New German draft legislation establishing a collective action for data protection violations

Germany’s consumer associations are powerful players when it comes to seeking injunctive relief. According to a draft legislation that has recently been approved by the federal cabinet this right will soon be extended to data protection violations. It could remedy situations in which companies collect, process and use personal data of consumers without authorisation.

Federal Minister of Justice and Consumer Protection, Heiko Maas, considers this an important step in strengthening the rights of German consumers (see press release). Consumers may face difficulties in identifying whether a company has breached data protection legislation. They, furthermore, fear the costs and efforts of pursuing an action against a data protection law violation themselves. Consequently, the intervention of consumer associations seems justified to overcome such passivity. Such a right is particularly important in the light of an increasing digitalisation.

It remains to be seen which changes the legislative proposal will undergo during the legislative procedure.

Consumer law as a solution to online privacy issues?

Can (European) consumer law be used to help increase privacy protection online? Other solutions applied so far (e.g. mandatory disclosures about privacy policies; informed consent requirement) are constantly being evaluated as insufficiently effective. Consumer protection organisations, etc. are, therefore, starting to consider the application of more traditional consumer protection measures to protect privacy online. Together with my colleague, Marco Loos, we have already considered whether, e.g., consumer protection against unfair contract terms and private international law rules protecting consumers could apply to contracts for the provision of online services and what scope of protection they could guarantee consumers (see Wanted: A Bigger Stick. On Unfair Terms in Consumer Contracts with Online Service Providers). Some national courts (in France and Germany) are already engaged in evaluating the applicability of such consumer protection measures to online privacy policies and other online terms and conditions (see European Consumer Legislation and Online Privacy Policies: Opening Pandora's Box). French consumer agency DGCCRF also published certain recommendations as to what clauses could be considered abusive or illicit under French consumer law (Recommendation no. 2014-02). The authors of the online article (M. Kuschewsky, C. Ryckman) worry about the possibility that the consumer protection measures could apply to the evaluation of online privacy policies, since this could: 1. complicate the legal environment for the assessment of the validity of such terms (consumer legislation applying next to and not instead data protection legislation); 2. increase competence quarrels between the authorities supervising online traders and service providers (consumer authorities next to data protection authorities). These worries may, of course, be justified to an extent. However, the (European) courts and legislators could introduce legal certainty as to the scope of application of consumer protection measures to online privacy policies and consumer and data protection authorities could work together enforcing compliance therewith. This could give enough incentive to online service providers and traders to introduce more transparent, user-friendly terms and conditions, also in their privacy policies. Indeed, this could signify that these traders/ service providers would need to provide two sets of terms and conditions: EU and global ones, but as long as the protection in the EU would be harmonised and not country-specific, the costs thereof could be limited.

New digital single market strategy expected to kick off next May

Yesterday, the EU Parliament Magazine recapped the priorities announced by the two Commissioners in charge of the Digital Single Market, Andrus Ansip and Günther Oettinger. 

What we can extrapolate from the series of statements is that the Commission will start with a proposal to "modernise" existing copyright rules (modernisation which, indeed, many stakeholders invoke), to then move to telecoms and audiovisuals. Less specific undertakings concern search engines and the digitalisation of public administrations, while a last topic-"striking the right balance between keeping the internet open as a forum  for freedom of expression, while also making sure it is not abused as a vehicle to fuel hatred"- might be more contentious, especially since its pertinence to the digital single market agenda seems questionable. 

The article highlights how the two Commissioners expect the Parliament to cooperate with the effort; while the latter, however, emphasises the need to concentrate on "supporting consumers rights" in the digital marketplace, the Commissioners seem more concerned with the establishment or improvement of market conditions in the first place- a difference in vision that might make cooperation less smooth on given occasion. 

Of course, we will know more after May, when the copyright proposal will be presented. 

