Tuesday 14 May 2024

Blog team changes

Dear Readers, we wanted to update you on a few changes that have taken place in our merry blog team. After a few years of productive collaboration with Agnieszka Jabłonowska (Leiden University), she has decided earlier this year to give up this side project. It was a pleasure working with Agnieszka and we keep hope she may return to blog writing in the future. Since then, we have expanded our authors' team, thus you may shortly expect to see posts by new authors. Warm welcome to our three new contributors (in order of joining us): Marina Federico (Ca' Foscari University of Venice), Jie Ouyang (University of Groningen) and Dominik Dworniczak (EUI). 

Friday 10 May 2024

Reversed burden of proof under strict conditions to exercise early repayment rights of consumer credit- the CJEU in C-326/22

Case C-326/22 Z  arose regarding Article 16(1) of Directive 2008/48/EC on consumer credit and the right to early loan repayment, which provides consumers with a right to repay their loan early and to the costs of the loan reduced accordingly.

The facts

Six consumers assigned to Z their claims regarding 15 consumer credit contracts that were repaid early, who intended to claim the total cost of credit reduction. However, under the applicable Polish law, Z needed to prove the claim's existence, which could have been only done by reference to the contract, but the consumers did not have the contract anymore. Consequently, Z requested access to the contracts, which the bank refused, saying there was no legal duty to do so. However, the referring national court rightly noted that the absence of such duty of the bank would lead to a contrary result to Article 16(1), which may, as in this case, effectively make the right to cost reduction unenforceable.

The legal question

The referring Polish court asked the CJEU whether Article 16(1), read in the light of the principle of effectiveness of EU law, must be interpreted as meaning that a consumer may request, from the creditor, a copy of that agreement and information concerning the repayment of the credit not featured in the contract when this is necessary to verify the calculation of the sum owed by the creditor connected to the early loan repayment right and for allowing that consumer to bring an action for the recovery of that amount.

The ruling

The answer was not apparent from the wording of Art. 16 (1). However, the CJEU noted that in interpreting the provisions of EU law, it is necessary to consider not only the wording but also the context of the provision and the objectives it aims to pursue, which is, achieving a high level of consumer protection.

Crucial is paragraph 26:

In that regard, it is relevant that Article 16(1) of Directive 2008/48 implies that the consumer is entitled to a reduction in the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the agreement, without needing to adduce evidence other than that of the early repayment of the credit. It follows that it is for the creditor to provide the information necessary to establish the amount of the reduction in the total cost of the credit to which the consumer is entitled.

If the information is unavailable in the contract, the creditor must provide that information to the consumer where it is necessary to calculate the amount owed by the creditor (para 27).

The CJEU ruled that Article 16(1) must be interpreted as meaning that a consumer may request, from the creditor, a copy of that agreement and all information concerning the repayment of the credit not featured in the agreement itself which is necessary for verifying the calculation of the sum owed by the creditor under the reduction in the total cost of the credit due to its early repayment and for allowing the consumer to bring a possible action for the recovery of that amount.

The approach was justified by the banks' duty to provide information to consumers via Article 10, which ensures a high level of consumer protection. This duty includes information to be incorporated into the contract and a copy of the agreement provided to the consumer. A credit agreement must be drawn up on a durable medium that should enable the consumer to easily access and store the information provided.

Our analysis 

This rare interpretation of Article 16 follows the only case so far (Lexitor). A seemingly very technical judgment on access to documents turns into a decision that establishes an important legal principle. The court effectively reversed the burden of proof in exercising the rights connected to early loan repayment. Depending on how we define the burden of proof, this might not technically be a reversal of the burden. However, it is based on the same idea of easing the burden of proof. This is based on an understanding that the consumer cannot access the documents and that this access is an essential condition for realising the consumer's rights. The judgment is a significant development, given that the burden of proof was only previously reversed in connection to Article 5 -providing evidence that the creditor complied with pre-contractual information duties (CA Consumer Finance). However, the reversal of the burden of proof here has important limits. It only applies when:

1)    the consumer does not have a copy of the credit agreement or if the agreement does not contain the relevant information, and

2)  the information is necessary for verifying the calculation of the sum owed by the creditor to reduce the total cost of credit due to its early repayment, and

3)   the information is necessary to allow the consumer to take action to recover the sum owed by the creditor. 

