AG De La Tour on Volvo and others (C‑30/20): Article 7(2) of Brussels I establishes international and domestic jurisdiction in cases of tort harms and anticompetitive practices

Case C-30/20 (AG’s Opinion here) concerns the interpretation of Article 7(2) of Regulation (EU) No 1215/2012 (Brussels I), which states that a person can be sued in the place where the harmful event occurred (regarding tort, delict or quasi-delict harms).

Between 2004 and 2009, RH (the claimant) purchased five trucks from Volvo for its road transport business. In 2016, the Commission found that there was a cartel between fifteen truck manufacturers, including AB Volvo, Volvo Lastvagnar AB and Volvo Group Trucks Central Europe GmbH concerning medium trucks and heavy trucks (in the period between 1997-2011). RH sued the Volvo group in Spain, even though three of the four sued companies are based outside of Spain. The Volvo companies contested the international jurisdiction of Spanish courts, and argued that Article 7 refers to the place where the ‘event giving rise to the damage occurred’, which would be the place where the cartel was formed. The referring court questioned whether Article 7 of Brussels I refers solely to international jurisdiction or also to domestic jurisdiction, especially considering existing national case law determining that this rule does not determine the territorial domestic jurisdiction of a court in private competition actions. In this sense, the referring court asked the CJEU whether Article 7(2) of Brussels I should be interpreted as imposing only international jurisdiction in matters relating to tort, delict or quasi-delict, and whether the domestic court with jurisdiction should be determined by national civil procedure rules, or if, on the other hand, Article 7(2) also determines domestic territorial jurisdiction without the need to refer to domestic regulation.

AG De La Tour considered that Article 7(2) does not only impose international jurisdiction, but also determines domestic jurisdiction. The Advocate General analyzed the literal, systematic and teleological element of interpretation. When comparing Article 4(1) of the Brussels I Regulation with Article 7(2), the Advocate General stated that, while the former refers to ‘the courts’ of the Member State where the persons sued are domiciled, the latter refers to ‘the courts for the place’. This difference in wording seems to point towards different jurisdiction scopes. Additionally, since Article 7(2) is a special jurisdiction rule, AG De La Tour reminded that these rules are meant to protect a weak party, and, in that sense, these special rules have a nature of derogation. Finally, these special rules are meant to allow the party to choose the courts of a Member State based on the place with which the dispute has a particular connection, as well as to facilitate the sound administration of justice.

In addition, AG De La Tour considered that this analysis should be supplemented by further details as to the place where the alleged damage occurred, as well as to the specific designation of the court having special jurisdiction. In this sense, the Advocate General differentiated the current case from related cases (such as Tibor-Trans, where the CJEU determined that ‘where the market affected by the anticompetitive conduct is in the Member State on whose territory the alleged damage is purported to have occurred, that Member State must be regarded as the place where the damage occurred for the purposes of applying Article 7(2)’). The Advocate General concludes that, in the relevant related cases, the justification of the connecting factor adopted by the CJEU indicates that the ‘distinctive feature of competition litigation was taken into consideration in concrete terms’ (para 66). 

AG De La Tour also stated that the determination of the place where the damage occurred operated by the CJEU in Tibor Trans is not sufficient to specify the exact location of the court having territorial jurisdiction, which constitutes a source of legal uncertainty (para 70). The AG considered, therefore, that the CJEU should complement the answer given in Tibor Trans, particularly by taking into account ‘the number of proceedings which could be brought due to the extent of the cartel at issue’. In particular, the Advocate General noted that it is necessary to consider that, especially in the vehicle sales and transport sector, the place where the market (affected by the cartel) leads to additional costs is not necessarily the place where the goods were purchased (para 79).

For these reasons, the Advocate General calls for the CJEU to clarify the criteria for identifying the relevant court when interpreting the expression ‘place where the harmful event occurred’ (Article 7(2) Brussels I Regulation), and for the CJEU to draw a parallel with case Verein für Konsumenteninformation, where the CJEU held that ‘the place where the damage occurred is that where the vehicle in question was purchased’. The Advocate General also highlighted that it is important to assess the meaning of ‘purchase’ because, in the context of these proceedings, RH concluded leasing agreements, under which it became the owner of the trucks. This assessment should be done from an economic perspective, because the claim for compensation is based on competition law (para 86). AG De La Tour then interprets it as meaning ‘the place where [the] transaction was concluded’, understood in a wide sense as the place where the agreement was reached (and not where the price was paid) (para 88). Therefore, according to the Advocate General, the criterion of ‘the place where the transaction was concluded’ is sufficient to identify the court ‘objectively best placed to analyse the constituent elements of the defendant’s liability’. In this case, that means the place where the trucks were purchased by RH.

However, the Advocate General also highlighted that, to protect the objective of providing easier access to evidence, two criteria for establishing the location of damage can coexist (para 108). In that case, AG De La Tour also proposes that ‘if the place where the damage occurred does not correspond to that where the injured party carries on business, the action may be brought before the court in whose jurisdiction the injured party is established’ (para 110).

Finally, the Advocate General also considered that, despite the fact that Article 7(2) of the Brussels I Regulation determines territorial jurisdiction at both an international and domestic level, the CJEU should interpret it as allowing Member States to centralize the jurisdiction in certain specialized courts (para 130).

CJEU on jurisdiction in Dieselgate disputes: C‑343/19, VKI v Volkswagen

Dear readers, 

as many of us prepare to enjoy some well-deserved holidays, we should not neglect to pay attention to a judgment by the Court of Justice from this week which can have important consequences on Dieselgate litigation. 

Since the scandal known as Dieselgate emerged a few years ago, several individuals, consumer organisations and law firms have started actions against Volkswagen to claim damages or other remedies in connection with the company's emissions fraud. While national courts are gradually also starting to render important decisions on the subject, this week the Court of Justice had to answer an important question: which national courts have jurisdiction to adjudicate on actions for damages brought by disappointed consumers?

image: pikist.com

Under article 7.2 of the so-called Brussels I regulation (n 1215/2012), a person domiciled in a Member State can be sued in a different member state, in tort cases, when this is the place where the "harmful event" has occurred or may occurred. 

In the case of Dieselgate claims, the referring Austrian court doubted what would have to be considered as the harmful event: is it the installation of a "defeat device" making the car's tracking of emissions unreliable, or is it, as claimed by the plaintiffs, the place where the defective vehicle has been purchased?

