Saturday, 6 April 2019

National rules on jurisdiction and the right to an effective remedy - case C-266/18 Aqua Med

Case C-681/17 slewo was not the only dispute concerning mattresses on which the Court of Justice ruled in recent time (see Sealed without a reason...). Earlier this week it also passed a judgment in case C-266/18 Aqua Med - this time not on the right of withdrawal, but on fairness control of a choice-of-court clause under Directive 93/13/EEC on unfair terms (UCTD).

Facts of the case

The case concerned a dispute between a Polish trader - Aqua Med - and a consumer to whom the trader sold a mattress (for some partially related mattress trivia see * below). The contract included a pre-formulated clause, according to which '[t]he court which has jurisdiction to hear disputes between the parties shall be the court which has jurisdiction under the relevant provisions'. After the consumer failed to pay the price for the mattress, Aqua Med sued her before the court of its registered office. This choice of court appeared to find support in the national rules of civil procedure, according to which actions relating to contractual performance can be brought either before the court within whose area of jurisdiction the defendant is domiciled, or before the court for the place where contract is to be performed (e.g. trader's registered office).

The national court run into doubts as to whether such state of affairs was in line with the requirement of effective consumer protection under UCTD. Specifically, the question arose whether national court could review the choice-of-court clause of its own motion, set it aside and apply a rule of civil procedure, which was more favourable to the consumer. 

Judgment of the Court

The judgment passed earlier this week consisted of two parts, each focused on a different provision.

In the first part Article 1(2) was examined, pursuant to which 'contractual terms which reflect mandatory statutory or regulatory provisions ... shall not be subject to the provisions of this Directive'. The Court acknowledged the existence of this exclusion as well as rationale behind it (a presumption that the national legislature has struck a balance between respective rights and obligations). It recalled, however, that - as an exception from a high level of consumer protection - such an exception had to be interpreted strictly. Against this backdrop the Court concluded that the contractual term in the case at hand was worded so generally that it did not, strictly speaking, reflect a specific national provision. The clause rather referred to a set of rules on jurisdiction, from which the seller or supplier could choose whichever rule he found most favourable. Consequently, the standard term in question fell within the scope of the UCTD.

Having established that, the Court moved on to the second part of the judgement, one devoted to the interpretation of national procedural rules in the light of Article 7 UCTD. To do so it first needed to reformulate the question asked by the national court, as the original submission made no references to Article 7. Thus, instead of analysing the unfairness of the term at hand (a tasks the Court has long avoided), the Court rather chose to analyse the underlying procedural rules.

This part of judgment consequently built upon the Court's earlier case law (see e.g. our previous posts Effectiveness of the UCTD revisited...The ‘proceduralization’ of Directive 93/13...). It began by stressing that, in principle, procedures for assessing unfairness of a term are covered by the Member States' procedural autonomy. Directive 93/13/EEC does not include any provisions about jurisdiction over relevant claims and Regulation 1215/2012 does not apply to cases without a cross-border element. National procedural rules should, nevertheless, comply with the following two principles: equivalence (should not be less favourable than those governing similar situations subject to domestic law) and effectiveness (should provide for a right to an effective remedy, as required by Article 47 of the Charter of Fundamental Rights). Since compliance with the first principle did not raise any concerns, the judgment focused on the latter.

According to the Court, while a national rule which, as an alternative, allows territorial jurisdiction to be established according to the place of contractual performance does not, in itself, excessively restrict consumer’s right to an effective remedy, the exercise of consumer rights may be subject to such restrictions if procedure as a whole, its conduct and special features are taken into consideration. Specifically, the Court went on, "procedural arrangements which give rise to overly high costs for the consumer could have the effect of deterring him from properly defending his rights before the court before which proceedings have been brought by the seller or supplier. That would be the case where proceedings brought before a court which is very far away from the consumer’s place of residence give rise to overly high travel costs for the latter, such as to deter him from entering an appearance in the proceedings brought against him" (para. 54). The relevant assessment is, of course, for the national court to make.

Concluding thought

The judgment in Aqua Med further establishes Court's case law regarding the effectiveness of national procedural rules in light of Article 7 UCTD. The Court reiterates the criteria which it summerised in Profi Credit (with references to previous judgments) and provides some context-specific guidelines. While Profi Credit was strictly concerned with time limits, Aqua Med related to costs and distance. The judgment mentions both of these elements, but particularly underlines the former. If costs are the main concern, then procedural rules which allow consumers to be reimbursed for their travel costs could potentially mitigate against it. However, the need to travel to a court which is far away from the consumer’s place of residence involves not only monetary costs, but also takes consumers' (working) time. If national courts are to critically assess the impact of procedural rules on consumers' access to justice, then this element too should be considered.

* Aqua Med was not only the claimant in the present case, but also addressee of an earlier decision by the Polish consumer protection authority (see press release). Just over a year ago, the President of the Office of Competition and Consumer Protection (UOKiK) found that Aqua Med provided consumers with deceptive product information, among others by claiming that the thermal mat, which it sold on an off-premise basis, was used by... John Paul II. According to the consumer protection authority "this could not be true, as the production of this mat began after the Pope's death". For the violation of national rules implementing the Unfair Commercial Practices Directive the company had to pay a fine of 20 548 PLN (approx. 4 800 EUR). It is unclear whether Ten Commandments can also be binding on the legal persons. 

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