Thursday, 30 May 2013

Unfair terms, ECJ reaffirms important principles

In two cases delivered today the Court of Justice had the chance to confirm its previous case law and add a new tile to the (ascertained) coverage of Directive 93/13.

To start with this last bit, in Asbeek Brusse and da Man Garabito v Jahani BV, the CJEU clarified that residential tenancy contracts concluded with professional landlords are also covered by the unfair terms directive.
In particular, the fact that the Dutch provision implementing the directive did not use a general term (  to identify the consumer counterpart (the English version is "seller or supplier"), but mentioned the "seller" (verkoper) instead, should not prevent the directive from applying to contracts which involve no sale.

As concerns the duties and prerogatives of courts faced with unfair terms, two important principles have been reaffirmed:
- first, on the ex officio nature of unfair terms control: appellate courts are not exempted from the duty to independently ascertain a term's unfairness under the Directive when they are allowed to act ex-officio to enforce public policy; in other words, the Directive and in particular its rules concerning the non-binding nature of unfair terms are equal to internal public policy rules;
- second, as concerns the consequences of unfairness, an effective implementation of the Directive requires that courts declare the terms wholly unbinding: reducing a penalty instead of considering it as never stipulated would "weaken the dissuasive effect on sellers and suppliers" (par.58) of the European rules.

This extension of ex officio control to second instance cases where the issue has not been raised in the first instance, was also reaffirmed in today's second case, Jőrös v Aegon
The most interesting part of this decision, though, concerns jurisdiction. The referring court asked in this case whether, having identified one term as unfair, it should proceed with a declaration of invalidity even though in principle the application of unfair terms control is demanded to a different and higher jurisdiction. 
After having paid lip-service to the Member States competence to "determine which court or tribunal has jurisdictions to hear disputes involving individual rights derived from European Union law" (par 50), the court  states that , once a court has found a term unfair, effective protection requires that the court "must draw all the consequences" from its finding. Thus, notwithstanding the national rules on jurisdiction, the "incompetent" court should still proceed to declare the term invalid and check whether the contract can still exist without that term. 

In both cases, the CJEU and the Advocate General agreed that there was no need to request an Opinion- which underlines how the Court considers the issues settled. On the other hand, the fact that cases keep coming in where the consumer (and her lawyer) did not seem to be aware of her rights under the (legislation implementing the) Directive seems to confirm the need for a judge-driven application of this branch of consumer protection.      



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