Recalling its earlier case-law, the CJEU (para 23) asserted that the concept of the "place where the harmful even occurred" covers both the place where the damage has occurred and the place where the damage-generating event took place.

The damage suffered by the buyers emerged immediately with the purchase of a vehicle whose value was lower than the price paid due to its defect and was not purely financial loss exactly because the vehicle was defective (para 35). For this reason, the damage emerging at the moment of purchasing the vehicle is suitable for establishing jurisdiction in the MS where the contract was concluded - in this case, Austria. 

According to the Court, this outcome does not undermine legal certainty as a manufacturer who sells in several Member States can expect to be sued in these MS and because, given the nature of the damage, courts of the state in which the contract has been concluded will be best placed to investigate the loss. Indeed, the CJEU observes, the possible loss of market price of the defeat vehicles depends very much on local market conditions, which means that courts of the MS where the original sale has been made can assess whether the consumer has suffered a loss of value. 

By taking away exceptions of jurisdiction, the CJEU has thus cleared one of the stumbling stones standing between consumers and effective remedies in this interesting saga. 

Cancellation of connecting flights: whom to sue and where? Case C-606/19 flightright

On 13 February the Court of Justice delivered an order in case C-606/19 flightright concerning jurisdiction over the claim for compensation brought against an air carrier in charge of the final leg of the journey divided into several legs, confirmed in a single booking.

The case involved two passengers who booked a journey from Hamburg (Germany) to San Sebastian (Spain) via London and Madrid, comprising of connecting flights operated by different carriers. The problem faced by the passengers was cancellation of the third flight of the journey, operated by Iberia. The question to be addressed was whether a claim against Iberia could be brought before the court in Hamburg. Pursuant to Article 7(1)(a) of Regulation No 1215/2012 (Brussels I bis) in matters relating to a contract, a person domiciled in a Member State may be sued in another Member State in the courts for the place of performance of the obligation in question. The subsequent provision explains that in the case of the provision of services the place of performance of the obligation in question is generally the place in a Member State where, under the contract, the services were provided or should have been provided.

It was already clear from the previous case law that both the place of departure and that of arrival must be considered as the principal places of the provision of services under a contract for carriage by air, which in turn gives the person bringing a claim for compensation on the basis of Regulation No 261/2004 a choice of jurisdiction. This is the case for both direct flights and, mutatis mutandis, situations in which the journey with connecting flights consisting of a confirmed single booking for the entire journey comprises two legs. In the latter case, the passenger can also choose to bring the claim before the court or tribunal which has territorial jurisdiction over the place of departure of the first leg or one having jurisdiction over the place of arrival of the second leg.

The present case dealt with a similar legal matter yet with relation to a multi-leg flight, operated by different carriers. According to the Court none of this affected the procedural position of the passenger experiencing a cancellation or delay. First of all, the Court stressed that a contract for carriage by air consists of a confirmed single booking for a three-leg journey establishes the obligation for an air carrier to carry a passenger from a point A to a point D. The place of performance, within the meaning Article 7(1) of Regulation No 1215/2012, can therefore be the place of departure of the first leg of the journey (point A).

What is more, the rule of special jurisdiction for matters relating to a contract set out in that provision does not require the conclusion of a contract between two persons, but the existence of a legal obligation freely consented to by one person in respect of another on which the claimant’s action is based.  This is the case for an air carrier performing obligations under Passenger Rights Regulation No 261/2004 on behalf of another carrier having a contract with a passenger, in line with Article 3(5) of that regulation. Consequently, even though there were no complications on the first leg of the trip and the Hamburg-London flight was not operated by Iberia, the claim against the carrier could be brought in the Hamburg court.

How to claim from air carriers when flight included in a package travel contract - AG Saugmandsgaard Øe in Primera Air Scandinavia (C-215/18)

Last Thursday AG Saugmandsgaard Øe issued an opinion in the Primera Air Scandinavia case (C-215/18 - English text is not available), interpreting provisions of Regulation No 261/2004 on air passenger rights and of Regulation No 44/2001, that is Brussels I, on jurisdiction. The passenger, domiciled in Prague (Czech Republic), was flying with Primera Air Scandinavia airlines between Prague and Keflavik (Iceland). She purchased the tickets for this flight at a Czech travel agency. Unfortunately, the flight was delayed for more than 4 hours, thus she has claimed compensation on the basis of Article 7 Regulation 261/2004 (as it was interpreted in the Sturgeon case, i.e. as applicable to long delays, too). The airline refused to pay the compensation claiming extraordinary circumstances. The passenger decided to go to court with her claim, but the Czech courts had doubts as to their jurisdiction due to the uncertainty as to which, if any, provisions of Brussels I Regulation could apply in this case.

The issues in this case pertained to:

1. whether the passenger had a contractual relationship with the air carrier in the meaning of Art. 5(1) Brussels I Regulation, as her flight was part of a package travel contract concluded with a travel agency;

2. whether the legal relationship between the passenger and the air carrier was a B2C relationship;

3. whether the air carrier had a locus standi as a defendant in a case raised on the basis of Regulation No 261/2004, even if the passenger concluded a package travel contract falling under the scope of Directive 90/314?

Legal relationship between passenger and air carrier

As Art. 5(1) Brussels I Regulation introduced special jurisdiction rules for disputes based on contractual claims, the Court was asked to elaborate on whether there was a contractual relationship between the passenger and the air carrier. After all, the passenger concluded a contract with the travel agency instead, for a package travel contract encompassing the contested flight. AG Saugmandsgaard Øe recalls that in the judgment in joined cases flightright (C-274/16, C-447/16 and C-448/16) the Court has already decided that claims from Regulation No 261/2004 may be raised as contractual claims against an operating air carrier, even if the passenger purchased the flight ticket from another air carrier (para. 30). The core of Art. 5(1) Brussels I Regulation is seen applying special jurisdiction rules when there was a case of a voluntary acceptance of a legal obligation of one party towards another party (rather than recognition of their role as contractual parties) (para. 31). AG Saugmandsgaard Øe decides that in the given case the same reasoning should apply (para. 34-35), as the operating air carrier voluntarily decided to perform the obligations towards the passenger that under the concluded package travel contract belonged to the travel agency (and their agents). As the air carrier chose to perform the flight between Czech Republic and Iceland, they should have been aware that they will be performing services in these two countries, and thus could face legal claims in courts of one of them (para. 37).

Is this a consumer relationship?

