Wednesday, 11 September 2019

AG opinion in VKI v TVP Treuhand (C 272/18) - a test case for the Amazon judgment

Last week, a seemingly very technical opinion has been delivered in a case concerning the transparency of a choice-of-law clause included in a fiduciary contract to be concluded by non-professional investors with an investment firm, Verein für Konsumenteninformation (VKI) vs
TVP Treuhand- und Verwaltungsgesellschaft für Publikumsfonds mbH & Co. KG (C-272/18) The case was triggered by an action brought about by VKI, seeking to obtain an injunction prohibiting the defendant to use the choice-of-law clause in the contracts it concludes with non-professional investors.

From the point of view of consumer protection, the case poses two main questions: 

  1. Does the Rome I Regulation, including its rules concerning consumer contracts, apply to contracts of the type at stake?
  2. If it does, is the choice-of-law clause unfair for failing to comply with transparency requirements and hence misleading the consumers as to their legal position?

As to the first question, the AG concludes that neither of the exclusionary rules possibly relevant to the case leads to attracting the case outside the sphere of application of the Regulation. More in detail, the case does not concern the functioning of a legal person (excluded under art 1.2.e); it also does not concern contractual obligations related to the provision of services exclusively in a country different than the consumer's country of residence. The latter exclusion (art 5.4.b), the AG claims, must be interpreted strictly and autonomously - ie not on the basis of a possibly relevant national rule. Given that some of the services rendered under the contract were to be performed in the consumer's country of residence, this exclusion does not apply according to the AG. 

If the Regulation applies, then the choice of law clause is only of limited impact - according to article 6.2. of the Rome Regulation, choice of law in consumer contracts cannot deprive consumers of the protection offered by mandatory rules of law in the country where the consumer has their habitual residence. In so far as a choice of law clause purports to determine exclusively which rules apply to the contract, the Court has declared in its Amazon decision, such clause is misleading and unfair under Directive 93/13 (UCTD). According to AG Øe, the Court's previous finding is applicable to this case and, hence, the clause is unfair. 

The Amazon case, one should say, was welcomed by consumer advocates but is also object of criticism - inter alia, by Øe's colleague Hogan -, thus it will be interesting to see how the Court will respond to this question as it may indicate whether it intends to stand by its previous findings or reconsider/restrict them. 

CJEU in Romano v DSL (C-143/18): sorry BGB, you can't sail around EU law implementation

Today, the CJEU published its decision in a case we had reported on a few months ago, Romano v DSL. In this case, two consumers had taken out a loan - renouncing their right of withdrawal (RoW) in order to obtain immediate performance. In such cases, the 2002 Directive on distance marketing of consumer financial services prescribes the extinction of the RoW when the creditor's performance has been entirely delivered, ie once the consumers have actually received the money. 

The Romanos claimed that, ten years after entering the contract, they should still be entitled to withdraw because they had not been given correct information. Given that German courts did not recognise withdrawal in distance financial services to deserve different treatment than other transactions and hence ignored the restriction, they should have been told that they were actually entitled to withdrawal even after having nominally renounced the possibility. 

According to the AG, the position maintained by German courts was untenable under the Directive. As a consequence, there was also no misinformation on the side of the lender, who had correctly notified the consumers that they were giving up their RoW.  The Court follows this reasoning, which  seems to trump the German courts' quest for systematic consistence in view of the integral application of  the concerned EU directive. Nice try for the claimants, but no belated Easter egg in this case.

CJEU judgment in Salvoni: no extra consumer protection in cross-border enforcement

In May we reported on this blog on AG Bobek's Opinion in C-347/18 Salvoni v Fiermonte. The referring Italian court that was requested to issue a Certificate for the cross-border enforcement of an order for payment against a consumer in Germany under the Brussels I Regulation (Recast). The order appeared to be in breach of the Regulation's jurisdiction rules; the consumer was domiciled in Germany, not in Italy. Should the court review and rectify the order, or inform the consumer of the possibility to challenge its enforcement? In this respect, the court referred to the CJEU's case law on Article 47 EUCFR and the Unfair Contract Terms Directive. According to AG Bobek, however, such an "extra layer of protection for consumers" could not be read into the provisions of the Regulation.

The CJEU confirms this in its judgment of 4 September. First, it found that the Certificate-procedure under the Brussels I Regulation can be qualified as judicial in the sense of Article 267 TFEU. Therefore, the preliminary reference was admissible. Secondly, it held that the court that issues the Certificate does not have to (re-)examine (ex officio) the jurisdiction of the court that has given the underlying judgment, even if it involves a consumer. The CJEU made a distinction between jurisdiction (see e.g. Article 17(1) of the Regulation for specific rules on consumer contracts) and recognition and enforcement. In the latter phase, it is the party against whom enforcement is sought who must oppose it. Because jurisdiction is one of the opposition grounds, there is no violation of Article 47 EUCFR. The CJEU's case law on the Unfair Contract Terms Directive does not apply in the context of the Brussels I regulation, which contains rules of a procedural nature. 

As we pointed out earlier, this outcome is understandable in light of the Regulation's framework, which aims to enhance the free movement and rapid enforcement of judgments within the EU, in the light of mutual trust based on legal certainty. From a consumer protection perspective, it possibly leads to a gap in the effective judicial protection of consumers. Not only is a court that has failed to apply mandatory jurisdiction rules (ex officio) in violation of the Regulation not allowed to rectify this; it is not allowed to subsequently inform the consumer of her defence possibilities either.  

Banks prevented from manipulating reimbursements following early credit repayment - CJEU in Lexitor (C-383/18)

Today the CJEU issued a judgment in the case Lexitor (C-383/18). As we have presented the facts of this case before, we refer the readers to our description of the AG Hogan's opinion first - Early birds and credit costs' repayment... here

Article 16 Directive 2008/48 (Consumer Credit Directive, CCD) states that 'The consumer shall be entitled at any time to discharge fully or partially his obligations under a credit agreement. In such cases, he shall be entitled to a reduction in the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the contract'.

The dispute pertained to the interpretation of the last part of this provision ('reduction consisting of the interest and the costs for the remaining duration of the contract'), namely, whether it allowed for the compensation in case of an early repayment of the credit of fees and charges placed on the consumer by the credit institution but unrelated to the duration of the credit agreement (para. 21). The CJEU believes that is indeed the case based on the purposive approach to CCD provisions. Art. 16 CCD replaced previously binding Art. 8 of Directive 87/102 (old Consumer Credit Directive), which referred to the consumer's right to 'an equitable reduction in the total cost of the credit'. Art. 16 CCD intended to make the general right of 'an equitable reduction' more precise by adding that this reduction would pertain to both interest and costs (paras. 27-28). The total cost of the credit as defined in Art. 3(g) CCD encompasses all fees and charges, with the only exception of public notary costs. The total cost of the credit includes, therefore, also fees and charges that are unrelated to the duration of the credit agreement (para. 23). The general objective of the CCD is to ensure a high level of consumer protection (para. 29), which aim would be endangered if during an early repayment the consumer could only be entitled to the reduction of costs presented by the credit provider as dependant on the duration of the credit agreement. It is, after all, the credit provider that unilaterally determines the fees and charges, and their amount, which could facilitate the credit provider choosing to limit fees and charges related to the duration of the agreement (paras. 31-32). The credit provider's interests are protected during the early repayment of the credit by Art. 16(2) and (4) CCD, which allow the credit provider to deduct costs related to the early repayment and for the Member States to set rules on ensuring the fit of the early repayment with the particular credit terms (para. 34).

