Wednesday 13 November 2019

CJEU in Kanyeba: "contract of transport" and the scope of Directive 93/13

Dear readers,

last week the Court of Justice rendered a decision of some consequence in the field of unfair terms - which was to an extent unexpected in light of the somewhat less conclusive AG Opinion published before the summer.

In Kanyeba, the CJEU had to decide on the applicability of Directive 93/13 to the legal relationship between a passenger who had boarded a train without paying a ticket and the railway operator: was this a matter of contract law or, given the fact that the consumer was seemingly not intending to pay the price, a matter or administrative regulations? Under Belgian law, authoritative court decisions had clarified that unfair terms control should apply in either scenario. The referring court, however, seemed to disagree: whether the Directive applies, it reasoned, is a matter of EU law and should thus be clarified by the Court of Justice.


The Court's answer suggests that the Directive does, in principle, apply. This descends from the fact that, according to the Court, Regulation No 1371/2007, which defines certain essential rights of passengers of train transport services, must be interpreted to mean that a contract to transport under the Regulation (and hence, it seems, for purposes of consumer protection) is concluded as soon as a passenger boards a train with the intention to travel - irrespective of whether they have a ticket or whether they intend to purchase one. This conclusion, according to the CJEU, is warranted both by the wording and context of article 3(8) of the Regulation and by the consumer protection goals. The latter would be undermined, the court says, if consumers were exposed to losing all protection as soon as they boarded a train with no ticket. 

The finding may not mean much in the case at stake as the Court observes that the terms and conditions featuring the terms under consideration in Kanyeba - some very steep penalties for failing to buy a ticket in time or pay an extra charge - may quite possibly be exempted from unfair terms control under article 1 of the UCTD, which safeguards national statutory or regulatory provisions if they are applicable irrespective of the parties' will. 

Of probably broader interest - if in itself not incredibly surprising - is the answer given in this case to a further question raised by the referring court: if the penalties were to be found unfair, would the court be allowed to "replace" them by means of general tort law?

The Court's answer comes in two instalments, which I think must be separately considered: 
1) in para 74 the Court reiterates that the Directive precludes "that a national court replace that term, in accordance with the principles of its contract law, with a supplementary provision of national law"; however, a little above the Court reasons that
2) the question whether circumstances such as those at issue in the main proceedings are, moreover, capable of falling within the ambit of the law governing non-contractual liability does not come within the scope of Directive 93/13, but of national law.

The Directive, the Court says, does not seek to harmonise non-contractual liability. Hence, we seem to understand, it does not pre-empt claims in torts by the seller concerning the same circumstances which the penalty clause would have applied to. 

This conclusion makes very good sense and could help clarify some questions that scholars in various Member States have been grappling with in the past few years. In particular, I think it is safe to read two implications into this decision: 
a) a national court cannot decide, so to say ex officio, to grant damages on the basis of general rules to a party who was seeking to enforce an unfair term;
b) however, the Directive does not preclude awarding of damages when the claimant makes a relevant submission and fulfils all the conditions for granting such a claim as established by national legislation. 

While the comparative lawyer in me would have loved it for the Court to engage in a more general analysis on the notion of contract under the UCTD, I think this is a very balanced decision which deals well with a number of relevant issues without excessively muddling the waters or hiding away.