CESL moving forward

Yesterday, a large majority of the European Parliament's Legal Affairs Committee (JURI) voted in favour of its rapporteurs' report on the proposal for a Common European Sales Law (CESL). Furthermore, the committee negotiators received a mandate to start negotiations with the Council.

The CESL is meant to facilitate cross-border trade in the EU by providing businesses and consumers with a set of contract law rules they may choose to apply to their sales agreements. JURI is backing the adoption of such an optional instrument for distance contracts, in particular those concluded online. Its amendments to the proposed CESL have been inspired by the European Law Institute's suggestions (on which we reported earlier, 'ELI on CESL').

For more information on the CESL and JURI vote, please refer to the press releases issued by JURI and the European Commission.

European Parliament intends to strengthen air passengers' rights

Yesterday the European Parliament's Transport Committee debated on the European Commission's proposal for a new Regulation No 261/2004 (see our previous post: Passenger rights, work in progress and 101 on air passengers' rights proposal). There is a possibility that the rules would be made more consumers-friendly (see the report). 

As far as monetary compensations are concerned, the Commission's proposal intended to allow passengers to claim compensation in case of a delay on European flights and short international flights (up to 3500 km) only if the delay was longer than 5 hours, for flights of 3500km-6000km when the delay was longer than 9 hours and for the remaining flights when the delay was longer than 12 hours. The Parliament's rapporteur argues for keeping the 3 hours delay standard as allowing for compensation claims of 300 Euro (for flights up to 3500km), and for all remaining . flights the compensation of 600 Euro would be granted for delays of at least 5 hours (Amendment 47-49; 58-59) As a reminder, currently passengers may claim compensation for a delay longer than 3 hours in the following amounts: 250 Euro - when the flight was short (up to 1500 km), 400 Euro - when the flight was for a distance between 1500km and 3500km, and 600 Euro for all remaining distances. Additionally, the limit of 100 Euro per night per person for accommodation was raised to 125 Euro, in case the flight cannot take place due to extraordinary circumstances and passengers need to stay overnight at their departure point. More importantly, the Parliament's rapporteur believes that there should not be a limit to the number of nights that would be compensated, unless the passenger organizes his accommodation himself (and only then the limit is set at 3 nights). (Amendment 69)

Moreover, the Parliament's rapporteur suggests that the definition of a 'ticket price' should encompass the following: "The ticket price always includes costs for the check-in, the provision of the tickets and the issuing of the boarding card, the carrying of a minimum luggage allowance and essential items, as well as all costs related to payment, such as credit card costs". (Amendment 25) The definition of 'denied boarding' should encompass cases in which the flight's departure time has been moved forward, due to which passengers might have missed that flight. (Amendment 23) On the other hand, the definition of 'tarmac delay' was changed so that the delay is not counted from the start but rather from the end of the boarding process of passengers. (Amendment 27) The Regulation's scope excludes such air travel that allows passengers to travel for free or at a reduced fare not available to public, which doesn't, however, apply to air tickets issued under a frequent flyer programme or other commercial programmes of air carriers. (Amendment 29) This provision could exclude such passengers from its benefits who have won free air tickets in competitions.

The Parliament's review upholds the Commission's proposal to grant passengers a right to use their return ticket in case they have not take the outward journey, also in case when they were denied boarding on the outward journey. (Amendment 33) The right to have the spelling mistakes on a boarding card/ air ticket corrected is upheld as well - up until 48 hours before departure without any additional charge. (Amendment 34)

Amendment 37 intends to strengthen information rights in case of flight cancellation by stating that passengers should be fully informed of their rights and of possible alternative transport modes. Amendment 38 clarifies the definition of 'extraordinary circumstances' that allows air carriers to forgo payment of compensation by clearly insisting that two conditions need to be fulfilled cumulatively: the cancellation is caused by extraordinary circumstances AND it could not have been avoided even if all measures had been correctly taken. As the rapporteur states: "The word ‘correctly’ leaves less room for interpretation regarding all measures that need to be taken in order to avoid cancellation."