All in all, this is the positive judgment for consumers, as they can be assured that the early repayment would entail a fair reduction in the total cost of the credit, which could not be manipulated by the banks by arbitrary setting of special, one-off fees and charges.

Tuesday, 10 September 2019

Unfairness assessment of variable interest rates - AG Szpunar in Gómez del Moral Guasch (C-125/18)

Facts of the case

In 2001 M. Gómez del Moral Guasch concluded a mortgage loan contract, with a variable interest rate, with a Spanish bank in order to purchase a residential apartment. In 2017 the consumer contested the fairness of a term in that contract that determines the mechanism of calculating the variable interest rate - based on the Spanish IRPH index. The consumer claimed that it is unfair that the interest rate is not indexed pursuant to EURIBOR index, which would have been more beneficial to him and is more commonly applied to Spanish mortgage contracts (in ca 90% of all contracts - para. 30). 

The IRPH index used in this loan contract was one of six IRPH indexes that have been adopted by the Spanish government. In 2011 it has been replaced - automatically - by a new IRPH index, also determined by the Spanish government. In a judgment of 14 December 2017 the Spanish Supreme Court declared, in a similar to this case, that if the IRH index is adopted as such in loan contracts it should not be subject to the unfairness or the transparency test from the UCTD, as it reflects a mandatory statutory provision (para. 53). The Supreme Court further decided that a contractual term based on IRPH index, which was drafted similarly to the one used in the case referred to the CJEU, was transparent, both formally and materially. Formally it was transparent as it was placed in the contract in a grammatically clear way, it was comprehensible and allowed consumers to understand and accept the fact that the variable interest rate will be calculated on the basis of an index controlled by the Spanish central bank. Materially it was transparent as it allowed average consumers to calculate the costs of concluding the agreement and it could not be required from banks to propose differently indexed loan agreements and explain how various indexes have been set up (para. 54).


Scope of application of UCTD to terms that reflect national mandatory statutory provisions

First, AG Szpunar reasonably differentiates between evaluating the unfairness of an index rate that has been set out in national statutory provisions and a contractual term that foresees the use of such an index rate in calculating the variable interest rate of a loan contract (para. 59). Then he proceeds to consider whether the exception of Art. 1(2) UCTD should be applicable in this case, i.e. whether the contractual term reflects both a mandatory and a statutory provision of national law. His analysis leads to the conclusion that the mandatory character of the provision regulating the IRPH index is missing, which leaves it possible to subject a term reflecting it to the unfairness test of the UCTD. This conclusion is based on the fact that at the moment of the conclusion of the contract Spanish banks could choose whether to apply the IRPH index or another index that would fulfill the same conditions (e.g. EURIBOR index) (para. 78, 83). Therefore, as the exception from the scope of application of the UCTD should be strictly interpreted and applied only to situations where parties' freedom of choice is taken away, it cannot be said that the use of this index had a mandatory character (para. 82). 

Side note: It is irrelevant that subsequently, in 2011 the IRPH index used in the contract has been automatically substituted by a different IRPH index (here the freedom of choice of parties was eliminated, therefore, we could determine its mandatory character), as the unfairness should be assessed considering the facts of the case at the moment of the conclusion of the contract (para. 64).


- of core terms

Whilst implementing the UCTD the Spanish legislator chose not to apply the exception for the application of the Directive to core terms of a contract (Art. 4 UCTD). This leads to an interesting conundrum in this case. Namely, whether Spanish courts could still refuse to assess the unfairness of a transparent core contract term, which is what Art. 4(2) UCTD stipulates, despite this provision not having been implemented in the Spanish legal order.

AG Szpunar rightly observes along the lines that: you cannot have the cake and eat it too. Principles of legal certainty and transparency require full transposition of provisions of directives that will then be applied in national legal systems (para. 93). In the previous CJEU judgment (Caja de Ahorres), it was decided that the Spanish legislator could have made a legislative choice, by not implementing Art. 4 UCTD, to submit also transparent core terms to the unfairness control, as this provides more consumer protection and the UCTD is a minimum harmonisation directive (para. 89). If, however, the Spanish legislator made a transposition mistake and actually intended to subject transparent core terms to the unfairness control, then, following the CJEU's judgment, we would have expected a change of the Spanish legislation. This has not occurred. Instead, the Spanish Supreme Court took upon themselves to clarify Spanish law as indeed not submitting transparent terms to the unfairness control. Such a judicial and not legislative clarification could be, however, perceived as in breach of the above-mentioned principles of legal certainty and transparency of EU law (para. 96). Therefore, Spanish courts may subject transparent core terms to the unfairness control (para. 100).

- what does it entail?

AG Szpunar reminds the previous CJEU case law referring to the principle of transparency as being fulfilled when an average consumer not only receives information that is grammatically correct but also that allows them to determine economic consequences of concluding a particular contract (paras. 106-108). In light of a given contractual term, he considers the term to definitely be grammatically clear and comprehensible in a way that it informs consumers as to what index will be applied to their variable interest rate and how the rounding-up of the interest will occur (para. 112). Does the term, however, sufficiently inform consumers about the economic consequences of the concluded loan agreement? AG Szpunar is inclined to believe that it may have done so, provided that the method of calculating the interest rate and its elements was clearly related to the applicable index rate, which has not only been fully defined, with a reference to appropriate legal rules establishing it, but also mentioned changes in the past values of that index (para. 125).

Side note 1: Here, AG Szpunar differentiates between the previous case law on transparency, which addressed transparency of loan contracts concluded in foreign currencies, and the given case on a loan with a variable interest rate. When a loan is concluded in a foreign currency, the mechanism of calculating the exchange rate may be very complex and there are potentially serious economic consequences following from non-understanding that mechanism and the fact that there is a future, uncertain risk related to its application. These potentially serious economic consequences shape the transparency requirements (paras. 115-118). In the given case, however, such a future, uncertain risk is not present, as the economic consequences of concluding a loan contract with a variable interest rate are more foreseeable (para. 119). This leads AG Szpunar to not see as necessary that bank warns consumers about the possibility of future changes to an index rate. However, by obliging banks to provide consumers with an indication of past changes to the index values, a possibility of future fluctuation should become clear, as well. Consequently, the difference in transparency requirements seems subtle.

