Friday, 30 April 2010

Proposta di direttiva CE sui diritti dei consumatori – the way forward?

In her speech of 15 March 2010 (see earlier post on this blog) EU Commissioner Viviane Reding stated that the process of review of the Consumer Rights Directive needs a “rational calculation” in order to do justice to the interests of both businesses and consumers. The question is: how should we go about this? Now that the proposal is under review with the Commission and is expected to come before the European Parliament in the near future, it is a good time for reassessment. The challenge was taken up at a conference at the Scuola Superiore Sant’Anna in Pisa on 28-29 April. Under the title “La proposta di direttiva CE sui diritti dei consumatori e il suo impatto sul codice del consumo”, views were exchanged on the potential impact of the Directive on national laws, with particular attention for the Italian consumer code. The main difficulties of the original proposal remain:
• Should the degree of harmonisation aimed for be full, or maximum harmonisation? If so, which issues should be “targeted”: the technical ones only (e.g. information requirements to consumers, length of withdrawal periods) or also substantive issues (e.g. remedies)?
• Would there be a benefit in limiting the Directive’s scope to online transactions, as opposed to face-to-face transactions?
• What does the Directive, and the review process in European consumer law in general, tell us about the place of consumer law in relation to general contract law? In particular, should not more attention be given to the Draft Common Frame of Reference (DCFR) in the review process?
• Which policies prevail in European consumer law (e.g. internal market policy, consumer protection policy) and should they be the guidelines for future legislation?
More conferences are on the horizon… The Commission has taken up earlier academic input on the review of consumer law, so for those who have an interest in the process: now is the time!

Thursday, 29 April 2010

Four ways to fix a broken legal system

TED talk by Philip K. Howard 'Four ways to fix a broken legal system' given in February 2010

Great talk on TED filled with certain ideas on how to improve legal system that could apply also to consumer law.

1. Judge law mainly by its effect on society, not individual situations

'We have the wrong frame of reference. We have been trained to think that the way to look at every dispute, every issue is a matter of individual rights so we peer through a legal microscope and look at everything, is it possible that there were extenuating circumstances (...) and of course the hindsight bias is perfect: there is always a different scenario that you can sketch out where it is possible that something could have been done differently, and yet we've been trained to squint into this legal microscope hoping that we can judge any dispute against a standard of a perfect society, where everyone will agree on what's fair, and where accidents will be extinct, risk will be no more. Of course, this is utopia. This is a formula for paralysis not freedom.'

2. Trust in law is an essential condition of freedom. Distrust skews behavior towards failure.

'If you make people self-conscious about their judgments, studies show, you will make them make worse judgments (...) Self-consciousness is the enemy of accomplishment. Edison stated it best: "Hell, we ain't got no rules around here, we're trying to accomplish something".'

3. Law must set boundaries protecting an open field of freedom, not intercede in all disputes.

'What people can sue for establishes the boundaries of everyone else's freedom. If someone brings a lawsuit over a seesaw, kid fell off the seesaw, doesn't matter what happens in the lawsuit, all the seesaws will disappear.'

4. To rebuild boundaries of freedom, two changes are essential:
  • simplify the law
'The constitution is only 16 pages long it worked pretty well for 200 years.'
  • restore authority to judges and officials to apply law
'We have to rehumanize the law. (...) You have to think that if there is a dispute there is somebody in the society who sees it as their job to affirmatively protect you if you are acting reasonably. That person doesn't exist today.'

Tuesday, 27 April 2010

Complain and it will be given to you

The Commission has been paying more and more attention to consumer behavior in the past few years, trying to discover the influence it could have on effectiveness of the EU laws and regulations. This conference falls within this sphere of DG Sanco's interests. Policymakers will meet with complaints experts and will try to figure out a way to improve understanding on analysing and using complaints data by the Commission in order to improve consumer related policies.

The conference will be web-streamed and presentations and videos will be uploaded to the website after the conference.

Friday, 23 April 2010

NO discount passenger rights for discount airlines

Midday press briefing by Slim Kallas, EC Vice-President in charge of transport

As to the questions whether cheap airlines, e.g. EasyJet, RyanAir, etc. have to pay back the cost of the cancelled flight to the consumers or provide re-routing as well as accommodation, meals, etc. - see ca. 6 minutes down his presentation.