The question is whether the judgement will have a broader effect of reversing the burden of proof regarding Article 10 more generally. This seems to be the direction, but it is yet to be confirmed by further CJEU judgments. 

Thursday 9 May 2024

Financial services concluded at a distance in digital age - the new Directive 2023/2673

In 2023, European lawmakers were busy improving the protection of consumers in financial services. In addition to the new Directive 2023/2225 on consumer credit (on which we reported here), the regime distance marketing of financial service was also revamped. The new Directive 2023/2673 on financial services contracts concluded at a distance repeals the current Directive 2002/65/EC. The Directive entered into force on 18 December 2023, Member States are obliged to implement it by 19 December 2025 and apply the rules from 19 June 2026.

The 2023 Directive was driven by the need to ensure consumer confidence and trust in digital transactions. This need was underscored by the rapid development of digitalisation and the evolving means of distance communication, which have revolutionised how we use technology since the creation of the 2002 Directive. Digitalisation has also changed how products are marketed to consumers, with new products emerging in the online environment.

The other rationale was the progressive introduction of other sector-specific legislation that significantly overlapped the current, 2002 Directive, creating legal uncertainty.

The 2023 Directive clarifies its nature as a horizontal, general instrument that remains a safety net for matters not covered by other EU instruments or subject to exemptions. The Directive is a maximum harmonisation instrument and applies only to contracts concluded at a distance. Importantly, it amends Directive 2011/83/EU, which currently does not apply to financial services.

The Directive follows the current information approach to consumer production, detailing pre-contractual information duties and making the associated right of withdrawal more effective by mandating an easy-to-find 'withdrawal function' on the service provider online interface that should be continuously available during the withdrawal period. In laying down the rules on adequate explanations, the 2023 Directive adds the right to request human intervention when the trader uses online tools such as chatbots. 

Finally, the 2023 Directive recognises the realities of the online world and the difficulties in making informed decisions, thus protecting consumers against dark patterns or deceptive design patterns.

The new directive is a welcomed development of EU consumer law. It is based on the realities of the digital world and aims to tackle the most pressing problems for consumer decision-making.

Friday 3 May 2024

Validity of limitation periods for claiming mortgage costs back from banks - CJEU in Caixabank (C-484/21) and Banco Santander (C-561/21)

While many consumer lawyers are currently busy analysing the details of the opinion of AG Emiliou in Compass Banca case (C-646/22) (and we will add our own analysis of it in the coming days, too), on the same day (April 25) two judgments were issued by the CJEU clarifying the consequences of terms' unfairness on restitution of costs paid by consumers. Both in Caixabank (Délai de prescription) (C-484/21) and Banco Santander (Départ du délai de prescription) (C-561/21) Spanish courts posed questions concerning validity of various limitation periods for consumers raising a restitution claim for 'the costs clause'. The costs clause included in mortgage loan contracts obliged consumers to pay all the costs relating to the mortgage's creation. This may encompass notary, registry and agency fees.

The CJEU refers back to the Gutiérrez Naranjo and Others case (C-154/15 - with our comment here) to reaffirm the obligation of national courts to facilitate restitution of amounts consumers paid, which were imposed by an unfair contract term (e.g. paras 16-17 in C-484/21). Could national limitation periods stand in the way of such consumer claims? Previously, the CJEU already confirmed that limitation periods could be set in national laws as applicable to restitution claims brought by consumers in enforcing their rights from UCTD, however, these cannot make it in practice impossible or excessively difficult to exercise such rights (para 27 in C-484/21).

In short, regarding limitation periods for restitution claims, which are raised by consumers following a declaration of unfairness of terms setting the payment obligation, CJEU decided as follows:

  1. They cannot start running from the date of the payment, irrespective of whether consumers were or could reasonably have been aware of the unfairness of terms at the time of the payment, or before the term was found to be void (paras 30, 32, 34-35 in C-484/21).
  2. They cannot start running from the date on which the national supreme court delivered a judgment in a separate, earlier case, declaring a corresponding term unfair (C-484/21 and C-561/21). To pay attention to: The CJEU highlights here the lack of obligation for service providers to inform their consumers that terms in their contracts are equivalent in scope to terms in other contracts that have been found unfair (para 41 in C-484/21). Further, it mentions that average consumers cannot be 'required not only to keep himself or herself regularly informed, on his or her own initiative, of decisions of the national supreme court relating to standard terms contained in contracts of a similar nature to those which or she has concluded with sellers or suppliers, but also to determine, on the basis of a judgment of a national supreme court, whether a term included in a particular contract is unfair' (para 45 in C-484/21).
  3. They cannot start running on the date of the CJEU's judgments, which confirmed, in principle, that limitation periods for actions for restitutions are compatible with EU law (provided they are equivalent and effective) (C-561/21). (for similar as above reasons + the fact that CJEU often leaves determination of unfairness to national courts - para 58 in C-561/21)
  4. They can start running on the date on which the decision about unfairness of a term in a given case becomes final, without prejudice to the trader's right to prove that consumers were or could have been reasonably aware of the unfairness before the decision was made (paras 35-38 in C-561/21).

Thursday 18 April 2024

Unintentionally becoming an apparent producer - AG Campos Sánchez-Bordona's opinion in Ford Italia (C-157/23)

Photo by Benjamin Scheidl on Unsplash
AG Campos Sánchez-Bordona elaborated today on the notion of a producer under the Product Liability Directive (Directive 85/374) in the case Ford Italia (C-157/23). A consumer in this case purchased a Ford Mondeo car from Stracciari, Ford's dealer in Italy. The car itself was manufactured by Ford WAG, a German company, which used another company, belonging to the same company group, - Ford Italia - to distribute it to Stracciari. After the consumer was involved in a traffic accident, during which the airbag did not work, they brought a claim against the seller - Stracciari, and Ford Italia. The latter claimed their 'supplier' status and identified Ford WAG as the producer. Still, Italian courts allocated producer's liability to Ford Italia in the cases before them in both instances. 

As AG Campos Sánchez-Bordona also agrees here with, using Art. 3(1) PLD that is considering Ford Italia as an 'apparent producer' instead of Art. 3(3) PLD, which only allows to hold the supplier liable if they did not timely identify the producer, is what the CJEU should consider here. The referred question asks then whether if the supplier has not physically placed its own name, trader mark or other distinguishing feature on the consumer product, they could be held liable as a producer on the ground that they share in whole or in part the same name, trader mark or other distinguishing feature as the producer. How broad then is the concept of an 'apparent producer'?

AG Campos Sánchez-Bordona advises the CJEU to consider that in the given case not only the producer and the supplier share the same name (which allows the supplier, Ford Italia, to raise consumer confidence, taking advantage of the reputation of Ford brand - para 39) , but that they also belong to the same group of companies, operating under the same emblem (para 50), and that the car bears the trade mark the characterises both companies. As such, the consumer could have considered Ford Italia as presenting itself as a producer, which could lead to their liability under the PLD. '(...) the consumer cannot be expected to discover, by his or her own means, who the (actual) producer is, where that producer is distinct from the supplier which presents itself with those characteristics." (para 41). This according to AG Campos Sánchez-Bordona could lead to to joint and several liability of actual producer and apparent producer (para 48).

The AG Campos Sánchez-Bordona draws parallels to the recent Fennia v Philips case (C-264/21 - with our comment), however, in that case both Saeco and Phillips names were placed on the consumer product, which made the reference to the 'apparent producer' easier. The second invoked case, O'Byrne (C-127/04), made it easier to consider as a producer another company, a distributor, belonging to the same company group. However, there, the distinction with the current case was that in O'Byrne the actual producer could no longer have been sued, due to the time limits having passed. 

As AG Campos Sánchez-Bordona mentions in para 31 the given case requires careful weighing of the consumer protection interests, which the broader interpretation of the notion provides, against interests of traders involved in the production and supply chain. 

I am not fully convinced whether in the current case the latter should not have prevailed. Considering that the supplier, Ford Italia, promptly identified the actual producer, it seems that the consumer interests could have been protected by national procedural laws allowing either adding to the procedure another party (Ford WAG) or raising a new claim against them. However, holding the supplier liable as an apparent producer under the circumstances of this case may expose suppliers to claims they have not accounted for either by insurance or in their B2B agreements within the production and supply chain. Let's see what the CJEU decides in this case.