Art. 16 Brussels I Regulation provides for further special jurisdiction rules for B2C contracts. In order for these rules to apply, requirements from Art. 15(1) Brussels I Regulation need to be fulfilled, that is: a consumer status of one party; conclusion of a B2C contract; the B2C contract needs to qualify as a contract defined in this provision (para. 42). Transportation contracts are generally excluded from the scope of this provision, except for package travel contracts (Art. 15(3) Brussels I Regulation). Here, AG Saugmandsgaard Øe sees the difference in case the passenger makes a claim against the travel agency (Art. 16 Brussels I Regulation applies) or the operating air carrier (it does not apply) (para. 45 and ). The literal interpretation of this provision draws attention to the fact that here the role of a defendant as a contractual party is vital to determine the applicability of special jurisdiction rules (para. 48). Only by contracting with consumers, the air carrier could predict in which country he could be sued by their passengers if things went wrong and legal certainty and predictability would be guaranteed (para. 57). Therefore, Art. 16 Brussels I Regulation should be strictly interpreted here.

Can the operating air carrier be sued when a passenger purchased a package travel?

In the recent Aegean Airlines (C-163/18) case the Court decided that the passenger could not claim reimbursement of a flight ticket from the operating air carrier for a cancelled flight, when the flight and the whole package travel contract was cancelled as a result of the travel organiser's insolvency. This is because it is the Package Travel Directive that provides insolvency protection as well as because Art. 8(2) Regulation 261/2004 clearly excludes a possibility of passengers to make such a claim (para. 68). This exclusion is not provided in Art. 6 and 7 Regulation 261/2004 which regulate compensation for a delayed flight. Thus a passenger travelling on a basis of a package travel contract could claim fixed compensation amount for a delayed flight from an operating air carrier pursuant to Regulation No 261/2004 and individualised compensation on the basis of PTD from a package travel organiser (para. 70).

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.  

Crossing Paths: AG Bobek on jurisdiction in consumer cases under Regulation 1215/2012 and Directive 93/13

Yesterday, Advocate-General Bobek published his Opinion in a case where the Brussels I Regulation (Recast) and the Unfair Contract Terms Directive cross paths (C-347/18 Salvoni v Fiermonte). The case concerns the question what happens if a national court fails to check - ex officio - whether the rules on jurisdiction over consumer contracts have been observed in a cross-border dispute and the court issues an order for payment, even if there are indications that the consumer involved lives abroad? Once the order becomes final, can judicial review still take place in the country of origin before the order is enforced in another Member State?

When the defendant is a consumer, only the courts in the Member State where the consumer is domiciled have jurisdiction under the Brussels I Regulation (Article 18). In the case at hand, the consumer involved - Ms Fiermonte - appeared to live in Hamburg, Germany, which would mean that the Italian court where the order-for-payment procedure was brought did not have jurisdiction. In so far as Ms Fiermonte did not enter an appearance, the court should have declared of its own motion that it had no jurisdiction (Article 28). And if she did appear in court, she should have been informed of her right to contest jurisdiction (Article 26(2) of the Regulation).

Source: e-justice.europa.eu

The court in Milan nevertheless issued an order for payment against Ms Fiermonte, who did not oppose it. The court was subsequently requested to issue a so-called 'Article 53 Certificate'. Under the Regulation such a Certificate is necessary for cross-border enforcement (i.e. in Germany) to demonstrate that the order is enforceable in the country of origin (i.e. in Italy). The court then concluded that it should have verified its jurisdiction.
It found - ex officio - that the order in question was based on a legal relationship between a consumer and a professional. Thus, the order was issued in breach of the jurisdiction rules in the Regulation. The court asked the CJEU whether it should rectify this in the course of the Certificate-procedure. In this respect, it referred to the CJEU's case law on effective consumer protection under the UCTD and pointed out that the automatic issue of the Certificate might deprive Ms Fiermonte of an effective remedy as guaranteed by Article 47 of the EU Charter of Fundamental Rights.

Before we discuss AG Bobek's Opinion, let us briefly recall that in the context of the UCTD, the CJEU has repeatedly held - e.g. in Océano, Pénzügyi Lízing, and most recently Aqua Med - that costs or distance may deter consumers from taking legal action or exercising their rights of the defence. This would be the case where proceedings are brought before a court which is very far away from the consumer's place of residence (see Aqua Med, para 54). If this is already the case in domestic disputes, it applies all the more strongly in cross-border disputes. Moreover, the CJEU has held that rules conferring final and binding effect (res judicata force) on a decision must still meet the requirements of equivalence and effectiveness; see e.g. Finanmadrid. For instance, short time-periods to oppose an order for payment or to challenge its enforcement are problematic, also from the perspective of Article 47 Charter; see e.g. Profi Credit Polska.

Against this background, the referring court's question whether it should review the order and/or inform the consumer of the possibility to challenge its enforcement in Germany is not so strange. In addition, it was unclear whether the documents were properly served and thus, whether Ms Fiermonte had had an actual opportunity to oppose the order for payment. In a domestic situation, it would therefore be questionable whether the requirements of effectiveness and Article 47 Charter are complied with. The court responsible for the enforcement may operate as a last resort.

However, AG Bobek makes a strict separation between the CJEU's case law on the UCTD and the system of the Regulation. In his view, judicial review (ex officio) in the course of the Certificate-procedure is neither permitted nor required by EU law. It would run against the logic and spirit of the Regulation, which is aimed at the rapid and efficient enforcement of judgements abroad. The court must issue the Certificate automatically when the formal conditions are satisfied. It cannot re-evaluate the underlying judgment on points of substance and jurisdiction. This would compromise the Regulation's effectiveness.

Whereas AG Bobek's view is understandable in light of the Regulation's framework, his explanation of the distinction between the Regulation and the UCTD seems a bit artificial. On the one hand, he states that the Regulation lays down rules of a procedural nature, which are not as result-oriented and far-reaching as the (substantive) provisions of the UCTD. Yet, the rationale of the CJEU's case law on the UCTD is that consumers must be enabled to exercise their rights and that, because of their weaker (procedural) position in terms of knowledge and financial means, courts fulfil a compensatory role.
On the other hand, Bobek submits that the Regulation recognises that consumers are worthy of specific protection as defendants and that it contains additional procedural guarantees for that reason. Doesn't this mean that courts should play a role in enabling consumers to exercise their rights under the Regulation as well? It might be true that Ms Fiermonte can make an application for refusal of enforcement of the order in Germany on the grounds of lack of jurisdiction or the absence of due service of documents, but this depends on her initiative (Articles 45 and 46 of the Regulation). To what extent will it be taken into account that Ms Fiermonte is a consumer who might not be aware of her rights or not be able to pay lawyer's fees? (Ironically, the case was about unpaid lawyer's fees.) Shouldn't she at least be informed of her defence possibilities?
Bobek observes that it would be strange for the court to issue a Certificate for enforcement of the order while simultaneously pointing out its allegedly erroneous nature. This would be contrary to the principle of legal certainty. It would also undermine the principle of fair trial if the court would take on the role of the defendant's legal counsel.