EU-US trade talks hindered by gouda cheese and cognac

While the TTIP negotiations continue, aiming at converging legal rules governing trade in the EU and in the US, certain areas raise more problems in the harmonisation process than others and could be excluded from the negotiations so that they don't halt the whole process. Political opposition against imposing new, other parties' rules is especially strong when related to food products or environmental concerns. This has been, among other, a subject of a discussion during a workshop on TTIP today at the University of Amsterdam; a workshop organized by Marija Bartl within the Access Europe research platform (Why TTIP?). Protected Geographical Indications for food and drinks, which guard a certain quality and origin of European products, such as gouda cheese or cognac, are not something that the Member States could easily relinquish in the trade negotiations. The origin rules are perceived to protect European consumers from unfair commercial practices. This may prove problematic for the US where these restrictions do not apply and e.g. gouda cheese could have a different connotation for American consumers than for European ones ('generic' name). Changing the existing default in one of the countries is likely, at least temporarily, to confuse consumers and may be tricky to agree on. Therefore, it could be an idea to discuss harmonisation of the origin labels separately from other issues of the TTIP. (Opinion divided over protected food names in EU-US trade talks)

Unfair contract (terms), split jurisdiction: not a problem, ECJ says (C-567/13)

 Yesterday, with its decision in Baczó and Vizsnyiczai (C-567/13), the Court of Justice might have given a signal that its important series of pro-consumer decisions in the field of procedural law has come to an halt.

The ECJ, in essence, had to decide where the two claimants had to seek the annulment of the arbitration clause contained in a contract that they actually intended to challenge in its entirety.

In 2007, Ms Baczó and Mr Vizsnyiczai concluded a mortgage loan agreement containing an arbitration clause. Later, they asked a local court, competent for this kind of action, to declare the contract invalid. A different local court then suggested that they should also demand that the arbitration term be declared invalid- and so they did. At that point, the court where they had lodged their original request referred the case to the county court: under Hungarian law, only these courts are competent to decide on unfair contract terms. 

The claimants challenged the decision to involve the higher court, which then raised a request for preliminary ruling. The referring court asks the ECJ to assess the exclusive competence of county courts, which effectively gives rise to split jurisdiction on the validity of a consumer contract and of specific terms contained therein. 

The referring court mentions some elements which suggest the rule might be dubious from the point of view of consumer protection:

- seizing the higher court might entail higher costs for the consumer;

- if the consumer brings the suit, she has to bring the case before the county court- if, however, the other party brings proceedings against her, the consumer can rely on the unfairness of a contract terms also before the local court- difference which, the court suggests, seems rather unreasonable.

The ECJ did not, in principle, give a final answer as to whether the rule is in line with EU law. 

However, it gave quite detailed guidelines.

The rule has to be assessed in the framework of Member States' procedural autonomy. In this context, the benchmark is the so called "equivalence and effectiveness" test. The ECJ seems to have no problem with the equivalence prong: the fact that unfair terms claims have to be brought by a court different than the one competent to decide on the invalidity of of contractual terms in general does not breach the principle of equivalence if it is not unfavourable to consumers. This assessment (para 46), in turn, practically gives the Court's answer to the effectiveness question too: 

"the designation of [county] courts, which are less numerous and hierarchically superior to the local courts, may facilitate a more homogeneous and specialised administration of justice in cases concerning the rules arising from Directive 93/13."

This, it seems, should automatically bring an advantage to consumers. The Court follows, as to this, the Hungarian Government's submission that the County court judges' professional experience ensures more effective consumer protection (para 58).

Other considerations, of course, also matter in the effectiveness test. In particular, procedural rules pursue public interests that cannot be thwarted to suit the specific interests of private parties (see para 51); thus, the standard to be applied is that the rules organising remedies must nor make the exercise of individual rights impossible of excessively difficult. To this respect, the existence of legal aid mechanisms should also be considered. 