Thursday 11 April 2024

May airlines use T&Cs to prohibit passengers from assigning their rights to claim damages? - CJEU in Air Europa Lineas Aéreas (C-173/23)

In today's Air Europa Lineas Aéreas judgment (C-173/23) the CJEU looked into the application of the Unfair Contract Terms Directive (UCTD) to contracts concluded between air passengers and air carriers. Specifically, the passenger in case suffered damages as a result of a delay in receiving his checked-in baggage. He assigned his claim for damages against the air carrier (Air Europa) to a third party (Eventmedia). The air carrier disputes the transfer of rights to Eventmedia, claiming that assignment of passenger rights is prohibited by a clause in its general conditions of carriage (para 12). The referring court had sufficient evidence to declare this clause unfair ex officio but had doubts whether it could do so procedurally. First, the consumer was not part of the judicial proceedings, as he was represented by the assignee of his rights (whose standing was contested). Second, if the court declared the clause unfair the consumer, still remaining outside the judicial procedure, would not have received a chance to object to the application of this finding. 

Ex officio unfairness testing after consumers assigned their claims

First, the CJEU reminds that it has already previously declared (in the DelayFix case - C-519/19) that the UCTD's application is based on the capacity of the parties when they were concluding a contract (B2C) rather than the identity of parties entering into a dispute (paras 17-18). Therefore, the UCTD applies to more cases than just the ones, in which a dispute is between B2C contractual parties (para 25).

The CJEU reminds further that the ex officio judicial mechanism aims to compensate for the imbalance between consumers and professional parties (para 29). Other procedural issues remain in the discretion of the Member States, provided that they comply with the principles of equivalence and effectiveness (para 31).

To comply with the principle of equivalence here, the national court needs to determine whether national law allows it to ex officio assess whether a contractual term is contrary to national rules of public policy. If the answer is affirmative, the unfairness assessment also needs to take place ex officio (paras 34-35). This conclusion is not impacted by the consumer's presence in the judicial procedure, as if conditions for the applicability of the UCTD have been fulfilled (e.g., contract concluded B2C) its provisions benefit from having been assigned an equivalent status to domestic rules of public policy.

The assessment differs regarding the observance of the principle of effectiveness, as this considers the specifics of each procedure and the role that the contested legal provision plays in it. Specifically, " (...) whether a national procedural provision makes the application of EU law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, and, where relevant, the principles which lie at the basis of the national legal system, such as the protection of the rights of the defence, the principle of legal certainty and the proper conduct of proceedings (...)." (para 37). Here then the fact that the procedure occurs between two professional parties weakens the need to provide as much protection against unfair terms, as if a consumer was one of the parties in the dispute, as there should be more balance between parties in the dispute (para 38). The principle of effectiveness does not require then the national court to test unfairness ex officio (para 39), unless the professional assignee of the consumer's claim had no real chance to rely on the unfairness in the procedure (para 40).

Consequences of unfairness in light of audi alterem partem when consumers are not part of the judicial process

When national courts find a term unfair ex officio, they follow the rules of audi alterem partem, of a fair hearing, by apprising parties in the dispute of court's findings and giving them an opportunity to debate these and to be heard (para 44). This applies also in case the dispute is between the assignee of the consumer rights and it is this assignee that needs to be informed of the unfairness finding, alongside the trader (para 46). As the consumer is not a party to the dispute, they do not need to be informed of the court's finding of unfairness and do not need to address it (para 49). It is the assignee of their rights that may object to it instead (para 47), although, obviously, they are unlikely to do so as they would then lose standing in the procedure (para 48).


The first part of the judgment has enormous practical relevance, as air passengers commonly assign their rights for compensation to third parties. It is, therefore, important for the effectiveness of passenger protection framework that air carriers could not block this process by prohibiting the transfer of rights in their general terms and conditions. This judgment will help assure this further, following the previous judgment in the DelayFix case (see our comment here), as professional assignees of consumers' claims will be able to raise unfairness of the prohibition of transfer of rights themselves. If this is prohibited or hindered, they could then rely on the breach of the principle of effectiveness and expect national courts to test unfairness ex officio (pursuant to para 40). This way assures more legal certainty than relying on the ex officio unfairness testing due to the principle of equivalence, as it could differ between the Member States whether ex officio testing of measures of public policy was allowed.

Tuesday 2 April 2024

How the CJEU's ruling in C-604/22 may transform online advertising: a closer look at the IAB Europe case

In March, the CJEU issued a ruling (Case C-604/22 IAB Europe) that has sparked a lot of discussion. The ruling addresses certain practices related to online advertising in Europe, particularly the collection of personal data for the purpose of behavioural advertising.