Side note 2: AG Szpunar did not consider it necessary that the banks provide consumers with a separate information on the mathematical formula that allows to clearly follow the method of calculation of the index rate, as this information was publicly available (paras. 122-123). If, however, the information would have been difficult to access, we could possibly expect the information obligations of the banks being extended.

Saturday, 7 September 2019

Full harmonisation of consumer credit rules re-explained - judgment in C-331/18 Pohotovosť

Last Thursday the Court of Justice delivered its judgment in C-331/18 Pohotovost’. The case forms part of the series of Slovak references concerning the interpretation of EU consumer law in the context of credit agreements. It is not to be mistaken with previous disputes involving the same creditor and focusing on Directive 93/13/EEC on unfair terms (especially C-470/12 Pohotovost' and C-168/15 Tomášová - see the relevant posts here and here). Rather, it revolves around disclosure duties laid down in Directive 2008/48/EC on consumer credit, and as such, presents a direct follow-up to the ruling in C-42/15 Home Credit Slovakia.

Facts of the case

The case involved a consumer who questioned his obligations under a credit contract, arguing that the creditor failed to comply with several disclosure duties set out in national rules implementing Directive 2008/48/EC. As we have learnt from Home Credit Slovakia, non-compliance with key disclosure duties may result in the credit being deemed as free of interests and charges - a sanction established among others by Slovak law, which the Court of Justice found to be compatible with EU law. 

Home Credit Slovakia, however, also addressed another important matter - the scope of disclosure duties which Member States can impose on the creditors in the first place. This part of Court's reasoning was not really surprising: the CJEU held that, due to the principle of full harmonisation, to which Directive 2008/48/EC is subject, Member States may not adopt information obligations which are not established in that act. In response to this ruling, the Slovak legislator decided to adjust the national act on consumer credit, among others by removing the duty to break down the payment of the credit in terms of the capital, interest and other charges. The consumer in the present case nevertheless sought to rely on precisely on that duty, arguing that, firstly, the legislative changes undertaken in response to Home Credit Slovakia were too far-reaching and, secondly, they could not be applied to him as the disputed agreement predated the legislative amendment. This faced the referring court with questions about the scope of disclosure duties in Consumer Credit Directive and the limits of its obligation to interpret national rules in conformity with EU law.

Judgment of the Court

The Court of Justice did not consider the dispute to be all that complicated and, in any case, did not find arguments to support the pro-consumer approach considered by the referring court. Firstly, no obligation to break down credit payment was found in Directive 2008/48/EC. As noted by the Court, Article 10(2)(h) refers merely to frequency of payments, Article 10(2)(i) to the right to receive an amortisation table, and Article 10(2)(j) to a statement showing the periods and conditions for the payment of the interest and associated charges, if charges and interest are to be paid without capital amortisation. As a result, the duty relied upon by the consumer in the main proceedings was precluded by the principle of full harmonisation. 

Secondly, the Court recalled that interpretation of EU rules provided in its judgments clarifies and defines the meaning and scope of these rules as they ought to be understood and applied from the time of their entry into force. It follows that a rule must be interpreted according to the CJEU judgment also when the legal relationship, to which it is applied, was established before that judgment. The referring court should, therefore, apply the law applicable at the time when disputed agreement was concluded in conformity with EU law, as interpreted in Home Credit Slovakia. While it is true that the requirement to interpret national rules in conformity with EU law cannot serve as the basis for an interpretation of national law contra legem, a national court cannot consider this to be the case merely because it would have to change the established, national case-law.

Concluding thought

The analysed case is not groundbreaking but it helps to systematise several important pieces of CJEU case law, notably on the principle of full harmonisation and interpretation of national rules in conformity with EU law. As regards the more specific context of consumer credit, the ruling should be read together with the previous judgments in C-76/10 Pohotovosť and C-42/15 Home Credit Slovakia. Some of the parties intervening in the proceedings observed that the consumer could also have relied on inaccurate definition of annual percentage rate - a matter which the previous case law clarified to his advantage. This shows that - regardless of the analysed judgment - Consumer Credit Directive leaves room for important safeguards of consumer interests.

Tuesday, 27 August 2019

Towards clearer Terms and Conditions... again

Be it pre-contractual information in terms and conditions or information on the processing of personal data in privacy policies, the truth is that the way businesses provide information to consumers generally leaves a great deal to be desired. In order to prevent this, and to better inform the informers, the Behavioural Insights Team (BIT) published a ‘Best Practices Guide’ on improving consumer understanding of contractual terms and privacy policies. These evidence-based guidelines are aimed at businesses and focus on ‘how’ to present information, rather than on the ‘what’. 

This study had a dual-focus: consumer comprehension of online contractual terms/ privacy policies and consumer engagement (i.e. the opening of full contractual terms or privacy policies). The study produced interesting, although not surprising, findings. In fact, the shortcomings of the information paradigm have been repeatedly studied and analysed, both at a practical and at a normative level. See, for example, what we previously reported here, here and here.

From the 18 measures tested, 6 proved to be effective, meaning that they showed evidence of increased consumer understanding or increased consumer engagement. The most effective measures are the display of important or unusual terms as Frequently Asked Questions (which increased comprehension in 36%), the use of icons combined with summaries to explain key terms (which increased comprehension in 34%) and telling customers how long it will take to read the policy (which increased opening rates of full terms and policies in 105%). Other effective measures include the use of illustrations and comics to explain step-by-step actions and processes, telling customers when it is their last chance to read information before they make a decision and showing customers the terms in a scrollable text box instead of requiring a click to view them. Also noteworthy is the fact that while BIT’s research showed that reducing a policy’s reading age level did not change comprehension levels for general customers, it showed evidence that such a measure helped people with lower levels of qualifications (increased comprehension by 16.9%).

Funnily enough, considering social media trends, adding emojis to contractual terms is amongst the measures that have no supportive evidence of increased understanding or engagement. Besides, well-known techniques like shortening the terms and conditions, using simpler language or resorting to summaries showed mixed evidence, which means that although they worked in some cases, they did not work in others. For example, presenting key points in a summary table increased comprehension of terms included in the summary, but it also decreased comprehension of terms not included in the summary. These findings show that a mere language simplification-based solution is not enough to fix consumer disinformation: measures such as simple language and summaries must be combined with visualization.

The study – which was commissioned by the UK Government – also demonstrates how regulators are well-aware of the consumer disinformation problem. However, it is rare to see a legislative instrument (both at national and EU level) incorporating explicit measures dealing with these (or with similar) findings. The only recent exception at EU level is the General Data Protection Regulation, which explicitly calls for ‘standardized icons’ and visualization as a means to increase transparency in the pre-contractual stage. This study is another reminder of the need for lawyers to work with information designers in order to increase and improve visualization of their terms and conditions.