The Commission's suggestion that contingency plans should be created by airport management for cases of multiple flight cancellations has been adjusted in favour of consumers, as well. Such plans would now have to be created for airports with an annual traffic of 1.5 million passengers (instead of originally suggested 3 million). (Amendment 39) Additionally, the proposal suggests that air carriers provide proof of sufficient insurance to ascertain that they would be able to reimburse passengers in case of their insolvency. (Amendment 42)

The passengers right to disembark the plane when the flight was delayed for at least 5 hours on the tarmac has been strengthened by reducing the time allowing for such disembarkation to 2 hours. (Amendment 51) The passenger who misses a connecting flight as a result of delay etc. of the previous flight, should be offered assistance, compensation etc. by the air carrier of the delayed flight. (Amendment 52) The passengers are also granted a new right to organise their own re-rerouting and then to claim compensation therefor if the air carrier fails to offer the choice of re-rerouting . (Amendment 65)

The Transport Committee will vote on this report on 14 November. (Strengthening air passengers' rights while providing legal clarity to airlines)

One step forward towards a mortage credit directive

On Wednesday, the European Parliament gave broad support to the pending proposal for a Mortgage Credit Directive, which, if everything works according to plans, should come into force in the spring of 2014. 

While not all loan-seekers will be enthusiastic with this intervention, the directive is aimed at two quite important objectives:

1) facilitating the creation of a single market for mortgage loans;

2) preventing the recurrence of crises in the housing market such as the ones that hit fiercely Spain and Ireland over the last few years.

How should these objectives be achieved? 

First, and this is the part credit consumers might be worried about, the Directive introduces European standards for creditworthiness assessments: the effect of this on consumers is likely to vary according to the state where they live. At the same time, better information and decision-making are pursued by the introduction of a standard information sheet, which should make comparison easier, and a 7-day reflection period. 

The directive also foresees a general right to early repayment, which the member states might subject to the payment of a fair compensation to the credit provider. 

As concerns brokers and intermediaries, while the directive  imposes a set of rules of conduct (concerning inter alia pay structure and the obligation to provide prospective lenders with "worst-case-scenario" information) meant to prevent conflicts of interests and encourage "fair" lending practices, new chances will be provided by the introduction of a "pass-porting regime"- i.e. the chance of seeing one's trade authorization recognized in the whole Union. 

The directive also introduces "good practices" on the sensitive issue of arrays and foreclosures, encouraging banks to consider their debtor's position carefully before undertaking irreparable actions and asks states to make sure that incorporation of the asset takes place at "best effort" price. 

In addition, national rules of contract law might have to be adapted to provide parties the possibility to stipulate that "returning" the collateral- the house- will suffice to extinguish the debt. 

Major telecom sector reform

Yesterday the European Commission adopted a major and quite controversial telecom sector reform, which is supposed to put an end to mobile phone roaming charges. (Commission proposes major step forward for telecoms single market) As Jose Manuel Barroso, European Commission's President, announced a real single market in the telecommunication and digital sector is vital to ascertain that Europe is not left behind. A single market for goods is not sufficient any longer. If the proposal is accepted by other European institutions, consumers travelling within European borders as of July 2014 could be offered 'roam like at home' packages to cover all Europe or be allowed to subscribe to separate roaming service providers with the same SIM card. The goal: ending roaming charges for incoming calls. In order to achieve that, European Commission intends to permit all telecom companies to operate in any Member State, without the need to apply for national permits. In exchange, telecom companies will need to cap international outbound calls the same way as a long-distance connection in the country where from consumer's phone subscription originates (not more than 0.19 cents per minute). Already telecommunication companies are voicing their displeasure with this proposal, saying that it goes too far. Aside roaming the European Commission announced its plans to further ensure net neutrality - by better coordination of frequencies to spread 4G networks in Europe, making sure that specialist net service providers do not restrict access to the network for their rivals etc. Finally, the proposal touches upon the consumer contracts' complexity and calls for the use of plain-language in contract drafting, facilitating switching of telecom providers and ending the fixed term contracts for mobile phones (of 2 years). (Europe lays out its most ambitious reform plan yet: no more roaming premiums, enforced net neutrality, and more)