Still, one cannot help but wonder why "an extra layer of protection for consumers" as proposed by the referring court could not "be ‘read into’ the provisions of Regulation No 1215/2012". That would be a true crossing of paths.

Airbnbing it? Likely not a consumer: CJEU in Milivojević (C-630/17)

Last Thursday the Court of Justice issued a judgment in the Croatian case Milivojević (C-630/17). Ms Milivojević concluded a credit agreement through an intermediary to obtain funds for the extension and renovation of her house, to create apartments to be let for tourists. Part of the loan might have, however, been used for private purposes. The credit was secured by the mortgage on the house and was supposed to be paid back from profits that Ms Milivojević would acquire by letting the apartments. The credit agreement was concluded with the Raiffeisenbank, which turned out to be considered a 'non-authorised lender' in Croatia, as it was established in another Member State and was not authorised to operate in Croatia by the Croatian National Bank. Contracts concluded with non-authorised lenders may be declared null and void in Croatia with retroactive effect, which is what Ms Milivojević applied for. 

 

The referring court had questions about the validity of its jurisdiction under the agreement, which stated that either the courts of the domicile of the debtor or of the registered seat of the bank were  competent in case of disputes. In the procedure the parties were disputing the place of conclusion of the agreement, which could determine jurisdiction - Raiffeisenbank claimed it was Austria, Ms Milivojević - Croatia. Moreover, the referring court wondered whether Ms Milivojević could be considered a consumer, which would grant her exclusive jurisdiction rights. Furthermore, the questions of the compliance of the Croatian law allowing to invalidate credit agreements concluded with non-authorised lenders established in other Member States than Croatia with retroactive effect was raised.

Consumer status

 

Having read the facts, most of us would immediately deny the status of a consumer to Ms Milivojević in this particular transaction. She is openly admitting to having taken out the loan for the purpose related to conducting a business activity - letting out parts of her house to tourists. In light of the Gruber case, demanding that the use for business purposes was merely negligible, this situation does not seem to qualify as a consumer transaction, even if in the process of renovation of her house from the acquired loan money Ms Milivojević would have also improved parts of the house, in which she herself had lived. 

 

The Court relies more on the recent Schrems judgment, but still concludes that

"Ms Milivojević can be considered to have concluded the agreement at issue as a consumer only if the link between that contract and the professional activity in the form of tourist accommodation services is so marginal and negligible that it appears clearly that that contract was concluded essentially for private purposes." (para. 93)

Retroactively invalidating (consumer) credit agreements

 

The CJEU states that EU law (specifically Article 56 TFEU on the freedom of the provision of services) precludes Croatian law allowing to invalidate credit contracts with non-authorised lenders, who are established in another Member State, from the date of conclusion of that agreement, even if it was concluded before the entry into force of that Croatian law. Whilst it may be necessary for national law to ensure that credit agreements concluded by weaker parties are legal and afford them sufficient protection, this objective may be achieved by less restrictive measures (see in particular further para 73-74 of the judgment).

Determining competent courts

Further, Croatian law is incompatible with EU law by providing for different jurisdiction rules than these set out in Regulation No 1215/2012 (Brussels I recast). See further on these issues: paras 80-84. Finally, there was a question whether exclusive jurisdiction of Article 24(1) Regulation 1215/2012 would apply in this case, as it applies to actions relating to rights in rem in immovable property. The CJEU decided that an action for a declaration of invalidity of a credit agreement and of the notarised deed relating to the creation of a mortgage taken out as a guarantee for the debt arising out of that agreement does not fall within that concept (see para 105). However, an action for the removal from the land register of the mortgage on a building - would be covered.

Max Schrems is a consumer - with respect to his own claims, Court says

Source: https://twitter.com/maxschrems

Yesterday, on 25 January, the judgment in the second high profile case concerning the battle of Max Schrems against Facebook was delivered by the Court of Justice. The ruling does not come as a big surprise to those familiar with the earlier opinion of Advocate-General Bobek (for a broader overview of the dispute itself and the AG's opinion see our earlier post here). Indeed, the Court decided to follow the midway approach proposed to it by the AG. According to the Court, a claimant does not lose the status of a 'consumer' for purposes of establishing jurisdiction of the court seised, as a result of his engagement in activities such as book publishing, lecturing, operating websites, fundraising and collecting claims of numerous consumers. However, the jurisdictional privilege arising out of Article 16(1) Regulation No 44/2001 (Brussels I; currently Article 18(1) Regulation No 1215/2012) does not extend to collective redress.

Question 1: Is Schrems himself a consumer?

The Court began its analysis by recalling the general rule of actor sequitur forum rei, upon which the Brussels I regime is based, and the consequent requirement to interpret the rules which derogate from it strictly. This applies to Article 16(1) which allows consumers to bring proceedings against their contractual counter-party in the courts for the place where they are domiciled. 

It then reaffirmed its established line of reasoning, according to which:

• in the interpretation of the term 'consumer' for purposes of Brussels I regulation reference must be made to the position of the person concerned in a particular contract, having regard to the nature and objective of that contract and not to the subjective situation of the person concerned (para. 29);
• only contracts concluded outside and independently of any trade or professional activity or purpose, solely for the purpose of satisfying an individual's own needs in terms of private consumption, are, in principle, covered by the special rules aimed to protect the consumer as a weaker party (paras. 30-31).

Mixed purpose and dynamic assessment

The judgment further recalled that in mixed purpose scenarios, i.e. where a person concludes a contract for a purpose which is partly within and partly outside his or her trade or profession, the Gruber test applies. Consequently, a person can only rely on the jurisdictional privilege available to consumers if the link between the contract and that person's trade or profession is so slight as to be marginal and, therefore, has only a negligible role in the context of the supply in respect of which the contract is concluded, considered in its entirety (para. 32).