Finally, it is important to stress that even though the effective measures led to an increase in consumer understanding and consumer engagement, the final numbers did not go above 58% and 34%, respectively. In other words, according to this study, around 40% of consumers still do not understand terms and conditions, while 66% of consumers do not open the full policies, even after the tested measures are implemented. This means that in order to reach an almost complete comprehension of pre-contractual information – or to guarantee that everyone understands what they are binding themselves to - we need additional solutions and new approaches.

Thursday, 15 August 2019

Are contract summary templates transparent? - feedback opportunity

The European Commission asks for feedback on the draft contract summary template, which all consumers must receive from e-communication service providers. Commission aims to make this template 'clear and understandable' and to facilitate comparison of services of different providers, thus transparency is definitely one of the key points that should be considered during the evaluation. Feedback may be submitted until 9 September on this website.

Tuesday, 6 August 2019

Public call for information on online choice architecture for consumers

The Dutch Authority for Consumers and Markets (ACM) has published a call for information on online choice architectures for consumers. The questionnaire may be found on this website, with the deadline for submitting information being set at August 16. The gathered information is to be used in preparation of the 'Guidelines regarding online choice architectures'. Through these guidelines ACM intends to advice traders, which online behavioural persuasive practices could e.g. be assessed as unfair (deceptive or coercive) commercial practices, and which examples of online persuasion could be seen as exemplary.

Friday, 2 August 2019

When the going gets tough - the need for insolvency protection of travel organisers

As today's UK news bring about information about two major holiday providers (Super Break and Late Rooms) going into administration (Super Break and Late Rooms holiday firms go into administration), the scope of consumer protection measures is again at the forefront of many travellers' minds. Already the previous Package Travel Directive (Directive 90/314/EEC) required the Member States to ensure that package travel providers had sufficient insolvency protection, but these rules have been further specified and strengthened in the new Directive 2015/2302 on package travel and linked travel arrangements. The UK has implemented the new Directive in the Package Travel and Linked Travel Arrangements Regulations 2018.

At the moment, the European Commission is reviewing whether the Member States have completely and properly implemented provisions of Directive 2015/2302 into their national laws. What happens to travellers who have booked their holidays with Super Break and Late Rooms will be a good example, on which to check how effective the UK protection against the insolvency of the package travel organiser is. However, even if the insolvency protection has been properly arranged many customers of Super Break and Late Rooms are likely to end up dissatisfied. Why? 

Well, first: they may not have concluded a package travel or a linked travel arrangement contract, which means that they would not benefit from insolvency protection.
Travellers who have been inconvenienced and do not have a separate travel insurance (as then it is best to contact the insurance company), should then first check whether their holidays are a package holiday or a linked travel arrangement, as in both cases insolvency protection had to be assured. Generally, this means that the traveller booked at least two different types of travel services (accommodation, travel, vehicle rental, etc.) for the purpose of the same holiday with either the same trader or through a linked booking process. If only accommodation was booked, without travel or vehicle rental, then the question whether a booking of another travel service makes it a package holiday depends on the value and importance of the provision of this additional travel service in the overall context of the package travel contract. 

Second, even if they fall within the scope of protection, their holiday has likely been ruined.
In case of package travel holidays or linked travel arrangements, travellers may at least expect the full refund of the payments they have made for the purchase of the package (but not additional payments that e.g. have been made after the package has already been concluded - e.g. to purchase additional attractions at their destination) and repatriation, in case they were already on holidays. Unfortunately, it is unlikely that they will be able though to enjoy their holidays as the insolvency insurance does not have to ensure the possibility of travellers continuing with their travel plans.

Tuesday, 30 July 2019

CJEU in Fashion ID (C-40/17): some consequences of embedding social plugins

Yesterday, the CJEU published its judgment in Fashion ID, a case concerning mainly the notion of "controller" under EU data protection law.

The facts of the case are relatively simple: Fashion ID had placed a "like" button on its website which was connected to Facebook. What Fashion ID's customers may not realise is that - even if they did not use it - the button's presence meant that information concerning them was being transmitted to Facebook. In the proceedings it was uncontested that this information qualified as personal data.

Verbraucherzentrale NRW, a consumer association, brought an injunction against Fashion ID demanding that it abandon such practice. The question whether Fashion ID has any obligations in connection with the data processing - including the duty to inform consumers that their data are being collected and/or require their consent - depends on whether the website is to be considered a data controller.

The referring court doubted whether this is the case since the website operator has no control over the processing of the data transmitted to the plugin provider (para 37).

The Court, in essence, answered that the operator of the website acts as a controller, and is thus responsible for informing the consumer or collecting their consent, insofar as the collection of information and transmission to Facebook is concerned. In particular concerning the collection of the user's consent, the court highlighted that it would not be in line with efficient and timely protection of the subject's rights if the consent would be given only to the second controller, which is involved at a later stage (para 102). Even more strongly, when a customer is not a Facebook user, their data will be processed by the social media operator without them having any direct connection to the latter- which makes the responsibility of the other provider all the greater (para 83).

However, the website operator is not responsible vis à vis the data subjects for any other uses that Facebook itself will make of the data, nor for collecting their consent in that respect (para 102).

While the website has no control on the use of the transmitted data, the purpose of such collection is in part related to the website's benefit as it allows better promotion of its products (para 77-81).

As concerns the collection of data without the subject's consent - ie data that is necessary for the pursuit of a legitimate interest - the court importantly clarified that where both the website and the provider of the social plugin are controllers, they must both be pursuing a legitimate interest for the ground of processing to apply (para 96).

The decision interprets relevant provisions in the "old" Data pProtection directive, which has meanwhile been replaced by the GDPR - but the concepts that it deals with have been kept in the Regulation, so the decision can be transposed to the new rules.

Quite unsurprisingly, the Court rejected Fashion ID's claim that consumer associations would not be entitled to bring any claims under data protection rules - while article 80(2) of the GDPR quite
famously invites MS to set collective enforcement mechanisms, nothing in the previous directive, which only contained general indications on enforcement, can be seen to stand in the way of Member States allowing consumer associations to bring such claims (see in particular paras 57-62).

The Court seems to be aware of the potentially high-profile nature of this case and has accompanied the publication of its decision with a press release

Consequences of sub-optimal re-routing - CJEU in Rusu (C-354/18)

The Court of Justice came out of its summer break yesterday and published a judgment in the case Rusu (C-354/18), further clarifying the application of Regulation No 261/2004 on air passenger rights.