Solvency II on hold

Another new legislative proposal that has been pushed on the European Parliament's agenda is the suggested amendment to Solvency II Directive 2009/138/EC from 2009 (through Omnibus II Directive). On the European Commission's website we may still read that the proposed changes are likely to apply as of 1 January 2014. However, the vote in the European Parliament has been delayed by five months until 11 March 2014 and since by then the new European elections would be approaching, the election preparations may further delay the implementation of these rules ("Solvency II kicked into long grass"). The proposed changes were supposed to update the existing rules for the insurance companies regarding their supervision, financial reporting, finance techniques and risk management, among others making sure that consumers are protected due to insurers keeping enough money in reserve, proportionally to the risks they were underwriting. Since insurance companies do not hide their unhappiness with this proposal, on top of the news from the tobacco world, it is not hard to imagine that some heavy lobbying took place also in respect of this proposal to delay its adoption

.

On lobbying in Brussels

It is not a secret that international companies lobby heavily the European institutions in Brussels. However, the scale of that lobbying may astound even the most cynical of our readers. The Guardian reported last week on documents leaked to The Observer from the international tobacco giant - Philip Morris, which reveal what measures it undertook to prevent new EU regulations regarding health warning labels on cigarettes' packaging from becoming reality ("Tobacco giant Philip Morris 'spent millions in bid to delay EU legislation'"). We have previously reported on the proposal to change existing labelling rules in order to make cigarettes even less attractive to European consumers (Plain packaging of tobacco products; Smoke-free EU; Smokers beware). This week the European Parliament was supposed to vote on the new law that would review the existing 2001 Tobacco Products Directive (in our previous posts we've discussed the proposed changes), however, the vote has been postponed until 8 October. You could think that a month should not make a difference, however, if the revisions of the Directive are not adopted by January 2014 they may not be adopted at all, since in January the presidency of the European Union goes from Lithuania (pro-regulation of stricter tobacco products measures) to Greece (against-regulation). This delay in the legislation process is definitely a win for the lobby sector in Brussels, and no wonder since according to the Guardian just Philip Morris International (PMI) employed 161 people (!) to oppose the proposed changes. The employees of the PMI met at least once with 233 MEPs (31% of the total) and spent almost 1.25 million GBP in a year for these meetings. I was less surprised to find out that PMI commissioned academic and economic studies to promote its claims and give negative opinion to European studies. Knowing what a hard battle is being fought behind the scene, I am even more interested in following the fate of the proposed review.

"Private Law and the Basic Structure of Society" conference

Our colleagues Lyn Tjon Soei Len and Josse Klijnsma are organising a private law (theory) conference on 31 January 2014, 8:30-18:00: "Private Law and the Basic Structure of Society". The conference participants will discuss private law theory through political philosophy and political philosophy through private law theory, seeking to broaden their understanding of the relationship between social justice and private law. Among the conference presenters there are many famous private law theoreticians and at least one of the speakers will discuss consumer law: Horst Eidenmüller will present a paper 'Against False Settlement: Designing Just and Efficient Consumer Rights Enforcement Systems'. The conference is free of charge and the registration has just opened.

Rights and remedies - AG Mengozzi's opinion in Case C-413/12 ACICL v. Anuntis

While EU law on the one hand requires Member States to provide effective remedies for the protection of Union law (Article 19 TEU), on the other hand it shows respect for national rules of procedure that fall outside of the scope of EU competences. This raises the question how a balance should be struck between effective protection of European rights and national procedural autonomy. In the field of European consumer law, accordingly, the Court of Justice of the EU is regularly asked to assess whether national laws offer adequate means to enforce consumer protective rules. Advocate-General Mengozzi today delivered his opinion in a case of this type, namely that of the Asociación de Consumidores Independientes de Castilla y Léon (ACICL) v. Anuntis Segunda Mano SL (not yet available in English).

