A recent request for a preliminary ruling C-590/17 Pouvin v Electricité de France from the French Cour de Cassation raised interesting and so far unexplored questions about the applicability of the 1993/13/EC Unfair Contract Terms Directive (UCTD) on contracts concluded between employers and employees that are connected to but do not fall within the employers' main business. Last week AG Bobek delivered his Opinion on the case.
Claimants Mr Pouvin and his wife Ms Dijoux entered into a mortgage loan contract with Mr Pouvin's employer, Electricité de France (EDF). The contract contained an automatic termination clause according to which the loan becomes immediately and in full payable if Mr Pouvin leaves his employment. When Mr Pouvin resigned, the employer called on the loan. In the case that followed the claimants argued that the termination clause was unfair under the UCTD.
Questions to consider
1) Can EDF, the employer, be considered the 'seller or supplier' within Art. 2(c) UCTD given that lending is not its main business?
2) Can Mr Pouvin, the employee and his wife (not an employee of EDF) be considered 'consumers' under Art. 2(b) UCTD?
Can employers be considered the 'seller or supplier'?
Relying on the wording of Art. 2(c) of the UCTD and previous CJEU case-law AG Bobek proposed a wide interpretation to the notion of 'seller and supplier' so as to include the employer in the present case. Under Art. 2(c) a 'seller or supplier' means any natural or legal person who, in contracts covered by the UCTD, is acting for the purposes relating to his trade, business or profession.
First, AG Bobek considered the meaning of acting for the 'purpose' of someone's trade, business or profession. He dismissed EDF's argument that in providing the loan they did not act for the purpose of their trade, business or profession given that lending is not their main business. Drawing a parallel with the CJEU's earlier judgment in C-147/16 Karel de Grote (on which we reported here) that confirmed that complementary or ancillary services carried out in connection with the main activity can be included into the concept of 'business, trade or profession', which defines the status of the 'seller or supplier', AG Bobek concluded that in the present case too, the employer provided an ancillary service that was connected to its main activity. While in Karel de Grote the educational institution directly provided the loan to consumers, in the present case the connection is more indirect, since the employer only provided the loan and not the property- that had to be purchased from a third party seller. Regardless of the indirectness of the connection, the AG argues that the connection is not too remote to push the contract outside the scope of the UCTD. Especially since providing loans to employees is part of the companies' social policy that is used to attract high quality employees and as such is essential for a running a successful business.
Second, AG Bobek argued that giving a broad meaning to the notions of 'seller and supplier' is in line with the UCTD's intention that provides for 'any' natural or legal person acting for the purpose relating to his trade, business or profession. Both the words of 'any' and 'relating' provide additional strong basis for the definition to conclude that the UCTD's intention is to include ancillary services, not just the core activities, those that squarely fall within the 'sphere of professional competence' of the business.
Can employees be considered 'consumers'?
The second question that AG Bobek needed to answer is whether Mr Pouvin who is an employee of EDF can be considered a consumer. Again, the AG proposed a broad interpretation of Art. 2(b).
Although one of the recitals of the UCTD expressly excludes employment contracts from its scope, AG Bobek dismissed the applicability of the exclusion in the present case. First of all, he contends that the recital has no biding force and that in any way it only provides an illustration of a sort of contracts that should be excluded because the parties to them are not acting as 'consumers' or 'sellers or suppliers' in the sense of the UCTD. In the present case the loan agreement does not form part of the employment contract and does not regulate the employer-employee relationship; the loan is merely provided in connection with the employment contract of Mr Pouvin. Therefore, the fact that the loan was reserved only for employees does not change the characterization of the parties as a 'consumer' or 'seller or supplier'.
AG Bobek proposes the following answers:
1) Art. 2(c) of the UCTD should be interpreted as meaning that where a company grants a mortgage loan to an employee and the employee's spouse that is covered by a scheme only available for the employees of the company, it is acting as a 'seller or supplier'.
2) Art. 2(b) of the UCTD is to be interpreted as meaning that an employee of a company and the spouse of such employee, who entered into a loan agreement with the employer to purchase a home, is acting as a 'consumer'.
AG Bobek's proposed wide interpretation of the two notions is a welcomed approach that is likely to serve the UCTD's intention to deliver a high level of consumer protection. The Opinion is well reasoned and the relevant connection is made between the two notions and the UCTD's broader policy aim to protect consumers that are in a weak(er) position compared to businesses (general inferiority vis-à-vis businesses, weak bargaining power and information asymmetries). It is particularly interesting to read AG Bobek's rejection on the decisive role of these rationales in the present case. The core of AG Bobek's thinking seems to be that the rationales are not decisive per se whether the employer acted as a seller or supplier, and that applicability of the UCTD does not depend on a balancing exercise between the interest of the parties, since this has already been done by the legislator and is included in the broad wording of the relevant provisions. These are certainly compelling arguments that invite the reading of the relevant parts for our readers interested in the role of the UCTD in the society (paras. 24-29).