after a short period of inactivity. The average saving on electricity per year for a household should amount to ca 30 GBP. E.g.: Tepid coffee anyone?..., Smart TVs will have to switch themselves OFF overnight... .

Apple

Apple has adopted its terms and conditions for European consumers that fall in line with the Consumer Rights Directive. Contrary to customers e.g. in the US, European consumers of e.g. iTunes are granted the 14-day right of withdrawal from a digital purchase, except when they purchase digital gift cards that have been redeemed in this period. E.g.: Apple gives EU consumers refund option for apps, music. While the Directive allows for already consumed digital content to be excluded from the application of the right of withdrawal Apple doesn't seem to introduce such a distinction. Apple's Lenient Return Policy in Europe for Digital Purchases Draws Ire of Developers.