Mr and Mrs Rusu were supposed to fly with Blue Air airlines from Romania to the UK, but they were denied boarding due to a last minute change of an operating aircraft, which resulted in fewer seats and overbooking. They have then been re-routed on another flight, which only took place 5 days later. Blue Air first offered the passengers a free flight ticket as compensation, which offer has been rejected as not fully compensating their loss. Subsequently, they have been offered compensation from Regulation No 261/2004 - 400 Euro each. As the passengers experienced loss that was not covered by this amount of compensation, they filed a claim for further compensation to be paid out to them. This was to cover both material damages - having lost part of their earnings as they were not able to report to work on agreed time - and non-material damages - loss from having experienced a threat of being fired from their job. Blue Air claimed that further compensation should not be awarded to the passengers, as they have agreed to the proposed offer of re-routing, without explicitly emphasising the need to be re-routed on an earlier date, perhaps by another air carrier.

As a reminder, Art. 7(1) Regulation No 261/2004 awards passengers a right to compensation, which has been determined in CJEU's case law and scholarship to compensate passengers for the standardised loss of time (amount of compensation is dependant on the distance of the flight) (para. 30). Additional individual losses may be compensated further based on the provisions of national law, on the basis of Art. 12(1) of this Regulation, which provision also allows national courts to deduct the amount of compensation paid out pursuant to Art. 7(1) from the compensation awarded pursuant to Art. 12(1).

The CJEU indicates explicitly that the loss of earnings by the passengers is a clear example of an individualised loss, which is not covered by the standardised amount of compensation pursuant to Art. 7 Regulation (para. 32-34) and thus can be recovered on the basis of Art 12. It is then up to national courts to determine the individual damage, as well as whether the national requirements for recovering it have been fulfilled (para. 40). Whether the national court decides to deduct from it the amount of compensation paid out pursuant to Art. 7 of the Regulation is left to them to decide on the basis of applicable national or other international law, as well, as Art. 12(1) 2nd sentence provides for such a possibility but not an obligation of deduction (para. 44).

As the operating air carrier raised an issue of the passengers not explicitly emphasising the need to reach their destination as soon as possible, by the best/fastest re-routing possible, the CJEU also considered the scope of air carriers' obligations related to arranging the re-routing on the basis of Art. 8(1) Regulation No 261/2004. The CJEU highlights that this provision places the obligation on the operating air carrier not only to provide the passenger with the choice of reimbursement of their flight tickets or re-routing, but also with all appropriate information to make the choice between these options (para. 53-55). It is, therefore, not expected that the air passengers would actively seek any of the information that the operating air carrier is supposed to provide - e.g. on best re-routing options. As Art. 8(1)(b) of the Regulation requires that the re-routing takes place at the earliest possibility, it is up to the operating air carrier to prove that the proposal made by them to passengers complied with this requirement (para. 61). When putting together a re-routing proposal the air carrier should clearly  consider whether the re-routing proposal would transport passengers under similar conditions and at the earliest possibility based on its own resources, or whether it would require a help of another air carrier, in appropriate circumstances, depending on their available seats (para. 60).

Whilst the Regulation No 261/2004 does not place an obligation on operating air carriers to use services of other air carriers to find best re-routing options for their passengers, the CJEU clarifies that if they choose not to do so, they have to be prepared to pay damages under national law. The scope of these damages and under what conditions they will be awarded will differ amongst the Member States then.

Monday, 22 July 2019

Commission guidance note on Unfair Terms Directive

The European Commission adopted today a guidance note on unfair contract terms. It is intended to ensure that consumer associations and legal practitioners, including judges, will be better equipped to protect EU consumers from unfair contract terms. The guidance note is based on the case law of the EU Court of Justice on Directive 93/13. As a complement to the guidance note, European businesses organisations have drawn up recommendations on how mandatory consumer information as well as terms and conditions can be presented to consumers in a more user-friendly and transparent way.
Both initiatives follow up on the REFIT Fitness Check of EU consumer and marketing law, as announced in the Commission’s Communication on a New Deal for Consumers.


Thursday, 18 July 2019

Connecting fligts come with air passengers rights - CJEU in České aerolinie (C-502/18)

Last Thursday, on July 11th, the CJEU published the judgment in the case České aerolinie (C-502/18) further interpreting provisions of Regulation No 261/2004 on compensation due in case of a delay of one of the connecting flights. Here, the uncertainty arose from the fact that whilst passengers booked flights from Prague (Czech Republic) to Bangkok (Thailand), they had a connection in Abu Dhabi (UAE), and only the flight Prague-Abu Dhabi was performed by the European air carrier (České aerolinie). The flight Abu Dhabi-Bangkok was operated by Etihad Airways (code-share agreement) and it is that second flight, which was delayed (488 minutes). The question was whether České aerolinie remained responsible for paying air passengers compensation in such a case.

The CJEU recalls its previous findings: that connecting flights subject to a single reservation should be seen as a whole for the purposes of Regulation No 261/2004 (para. 16); that delay at the final destination entitles passengers to compensation from Art. 7(1) Regulation No 261/2004 (para. 19); that it is the operating air carrier who has to pay the compensation (para. 20); that as the connecting flights are perceived as a whole unit, the air carrier operating the first of the connecting flights should bear the responsibility for the improper performance of the second one, even if another air carrier operated the latter (paras. 27, 29); that the air carrier who pays out compensation to passengers may seek recourse from third parties pursuant to Art. 13 Regulation No 261/2004 (para. 31).

This judgment reiterates, therefore, previously established rules. However, the clarification provided by it is important for practice: as European air carriers will not be able to escape liability for flight cancellations and delays by hiding behind code-share agreements with other non-European airlines.

Friday, 12 July 2019

Online traders may choose how to communicate with consumers - CJEU in Amazon EU (C-649/17)

On July 10, the CJEU supported AG Pitruzzella's opinion (Online chats...) in the case Amazon EU (C-649/17) that Article 6 of the Consumer Rights Directive does not place on distance selling traders an obligation to set up the means of communication specified in that provision (phone line, fax, e-mail). Such an interpretation could disproportionately burden especially small businesses (para. 48). Instead, this provision just specifies that the means of communication, which a given trader chooses, should facilitate quick and effective contact with consumers (para. 46).

Wednesday, 10 July 2019

Who covers for insolvent package tour organisers? States, not air carriers - CJEU in HQ and Others (C-163/18)

Today the CJEU issued a judgment in the case HQ and Others (C-163/18), which we previously discussed as the Aegean Airlines case (Avoiding double claims at all cost...). The CJEU followed the argumentation presented by AG Saugmandsgaard Øe and decided that as long as passengers have a right to claim a reimbursement of their air tickets' costs from a package tour organiser pursuant to the national rules implementing Package Travel Directive, they are prohibited from claiming such costs from an air carrier, as well. Irrespective of whether they are actually able to obtain actual compensation. 