Although the ECJ concludes that the rule is valid unless declining the local court's jurisdiction "gives rise to procedural difficulties that would make the exercise [of the consumer's rights] excessively difficult", it clearly indicates that it doesn't think any such difficulties are likely to arise. 

Among the elements of criticism (that for instance include the fact that the Court considers that, after all, the consumer does not need to be present at all stages  during the proceedings...), it is interesting to notice that the ECJ based several decisive passages of its decision on its previous statements in a case concerning actions brought by consumer associations, without really explaining why it considers them applicable to individual actions too. 

Not a brilliant start of 2015 for Hungarian consumers...

How to improve consumer food choices?

This month BEUC published its position paper on consumer nutrition: "Informed food choices for healthier consumers". Generally, the end responsibility to eat healthy rests on the consumer, however, it should not surprise anyone that consumer's choices with regard to nutrition are driven by food marketing. The complex and non-transparent food environment hinders healthy consumer choices with regard to food. Additionally, consumption pattern has changed and we tend to eat more processed food, of little nutritional value, but highly calorific, filled with added sugar, salt and saturated fat and lacking on vegetables and fruit. This may be the result of the fact that unhealthy food is often cheaper and easier accessible than healthy options. That is why the European Consumer Organisation calls for the introduction of better and more efficient European food policy with regard to consumer nutrition, believing that if the food environment and our behavioral patterns drive us to unhealthy food choices at this moment, both these factors could be influenced to re-shape our nutrition choices (p. 5).

First, the European legislator could introduce labelling on the front of the package of any food product (p. 7 - "as it is a time-saver"). This would be more likely to get consumer attention and if it came together with simplifying this information (e.g. by color-coding levels of sugar, salt, fat), consumers could be one step closer to making good nutritional decisions (p. 8-9 on raising awareness of consumers about the nutritional profiles of food). 

"More specifically a quiz launched by the Slovenian Consumer Organisation (ZPS) found that without traffic lights, only 35% of people correctly answer the questions on sugar, salt, fat and saturated fat contents. In contrast, when traffic lights were used 85% of respondents gave the right answer. Our Dutch member, Consumentenbond, found roughly the same results: without traffic lights 43% gave the right answer, while with traffic lights 90% of respondents correctly identified products high in salt, added sugar and unhealthy fat."

"Which? research showed people can eat over three times the fat and saturated fat as well as double the amount of salt depending on which chicken sandwich brand they choose."

"It is important to highlight that as colours are attributed to nutrients and not the whole product, traffic lights do not discriminate against certain products in particular but merely inform consumers as to the amounts of key nutrients such as sugar, salt and saturated fat. For instance, under a traffic lights scheme a sorbet would get a red for sugar whilst a vanilla ice cream would get an amber. At the same time the ice cream would get a red for fat while the sorbet would get a green. While seeing that on average sorbets contain less calories than ice cream people would also understand that sorbet remains a product high in sugar and that they should take into account this information to balance their whole diet." (p. 10)

However, the information on these labels should be truthfully relayed and not made more attractive than it should be. That is to say, food producers should not be allowed to claim health benefits of their products only on the basis of adding some desired nutrients to the food (vitamins), when the rest of its ingredients would remain harmful. (p. 11-12)

"In Austria our member Konsument found that health claims for calcium and multivitamins were appearing on the FOP of biscuits filled with sugar, salt and fat."

Therefore, BEUC is calling for a speedy introduction of minimum healthy nutrient profiles by the European Commission.

Another issue remains that current consumers lifestyle often prevents them from taking time to prepare a healthy meal at home. Getting food outside consumer's home has become a common occurrence. To assist consumers in improving their nutrition under such circumstances, BEUC calls for the improvement of food labelling eaten outside consumer's home. For example, restaurant menus could list energy, salt, sugar, fat intake by every dish. (p. 13-14)

"In the USA, where menu labelling is mandatory for chain restaurants (defined as those with 20 outlets nationally), many fast food chains have developed new food items to meet a specific calorific threshold and some committed to change recipes to add more fruits and vegetables to their menu options. A study performed in the US found that in order to affect customers’ purchasing behaviours, nutritional information must be visibly displayed e.g. on a menu board so that it can be considered by the consumer before placing an order, not afterwards. The information should be readable, meaning the font sizes should be similar to the one used for the name of the product, it should be as clear and easy to read as the price of the item."

