Should a practising lawyer who concludes a credit contract with a bank, security for which is provided by a mortgage on property belonging to his solely-owned law firm, be considered to be acting as a 'consumer'? The question was raised in the Romanian case of Horațiu Ovidiu Costea v. SC Volksbank România SA, which is currently pending before the Court of Justice of the EU. Today, Advocate General Cruz Villalón presented his opinion in the case (English translation not yet available; this post is based on the original Spanish text, and Dutch and French translations).
The case concerns Mr Costea, who in 2008 had concluded a credit agreement with Volksbank România, surety for which was provided by his solely-owned law firm. In May 2013, he brought civil proceedings against the bank, stating that the contract term on provision for risk was unfair and, for that reason, claiming repayment of sums paid to the bank on the basis of that contract clause. The claim was further substantiated by the statement that the term had been one-sidedly imposed on Costea by the bank and that it was unnecessary given the fact that security was provided by the mortgage. The Romanian judge assessing the case raised the preliminary question whether the claim falls within the sphere of EU Directive 93/13/EEC on Unfair Terms in Consumer Contracts, given Mr Costea's professional capacity and the fact that the suretyship had been provided by his law firm.
AG Cruz Villalón starts by pointing out that the 'consumer' concept in EU law is interpreted differently according to the legal area in which it is applied. It is an 'operational and dynamic concept' that is defined by specific legislation's content (para. 18 of the AG's opinion). Article 2(b) of the Directive stipulates that '"consumer" means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business or profession'. Article 2(c) determines that '"seller or supplier" means any natural or legal person who, in contracts covered by this Directive, is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned'. As AG Cruz points out, the distinction is not symmetrical: not all persons who cannot be qualified as sellers are consumers (para. 21).
While Costea had concluded the contract as a natural person, and not on behalf of his law firm, it was contested that he had acted as a consumer in the sense of the Directive, given his professional capacity as a practising lawyer. AG Cruz, however, observes that a person's profession should not influence the assessment of whether or not he falls within the scope of the Unfair Terms Directive's consumer notion - the 'consumer' is not a static category. Rather, a person's capacity depends on the situation in which he finds himself as regards the conclusion of a transaction (paras. 25-26). In sum, 'consumer' is an objective and functional concept, which depends on one criterion: whether or not the specific juridical act falls within the framework of activities that are outside of the professional sphere (para. 28). Taking into account factors relating to e.g. a consumer's experience, education, profession or intelligence would hamper the Directive's effectiveness and would, in particular, exclude legally trained people from protection in private legal transactions (para. 30). Accordingly, a lawyer concluding a credit agreement secured by his firm's property should not be excluded from the consumer concept in case it is shown that he was acting for purposes outside his profession.
The AG goes on to consider mixed-purpose contracts, in which a person concludes a contract partly for purposes outside of his profession and partly for purposes relating to his profession. In the present case, the purpose for which the contract was concluded had not been clearly stated. Referring to recital 17 of the Consumer Rights Directive (Directive 2011/83/EU), Cruz Villalón is of the opinion that in case a national judge establishes that it is unclear whether a contract was concluded exclusively for personal or for professional purposes, the contracting party should be considered to be a consumer if the professional objective was not predominant within the overall context of the transaction (para. 47).
AG Cruz Villalón's opinion, thus, clarifies to what extent a person's (legal) professional capacity could affect his being able to rely on consumer protection. The case addresses a relevant point for European consumer law, both in regard to its scope (who is and who is not a consumer in the sense of the Unfair Terms Directive) and, in a second step, its effectiveness to protect consumers against unfair terms in mortgage credit contracts (a recurring theme in CJEU case law).