The case concerns a claim of the regional consumer organisation ACICL against the Anuntis company to have some of the latter's general terms and conditions (as used on its website) declared void because of their unfair nature, and to impose an injunction against Anuntis to prevent further use of these terms. In first instance, the judge in Salamanca who was presented with the dispute held he was not competent to hear the case, since the relevant rules of procedure stipulated that the claim should be brought before the competent court in the place of residence of the defendant. The judge added that this decision was open to appeal, even if the national law did not provide any rules to that effect. The court hearing the appeal considers this interpretation of Spanish law to raise the following preliminary questions:

'Does the protection afforded to the consumer under Council Directive 93/13/EEC on unfair terms in consumer contracts allow the Audiencia Provincial, as a national court of appeal, to hear and determine, in spite of the absence of any relevant domestic legal rule, the appeal brought against the decision of the court of first instance assigning to a court of the place where the defendant has its address territorial jurisdiction to hear and determine the action for an injunction brought by a consumer association of restricted territorial scope, which is not associated or federated with other associations and which has a small budget and a small number of members?

Must Articles 4, 12, 114 and 169 of the Treaty and Article 38 of the Charter of Fundamental Rights of the European Union, read in conjunction with Directive 93/13 and the case-law of the Court of Justice relating to the high level of protection of the interests of consumers, as well as to the practical effect of directives and the principles of equivalence and effectiveness, be interpreted as meaning that the court of the place where that association has its address, and not the court of the place where the defendant has its address, is to have territorial jurisdiction to hear and determine an action for an injunction against the use of unfair terms, to protect the collective or general interests of consumers and users, brought by a consumer association with restricted territorial scope, which is not associated or federated with other associations and which has a small budget and a small number of members?'

AG Mengozzi is of the opinion that the relevant procedural rules in this case survive the Court's normal 'effectiveness and equivalence' test. In casu, the test boils down to one on effectiveness only, since the equivalence of the handling of cases under EU law and under national law is not contested. As regards the effectiveness of the Spanish rules of procedure that are at stake here, the AG observes that these rules do not completely prevent ACICL's access to justice and can, therefore, not be considered to make the enforcement of EU rights 'impossible or excessively difficult'. ACICL's financial difficulties to pursue a claim in a different region are of no relevance here, according to the AG, since national rules of procedure are based on objective considerations regarding the costs of litigation rather than on subjective financial problems of litigating parties.

As regards the second question, AG Mengozzi expresses doubts concerning the CJEU's competence to rule on this point, since it will lose its practical relevance after a negative answer is given to the first question. Still, he adds that also on this matter no fundamental problems of effective protection of EU rights are to be foreseen, taking into account that EU law does not prescribe that consumer protection (including rules on jurisdiction) should be extended to consumer organisations.

Relatively little attention is paid to the national court's reference to the EU Charter of Fundamental Rights. Concerning effective remedies in EU law, legal scholarship has suggested that Article 47 of the Charter might provide a framework for improving the (individual and collective) enforcement of consumer rights. For more on this topic, I refer to one of my working papers, which contains further references to the work of, among others, Norbert Reich and Hans Micklitz.

Master of European Private Law, University of Amsterdam

The new academic year started this week and the Law Faculty of the University of Amsterdam is full of life again. For any readers of ours who are still working on their law degrees, you may be interested in our international, English-speaking master program: European Private Law. The next application deadline is 1 April 2014, so there is still some time to gather all the documents, to fill out all the required forms (available as of December 2013) and to improve your English. I might see you then in my European Consumer Law course next fall.

The faculty in the summer and in the winter:

Personalised service wanted, preferably without having to share personal data

A new worldwide survey conducted by Infosys on consumers attitude to sharing their personal data shows an interesting pattern that has developed in past years. On the one hand, consumers are willing to share their data online with doctors, banks, retailers - in order to get better service. On the other hand, consumers want to share only particular personal data and only upon certain conditions being met. The contradictions in the reasoning are clear - while 78% of consumers feel that they would positively respond to personal, targeted ads, only 16% is willing to share social media profile information; while 63% consumers would like their banks to inform them about their account and transactions through alerts to mobiles/smart phones, only 32% share information on these devices with any frequency; moreover, while 88% of consumers declare more trust to doctors who have online access to their medical files, only 56% would be willing to share personal medical history. (Consumers worldwide will allow access to personal data for clear benefits, says Infosys study)

 

Digital Consumer from Infosys