Thursday, 19 September 2013

Diligence cannot undo unfairness - CJEU judgment in Case C-435/11 CHS Tour Services

This morning, the Court of Justice of the EU handed down its judgment in the CHS Tour Services case. For a summary of the facts of the case and the Advocate General's opinion, I refer to Bram's earlier post on this blog ('Opinion AG Wahl in CHS Tour Services on Unfair Commercial Practices'). The question referred to the CJEU is whether the requirement of 'professional diligence', laid down in Article 5(2)(a) of the Unfair Commercial Practices Directive, should be understood as an independent condition for assessing the misleading nature of certain commercial practices (in this case: a tour operator's exclusivity statement in brochures for skiing lessons and snow holidays for groups of schoolchildren).

The Court observes that:

'(...) Article 5(4) of the directive categorises commercial practices as unfair where it is established they are misleading or aggressive ‘as set out in’, Articles 6 and 7 and Articles 8 and 9, respectively, of that directive, that expression suggesting that the determination of whether the practice concerned is misleading or aggressive depends only on the assessment of the practice in the light of the criteria set out in those latter articles alone. That interpretation is supported by the fact that Article 5(4) does not contain any reference to the more general criteria set out in Article 5(2).' (para. 39)

'Furthermore, Article 5(4) begins with the words ‘[i]n particular’ and recital 13 in the preamble to the Unfair Commercial Practices Directive states that ‘[t]he … general prohibition established by this Directive … is elaborated by rules on the two types of commercial practices which are by far the most common, namely misleading commercial practices and aggressive commercial practices’. It follows that the basic rule of that directive, that unfair commercial practices are to be prohibited, as laid down in Article 5(1) of the directive, is given effect and concrete expression by more specific provisions with a view to due account’s being taken of the risk posed to consumers by the two cases that arise most frequently, namely, misleading commercial practices and aggressive commercial practices.' (para. 40)

Moreover:

'As regards, more particularly, Article 6(1) of the Unfair Commercial Practices Directive, at issue in the case in the main proceedings, it is to be stressed that, in accordance with the wording of that provision, the misleading nature of a commercial practice derives solely from the fact that it is untruthful inasmuch as it contains false information or that, generally, it is likely to deceive the average consumer in relation to, inter alia, the nature or main characteristics of a product or a service and that, therefore, it is likely to cause that consumer to take a ‘transactional’ decision that he would not have taken if there had been no such practice. When those features are to be found, the practice is to ‘be regarded’ as misleading and, therefore, unfair pursuant to Article 5(4) of that directive, and it must be prohibited in accordance with Article 5(1).' (para. 42)

'(...) having regard both to the wording and to the structure of Articles 5 and 6(1) of that directive, and to its general scheme, a commercial practice must be regarded as ‘misleading’ within the meaning of the second of those provisions if the criteria set out there are satisfied, and it is not necessary to determine whether the condition of that practice’s being contrary to the requirements of professional diligence, laid down in Article 5(2)(a) of that directive, is also met.' (para. 45)

'The interpretation above is the only one capable of preserving the effectiveness of the specific rules laid down in Articles 6 to 9 of the Unfair Commercial Practices Directive. Indeed, if the conditions for the application of those articles were identical to those set out in Article 5(2) of the directive, those provisions would have no practical significance, even though they are intended to protect the consumer from the most common unfair commercial practices (see paragraph 40 of this judgment).' (para. 46)

Accordingly, the Court holds that:

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’), must be interpreted as meaning that, if a commercial practice satisfies all the criteria specified in Article 6(1) of that directive for being categorised as a misleading practice in relation to the consumer, it is not necessary to determine whether such a practice is also contrary to the requirements of professional diligence as referred to in Article 5(2)(a) of the directive in order for it legitimately to be regarded as unfair and, therefore, prohibited in accordance with Article 5(1) of the directive.

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