"EU must be respected. Airlines have legal obligations. Air passenger rights will be enforced by national authorities. This is not a voluntary scheme. EU passenger rights apply to all air companies. There are no discount passenger rights for discount airlines. All airlines have legal obligations under EU law."

Since the video plays automatically, I'll post it behind the 'Read more'. Enjoy!

Full Harmonisation in European Consumer Law conference

Conference 'Full harmonisation in European Consumer Law' will take place on 4-5 June 2010 in Frankfurt (Oder)

The conference 'Vollharmonisierung im Europäischem Verbraucherrecht' (yes, it will be held in German) is organized to discuss the forthcoming directive on consumer rights COM (2008) 614 that is still being worked on by the European Commission. One of the most controversial issues related to the proposal of the EC was that this directive was/is supposed to have a full harmonization character. That raised many questions as to the relation of this diretive to national general contractual laws. Therefore, it does not come as a surprise that whole conferences are devoted to this subject matter. The programme of the conference organized by the European University Viadrina may be found here.

Wednesday, 21 April 2010

Your flight has been cancelled - what can you claim back from the airlines?

Memo on Volcanic Ash Crisis published by the European Commission - clear answers as to rights of passengers stranded due to volcanic ash

The European Commission published a short memo in a reply to the volcanic ash crisis, trying to facilitate answers to the frequently asked questions. The first part of the memo concerns the role of the European Commission in solving the crisis and is definitely less relevant from the consumer point of view (it might have been different if the EC had power to clear up the skies, but it does not, so there). The second part concerns the rights of the stranded passengers. I have heard lots of doubts even amongst lawyers in the past few days as to what rights the consumers may make use of taking into account that the non-performance on the side of the airlines was clearly caused by exceptional circumstances or even: 'the power of God'.

The answer is straight-forward:
1. You have the right to either reimbursement or re-routing
2. You have the right to information - there is an obligation for airlines to inform you about rights and flight schedules
3. You have the right to care- that means food, drinks, accommodation as appropriate

The choice between reimbursement and re-routing depends on the consumer.

From the momemt of choosing reimbursement, the consumer ceases all his other rights towards the airlines - they are not supposed to provide refreshments, accommodation, etc. since they have already performed the contract (by paying back the money instead of providing a flight). The reimbursement covers the whole price the consumer paid (included all taxes and charges).

If the consumer chooses re-routing the airlines might pay for different means of transportation, until that time the consumer has a right to accommodation etc. on the cost of the airline. The consumer needs to wait then until the airline provides for re-routing. In case the consumer chooses to arrange transportation on his own, to get back home quickly, he may still claim reimbursement of the ticket price since the choice between these two measures is his.

The only right that the consumer loses is his right to compensation of the incovenience caused by the delays, etc. All other rights from the Regulation on Air Passengers Rights (EC Regulation 261/2004) still apply.

Workshop on the revision of the Package Travel Directive 90/314/EEC

Stakeholders' workshop on the revision of the Package Travel Directive (90/314/EEC)

The workshop
will be held by the European Commission tomorrow - on 22 April 2010 - in Brussels. Webstreaming of the workshop is available (from 10.00 to 13.00 and from 14.30 to 17.00). After considering the feedback from consumers, civil society, national authorities and business, the Commission will assess the different policy options, with the aim of presenting a possible proposal for revising the current legislation at the beginning of 2011.

Sunday, 18 April 2010

Teaching Consumer Law in the New Economy

Teaching Consumer Law in the New Economy - a conference for those interested in teaching consumer law

Centre for Consumer Law of the University of Houston organizes a conference Teaching Consumer Law in May 21-22, 2010.

It is a good opportunity for academics from all over the world to meet and discuss relevant consumer law related issues, recent developments in consumer law and what challenges they pose to the academic curriculum.

I am one of the speakers at this conference in the panel on 'Labels, Warnings, Behavioral Studies and Virtual Worlds'.

You should not miss out on an opportunity to be there if you are interested in consumer law.

Registration forms and more information may be found here.