Facts of the case

The Interactive Advertising Bureau Europe (IAB Europe) is a non-profit association that represents digital advertising and marketing businesses at the European level. IAB Europe's members include companies that generate significant revenue by selling advertising space on websites or applications. Several years ago the association developed the Transparency & Consent Framework (TCF) to promote General Data Protection Regulation (GDPR) compliance when using the OpenRTB protocol (a popular system used for "real-time bidding", which means it quickly and automatically auctions off user information to buy and sell ad space on the internet). The TCF consists of guidelines, technical specifications, instructions, protocols, and contractual obligations. The framework is designed to ensure that when users access a website or application containing advertising space, technology businesses representing thousands of advertisers can instantly bid for that space using algorithms to display targeted advertising tailored to the individual's profile.
Image by "storyset" (Freepik)

The TCF was presented as a solution to bring the auction system into compliance with GDPR (para. 21, 22). However, before displaying targeted advertisements, the user's prior consent must be obtained. When a user visits a website or application, a Consent Management Platform (CMP) appears in a pop-up window. The CMP enables users to give their consent to collect and process their personal data for pre-defined purposes, such as marketing or advertising, or to object to various types of data processing or sharing of data based on legitimate interests claimed by providers, as per Article 6(1f) of the GDPR. The personal data relates to the user's location, age, search history, and recent purchase history (para. 24). In other words - the TCF facilitates the capture of user preferences through the CMP. And these preferences are coded and stored in a "TC string" (which is a combination of letters and characters), and then shared with organizations participating in the OpenRTB system, indicating what the user has consented/ objected to. The CMP places a cookie on the user's device, and when combined with the TC string, the IP address of the user can identify the author of the preferences. Thus the TCF plays a crucial role in the architecture of the OpenRTB system as it is the expression of users' preferences regarding potential vendors and various processing purposes, including the offering of tailor-made advertisements (para. 25, 26).

Since 2019, the TCF model has faced numerous complaints to the Belgian Data Protection Authority (DPA) regarding its GDPR compliance. IAB Europe was criticized for providing users with information through the CMP interface that was too generic and vague, preventing users from fully understanding the nature and scope of data processing and thereby maintaining control over their personal data. Furthermore, IAB Europe was accused of failing to fulfil certain obligations of a data controller, including ensuring the lawfulness of processing, accountability, security, and adhering to data protection privacy by design and by default rules (more details about the proceedings can be found on the DPA's website). Consequently, the DPA concluded that IAB Europe did not meet its GDPR obligations and imposed an administrative fine of €250,000. Additionally, it mandated corrective actions to align the TCF with GDPR standards. 

IAB Europe disagreed with the decision and challenged it before the Belgian court. According to IAB Europe, it should not be considered a data controller for recording the consent signal, objection, and preferences of individual users through a TC string. Thus the association should not be obliged to follow data controllers' obligations under GDPR. IAB Europe also disagreed with the DPA's finding that the TC string is personal data within the meaning of Article 4(1) of the GDPR. Specifically, IAB Europe argued that only the other participants in the TCF could combine the TC String with an IP address to convert it into personal data, that the TC String is not specific to a user and that IAB Europe cannot access the data processed in that context by its members (para. 28).

CJ's ruling

The Court has confirmed the key aspects of the DPA’s decision, emphasizing, among other things that:

1. the TC String holds information that pertains to an identifiable user and, thus, qualifies as personal data under Article 4(1) of the GDPR. Even if it doesn't contain any direct factors that allow the data subject to be identified, it does contain the preferences of a specific user relating to their consent to data processing. This information is considered to be related to a natural person (para. 43). If the information in a TC String is linked to an identifier, such as the IP address of the device, it could be possible to create a profile of that user and identify a particular person (para. 44). The fact that IAB Europe cannot combine the TC String with the IP address of a user's device and doesn't have direct access to the data processed by its members is irrelevant. As the Court stated, IAB Europe can require its members to provide it with the necessary information to identify the users whose data is being processed in a TC String (para. 48). This means that IAB Europe has reasonable means to identify a particular natural person from a TC String (para. 49).

