Friday, 3 June 2016

"Günstige Preise": Advocate-General's Opinion in Amazon EU case (C-191/15)

Amazon EU, the European branch of a well-known e-commerce company, has been accused of using unfair terms by the Verein für Konsumenteninformation (VKI), an Austrian consumer organisation. Amazon EU has its seat in Luxembourg, but it operates in Austria via, a German website promising "Günstige Preise". The general conditions of sale contain a choice of law for the law of Luxembourg, which VKI says is unfair. Now solve the riddle: what law is applicable to the dispute between VKI and Amazon EU?
Advocate-General Henrik Saugmandsgaard Øe, who was appointed last year, presented his solution to this riddle yesterday (see the full opinion here, in French), following a preliminary reference from the Austrian Oberster Gerichtshof. He breaks it down into three questions:
  1. On the basis of which rules on the conflict of laws should the applicable law be determined: Rome-I or Rome-II? In other words, does the underlying issue of law concern a contractual or a non-contractual obligation?
  2. Follow-up question: what law is applicable?
  3. Is the choice of law at issue unfair (within the meaning of Directive 93/13)?
The case brought against Amazon EU by VKI is an action for an injunction for the protection of consumers' interests (Directive 2009/22). Although VKI acts in the collective interests of Austrian consumers, the Advocate-General's proposed answers are relevant as well for website users all over Europe.

If you are mainly interested in the (potential) unfairness of a choice of law, you can jump directly to the third heading below. For our readers with an interest in private international law, we will also discuss the more technical matter of Rome I vs. Rome II and the practical consequences.

1. Rome I or Rome II (paras. 32-66)?
The first question is relevant, because the Rome I Regulation (593/2008) would lead to the applicability of the law of Luxembourg, while the Rome II Regulation (864/2007) would lead to the applicability of the law of Austria. VKI claimed that Amazon EU's general conditions of sale violated, among other things, the Austrian Konsumentenschutzgesetz and Datenschutzgesetz on consumer protection and data protection respectively. The Handelsgericht Wien and the Oberlandesgericht Wien had both determined the applicable law in accordance with Rome I. However, as the Advocate-General points out, VKI acts in the general interest and its action for an injunction is abstract and preventive, i.e. forward-looking; it is not connected to specific individual consumer contracts. VKI is not a party to the contracts with Amazon EU, nor is there a contract between Amazon EU and VKI itself. VKI's right to bring an action has been assigned to it by law and its goal is to prevent the use of unlawful terms. In the context of jurisdiction (the Brussels I Regulation), the Court of Justice had already decided that such an action cannot be qualified as a "contractual obligation" (HenkelC-167/00). The Advocate-General proposes a parallel interpretation of Rome I. He rejects the view that a "symmetry" is necessary between an action for an injunction on the one hand and an individual action - based on a concrete and existing contract - on the other, because of the different and supplementary nature of both actions. In this respect, he refers to Article 5 of Directive 93/13, which gives separate rules of interpretation for individual actions. Indeed, in the context of this Directive, the Court of Justice distinguishes between individual and collective actions (see, e.g., our blog here). Hence, the applicable law should be determined on the basis of Rome II.

2. What law is applicable (paras. 67-81)?
Pursuant to Article 6(1) Rome II, the law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected. The Advocate-General puts forward that "unfair competition" includes the use of unfair terms which are likely to affect the collective interests of consumers. Therefore, Austrian law is applicable. Furthermore, the Advocate-General argues that the exception of the general lex-loci-damni-rule in Article 4(3) Rome II - when the tort/delict is "manifestly more closely connected" to another country - should not be applied, because it should not be possible to circumvent Article 6(1) by seeking a closer, personal link between the parties, for example the existence of a contract. He refers again to the argument that an action for an injunction is not connected to individual consumer contracts. 

What are the practical consequences? The action for an injunction is governed exclusively by Austrian law. An individual action would be governed by the law of Luxembourg, on account of the choice of law in the general conditions of Amazon EU. According to the Advocate-General, consumers in Austria would nevertheless still be protected by mandatory provisions of Austrian law. Pursuant to Article 6(2) Rome I, a choice of law may not have the result of depriving consumers of the protection afforded to them by virtue of the law that would otherwise have been applicable, i.e. the law of the country of their habitual residence. This had also been the conclusion of the Oberlandesgericht Wien: consumers cannot lose the protection they enjoy under Austrian law, in particular the Konsumentenschutzgesetz.

So far, so good. However, if we follow the Advocate-General's reasoning that the action for an injunction is not connected to individual consumers and that the underlying issue of law concerns a non-contractual obligation, then we may conclude that consumer associations such as VKI cannot rely on Rome I. Interestingly, the Advocate-General subsequently refers to Article 6(2) Rome I in order to determine whether the choice of law at issue is unfair in the relation between the consumer and the seller

3. Is the choice of law unfair (paras. 82-104)?
In the Advocate-General's opinion, a choice of law is not in itself unfair because it may be disadvantageous to consumers. A choice of the law of another country may nevertheless have a chilling effect, deterring consumers to bring an action against the seller. They are presumably unacquainted with the laws of that country; the laws of their own country are in general more familiair and accessible, if only because of the language, and can thus be more easily invoked. The Advocate-General considers it especially important that consumers are informed in a clear and understandable manner about their rights; contractual terms should not be misleading. Terms containing a choice of law must be sufficiently transparant, in that they should specify unambiguously that consumer still have the possibility to invoke mandatory provisions of the laws of their own country (under Article 6(2) Rome I), in particular those laws which implement the acquis regarding consumer protection and which may - in case of minimum harmonisation - offer even a higher level of protection than required. If no explicit reference to the laws of the consumers' own country, they could get the incorrect impression that the contract is governed only by the law of another country. This may cause a significant imbalance to the detriment of consumers, which is unfair in the sense of Directive 93/13.

Thus, the Advocate-General de facto introduces a new requirement for a choice of law in consumer contracts, by connecting Article 5 of Directive 93/13 - providing that terms must always be drafted in plain, intelligible language - to Article 6(2) Rome I. This does not mean that all potentially applicable mandatory provisions should be listed, but consumers should at least be notified that they cannot lose the protection afforded to them under the laws of their own country.

Data protection (paras. 105-128)
Lastly, the Advocate-General addresses the question which law is applicable to the processing of personal data under Directive 95/46. Pursuant to Article 4(1) of this Directive, the territory of the Member State on which the controller is established is decisive. It is up to the national court to assess whether Amazon EU can be said to have an "establishment" in Austria, and whether the processing of personal data is perhaps more closely connected to activities in Germany. 

Concluding remark
So far, Amazon EU does not seem to have changed its general conditions of sale yet (see the Verkaufsbedingungen, the screenshot below was made on 3 June 2016):

Article 10 also contains a forum choice for the courts of Luxembourg, but explicitly states that consumers can submit claims either in Luxembourg or in the EU Member State where they live (cf. Brussels I). It would be to Amazon EU's credit if they would follow the Advocate-General's opinion and add a similar clarification for the choice of law for the law of Luxembourg.

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