Having in mind the conclusion reached in Gruber as well as the Court's repeated references to the strict interpretation requirement in the commented judgment, the reasoning presented so far did not appear to bode well for Schrems. Neither did the following passage of the judgment, which introduced an element of novelty to the Court's existing jurisprudence and could be of considerable relevance for the future cases. 

"[I]t is necessary, in particular, to take into account, as far as concerns services of a digital social network which are intended to be used over a long period of time, subsequent changes in the use which is made of those services" (para. 37). Consequently, "a user of such services may, in bringing an action, rely on his status as a consumer only if the predominately non-professional use of those services, for which the applicant initially concluded a contract, has not subsequently become predominately professional" (para. 38).

The Court has thus made clear that the subsequent change of the purpose, for which the services provided under the contract are used, should not be disregarded. This is already a very important take-away. The importance of these follow-on factors is, nevertheless, far from clear. While the Court does not refer to it explicitly, it seems that the time of contract conclusion could still be perceived as the main point of reference, as reasoned by the AG. Based on this premise, one could argue that it is at this stage that the strict Gruber test should be applied. Indeed, the negative formulation "has not subsequently become predominately professional" leaves room for a more consumer-claimant-friendly interpretation at a subsequent stage.

The contract, not the person

As seen from above, with respect to mixed-purpose long-term contracts the judgment leaves several important questions open and its consumer-claimant-friendly reading may be regarded as a stretch. The answer provided by the Court was, nevertheless, favourable to Schrems. The reason seems to lie in the character of his "professional" use of Facebook services. According to the Court, acquiring expertise in the field covered by the services at issue and giving assurances for the purposes of representing the rights and interests of other service recipients cannot lead to the loss of one's consumer status. This is because: 

• as mentioned before, an assessment of the 'consumer' status is undertaken irrespective of the subjective situation of the person concerned, in particular his or her knowledge and information possessed (para. 39);
• a contrary interpretation would prevent an effective defence of the rights that consumers enjoy in relation to their contractual partners who are traders or professionals (here especially: the protection of personal data) and would disregard the objective set out in Article 169(1) TFEU of promoting the right of consumers to organise themselves in order to safeguard their interests (para. 40).

Question 2: Can Schrems bring claims of other consumers in his domestic court?

Article 169(1) TFEU, however, did not prove helpful in respect of the second question. Emphasising once again the requirement of strict interpretation, the Court found that the special protection granted to a consumer as a party to the legal proceedings applies only in so far as the claimant or defendant is, in fact, a party to the consumer contract in question (paras. 44-45). A situation of a consumer to whom claims of other consumers were assigned was thus treated analogously to that of a consumer organisation. A different interpretation would, according to the Court, lead to the establishment of a specific forum for consumers to whom claims of other consumers have been assigned, which is nowhere to be found in the Brussels I regulation and which would undermine the predictability of attributing jurisdiction (paras. 46-48).  

Consequently, the jurisdictional privilege set out in Article 16(1) of Regulation No 44/2001 does not apply to the proceedings brought by a consumer for the purpose of asserting the claims assigned to him by other consumers, irrespective of whether the assignors are domiciled in the same Member State, in other Member States or in non-member countries.

Concluding thought

The judgment appears to be a win for consumers who decide bring their civil claims against traders to a court and take their disputes seriously - a result which is hard not to agree with. The ruling is, nevertheless, far from a sweeping consumer victory. Despite a reference to the consistency of EU law in para. 28, the Court maintained the established reading of Gruber for jurisdictional purposes and accepted that consumer status can be lost over time. Last but not least, even if the Court's choice to leave the collective redress dimension up to the European legislator cannot be denied legal grounds, it goes without saying that transnational private enforcement of consumer law remains an issue. One can hope, however, that the experience made in discussions on the GDPR regarding that latter point, along with the recent steps taken by the Commission as a follow-up to its 2013 recommendation on collective redress, will eventually bring something more concrete to reason about.

Is Max Schrems a consumer? AG Bobek in C-498/16

On Tuesday, 14th November, Advocate-General Bobek delivered an important opinion in case C-498/16 Schrems v Facebook. Readers of this blog will certainly remember an earlier court battle involving the same parties, fought entirely on the grounds of data protection law, which resulted in the invalidation of the Commission's Safe Harbour decision and its later replacement with a somewhat more robust, yet no less controversial, framework renamed as Privacy Shield. The present case also revolves around data protection issues, albeit in a more horizontal setting. These, however, are not the focal point of the commented opinion as the preliminary reference had been made before  national courts even began to assess the merits of the action. This was due to the doubts as to whether the court seised was at all competent to try the case.

Legal framework and the contested issue 

In the EU competence of national courts to hear and adjudicate disputes in civil and commercial matters is established under the so-called Brussels framework. The instrument which currently lies at its heart is Regulation No 1215/2012 (Brussels I bis), which, as of 2015, repealed and replaced Regulation No 44/2001 (Brussels I). The case at hand still refers to the previously applicable act, but – as the provisions under analysis have not been affected by the reform (recast) – the interpretation provided by the AG and, ultimately, the Court remains of direct relevance also to the law as it currently stands.

Key provisions under dispute are Articles 15 and 16 of Regulation No 44/2001. Both of them form exceptions to the general rule of actor sequitur forum rei set out in Article 2(1) and aim to assist consumers in the pursuit of their claims against traders. Pursuant to Article 15(1)(c) if a matter relates to a contract concluded by a person for a purpose, which can be regarded as being outside his or her trade or profession (the consumer) and the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities, the special regime laid down in the subsequent provisions kicks in. This includes Article 16(1) according to which "a consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled".

Relying on these provisions, Max Schrems – an Austrian national domiciled in Austria – lodged a number of claims both on his own behalf as well as on behalf of several others Facebook users who assigned claims to him concerning the company's alleged infringements of the data protection rules. The defendant contested the jurisdiction of the Austrian court, submitting that Schrems cannot rely on the consumer status as he has been using the platform not only for personal, but also – and increasingly – for professional purposes. According to the defendant, the fact that Schrems specialises in data protection law, publishes books, delivers lectures for remuneration, operates a website and a Facebook page concerning the ongoing litigation, coordinates collective redress and collects donations for that purpose suggests that he no longer acts merely in his private capacity. Secondly, in view of the defendant, jurisdiction established for Schrems was, in any case, not transferable onto other persons who assigned claims to him.

