Customs duties and contracts: AG Ćapeta clarifies Article 5 CRD (C-488/24)

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Last Thursday, AG Ćapeta delivered her opinion in Kigas (C-488/24), which primarily addresses the scope of information obligations under Article 5 of the Consumer Rights Directive. In this case, a consumer arranged for the transport of goods, such as motorcycles and washing machines, from Norway to Lithuania using a small transport company. They agreed price for the service was EUR 450. Based on the facts, both parties were taken by surprise when the shipment was stopped at the Swedish border and customs duties of approximately EUR 3,900 were imposed. The transport company paid these charges, delivered part of the shipment to the consumer, and withheld the remainder until the consumer reimbursed the customs payment. This raised the key question: Who bears the cost of customs duties when the contract is silent on the matter and how far service providers' duties to inform (about the main characteristics of the service and the price) stretch in this respect? 

The first part of AG's reasoning is unsurprising. It is evident that the potential payment of customs duties is one of the main characteristics of a contract for the international carriage of goods. After all, the physical transport of goods across borders requires carriers to ensure successful passage through border and customs checks (as reflected in para 62 of the opinion). Since Article 5(1)(a) CRD obliges traders to provide consumers with information on the main characteristics of the service prior to the conclusion of the contract, the carrier should indeed have informed the consumer that customs duties might be payable. 

The referring Lithuanian court views this a broader interpretation of the concept of an international carriage of goods contract (para 52), but in light of the CRD's objective, such an interpretation appears necessary (para 54). 

Based on the facts outlined in the opinion, this seems to have occurred in practice. There is mention that an employee of the carrier raised the issue of customs duties with the consumer, and that the consumer reassured them that no duties would be payable (para 7).

This brings us to the second part of the opinion: how detailed should the duty to inform be? Is the carrier obliged to verify whether customs duties will apply, identify the documents required by customs authorities, and estimate the potential charges? AG Ćapeta concludes that the scope of this duty depends on the nature of the carriage contract (para 67). If the carrier undertakes to act on consumers' behalf regarding customs - effectively concluding a brokerage agreement, they must liaise with the consumer on the specific documents required and provide an advance estimate of customs charges (para 72). AG Ćapeta acknowledges that custom tariffs for international carriage are not always predictable or fixed, but this does not absolve the carrier from providing a reasonable estimate and examples of applicable tariffs (para 76).

If, however, as in the present case, the contract is narrower in scope and limited to transportation, the carrier's information are correspondingly limited (para 82). This reflects the operational constraints faced by smaller carriers and the complexity of verifying the customs status of each item transported. Nevertheless, as AG notes (para 68), the carrier must inform the consumer, prior to contract formation, whether brokerage services are offered and who will be responsible for customs formalities. I agree that this enables consumers to make an informed choice, either to contract with the carrier or seek one that provides brokerage services (para 69). 

However, even smaller carriers occupy a stronger transactional and informational position than consumers, given their experience and repeated engagement in this market. Therefore, more should be required of them than merely stating that customs compliance is the consumers' responsibility. At a minimum, carriers should inform consumers of the types of documents typically required by customs, such as proof of the value of the goods. This duty does not extend to providing an exhaustive and detailed list of documents (para 88). Where brokerage service are not included, the carrier is not obliged to incorporate customs tariffs into the service price (para 89).

Overall, I find AG Ćapeta's opinion well-reasoned, striking an appropriate balance between consumer and trader interests. The applicability of Article 5 CRD is clear, but the scope of information duties often remains ambiguous under EU consumer law. Linking this scope to the breadth of the service provided is a sensible step towards greater legal certainty. Accordingly, where brokerage services are included, custom tariffs should be treated as part of the price to be disclosed, and carriers should assume greater responsibility for obtaining relevant information. Where brokerage services are absent, consumer should be clearly informed that they bear responsibility for customs compliance. Consumer protection objectives are nonetheless upheld if carriers remain obliged to guide consumers on the documents likely to be required and to warn them in advance that customs duties may apply. 

Labeling strikes again: non-alcoholic drinks cannot use the name "gin" (CJEU C-563/24 | PB Vi Goods)

It's been almost exactly one month since the CJEU issued a judgment which has left many non-lawyers (and also some lawyers) quite puzzled. The judgment may not concern consumer law strictly speaking, but will be of certain interest to those interested in consumer law and policy - and even more so with the holidays approaching. 

In PB VI Goods, the Court has sided with a German association in maintaining that PB VI Goods could not sell a beverage under the name "Virgin Alkoholfrei Gin". 

The decision is based on Regulation EU 2019/787, which concerns the "definition, description, presentation" and labelling of "spirits", including gin. The Regulation's stated aims include consumer protection, market transparency and fair competition, as well as the safeguarding of the Union's traditions and reputation in the field of spirits. This includes the protection of certain geographic designations  All three variants of Gin mentioned in the Regulation (Gin, Distilled gin and London Gin) have a minimum alcohol content of 37,5% and have to fulfil with other requirements concerning production process and allowed ingredients. 

Based on these facts, it is not too surprising that the CJEU declared that labelling a drink as "alcohol free Gin" goes against the Regulation: if that would be allowed, it would e.g. not be clear why a "reduced alcohol Gin" would have to be treated differently, whereas it is the Regulation's specific goal to prevent any variations other than those in line with the original designation to use the regulated denominations - not only in order to protect consumers against confusing terminology, but also to protect producers against exploitation of their reputation by competitors who are not bound by the same production standards. 

The Court also refers to its previous - and equally strict - decision in C-422/16, Tofutown.com, which similarly decided that plant-based drinks could not use the term "milk", even if indicating clearly in their name their non-dairy nature. The only allowed exceptions in that case were those made already within the relevant European rules, e.g. for products traditionally named as "milk" in some countries. 

PB VI's claim that the rules concerning spirits denominations may be against article 16 CFREU (freedom to conduct a business) were dismissed by the CJEU after a short analysis on the basis of the principle of proportionality. The restrictions were found to be appropriate to pursue legitimate aims (those discussed above) and not excessive, in particular due to the fact that they do not affect the ability to produce and market the concerned beverages, but only to call them "gin". For advocates of consumer choice and conscious lifestyles, the Court's argument that the designation may be misleading because of the role that "flavouring ethyl alcohol of agricultural origin with juniper berries" (and not, thus, water) plays in the production of Gin may sound formalistic and inconsequential - as consumers looking to replace alcoholic beverages with alcohol-free variants will likely be aware of the meaning conveyed by the terminology. 

At the same time, the literal meaning and spirit of the rules are quite unambiguous and the operation here consisten – regulated denominations are strictly enforced. Furthermore, there is no sense that a different approach could have plausibly anticipated on future developments as the European Parliament has just signalled a wish for stricter protectionof “traditional” food denominations, which would ban the use of “meat-related” names for non-meat products (think of “plant-based burgers” and similar terms). BEUC was among the first to point out that most consumers feel absolutely not confused by the practice, as well as to argue that the association is actually necessary/hepful for food replacements to find their audiences and play their role in the protein transition. 

Similarly, it seems that the rule concerning alcoholic beverages is likely to play out quite differently for different producers, favouring incumbents - whereas, for instance, an established gin producer will easily be able to leverage their brand recognition to also market their non-alcoholic product lines (imagine something like "Gordon's dry alcohol free"?), newcomers who want to focus on non-alcoholic drinks will not be able to signal their niche to customers will find it much more difficult to do so. 

We will keep an eye out for further developments!