AG Szpunar: No residency-based discrimination for direct debit payments

On the 2^nd of May, AG Szpunar published his Opinion on Case C-28/18 Verein für Konsumenteninformation v Deutsche Bahn AG. This is a case concerning payments within the SEPA area, so not on consumer protection legislation. Nevertheless, if the Court follows the AG opinion, this case can have a significant impact on the interests of consumers.

The opinion starts with setting the scene around residency requirements pointing out that while residency requirements are usually seen as discriminatory within the context of the internal market that view is limited to the relationship between public and private entities. In contrast to that, the position on residency requirements in the context of private relationships is a lot less clear. The nature of conditions placed in private relationships is at the centre of this case. 

The Verein für Konsumenteninformation is an Austrian Consumer organisation which brought an action against Deutsche Bahn, the German train company. Deutsche Bahn in its website offer customers 2 different modes of payment, namely credit card, instant bank transfer or under the single euro payments area (SEPA) direct debit scheme, the latter being limited to those customers with a residence in Germany.

The Verein für Konsumenteninformation argued in its action in front of Austrian courts that Deutsch Bahn breached article 9(2) of Regulation No 260/2012 on direct debit payments in euro by requiring that only German residents are able to participate in the scheme.

This case went up to the Oberster Gerichtohof, the Supreme Court of Austria, which referred the following question:

‘Must Article 9(2) of Regulation No 260/2012 be interpreted to mean that the payee is prohibited from making payment under the SEPA direct debit scheme dependent on the payer’s place of residence being in the Member State in which the payee also has his establishment (residence), if payment in a different way, for example with a credit card, is also allowed?'

Article 9(2) of Regulation No 260/2012 states that  ‘a payee accepting a credit transfer or using a direct debit to collect funds from a payer holding a payment account located within the Union is not to specify the Member State in which that payment account is to be located, provided that the payment account is reachable in accordance with Article 3 [of that regulation’.

The main objective of regulation No 260/2012 is to establish a Single European Payment Area (SEPA), yet in some parts of it, such as notably the article in question, it is concerned also with the relationship between payees and payers and offers protection to payers (para 29).

As the AG notes, the fact that most persons in the EU hold a bank account in the country where they reside is undisputed. Therefore, requiring a payer to be resident in a certain Member State is therefore tantamount to specifying in which Member State a payment account must be located (para 30). Pursuant to this, the AG found that Deutsche Bahn’s requirement breached art. 9(2) (para 31).

The AG continues to address whether the breach of art. 9(2), and the subsequent restriction to the freedom of payment can be justified. The AG rejects the argument put forward by Deutsch Bahn that there is a danger of abuse associated with direct debit payments, thus making credit checks and their practice necessary and justified. He states that while the reasoning of Deutsche Bahn may be sensible from a commercial point of view, there is no provision of justification in art. 9(2) or in any other part of the Regulation and the introduction of such a justification would be a matter for the legislator rather than the court (paras 45-46).

As the AG points out, the regulation does not require traders to offer direct debit payments. However, he argues, when they do, they should be non-discriminatory (para 49). However, attention should be paid to not make it more favourable for traders to offer fewer modes of payment in order to avoid adhering to additional requirements. 

Overall, this is a welcome and well-written opinion that, if followed in the judgement, can produce tangible benefits for consumers in the EU, facilitating cross-border payments in the internal market. Still the views expressed in the Opinion can have an impact going beyond payments and beyond consumers to further a broader debate on the role and indeed the obligations of private actors in respecting the fundamental freedoms of the EU.

No to unlimited shopping: CJEU in Pelckmans (C-483/12)

Today, the CJEU held in Pelckmans Turnhout II that the Belgian requirement for businesses to observe one day of rest per week cannot be contested on the basis of EU law. 

The facts of the case were simple: Garden centers were kept open seven days per week. Their owners argued that the Belgian provision prescribing one day of rest were contrary to EU law as they discrimintated businesses established outside railway stations, airports, port areas etc, where exceptions to the rule applied. Amongst others, they based their claim on the UCP-Directive. With its judgement of 4 October 2012 (Pelckmans Turnhout I), the CJEU had already decided that the UCP-Directive did not apply to the contested national legislation as the latter 'does not pursue consumer protection objectives'. 

In today's decision, the Court held that the princliples of equality and non-discrimination weren't applying either, the reason for this being that the subject matter didn't have any connections with EU law (paras 17-23). This point of the judgment is highly interesting as it concerns the question of when Member States are implementing EU law. Only then the Charter of Fundamental Rights is adressed to them (Art 51(1) Charter). The outcome is surprising, as the CJEU usually finds ways to 'bring' the referred questions under its jurisdiction. 

The Court recaps its case law stating that the treaty provisions on the free movement of goods do not apply to (non-discriminatory) national rules concerning the closure of shops (para 24). The same is true for the treaty provisions of the freedom to provide services (para 25), which is why the Court didn't have jurisdiction to answer the question referred to it. As a consequence, the Belgian law on the closure of shops is still applicable and shops generally must be kept closed for one day per week!

Cross-border succession in the EU

A few months ago we have posted about a new Regulation in matters of succession (An elderly uncle living in another Member State?...). This regulation becomes European law tomorrow - upon its publication in the Official Journal. New provisions aim at simplifying the procedure of inheritance of properties located in different Member States by determining that it is the country of habitual residence of the deceased whose laws will apply to establishing the jurisdiction and the law applicable in cross-border cases. It also provides for a European Certificate of Succession, allowing heirs to prove their claims to the inheritance throughout the EU. Member States have three years to implement them into their national laws. (EU rules to ease cross-border successions are now law)

HIT and HIT LARIX v Bundesminister für Finanzen: ECJ allows Austria's restrictions on foreign advertising for Casinos

12 July 2012: CJEU's case HIT and HIT LARIX (C-176/11)

In a judgment delivered by the ECJ today, the court made clear that the restrictive rules on foreign advertising for casinos in Austria do not breach the freedom to provide services. In Austria, foreign casinos can only advertise their services if the rules governing the casinos in that country offer at least similar protection (e.g. on legal gambling age, observing gamblers' conduct, etc.) as offered in Austria itself. In order for foreign casinos (in this case from neigbouring state Slovenia) to advertise in Austria, they must obtain prior authorisation by the Austrian state. According to the ECJ, the Austrian rules do limit the freedom of to provide services, but that this limitation is justified by the objective of protecting the population against the risks connected with games of chance. Lacking harmonised rules in the field, Member States are still able to set their own rules as long as they are proportionate. In the case of Austria, this does not pose problems. The ECJ does warn, however, that Member States cannot require foreign casinos to be subject to identical rules. Click here for the full judgment in the case (C-176/11).