2. IAB Europe, together with its members, is considered a 'joint controller' when it determines the purposes and ways of data processing. Why? According to the Court, the TCF framework aims to ensure that the processing of personal data by certain operators that participate in the online auctioning of advertising space complies with the GDPR. Consequently, it aims to promote and allow the sale and purchase of advertising space on the Internet by such operators. It means that IAB Europe has control over the personal data processing operations for its own purposes and, jointly with its members, determines the purposes of such operations (para. 62-64). Moreover, the TCF contains technical specifications relating to the processing of the TC String, such as how CMPs need to collect users' preferences, how such preferences must be processed to generate a TC String, etc. (para. 66). If any of IAB's members do not comply with the TCF rules, IAB Europe may adopt a non-compliance and suspension decision, which could result in the exclusion of that member from the TCF (para. 65). Therefore, the Court concluded that IAB Europe also determines the means of data processing operations jointly with its members (para. 68), so it meets the criteria of a data controller under Article 4(7) of the GDPR. However, this should not automatically make IAB Europe responsible for the subsequent processing of personal data carried out by operators and third parties based on information about the users' preferences recorded in a TC String (para. 74-76).

What could be the consequences of the ruling? 

The Court confirmed that the IAB Europe, due to the role and significant influence it has over the processing of data by its members for the purposes of creating user profiles and targeting them with personalized advertising, should be held responsible for how this process is organized. And it is organized in a way that is hardly transparent to users. While it is up to the national court to ultimately examine the compatibility of the Belgian DPA's decision, it can be expected that the court will affirm the main conclusions of the Belgian authority's decision. 

It appears unlikely that the CJ's ruling will lead to the elimination of the intrusive pop-ups on many websites, which often rely on dark patterns and manipulative techniques to coerce consent for data processing for marketing purposes. Nevertheless, the advertising industry should place a greater emphasis on enhancing transparency and providing users with more control over their personal data. This could include the development of more user-friendly and informative consent mechanisms, making it easier for users to understand what they are consenting to and how to exercise their rights over their data. The ruling is also expected to impose further restrictions on behavioural advertising practices, particularly those dependent on real-time bidding and the widespread sharing of personal data without explicit, informed consent from users. 

Vouchers, an acceptable reimbursement? - CJEU in C-76/23 (Cobult)

On March 21, the CJEU published the most recent judgment interpreting provisions of Regulation 261/2004 on air passenger rights in the case Cobult (C-76/23) concerning the possibility of reimbursing passenger's ticket cost through a voucher.

By Lu Lettering from Pixabay  
Many of our readers may have experienced a flight cancellation over the past couple of years, not limited to Covid-19-related causes. In case of a cancellation passengers may choose to have their cancelled flight rescheduled (re-routing) or have their ticket costs reimbursed, pursuant to Article 8 of the Regulation 261/2004. Reimbursement could happen via various means, including via a voucher but the latter only upon passenger's "signed agreement", pursuant to Article 7(3). Thus the reimbursement by a travel voucher "is presented as a subsidiary means of reimbursement" (para 20). 

In this case, TAP Air Portugal invited passengers to fill an online form to claim reimbursement of ticket costs, which would lead to them being immediately compensated in travel vouchers. The online form included conditions of acceptance, with text clarifying that acceptance of a travel voucher precluded further reimbursement claims in other forms. An alternative way of reimbursement was available, if passengers contacted their customer service department and allowed them to examine case facts (paras 8-9). 

The CJEU does not exclude a possibility that passengers could have provided a 'signed agreement' in an online reimbursement form. A 'signed' agreement does not need to include the consumer's signature on an online form they are submitting to the air carrier for reimbursement (para 34). However, certain conditions would need to be met. First, passengers need to be able to give their free and informed consent to reimbursement via a travel voucher (para 22). This will require air carriers to provide passengers with "clear and full information on the various means of reimbursement" of ticket costs (para 30). This condition will not be fulfilled if e.g., air carrier (para 32):

  • leaves any ambiguity on its website, 
  • presents partial information, 
  • writes information in a language that passengers may not be proficient in (e.g. information in this case was given only in English - would this be seen as compliant if many passengers were Portuguese-speaking?), or 
  • if the procedure for claiming monetary payment is unfair if compared to the procedure of claiming travel vouchers e.g. because it contains additional steps.

"(...) the addition of such supplementary steps is liable to render reimbursement by a sum of money more difficult to obtain, and thus to upset the relationship between the two means of reimbursement" (para 33) - this is an interesting conclusion by the CJEU, which follows recent developments in other areas of EU consumer law. For example, when assessing fairness of cancellation process of online subscriptions, we would also check whether there were additional steps included, which made the process more complex than when subscription was concluded.