AG opinion

The opinion of AG Bobek does not bring a clear win for either of the parties. Indeed, the AG ultimately sides with Schrems on first account and with the social network's operator on the other. The proposed reading of the regulation is supported by an extensive reasoning, which appears to be well grounded in the existing case law and not particularly ground-breaking. On a closer look, however, the opinion offers several hints which could lead to important developments in the jurisdictional regime for consumer contracts.

Question 1: Consumer status

As regards the interpretation of the notion of a consumer for purposes of Article 15(1), the AG points out, in a seemingly conservative way, that the assessment should always be contract-specific, that the parties should generally able to rely on the status of the other party determined at the time of the contract’s conclusion and that in case of ‘dual purpose’ contracts the Gruber case law should be applied (paras. 29-34).

However, on a more careful reading, the opinion appears to be more nuanced. Starting from the last point: the AG first reminds that, in line with Gruber, if a contract serves both professional and private purposes "the consumer status is maintained only if the connection between the contract and the trade or profession of the person concerned is 'so slight as to be marginal', meaning it had only a negligible role in the context in which the contract was concluded" (para. 34). Direct reference to the key passage of that judgment highlights the discrepancy between the Court's early case law on dual purpose contracts and the subsequent legislative developments on that matter. Indeed, in a number of more recent acts such as Directive 2011/83/EU on consumer rights (recital 17) or Directive 2013/11/EU on consumer ADR (recital 18) the EU legislator opted for a somewhat different – and more consumer-friendly – approach towards mixed purpose contracts. Naturally, indications included in the preambles of several acts do not preclude the applicability of the CJEU's test, especially in other contexts. By way of illustration, a more stringent stance towards consumer status in private international law can potentially be justified by reasons of procedural certainty.

This, however, does not seem to be the reading the AG is after. Despite direct references to the fairly tough standpoint in Gruber, he also presents some very interesting points as to how he understands that ruling and, ultimately, considers Schrems to qualify as a consumer. In this respect, two observations made by the AG in para. 59 are worth highlighting.

In the words of the Advocate-General: "First, what Gruber aims at, in my view, and what should remain negligible within one single contract, are activities having immediate commercial aim and impact, in the sense of structured and profit-making activity being the driving purpose of such use."

This may appear somewhat contradictory to one of his earlier observations regarding the interpretation of the phrase 'trade or profession'. Indeed, one can read in para. 31 that the term relates "in broad terms to one's economic activity" meaning that for a person to be disqualified as a consumer the contract at issue does not have to be "necessarily connected with immediate economic profit", but what matters is rather that it is "entered into in connection with an ongoing, structured economic activity". On the whole, however, it seems that the AG seeks to align, step by step, the reading of Gruber with the more recent trend concerning the issue of mixed purpose, which, in itself, is to be welcomed.

The second observation made by the AG in para. 59 is equally non-standard and goes back to his earlier discussion on the possibility of losing (or gaining?) the status of a consumer over time (paras. 35-41). While the AG confirms that the status of a party should generally be determined at the time of the contract's conclusion and not at the moment when the action was lodged, he does not consider this point to be absolutely fixed. "In abstract terms" and "in rather exceptional cases" a dynamic approach to consumer status could be envisaged (para. 39). This could be true particularly for long-term relationships, in which the aim of a contract is not specified or the contract is open to different uses. If, under these circumstances, there is "a clear evolution" of the type of the capacity in which the applicant has made use of the contract, the potential dynamism of the contractual relationship would need to be assessed (para. 59). While the application of this more flexible approach towards consumer status has not changed this assessment with regard to the claimant, if shared by the Court, the reading proposed by the AG could shake the foundations of consumer law as we know it.

Question 2: Collective redress

By contrast, the AG was not inclined to go into similarly subtle distinctions with regard to the second question and considered that Article 16(1) of Regulation No 44/2001 simply does not leave room to the interpretation advocated by the applicant (with the support of the intervening governments). It his view neither the text, not the context and the purpose of that regulation, support the establishment, solely on the basis of that act, of a new special jurisdiction with respect to claims assigned to a consumer on the same subject by other consumers domiciled in the same or another Member State or in a non-member state. This remains in line with the earlier case law, in which the CJEU  prevented both private companies (Shearson Lehman Hutton) and consumer organisations (Henkel), acting as assignees of the rights of the consumers, from relying on the special head of jurisdiction designed for the protection of the latter. According to the AG, the Court did so not only because those legal persons were not 'weaker parties', but also because they were not parties to the contract in question, which was also the case for Schrems (para. 96).

The Advocate-General thus denied the consumer-assignee the possibility of collecting numerous claims in the single proceedings carried out in his domestic court. This, however, was not yet his final word. In his concluding remarks the AG decided to share some broader views concerning the need for  an EU-wide collective redress in consumer matters. According to Bobek, collective redress undoubtedly "serves the purpose of effective judicial consumer protection" and may provide "further systemic benefits to the judicial system". He notes that the question is not only extensively discussed in the legal scholarship, but has also already led to several attempts at a legislative action and that, all in all, the EU legislator appears to be best placed to devise the relevant system, including its jurisdictional dimension. Consequently, even if it does not propose a major shift with respect to the assignment of claims under the applicable regime, the AG's opinion could provide for an additional impulse to revive these important discussions. This will, nevertheless, largely depend on whether the Court actually picks up on the many interesting proposals put forward by its advisor.

Financial Services Purchased from a Third Party and Jurisdiction - CJEU judgment in case C-375/15 Kolossa

Today the CJEU handed down its judgment in the Kolossa case (have a look at the blog entry about the AG's opinion as the CJEU followed its AG in all points). The Austrian resident Kolossa had purchased financial instruments issued by the British Barclays Bank. After the bearer bonds had lost all their value, Mr Kolossa filed a lawsuit against Barclays in front of an Austrian court which asked the CJEU for an interpretation of the Brussels I Regulation.

The CJEU holds that Art 15 Brussels I Regulation is not applicable to a case where a consumer purchased a financial instrument not directly from the issuer but from a professional intermediary. There has never been a contractual relation between Mr Kolossa and Barclays and a chain of contracts through which certain rights and obligations of Barclays are transferred to Mr Kolossa is not sufficient.

Regarding Art 5(1), the CJEU holds that - in contrast to the requirement laid down in Art 15 - the conclusion of a contract is not a condition for its application. It is nevertheless essential that a legal obligation freely consented to by one person towards another can be identified since the place of performance of this obligation determines jurisdiction. Although Barclays had certain obligations towards Mr Kolossa, there was no such legal obligation freely consented to by Barclays. 