The European legislator could also adjust current standards for fat, salt and sugar levels in products, as well as to motivate producers to lower these levels further (especially since the food market shows that currently similar products exist with different levels of these substances). 

"In the EU the average salt intake is almost twice the maximum level set by scientific bodies including the WHO." (p. 16)

"In Switzerland, the consumer organisation FRC found a tomato sauce can contain up to eleven times the amount of salt of another tomato sauce." (p. 17)

Additionally, food producers should be incentivized to increase the levels of fruits, vegetables, whole grains and healthy proteins in their food. (p. 19)

Moreover, the food marketing sector should be further controlled and additional measures could be taken to prevent marketing of unhealthy food products to children. 

"For instance in theory companies agreed to remove toys from kids menus, yet this practice is still widespread. More importantly each company can set its own rules, especially when it comes to determining which food can and cannot be advertised to children. BEUC members found that if food companies were to put children’s meals together 80% of the plate would be filled with processed food high in sugar, salt and unhealthy fat (fast food and snacks). By comparison, fruit and vegetables would account for 0.2% of the total plate." (p. 22)

A child could be defined as up to age 16 (currently - 12 years old). (p. 24) School programs should promote healthy nutrition. And supermarkets could start nudging their clients to healthy choices through in-store promotions and healthy store design. Obviously, this would require that the choice architecture would be taken over by the legislators and not left in the hands of the sector anymore.

"Another urging move would be to remove sweets and sugary snacks at check out as most supermarkets check out are filled in junks. Research from the Swiss Consumer Organization FRC found that all supermarkets visited sold unhealthy products such as candies, biscuits and in 89% of cases it was physically accessible to kids." (p. 25)

Coupling Data Protection measures and the Passenger Name Record proposal

Today, the European Parliament adopted a joint resolution pledging to proceed speedily towards the adoption of various anti-terrorism measures. In this context, as we noticed earlier, also the proposal for a Passenger Name Record directive is again on the table. To this regard, the Parliament insists on the need to adopt a comprehensive and possibly consistent framework on data protection. 

Important steps in order to match anti-terrorism efforts and a reasonable protection of citizens' privacy include encouraging Member States to make progress on the Data Protection Package and, importantly assessing the consequences of the EU Court of Justice’s annulment of the Data Retention Directive. To this end, the Parliament hopes that the Commission will seek independent experts' views on the "necessity and proportionality" of the PNR proposal

Where does our meat come from?

This week the European Parliament debates, among other, on the need for new rules regarding meat products' labelling (also in processed food) in the EU (MEPs to debate right to know where meat in processed food come from). The European Consumer Organisation (BEUC) argues for the introduction of clear origin labels for meat products that would ensure better traceability along the food supply chain ("While fresh meat origin will be displayed, we see no good reason why it becomes mysterious once meat goes through the mincer." M. Goyens - see EU Parliament's unique chance to push for meat origin labels). Not only would consumers benefit from this information (since everyone would know what - if any - meat is placed in McDonald's burgers and KFC's chicken nuggets), but also businesses would better know whether they could rely on specific suppliers and products. If the Parliament supports the earlier expressed call for new legislation made by the Committee for Environment, Food Safety and Public Health, we could expect the European Commission to start working on this issue.

Update: The European Parliament indeed called the European Commission to come up with a legislative proposal introducing mandatory labelling of the country of origin of meat use in processed food. (MEPs call for country of origin labelling of meat in processed foods)

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."