This is a very literal interpretation of Article 8(2) Regulation 261/2004 (para. 31), which aims to prevent double compensation claims from being raised by passengers (para. 34). However, this interpretation does not help consumers in a situation like in the given case, where the package tour organiser is insolvent and the consumer is left without a recourse. The CJEU indicates that where the package tour organiser did not ensure sufficient insolvency protection pursuant to Article 7 Package Travel Directive, this provision has been improperly implemented and applied in a given Member State (paras. 41-42) and the passenger may claim his damages from the Member State under State liability rules (para. 43). The burden is placed, therefore, on passengers to continue with their search for justice.

Thursday, 4 July 2019

CJEU in Kirschstein: the scope of UCPD is broad, but not infinite

Earlier today the Court of Justice delivered its judgment in a very interesting case C-393/17 Kirschstein. As reported in our earlier post on the opinion of Advocate-General, the case concerned the application of the Unfair Commercial Practices and the Services Directives in the sector of higher education. In the judgment issued today the Court agreed with the Advocate-General that the national requirement, according to which only accredited higher education establishments may award certain degrees, does not contradict the analysed directives. The part of Court's reasoning on the UCPD, however, clearly deviates from the arguments of AG Bobek. 

Facts of the case

The defendants were running a higher education institution which organised study programmes, upon the completion of which master's degrees were awarded, despite the lack of an accreditation. The Public Prosecution Service considered this practice to be in breach of Belgian law and initiated legal proceedings. The defendants argued that national legislation criminalising the act of conferring ‘master’s’ degrees, without having obtained the authorisation required for that purpose, was contrary to Directives 2005/29 and 2006/123.

Unfair Commercial Practices Directive

The questions referred by the national court are framed very generally and it is not entirely clear which part of the UCPD is considered to potentially preclude the contested national rules. The most likely argument seems to relate to the UCPD's black list. Indeed, from Plus Warenhandelsgesellschaft onwards, the Court of Justice has consistently found that national prohibitions, which pursue the objectives relating to consumer protection and are not included in the Annex I to the Directive, do not comply with the UCPD.  

The Court, however, did not even get to that stage and focused on the UCPD scope. It recalled the definition of a commercial practice, covering any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product (including services) to consumers (Article 2(d)). However, unlike Advocate-General, who focused on the question whether the provision of higher education qualifies as a service or not, the Court directed its attention towards the aspects of service provision, which fall within the scope of the UCPD. More specifically, according to the Court, a distinction must be made between commercial practices which are closely linked to a commercial transaction involving a product (promotion and sale or supply) and the product (service) itself (para. 42). As a result, a national rule which aims to determine which operators are authorised to provide a service in a commercial transaction, without directly regulating the practices which that operator may subsequently implement to promote or "dispose of the sales of that service", does not qualify as a commercial practice within the meaning of Directive 2005/29 (para. 45). By "disposing of the sales of services" the Court appears to mean "putting into practice the marketing of a service" (following the Dutch version), i.e. the act of supplying the service as such. From this it follows that the UCPD does not apply to national legislation at issue in the main proceedings.

Services Directive

The second part of the judgment, one involving the interpretation of Services Directive, appears to be more aligned with the Advocate-General's opinion (even though again no references are made to the opinion). Similarly to the AG, the Court found that educational services in question can be regarded as neither non-economic services of general interest (Article 2(2)(a)), nor activities which are connected with the exercise of official authority (Article 2(2)(i)), and thus cannot be excluded en bloc from the scope of Directive 2006/123. It then went on to assess whether the authorisation scheme established by national law was compatible with requirements set out in Articles 9 and 10 of Services Directive. According to the Court the analysed framework did not seem to have a discriminatory nature, was justified by an overriding reason relating to the public interest (ensuring a high level of higher education and protecting the recipients of services) and pursued that objective with appropriate means, thus complied with Article 9 of the Directive. As regards Article 10, the Court established that the preliminary reference did not contain sufficient information about the conditions of the authorisation scheme and left the relevant assessment to the national court. 

Concluding thought

Case C-393/17 Kirschstein shows that services in higher education sector are not, by their very nature, excluded from the scope of either UCPD, or Services Directive. However, the judgment delivered today also underlines that not all national rules restricting the provisions of services must be analysed under UCPD. When it comes to the conditions imposed on the service as such - here: determination of the operators authorised to provide such a service - it is Services Directive that provides the relevant benchmark, not the UCPD. In making that distinction the Court put a limit to the overly expansive interpretation of the consequences of the UCPD's black list and brought the focus of the discussion back where it belongs.

Recent developments in online content moderation

The discussion about the role of platform operators in content moderation is perhaps as old as online intermediaries themselves. Since the very beginning it involved a delicate balance between conflicting considerations: eg how to protect the freedom of expression, the freedom to conduct a business and the right to an effective remedy while ensuring that intellectual property and personality rights are safeguarded and harmful content does not thrive. The solution established by Articles 14 and 15 of the E-Commerce Directive has continuously been put into test (for the latest installment in the CJEU case law series, see C-18/18 Glawischnig-Piesczek). The approach of choice of the outgoing European Commission has been to keep the legal framework intact for the time being, while pursuing a set of non-legislative initiatives such as recommendations and codes of conduct (eg on hate speech and online disinformation). 

Screenshot of Facebook website
This did not hinder national stakeholders from taking further action. In particular, in 2017 the German lawmaker came up with a new law - the so-called Network Enforcement Act (Netzwerkdurchsetzungsgesetz, NetzDG), which imposed a legal obligation on the operators of social media platforms to take down illegal content within the set time limits and report the number of complaints. The act came into force in January 2018 and it has just shown its teeth for the first time: with a 2 million euro fine imposed on Facebook. Interestingly, the decision of the Federal Office of Justice (Bundesamt für Justiz) does not concern the failure of the platform operator to remove illegal content, but rather its alleged non-compliance with transparency duties. According to the German enforcer, the option for making a complaint under NetzDG was harder to find on Facebook than an option for complaining that a post violated the platform’s "community standards". Time will tell whether the decision holds in the appeal proceedings.

Meanwhile, allegations against insufficient blocking and reporting are not the only problems faced by the online platforms these days. Two ongoing legal proceedings in Poland offer an illustrative counterexample. In 2016 a case was brought against Facebook by the president of an association Reduta Dobrego Imienia (Polish League against Defamation) against an alleged overblocking of right-wing content. More recently, Facebook was yet again sued by a Polish NGO whose content was blocked by the platform operator, this time from the opposite side of the social-political spectrum. The dispute in SIN v. Facebook concerns the blocking of a site providing reliable information about the use of psychoactive substances, following a harm reduction strategy. The cases are still pending, the big news so far is the in both cases Polish courts recognized their jurisdiction on the basis of Article 7(2) Regulation 1215/2012.