Thursday, 15 April 2010

Sometimes when you gotta pay, you gotta pay - ECJ in Friz (C-215/08)

15 April 2010: ECJ case C-215/08 Friz

The ECJ was busy today as to cases concerning consumer law and gave a judgment also in the Friz case (C-215/08) concerning interpretation of the provisions of the Doorstep Selling Directive 85/577/EEC.

Mr von der Heyden in 1991, in Germany, entered into a doorstep transaction joining a closed-end real property fund (what is that? hey, I did not know that one either - the answer may be found on Wikipedia, as usual) as a partner in exchange for a capital investment. The object of the fund was the repair, modernisation and management of a property in Berlin. In 2002 Mr von der Heyden terminated without notice his membership in that fund making use of the fact that he never received a notice with information on his right of withdrawal, which meant that the time to withdraw from that contract has not started to run yet. Friz, as a manager of the real property fund, claimed from Mr von der Heyden payment of the difference between the value of the initial investment paid by the latter at the date he entered that partnership and his share of the losses which had been incurred by that partnership at the date the membership was cancelled. German case law allowed for such a claim.

The first question addressed to ECJ was whether this contract could be governed by the Doorstep Selling Directive taken into account that its Article 3 (2) excludes its application with regard to contracts concluded 'for the construction, sale and rental of immovable property or contracts concerning other rights relating to immovable property'.

The ECJ decided that this type of contracts are indeed covered by the scope of the Doorstep Selling Directive. Firstly, the ECJ reminded that 'derogations from the rules of EU law for the protection of consumers must be interpreted srictly'. (Par. 32) The contract concluded by Mr von der Heyden concerned his entry into a real property fund by means of acquisition of holdings in a partnership in exchange for a capital investment which should not be seen as transaction concerning rights relating to immovable property within the meaning of Article 3 (2) of the Doorstep Selling Directive. (Par. 33)

Secondly, the ECJ was asked whether national case law may provide for a claim for the consumer against a partnership, that he entered in a doorstep transaction and subsequently withdrew his membership from, to his severance balance, calculated on the basis of the value of his interest at the date of his retirement from membership, and may therefore get back less than the value of his capital contribution or have to participate in the losses of that fund.

The ECJ first reminds that the protection of consumers provided for in the Doorstep Selling Directive has certain limits and is not absolute. (Par. 44) 'Notification of the cancellation has the effect, both for the consumer and for the trader, of the restoration of the status quo ante (...) However, the fact remains that there is nothing in the Directive to preclude the consumer, in certain specific cases, from having obligations to the trader and, depending on circumstances, from having to bear certain consequences resulting from the exercise of his right of cancellation'. (Par. 45) And therefore, the ECJ decided that German case law's rule could be in accordance with the provisions of the Doorstep Selling Directive. '(...) that rule is intended to ensure, in accordance with the general principles of civil law, a satisfactory balance and a fair division of the risks among the various interested parties' (Par. 48) Moreover: 'such a rule offers the consumer cancelling his membership of a closed-end real property fund established in the form of a partnership the opportunity to recover his holding, while taking on a proportion of the risks inherent to any capital investment of the type at issue in the main proceedings. Secondly, it also enables the other partners or third party creditors (...) not to have to bear the financial consequences of the cancellation of that membership, which moreover occurred following the signature of a contract to which they were not party'. (Par. 49)


1. Doorstep Selling Directive applies to a contract for an entry to a closed-end real property fund established in the form of a partnership when the principal purpose of joining is not to become a member of that partnership, but is a means of capital investment.

2. Doorstep Selling Directive does not preclude a national law which, in the event of cancellation of membership of a closed-end real property fund, entered into following a doorstep transaction, the consumer has a claim against that partnership, to his severance balance, calculated on the basis of the value of his interest at the date of his retirement from membership of that fund, and may therefore get back less than the value of his capital contribution or have to participate in the losses of that fund.

No charge!... I'm talking to you, too, delivery costs! - ECJ in Heinrich Heine C-511/08

15 April 2010: ECJ case C-511/08 Heinrich Heine
In one of the previous posts I discussed the opinion of the AG in the case C-511/08 Heinrich Heine. It concerned the interpretation of Article 6 of the Distance Selling Directive 97/7/EC which gives consumers a right of withdrawal in case they concluded a contract through means of distance communication. Today the ECJ gave its judgment on this subject matter, supporting the opinion of the AG - which is a good news for the consumers all over Europe.

