Only natural persons can be consumers – CJEU in Condominio di Milano, via Meda (C-329/19)

On the 2^nd of April 2020, the CJEU decided on the Condominio di Milano case (here). The case concerned the concept of consumer under the Unfair Terms Directive, regarding a contract between Condominio Meda (a commonhold association) and Eurothermo SpA (an energy supplier). The dispute originated in the duty to pay interest for late payment in a contract for the supply of thermal energy. Article 6.3 of the terms and conditions of Eurothermo stated that, in the event of late payment, the debtor must pay ‘default interest at the rate of 9.25% from the expiry of the period for payment of the balance’. Condominio Meda claimed that it is a consumer in the sense of the Unfair Terms Directive and that Article 6.3 of the terms and conditions is unfair.

The national court highlighted the existence of pre-existing national case law from the Italian Supreme Court that determines that a commonhold association – as a form of co-ownership – is not a legal person but it is considered a ‘distinct subject of the law’. This means that, under Italian law, Condominio Meda is neither a natural person nor a legal person. The Italian Supreme Court has nonetheless previously applied consumer protection rules to contracts concluded by a commonhold association and a trader or supplier. Furthermore, the national court mentioned the CJEU’s previous decisions on the concept of consumer, which were exclusively based on the criterion of being (or not) a natural person. Therefore, the referring court asked whether the Unfair Terms Directive is applicable to this contract.

The CJEU started by analyzing whether a ‘distinct subject of the law’ that is not a consumer is covered by the Unfair Terms Directive. In fact, Article (2)(b) explicitly identifies a consumer with ‘a natural person’. According to past case law, the CJEU reiterated that ‘a person other than a natural person who concludes a contract with a seller or supplier’ cannot be considered a consumer (Cape and Idealservice MN RE, C‑541/99). Therefore, the contract concluded between the commonhold and the energy supplier is excluded from the scope of the Unfair Terms Directive (paragraph 29). This is a literal interpretation of Article 2(b), allowing for a well-defined and consistent notion of consumer.

Additionally, the CJEU extracted a second question from the national court’s request: is it contrary ‘to the spirit of the framework of consumer protection in the European Union’ for a national court to interpret the transposing legislation of the Unfair Terms Directive as covering contracts concluded between a commonhold (not a natural person) and a supplier? Given that the Unfair Terms Directive is a minimum harmonization Directive and that the Italian Supreme Court has developed a line of case law ‘which seeks to afford greater protection to consumers’, the answer is negative. Therefore, even though the contract in question is excluded by the scope of the Unfair Terms Directive, the Unfair Terms Directive does not preclude national case law from applying its transposing legislation to the contract in question.