Friday 10 January 2020

No inertia selling in non-individually requested energy contracts - EVN Bulgaria Toplofikatsia and Toplofikatsia Sofia (joined cases C‑708/17 and C‑725/17)

Facts

Joined Cases C‑708/17 and C‑725/17 (delivered on the 5th of December 2019 and found here) deal with owners of apartments in a building in co-ownership. In both cases, there is a contract for the supply of thermal energy concluded between the majority of the owners of the building and an energy supplier (EVN Bulgaria Toplofikatsia and Toplofikatsia Sofia, respectively). Also in both cases, the energy companies sent to the individual co-owners (Ms Dimitrova and Mr Dimitrov, respectively) a bill for energy consumption costs. The co-owners in question alleged that there is no contractual obligation between them and the respective energy companies since they did not individually request the supply of thermal energy, according to the prohibition of inertia selling of Directive 2011/83/EU and of Directive 2005/29/EC. Moreover, Ms Dimitrova and Mr Dimitrov argued that the consumption reflected on the bills did not reflect their actual energy consumption, which would breach Article 13(2) of Directive 2006/32.

Legal issues

There are two relevant issues from a EU consumer contract law perspective: first, whether there is inertia selling in the case of lack of individual request of energy supply; second, whether the co-owners of a building are consumers. Moreover, from a EU consumer energy law perspective, the case determines whether the bills for the consumption of thermal energy can be calculated in proportion to the heated volume of each owner’s apartment. This case is also interesting because it addresses the relationship between EU consumer law and national contract law.

CJEU’s decision

The CJEU started by determining the applicability of the Consumer Rights Directive. In this case, there is a contract concluded between the thermal energy providers and, according to Bulgarian law, the owners of a building in co-ownership. The question was whether the owners of the building can be considered consumers. Following AG Saugmandsgaard Øe’s opinion, the CJEU answered this question in a brief and evident manner: as long as the owners are not involved in commercial or professional activities, they are consumers within the meaning of Article 2(1) of the Consumer Rights Directive.

Then, the CJEU dealt with inertia selling. Inertia selling has been defined in the CJEU’s case law as a ‘conduct whereby the trader demands payment from a consumer for a product or service which has been provided to that consumer without the consumer soliciting it’ (Wind Tre and Vodafone Italia, C‑54/17 and C‑55/17). Inertia selling is considered an unfair commercial practice under Article 5 and under point 29 of Annex I of the Unfair Commercial Practices Directive. In addition, inertia selling is prohibited by Article 27 of the Consumer Rights Directive. The notion of inertia selling revolves around the concept of solicitation as the act of asking for a service or a good to be provided to the consumer. Therefore, to discuss whether this is a case of inertia selling, the CJEU had to discuss the notion of consent. In fact, the question is whether Mr and Mrs Dimitrova consented to the contract, considering that they did not individually agree to it, but that the majority of co-owners as a group decided it. In other words, when can we consider that a consumer ‘solicited’ a service?

The CJEU highlighted that aspects regarding consent and the formation of the contract are determined by national law, as is acknowledged by Recital 14 and Article 3(5) of the Consumer Rights Directive. Bulgarian energy law provides that the energy installations in a building in co-ownership follow from the written consent of (at least) two-thirds of the owners of the building. Therefore, the energy service appears to also have been solicited by the co-owners in question, since the rules on contractual consent are defined by national legislation. Article 27 of the Consumer Rights Directive states that ‘the absence of a response from the consumer following such an unsolicited supply or provision shall not constitute consent’. Taking Bulgarian law into account, the CJEU determined there was no unsolicited supply of thermal energy in the terms of Article 27 of the Consumer Rights Directive. It is noteworthy that, as the Court implied, the consent necessary to have a ‘solicited’ energy supply can be found in the co-owners’ agreement to be subject ‘to all (…) the decisions adopted by the general meeting of the owners of property in that building’. As a consequence, the CJEU concluded that the Consumer Rights Directive and the Unfair Commercial Practices Directive do not preclude a national law that requires co-owners to pay for energy bills regarding a contract that they did not individually request (and did not use). The take-home message is that the mere lack of individual consent for the supply of a service does not automatically mean that there will be inertia selling under EU consumer law.


Finally, the defendants claimed that to calculate the bills for consumption of thermal energy proportionally to the heated volume of the apartment instead of based on actual consumption goes against Directive 2006/32 and Directive 2012/27. However, both the AG and the CJEU concluded that a law that allows for such a method of bill calculation does not violate EU law, considering that the above-mentioned Directives give the Member States a wide discretion in what concerns the calculation method for billing for thermal energy consumption in buildings in co-ownership.