Monday, 1 July 2019

When CJEU case law travels from Spain to Slovenia: C-407/18 Addiko Bank

What happens when a Slovenian court asks the EU Court of Justice a question to which the answer should already clearly follow from previous case law on Directive 93/13? Then the Advocate General might not give an Opinion, but in Case C-407/18 Kuhar v Addiko Bank the Court provides a concise overview of its case law pertaining to, in particular, Spain and Poland, and explains what this means for Slovenia. Thus, the Court seems to understand what the referring court was looking for: back-up for its interpretation of Slovenian procedural law.

To readers of this blog, the case will look familiar: it reminds us of e.g. Banesto, Aziz, Profi Credit Polska and PKO Bank Polski. The CJEU also refers to Banco Popular Español, ERSTE Bank Hungary and Finanmadrid. What these cases have in common with Addiko Bank, is that they all concern the (limited) role of the court in expedited debt-collection procedures, i.e. mortgage enforcement or order-for-payment proceedings. The court only performs a formalities check and cannot assess the merits of the claim. It is the debtor who must initiate a contentious debate by challenging the claim or opposing the enforcement, and it is the (consumer-)debtor who must apply for a declaration of nullity of allegedly unfair contract terms and/or the loan agreement. The court cannot review unfair terms ex officio, and the enforcement is not automatically suspended. As the CJEU recalls, there is a real risk that consumers are unaware of their rights, especially if they do not receive legal aid and lack the financial means for legal representation. In Slovenia, an additional problem is that (consumer-)debtors must provide security for the payment of the debt when they apply for suspension of the enforcement. For a summary of the restrictive procedural conditions at issue, see para 50 of the judgment.

In paras 53-63, the CJEU elaborates why the constellation of procedural rules runs counter to the effectiveness of the Unfair Contract Terms Directive. The link with the Directive is that the mortgage loan agreement at hand appeared to contain an unfair foreign currency clause. In the enforcement proceedings, however, the emphasis was on the debtors' duty to meet their payment obligations rather than the question whether the enforcement was based on unfair terms. Whilst notaries can have a "preventive" role in respect of unfair terms in mortgage loan agreements and notarial deeds, the right of consumers to effective judicial protection must be observed by giving them the opportunity to exercise their rights under reasonable procedural conditions, in particular in respect to time-limits and costs. The mere existence of a means of recourse is not sufficient, as the Slovenian rules at issue show. If there is no ex officio control of unfair terms in the enforcement proceedings, and unfair terms control only takes place at a later stage, consumers will only be protected ex post. Financial compensation will not prevent the loss of their family home.

The Court does not only provide a synthesis of its case law on effective judicial protection in the context of the UCTD; it also discusses Slovenian procedural law in detail. Apparently, the Spanish and Polish cases (still) do not give enough guidance as to what level of procedural protection is required in light of the Directive. What happens in Spain, stays in Spain, and is not 'translated' to other jurisdictions - certainly not Slovenia, and as Padraic Kenna has pointed out, not in Ireland either. The CJEU has repeatedly urged national courts to apply their national laws in such a way as to ensure the full effect of the Directive (reiterated in paras 65-66 of the judgment), but Addiko Bank demonstrates this may not happen without CJEU back-up. The CJEU's case law must 'travel' from Spain and Poland to Slovenia first. Hopefully, the judgment will signal once again that effective judicial protection requires a genuine opportunity for consumers to exercise their rights, not a mere formality; and that the CJEU's case law on unfair terms control (ex officio) in mortgage enforcement proceedings transcends specific EU Member States.

Wednesday, 26 June 2019

Runaway closure as an extraordinary circumstance - CJEU in Moens (C-159/18)

Today the CJEU followed opinion of AG Tanchev (Crying over spilled fuel...) in the case Moens (C-159/18) and decided that if there is a fuel spilled on a runway, which leads the airport to close that runway, preventing flights from take off and landing, then the impacted air carriers may invoke the defence of extraordinary circumstances from Art. 5(3) Regulation 261/2004. Provided, of course, that the fuel spillage did not originate from the aircraft of the given air carrier, as only then the reason for closing of the runway will be unrelated to their business activity and beyond of their control (para. 13). Moreover, as it is the airport's management, who is responsible for the closure of the runway and the removal of the spilled fuel, the operating air carrier is not obliged to take any reasonable steps to remove the obstacle to their flight taking place. To the contrary, they are obliged to accept the decision of the airport's management and await re-opening of the runway or opening of an alternative runway for them (para. 28). With this judgment, following on the previous Germanwings case (Loose screws of Regulation No 261/2004...), the CJEU broadens the scope of the list of extraordinary circumstances allowing air carriers to forego payment of compensation for flight delays and cancellations.

Tuesday, 18 June 2019

The scope of non-standardized information provision under Directive 2008/48/EC- CJEU judgment in C-58/18 Schyns

A couple of days ago the CJEU delivered its judgment in case C-58/18 Michel Schyns v Banifius Banque SA. Luckily, the CJEU proceeded to decide on the merits of the case in spite of the vagueness of the application (see our report on AG Kokott's opinion in this case here).

The facts of the case
To remind ourselves, this case concerns the interpretation of Directive 2008/48/EC on Consumer Credit. In 2012 Mr Schyns concluded a contract with Home Vision for the installation of a photo-voltaic system (i.e. a solar power system) for the price of 40 002 euros. A couple of days later, Mr Schyns concluded a loan contract with the predecessor of Banifius Banque SA for 40 002 euros repayable in the next ten years in monthly instalments of 472,72 euros. The loan was issued to Mr Schyns who subsequently transferred it to Home Vision. The photo-voltaic system was never installed, and Home Vision subsequently declared bankruptcy. In 2016 (after paying the instalments for over 4 years) Mr Schyns commenced an action against the bank for setting the contract aside and terminating future performance.

The legal issues
This case raised interesting issues on the compatibility of Belgian law with Art. 5(6) of the Directive:
1) Are the rules requiring creditors to select a credit product suitable to the needs and the financial situation of the consumer incompatible with the above provision?
2) Are the rule requiring creditors to refuse to lend to consumers that cannot afford the loan contrary to the said provision?

The scope of 'adequate explanations' in Art. 5(6) of the Directive
The CJEU followed AG Kokott's opinion and answered the first question negatively. It is therefore not contrary to Art. 5(6) of the Directive for national laws to require creditors to recommend the most suitable loan taking into consideration the purpose of the loan and the consumer's financial situation at the time when the contract is concluded.
Given that the Directive does not provide for this obligation, and being a full harmonization instrument, one might question whether Member States may go beyond what is provided in the provision. The CJEU is of the opinion that they can, because the last sentence of Art. 5(6) of the Directive provides that Member States may adapt the manner in which and the extent to which 'adequate explanations' are given (para. 29). According to the CJEU, adapting the manner and extent of adequate explanations can extend the creditor's obligation  to select the most suitable loan. The CJEU also supported its reasoning by reference to Recital 27 and Art. 5(1) according to which consumers may need additional help in selecting the right credit products for their financial needs and wants (para.30), and creditors, as professional lenders are best placed to provide this help to consumers (para. 33).
The CJEU reiterated that, on the one hand, consumers need pre-contractual information to make informed decisions; on the other hand, this pre-contractual information might need to be supplemented with more personalized information for making a fully informed decision (para. 34). However, the CJEU also emphasized that despite of the obligation of the creditor to inform consumers and even to select the right credit product consumers stay ultimately responsible for the choices they are making (para. 34).