In general, according to Article 6, consumers are free to use the right of withdrawal within 7 days from the day of concluding the contract without having to pay any charges. Everything they paid for the good to the seller should also be returned to them. The only charge that the consumers might have to make is the direct cost of having to return the good to the seller. Since it is the consumer that chooses the method of returning the good to the seller, it makes sense that he will have to pay for it.

Heinrich Heine was a mail order company that decided to have its clients pay EUR 4.95 for delivery, which the supplier will not refund in the event of withdrawal from the contract.

The question brought to ECJ was whether provisions of the Directive are: 'to be interpreted as precluding national legislation which allows the costs of delivering the goods to be charged to the consumer even where he has withdrawn from the contract?'

The answer of the ECJ followed closely the opinion of the AG. The phrase 'the only charge that may be made to the consumer' should be interpreted strictly. (Par. 46) The Directive does not make a distinction between the price of the goods and the delivery costs but talks about the necessity of returning the 'sums paid'. (Par. 45) Furthermore, the ECJ notices that if the consumers had to pay back the delivery costs, that charge might dissuade them from using the right of withdrawal altogether which goes against the protection of the Directive (Par. 56) and that effect is not diminished by the consumer being aware of the amount of the delivery costs. (Par. 58) Additionally, charging the consumers with the costs of delivery and the costs of returning the goods, would distort the balance in payment for transporting the goods between the parties. (Par. 57)


Suppliers are not allowed under a distance contract to charge the costs of delivering the goods to the consumer where the latter exercises his right of withdrawal.

One could not agree more with this decision of the ECJ. It does not come difficult, to imagine a following situation:

- Hello? I saw on TV your advertisement for this new drink to lose weight. I would like to buy it for the price of 5 euro that you mentioned.

- Yes, of course. We charge 5 euro extra for delivery.

- Alright. I can use my right of withdrawal, right?

- Yes, sir. On our website you may found all provisions that will be applicable to this contract.

- Alright. *address and bank account number data follows*

3 days later.... SURPRISE! If you use your right of withdrawal you will not get back 10 but only 5 euro since the supplier will keep the delivery price and you will still have to pay, say, 3 euro for returning the goods. Most consumers would decide it is not worth the effort to withdraw from the contract in such a situation and the protection offered by the Directive would indeed be practically non-existent. Luckily, the ECJ saw through this possibility.

Tuesday, 13 April 2010

How the Legal System Perpetuates Injustice

On 16th of March I posted a presentation by Jon Hanson - professor at Harvard Law School, creator of the website The Situationist. He gave a small talk on 'A Legal System for Irrational Beings'. He shared more of his insights with The Big Think on the influence of law by consumer behavioralists answering a question 'How has policy makers responded to your research?'. I agree with him that the application of consumer behavior research to law could be multiple. The examples he mentions are more applicable to public law and its problems which are the starting point for most researchers combining these two disciplines. I'm convinced that consumer behavior could largely influence private law, as well, especially consumer law and I'm eagerly awaiting more interrelations between the consumer behavior researchers and law.

How the Legal System Perpetuates Injustice

Sunday, 11 April 2010

Mobile phone bills without shocking factor

As from 1st of March 2010 consumers are supposed to be more protected from receiving a surprise mobile phone bill for months when they were traveling abroad and used the internet on their mobiles.

According to new rules adopted by EU in June 2009 the mobile phone operators are obliged to offer their customers a cut-off limit service to protect them from roaming charges. Included in this service is first a warning that would be sent to a customer when he reaches 80% of the limit and then cutting consumers' mobile connection to the internet while abroad when the limit is reached. The default limit is set at €50. Consumers have until 1 July 2010 to choose a different limit, then it will be set at the default amount.

Together with the limit set on the price that operators pay each other per megabyte downloaded (€1 per MB), these new EU roaming rules are going in the right direction to protect consumers from paying shocking amounts for use of their mobile phones. More on roaming may be found at the EU website.