Monday, 24 September 2018

The limits of disclosure duties under the CRD (and what "vulnerable consumers" have to do with it) - AG opinion in C-430/17 Walbusch Walter Busch

Last Thursday, Advocate-General Tanchev delivered an opinion in case C-430/17 Walbusch Walter Busch. The opinion is a part of an on-going preliminary reference procedure in which the Court of Justice is asked to clarify the notion of “a means of distance communication which allows limited space or time to display the information” used in Article 8(4) of Directive 2011/83/EU on consumer rights (CRD).

Facts of the case and the key question

The case involved a trader who distributed an advertising leaflet as a supplement to newspapers and magazines. The leaflet did not merely promote trader’s products, but also allowed consumers to submit binding orders through an attached coupon. The existence of the mail order coupon triggered the applicability of Directive 2011/83/EU, which, among others, defines items of information to be communicated to consumers prior to the conclusion of a distance contract. The dispute in the case at hand concerned the exact scope of this disclosure duty; more precisely, whether the trader who distributed the relevant coupon was obliged to provide all information under Article 6(1) of Directive 2011/83/EU on the disputed leaflet/coupon or rather benefited from a milder regime of Article 8(4). The key question was, in other words, whether a coupon attached to an advertising leaflet amounted to “a means of distance communication which allowed limited space or time to display the information”, in which case the trader would only be obliged to provide information regarding the main characteristics of the goods or services, his own identity, the total price, the right of withdrawal, the duration of the contract and, if applicable, the conditions for its termination. Should this be the case, the Court was asked to provide further guidance as regards the reach of the “information about the right of withdrawal” laid down in Article 8(4): 1) whether the relevant obligation covered only the existence or also the conditions of the right to withdraw; and 2) whether it involved a duty to attach a model withdrawal form set out in Annex I B to the Directive.

Two interpretations

During the proceedings two main lines of interpretation emerged. The first one, supported by the plaintiff (Zentrale zur Bekämpfung unlauteren Wettbewerbs, a German self-regulatory organisation promoting fair competition), the Commission and two of the intervening states (Finland and Poland), denied the leaflet in issue the quality of a “means of distance communication which allowed limited space or time to display the information”. Advocates of this reading believed that it is the abstract nature of the means of distance communication (whether or not it was subject to particular technical constraints - this not being the case for conventional paper leaflets), and not the concrete form of communication chosen by the trader (e.g. a smaller or a bigger leaflet), that plays a role in assessing the applicability of Article 8(4). The reading, arguably, provided a higher degree of consumer protection and remained in line with the requirement for exceptions to be interpreted strictly.

Nevertheless, this was not the only reading of the Directive put forward as part of the proceedings. A different interpretation was proposed by Germany, which argued that it was possible to read the CRD in a way that safeguarded the traders’ freedom to advertise without undermining a high level of consumer protection. In order to achieve this result, in assessing the applicability of Article 8(4), preference was to be given to the subjective form of communication chosen by the trader, rather than the objective criteria. Therefore, according to this view, in a situation such as the one in the main proceedings, the trader should only be obliged to include a limited set of pre-contractual information on the leaflet/coupon itself. This would be without prejudice to a high level of consumer protection, which would still be ensured by other provisions of the CRD. Most notably, pursuant to Article 8(4) in fine, the trader would be required to provide the remaining information “in an appropriate way” (e.g. on a website). On top of this, as this reading appears to suggest, pursuant to Article 8(7)(a), the trader would be required to communicate detailed information (including on the right of withdrawal) in a confirmation of the contract delivered on a durable medium, at the latest at the time of delivery.

Opinion of Advocate-General

The Advocate-General was more convinced by the first of the described lines of reasoning and considered that the leaflet in question should fall under the full disclosure duty of Article 6(1) CRD. In forming his opinion the AG relied on several arguments related, among others, to the wording (“technical constraints of certain media” in recital 36; para. 63) and context (if Article 8(7)(a) was to be interpreted as Germany suggests, Article 8(4) would be superfluous; para. 80) of the interpreted act. Perhaps most interesting was, nevertheless, the contrast between Advocate-General's and Germany's views as regards an intepretation which best reflects the CRD's objectives. It is in this context that arguments related to the protection of (vulnerable) consumers, on the one hand, and traders’ freedom to conduct a business, on the other, were raised.

Most notably, the AG Tanchev disagreed with the opinion of Germany that the imposition of a full disclosure duty at the pre-contractual stage would restrict “freedom of traders to conduct a business under Article 16 of the Charter without supplying any advantage to consumers” (para. 47). Instead, he expressed a conviction that such an added value existed, and particularly so with respect to the protection of vulnerable consumers. Considering that the AG's reasoning is a rare (if not the first) occasion when recital 34 of the CRD acquired practical importance, the following two passages of the opinion are worth quoting in full:

73. Finally, as argued by the plaintiff, advertising media produced in traditional forms of communications, as is the case in the main proceedings, are often directed at societal groups, such as older people, who are unaccustomed to going to the internet to acquire access to the supplementary terms of the contract proposed.

74.  Recital 34 of Directive 2011/83 reflects protection of such groups as an aim of that directive. Its second sentence states that ‘the trader should take into account the specific needs of consumers who are particularly vulnerable because of their mental, physical or psychological infirmity, age or credulity in a way which the trader could reasonably be expected to foresee.’ This context too points toward rejection of the trader’s selection of design and medium in determining whether ‘a means of distance communication … allows limited space or time to display the information’ under Article 8(4) of Directive 2011/83, binding as it would all societal groups to engage with the internet to secure information traders are bound to provide pursuant to Article 6(1) of Directive 2011/83.

It remains to be seen whether the Court of Justice agrees with the interpretation of its advisor. While there is no doubt that the AG was driven by the objective to afford consumers a high level of protection, the opinion might be criticised for failing to engage with the consumer-oriented arguments supporting an alternative reading. Germany's view that a full disclosure duty at the pre-contractual stage may not be in consumers' best interests, considering that "realistically, it cannot be excluded that many consumers do not keep advertising leaflets after they place their orders" (para. 46), was perhaps too easily dismissed. All in all, resolution of the specific issue under dispute here may not be the most interesting part of the upcoming judgment. What deserves even closer attention are the specifics of the Court's argumentation, especially its position on (the need for and conditions of) the balancing between particular rights and freedoms as well as possible references to recital 34.

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