The Austrian court wanted to know if its jurisdiction could then be based on Art 5(3). The claim for damages was based, among others, on the liability for the prospectus and breaches of other legal information obligations towards investors. Art 5(3) points at the 'place where the harmful event occurred'. This is either the place of the event giving rise to the damage (which in this case was where Barclays has its seat) or the place where the damage occurred. In the specific circumstances the damage occurred on Mr Kolossa's Austrian bank account, which is why Austrian courts have jurisdiction for these non-contractual claim.   

Finally, the CJEU held that in the context of determining the international jurisdiction under the Brussels I Regulation, a national court does not have to conduct a comprehensive taking of evidence in relation to disputed facts that are relevant both to the question of jurisdiction and to the existence of the claim. The court can, however, examine its international jurisdiction 'in the light of all the information available to it, including, the allegations made by the defendant'.  

Contestable notice on contesting jurisdiction

The new Brussels I Regulation (1215/2012) (recast) intends to improve protection granted to weaker contractual parties in cross-border cases by obliging the national courts in Art. 26 Par. 2 to inform, among other weaker parties, the consumer that he has the right to contest the jurisdiction of the court if this is not the court of the Member State in which the consumer is domiciled. This needs to occur before the court assumes jurisdiction due to the consumer's appearance in this court. Alongside with the warning to the consumer, she should receive an information what happens if she enters or doesn't enter an appearance. The European Judicial Network in civil and commercial matters established a (luckily) non-mandatory standard text for this information (may be found here). I sincerely hope that national courts decide not to follow this advisory text, since in my opinion it fails to provide the most important part of this warning: namely inform the weaker party that it may be a weaker party and therefore could question the jurisdiction under rules as outlined above. See yourself:

"You are being sued before the court of a Member State of the European Union under Regulation 1215/2012.
Under Article 26 of this Regulation the court before which a defendant enters an appearance shall - in principle - have jurisdiction even if jurisdiction cannot be derived from other provisions of the Regulation.
This rule, however, does not apply where appearance was entered to contest jurisdiction.
If you are certain that the court has no jurisdiction under the other provisions of the Regulation, you need not respond to the lawsuit in any way. If you have doubts about the issue of jurisdiction, it is advisable that you challenge jurisdiction of the court prior to entering into the subject-matter of the lawsuit."

How is the consumer to be certain that the court has no jurisdiction if she is not informed that:

1. special jurisdiction rules apply to consumers;

2. what these rules are?

Are we now assuming that every EU consumer is familiar with Brussels I Regulation (recast) and can understand its provisions?

And even if by chance the consumer had doubts about the jurisdiction, the information on how to challenge jurisdiction is missing from the notice. While short information notices are to be recommended, in the interest of brevity the most important information should not be left out.

Financial Services and Jurisdiction: AG Szpunar in Kolassa (C-375/13)

3 September 2014: Opinion of AG Szpunar in Kolassa (C-375/13)

The Austrian resident Kolassa made claims against the British Barclays Bank based on prospectus liability (amongst others). He had acquired a bearer bond which lost all its value. The bonds had been issued by Barclays' German agency bank and were solely sold to institutional investors, not to private persons. The German DAB Bank AG bought some of these bonds and transmitted them to their Austrian subsidiary (direktanlage.at AG), who then sold it to the private investor Kolassa. Mr Kolassa himself was not the holder of the bond, but direktanlage.at, who held the bond in his own name and owed Mr Kolassa only a contractual obligation of delivery. The Austrian court dealing with the case had doubts about its jurisdiction and submitted several questions regarding the Brussels I Regulation to the CJEU.

As regards the application of Art 15 Brussels I Regulation, AG Szpunar suggested that Mr Kolassa himself is qualified as a consumer and that Barclays had directed its activities to the Member State of Mr Kolassa's domicile by having published the bond's prospectus in Austria. However, AG Szpunar answers in negative the question whether a contract was concluded between the parties of the dispute ('In matters relating to a contract...'). As a consequence, he deems Art 15 Brussels I Regulation not to be applicable.

The AG's reasoning why Art 5 Nr 1 lit a Brussels I Regulation is not applicable either is quite similar. He stresses the fact that, in the relation between Mr Kolassa and Barclays, there was no obligation freely assumed by one party towards another. The obligations Barclays had towards Mr Kolassa were thus not contractual in nature, but rather claims in tort, delict or quasi-delict within the meaning of Art 5(3) Brussels I Regulation. Prospectus liability clearly falls under Art 5(3) Brussels I Regulation. According to the AG, the harmful event occurred in the Member State of domicile of the 'holder' of a certificate, if the certificate's prospectus was published in this Member State and caused the holder's financial loss. Transferring this reasoning to the actual case, the Austrian court would have jurisdiction over the case. 

Finally, the Austrian court asked if, while determining its jurisdiction, national courts should only take into consideration the facts asserted by the applicant or whether they should rather conduct a comprehensive taking of evidence. On this topic, the AG suggested that national courts should evaluate the arguments of both sides, the applicant and the defendant, while not delaying the procedure with a comprehensive taking of evidence, which seems to be a reasonable solution.

Another preliminary procedure on financial services, this time in relation with the Brussels I Regulation. Let's see how the CJEU will decide!

Exclusive jurisdiction? Court second seised may not stay proceedings - CJEU in Weber (C-438/12)

3 April 2014: judgment CJEU in case Weber (C-438/12)

Today the Court of Justice followed the AG Jääskinen's opinion in determining that in matters of exclusive jurisdiction (in a given case the dispute related to immovable property) if two courts are seized, the second court may not stay its proceedings on the basis of Art. 22 (1) of the Regulation No 44/2001 without examining who has exclusive jurisdiction and if it belongs to the second court, it should proceed with the case. If the first court would recognize its jurisdiction this would be done contrary to exclusive jurisdiction rules and its judgment would not be able to be recognized on the basis of Art. 35. See for more details on this case our previous blog post (The Italian Torpedo...).

