Unsolicited supply of drinking water: unlikely inertia selling - CJEU in Stichting Waternet (C-922/19)

Today the Court of Justice issued a judgment in the Dutch case Stichting Waternet (C-922/19), which required examination of the concept of unfair commercial practices in light of providing public services, such as water supply. Stichting Waternet is a water supply company, which exclusively provides drinking water in the area of Amsterdam. The consumer in the given case moved to Amsterdam in Sep 2012, but did not notify the company of his move. The previous occupant at the address continued paying the water bill until January 2014. Stichting Waternet found out about the new occupant in November 2014, sent him a welcome letter then and proceed to issue monthly invoices, which, however, remained unpaid until November 2016, when the company decided to sue for past payments. 

The controversial issue in this case was whether a contract could be found between the parties, considering that the consumer did not explicitly agree to the water supply from Stichting Waternet. If not, this could be an example of inertia selling, where the service was provided to the consumer unsolicited and the consumer could then be justified in not paying for it, even if they used the service.

The CJEU leaves the matter of contract formation to the national laws to address, as neither the UCPD nor the Distance Selling Directive (then binding Directive 97/7) regulated this issue (paras 40-42, 44-45). Whether a contract could have been formed without the express consent of the consumer is then to be determined under Dutch law.

However, the CJEU does look into the matter whether this situation could qualify as an unsolicited supply of services to consumers, which pursuant to the UCPD would be prohibited as inertia selling. The CJEU makes a lot of disclaimers as to whether the assessment of the Dutch water supply company's commercial practice could be considered an example of inertia selling. Dutch courts should consider whether this matter is not fully regulated by national law (para 48), as well as whether the practice follows from the application of provisions of Dutch law (in case: Drinkwaterwet) that aim to protect economic interests of consumers (para 52). This would determine the applicability of the UCPD to begin with. 

Inertia selling is an example of an aggressive commercial practice that is prohibited in all circumstances. Protection of consumers against aggressive commercial practices aims at ensuring average consumers' freedom of choice in contract formation (paras 55, 57). The CJEU does not think that in the given case the consumers' freedom of choice has been infringed and, therefore, does not find it likely that this practice could qualify as an example of inertia selling. This follows from the fact that consumers generally do not have a choice of water supply provider in Amsterdam, that the supplier is obliged to provide prices to consumers in a cost-covering, transparent and non-discriminatory manner, proportionately to water consumption, and that average consumers know that they are connected to the public water supply network and that water is supplied against payment (paras 59-60). It was also obvious that the water supply company tried to personally inform consumers about the contract's terms and was obliged to provide the water supply service to them, which could not be disconnected due to non-payments before further actions were taken (para 58).

Overall, this case distinguishes then from the ruling in the Wind Tre case (C-54/17 and C-55/17, see our comment here). Considering the reasoning of the Dutch Supreme Court it is likely that the CJEU's answer to the posed questions will lead the Dutch Supreme Court to decide that the practice of the water supply company did not fall within the scope of the UCPD. This was already suggested as the practice is not perceived as harming economic interests of consumers nor limiting their freedom of choice (for reasons mentioned above) and further there is no competition on the water supply market in the Netherlands.

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 5^th 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.