Wednesday 13 March 2024

1st European Conference of the International Association of Consumer Law (IACL)

Good news for European consumer law enthusiasts: The First European Conference of the International Association of Consumer Law (IACL) will take place this September (17-18) in Cambridge, UK, on the topic of "Global challenges for consumer law and policy in contemporary Europe". The event will also honour the work of Prof. Iain Ramsay. There will be 3 streams devoted to 'Digital environments', 'Financial services' and 'Sustainable consumption'. Looking forward to meeting many colleagues in Cambridge this fall! 

Details of the call for papers may be found at this website.

Saturday 10 February 2024

Limitations to the Action for Restitution after Annulment for Unfairness of the Term - The CJEU in Caixabank (C-801/21 to 813/21)

With ruling of January 25th, the Court of Justice (CJEU) ruled on the consequences of the annulment of an unfair term in mortgage loan agreements and in particular on the limitations that an action for restitution may be subjected to. 

The Provincial Court of Barcelona referred to the CJEU three joined cases dealing with the same circumstances. Consumers concluded mortgage loan agreements in the early 2000s with Spanish banking institutions. They were charged for the notarial and administration charges related to those contracts. All of them brought an action for annulment of the term by which they were charged before the court of first instance in Barcelona, after slightly more than ten years. The banks, instead, objected that the action was time-barred because of the ten-year limitation period established under Article 121-20 of the Catalan Civil Code. In all cases but one, the court rejected the plea of limitation (and ordered to pay back the sums) and the cases arrived on appeal before the Provincial Court of Barcelona, the referring court. 

The case law of the Court of Justice does not exclude that an action for restitution may be subjected to some limitations: the question at stake is rather at which limitations. 

In particular, the referring court asks whether Articles 6(1) and 7(1) of the Unfair Contract Terms Directive must be interpreted as precluding a judicial interpretation of national law according to which, after the annulment of the term like the one at stake, an action of restitution is subject to a limitation period of 10 years which starts to run from the moment the term exhausts its effects (i.e., when the last payment is made), without it being relevant that that the consumer is aware of the unfairness of that term and, ‘if so, whether those provisions must be interpreted as meaning that that knowledge must be acquired before the limitation period begins to run or before it expires’ (para 41). 

To address the question, the Court begins by recalling its case law on limitation: provided that consumers are guaranteed equivalence effectiveness in the enforcement of the rights they derive from Directive 93/13 (i.e., it is not impossible in practice to exercise such rights), an action for restitution may well be limited in terms of time (see BNP Paribas Personal Finance, C-776/19 to C-782/19). 

The case law concerning the limitation period at issue in the main proceedings, observes the Court, has established that to assess whether the consumers were given the possibility to exercise the rights conferred to them under EU law it must be evaluated the duration of the limitation period (ten years), and the ‘mechanism adopted to start the period running’ (para 46). For the starting period to be in compliance with the principle of effectiveness the consumer must have had the ‘opportunity to have become aware of his or her rights before that period begins to run or expires’ (para 48). Whenever, like in the cases at issue, the consumer lacks knowledge regarding the unfairness of the term – irrespective of whether the consumer is aware of the existence of the terms, the limitation period cannot begin to run. The legal assessment is thus decisive. The Court proceeds and states that not only must the consumer have knowledge of the rights he or she holds, but that he or she must also have ‘sufficient time to be able effectively to prepare and bring an action in order to assert those rights’. (para 50). 

The Court thus ruled that Articles 6(1) and 7(1) of the UCTD must be interpreted as certainly precluding a judicial interpretation of national law which would allow the limitation period to start running prior to the consumer knowing that the term is unfair. 

The question of the Catalan court comprised of a second part: is the condition relating to the consumer’s knowledge of the unfairness of the term fulfilled when there exists established national case law on the matter? 

The Court answers the question negatively, by referring to the principle that is at the very core of consumer protection law, namely the asymmetry of information between consumers and businesses. While businesses, by virtue of their profession, are presumed to be highly informed including on the case law concerning the contracts and the specific term at issue, the same cannot apply to consumers ‘given the occasional, or even exceptional, nature of the conclusion of a contract containing such a term’ (para 60).