The Italian Torpedo: on staying proceedings in exclusive jurisdiction cases - AG Jääskinen in case Weber (C-438/12)

30 January 2014: opinion of AG Jääskinen in case Weber (C-438/12)

Two elderly sisters Weber, Irmengard and Mechthilde, were in a dispute over a piece of land they both partially owned in Germany. In 1971 through a notary act a preemptive right to purchase this lad was entered into a land register for I. Weber. In October 2009 through a notary act M. Weber sold her part of the land (4/10 thereof) to a company, of which her son, domiciled in Italy, is one of managers. She had a right to withdraw from that transaction until 28 March 2010. I. Weber was informed by a notary about this and through a letter of December 2009 she decided to use her pre-emptive right to purchase that land. Two sister signed an agreement in February 2010 and on 2 March 2010 I. Weber paid M. Weber the agreed purchase price. On 15 March 2010 Mechthilde withdrew from the first contract. On 29 March 2010 a case was started in a court in Milan against two sisters in which the Italian company claimed that the pre-emptive right was unlawfully used and that their purchase contract should be recognized as valid. In reply, in July 2010, Irmengard started a case in front of a German court asking them to order Mechthilde to register the change in the ownership of the land in the land register. As you may imagine, one of the matters that arose was as to what courts had jurisdiction etc. and what a German court should do taking into account the fact that an Italian court was seized first - therefore, the issue referred to the CJEU concerned interpretation of the Regulation No 44/2001.

Since this matter even if it concerns a dispute between private persons, relates to immovable property and, therefore, is not strictly a consumer law case we will keep the discussion of the issue short and mention only the primary question related to the CJEU. The AG Jääskinen advises in this case the CJEU to take the view that Art. 22 (1) of the Regulation that gives exclusive jurisdiction over matters related to immovable property to courts of the country in which that property is located encompasses matters related to establishing whether a pre-emptive right to purchase the land was rightfully executed (no surprise here). The AG follows this statement by interpreting Art. 27 (1) as obliging the court last seised to check whether they have exclusive jurisdiction based on Art. 22 (1) which would mean that the court first seised would not have jurisdiction and its judgments would not be recognized on the basis of Art. 35 (1). Current Art. 27 seems rather to oblige the court last seised to await the result of the jurisdiction check by the court first seised and to honor its decisions, but the AG argues that it's formulation "any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established" suggests that in case of exclusive jurisdiction, where the court first seised will never be able to establish its jurisdiction there is no obligation to stay the proceedings for the court last seised. The AG thinks also that the national court should not need to take into account what law will be applicable in the given case or whether the procedure in another Member State would take a long time in deciding whether to stay its proceedings on the basis of Art. 28 (1) of the Regulation, but it should take into account in this test whether the claimant's right to effective legal protection is observed.

Manufacturer's jurisdiction in product liability cases - CJEU judgment in Kainz (C-45/13)

16 January 2014: CJEU judgment in Kainz (C-45/13)

Mr Kainz, resident of Salzburg (Austria), bought a bicycle from a company Funbike, established in Austria, but the bike was manufactured by a German company Pantherwerke. While he was riding that bike in Germany he fell and injured himself. The bike turned out to be defective and based on the product liability rules Mr Kainz claimed compensation of more than 21.000 Euro from the manufacturer - Pantherwerke. The parties differed as to their opinion on which courts should have jurisdiction over this claim - pursuant to the Regulation No 44/2001 it should be the place of the harmful event - Austrian (bicycle was made available to the end user there) or German (where product was manufactured and where to the product was dispatched). Obviously, the consumer had an interest in claiming Austrian jurisdiction while the company wanted to defend themselves in Germany.

The CJEU needed to answer a question what should be considered as a place of the event giving rise to the damage in the product liability cases. The CJEU reminds that the main principle of the Regulation is to provide the defendant with an opportunity to protect himself in the courts of his country of domicile (Art. 2). (Par. 21) Special jurisdiction rules of Art. 5 should be interpreted restrictively. (Par. 22) However, in tort liability cases the Regulation gives a possibility to a claimant to choose to sue either in the courts of a country where the the damage occurred or where the place of the event giving rise to it was. (Par. 23) The CJEU determiners in this case that in principle in product liability cases the place where the event which damaged the product itself occurred is the place where the defective product was manufactured. (Par. 26) In this respect, Art. 5(3) of the Regulation does not intend to give special protection to the weaker party by allowing it to claim in courts of his own domicile (Par. 31), but rather to protect the legal certainty (Par. 28). 

As a result of this judgment two out of three possibilities will always point out to the jurisdiction of the courts of the manufacturer's domicile. Unless the damage occurred in the consumer's country of domicile, which in this case did not take place, the consumer has to sue in a foreign court for his damages.

CJEU once again on jurisdiction in consumer cases: C-478/12 (Maletic)

In a judgement delivered today, Armin and Marianne Maletic v lastminute.com GmbH, TUI Österreich GmbH, C-478/12, the Court added another brick to the implementation of the consumer protection project envisaged by Regulation 44/2001. It did so by declaring that in contract which the consumer enters with a travel agent and, indirectly, with a tour operator, the fact that the former business is established in a country different than the one of which the consumer is a resident suffices to make the regulation applicable to the tour operator, as well. This means, concretely, that the consumer can sue both companies before the "courts for the place where the consumer is domiciled" (art 16(1), Regulation 44/2001)

The question that the CJEU had to answer concerned a package holiday which had not gone as smoothly as the claimants, an Austrian couple, had hoped. The tour operator had reserved a room in a different hotel than the one which the Maletics had selected on the travel agent's website, so the couple had to pay a considerable surcharge to "upgrade" to their original choice once they found out about the mistake- which only happened when they reached Egypt!

Once back, Ms and Mr Maletic sued both the travel agency, lastminute.com, established in Germany, and the tour operator, TUI, which has a registered office in Vienna, Austria. For Regulation 44/2001 to apply, the legal relation concerned has to entail an "international" element. It was obvious that, under the Regulation, the couple could sue the "foreign" service provider before their local court of Bludenz; the lawyers assisting TUI however, claimed that all the (national) lawsuits against the company had to be filed in Vienna. Should proceedings in cases like this one be brought separately before different courts, then?

The Court of Justice held (par 30) that an interpretation allowing "split" jurisdictions in cases such as that at hand would both water down the protection that article 16(1) of Regulation 44/2001 offers to consumers and contradict one further objective of the Regulation, namely that of avoiding conflicting decisions. It is irrelevant, to this regard, whether the whole economic operation should be considered as made of one or two contracts. The fact that one of the two counterparts (and namely, in this case, the one with which the consumer has originally come in contact) was established in a different Member State is enough for the Regulation to be applicable to cases filed against both.

Users of lastminute.com and similar services should feel happy to know that this judgement makes them a little better-insured against
bad surprises- and therefore hopefully more confident, which is very likely exactly what the Court wants.