Refusing to lend under the Directive
The second question answered by the CJEU tackled the extent to which the selection of the right credit product can reach to. What should creditors do if in selecting the suitable credit product they considers that consumers cannot afford any loan?  Here too, the CJEU agreed with AG Kokott's opinion that it is not incompatible with the Directive for national laws to provide for an obligation to refuse to lend in a situation where creditors cannot be confident that consumers can dully fulfill their contractual obligations, i.e. pay the loan installments as they fall due (para. 49). Although the Directive does not directly provide for this obligation, this interpretation is compatible with  Art. 8(1) of the Directive on responsible lending and creditworthiness assessment and with the broader EU consumer policy reflected in Art. 18(5) of Directive 2014/17/EU that directly provides for an obligation to refuse to lend (para. 46).

Our evaluation
This is an important judgment that aim to clarify the scope of Art. 5(6) of the Directive. It does extend the scope of the provision, and clarifies that adequate explanations can go beyond mere explanations of standard information provided within the Directive; that creditors may also be obliged to select or recommend the suitable loan for consumers (taking into consideration the consumers financial situation at the time when the contract is being concluded and the purpose of the loan). It remains however unclear whether this means an obligation of the creditor to provide financial advice? AG Kokott seems to have thought that it does, however, the court does not make any specific reference to financial advise. Financial advise being an independently regulated activity raises the doubt that it falls within the scope of the Directive. It requires licensed financial advisers (and not every bank clerk dealing with loans will comply with this requirement) and the advisers should take at least some responsibility for the advise they have provided. Given the final reservation of the CJEU that consumers bear the ultimate responsibility for the taken loan leads me to think that adequate explanations do not extend as far as the provision of financial advise. This remains an interesting question though that will need clarification in the future. We may also think whether the question of responsibility is adequately addressed by the CJEU. If creditors are obliged to select the right or suitable loan for the consumer, should they not take the responsibility for it then?

The second aspect of the judgment is also an important development in clarifying the scope of the Directive. Given the full harmonization nature of the Directive and its silence on the creditors obligation following a creditworthiness assessment, the CJEU's contribution to consumer protection by specially enabling Member States to provide the sanction of refusal to lend is an important one. Probably following Directive 2014/17/EC, the CJEU highlighted that the bank should refuse to lend any time it estimates consumers are unable to fulfill their payment obligations as they fall due, arguably aiming to observe the goals of sustainable lending.

Friday, 14 June 2019

ECJ in Orange Polska: Signing a contract in the presence of a courier is not an aggressive practice

On 12th June the CJEU issued its judgement on the Orange Polska case (C‑628/17) on the meaning of the aggressive practices provisions in the Unfair Commercial Practices Directive. This blog previously reported on the AG opinion on the case. The facts of the case will be summarised here, but they are analysed in greater detail in that post. 

The referring court asked whether the practice in question, where in order to conclude a telecommunication contract the consumer has to make the final decision in the presence of the courier employee who is handing him the contract terms, should be considered an aggressive practice with the use of undue influence, according to art. 8 and 9 UCPD.

The Court draws attention to the fact that the context of each individual case needs to be taken into account for determining the existence of a practice that uses harassment, coercion or undue influence (paras 30-31). This case-by-case factual analysis seems to be necessary only for aggressive practices, rather than all kinds of unfair practices.

The Court goes on to clarify that only undue influence is relevant in this particular case (para 32). However, the wording of articles 8 and 9 UCPD doe snot appear to demand identifying whether a practice is aggressive due to the use of harassment, coercion or undue influence.Making reference to point 45 of the AG Opinion the Court pointed out that undue influence is not necessarily impermissible influence but influence which, without prejudice to its lawfulness, actively entails, through the application of a certain degree of pressure, the forced conditioning of the consumer’s will.

Tne Court stated that the fact that the consumer was asked to sign a contract in the presence of a courier without having been sent the contract beforehand, but having had the chance to access it online, cannot be considered an aggressive practice (para 40) on its own.In assessing whether the consumer actually had a chance to receive information prior to the courier's visit, the quality of information plays an important role. The mode of communication is key as the information provided on a trader's website may be superior to that included in a phone conversation (para 42). Still, while more detailed information may be available on line, one could argue that over the phone, consumers may be able to focus on the the questions more relevant for them.

The Court is taking a restrictive view on what can amount to an aggressive practice, as it is pointed out that even if a consumer did not have the chance to access the information beforehand, that is not enough to classify it as an aggressive practice (para 43). Instead, the key criterion is the conduct of the trader. It is stated that conduct, such as the one in the case in question where the courier asks the consumer to take his final transactional decision without having time to study, at his convenience, the documents delivered to him by that courier, cannot constitute an aggressive commercial practice (para 45).

What is needed is something additional to the conduct above that would make the consumer feel uncomfortable and confuse his thinking in relation to the transactional decision at hand. Some examples of what might be considered aggressive includes:'the announcement that any delay in signing the contract or amendment would mean that the subsequent conclusion thereof would be possible only under less favourable conditions, or the fact that the consumer would risk having to pay contractual penalties or, in the event of the contract being amended, would risk the trader suspending the service'(para 48).

Another example was that of the courier informing the consumer that, if he refuses to sign or delays in signing the contract or amendment that has been delivered to him, he could receive an unfavourable assessment from his employer could also fall within that same category; an example similar to point 30 of Annex I of the UCPD, where a trader informs the consumer that if he does not buy the product, his job or livelihood will be in jeopardy.

Unfortunately, the opinion of the AG was not followed in this case and the Court was not daring enough in its interpretation of the aggressive practices provisions, as it was in Wind Tre, even though it was often cited in the judgement. Contrary to the AG opinion, the judgement does not engage at all with the average consumer standard. The judgement fails to provide a comprehensive mechanism for interpreting the provisions or indeed promote our understanding of what kind of pressure is the consumer expected to withstand. Instead, it repeats the phrasing of art.8 on making the consumer take a transactional decision he would not have taken otherwise. 

With this judgement the concept of aggressive practices is interpreted in a restrictive manner, in an effort to balance consumer protection with commercial realities, thus failing to make use of the potential of the provisions.