UCTD applicable to other than employment contracts concluded between employees and employers - CJEU in Pouvin (C-590/17)

The CJEU supported today the AG Bobek's opinion in the case Pouvin (C-590/17) that the notion of consumers and sellers from the Unfair Contract Terms Directive should be interpreted broadly. This means that also employees (and their spouses) who are acquiring a loan from their employers should be seen as consumers when these loans are meant to finance the purchase of a real estate for private purposes. Simultaneously, the employer in this situation would be seen as a seller within the meaning of the UCTD, as the loan contract would be provided within its professional activity, even if it not the employer's main professional activity.

We have previously commented on the AG Bobek's opinion in this case in detail (see AG Bobek in Pouvin C-590/17: The scope of the UCTD should be interpreted broadly), thus we send our readers to this post for the summary of the facts of the case and the main arguments raised. The CJEU repeats the argumentation that the exclusion of employment contracts from the scope of application of the UCTD is not applicable to other than employment contracts concluded between employees and their employers, as long as these contracts do not regulate the employment relationship or employment conditions (paras 31-32). What is then only important to ascertain, in order to determine whether an employee is a consumer, is the purpose for which he is purchasing goods/services (needs to be private) (paras. 23, 26). It remains irrelevant that not every consumer could have concluded this contract, as they were reserved only for employees of this particular undertaking, as long as the employees who were eligible to conclude this contract did this in their private capacity (para. 30). Further, the employer should be seen in this case as a 'seller', as even if their main professional activity lies in supplying energy rather than offering loan contracts, the latter activity is ancillary in their business dealings - allowing them to attract a skilled workforce (para. 42). Moreover, the employer has more resources and, therefore, more information than any natural person, his employee. This puts the employees at a contractual disadvantage that the application of the UCTD will remedy (para. 40).

In light of the earlier judgments in Karel de Grote case and Costea, this is by no means a surprising judgment.

AG Bobek in Pouvin C-590/17: The scope of the UCTD should be interpreted broadly

A recent request for a preliminary ruling C-590/17 Pouvin v Electricité de France from the French Cour de Cassation raised interesting and so far unexplored questions about the applicability of the 1993/13/EC Unfair Contract Terms Directive (UCTD) on contracts concluded between employers and employees that are connected to but do not fall within the employers' main business. Last week AG Bobek delivered his Opinion on the case.

The Facts

Claimants Mr Pouvin and his wife Ms Dijoux entered into a mortgage loan contract with Mr Pouvin's employer, Electricité de France (EDF). The contract contained an automatic termination clause according to which the loan becomes immediately and in full payable if Mr Pouvin leaves his employment. When Mr Pouvin resigned, the employer called on the loan. In the case that followed the claimants argued that the termination clause was unfair under the UCTD.

Questions to consider

1) Can EDF, the employer, be considered the 'seller or supplier' within Art. 2(c) UCTD given that lending is not its main business?

2) Can Mr Pouvin, the employee and his wife (not an employee of EDF) be considered  'consumers' under Art. 2(b) UCTD?

Can employers be considered the 'seller or supplier'?

Relying on the wording of Art. 2(c) of the UCTD and previous CJEU case-law AG Bobek proposed a wide interpretation to the notion of 'seller and supplier' so as to include the employer in the present case. Under Art. 2(c) a 'seller or supplier' means any natural or legal person who, in contracts covered by the UCTD, is acting for the purposes relating to his trade, business or profession.

First, AG Bobek considered the meaning of acting for the 'purpose' of someone's trade, business or profession. He dismissed EDF's argument that in providing the loan they did not act for the purpose of their trade, business or profession given that lending is not their main business. Drawing a parallel with the CJEU's earlier judgment in C-147/16 Karel de Grote (on which we reported here) that confirmed that complementary or ancillary services carried out in connection with the main activity can be included into the concept of 'business, trade or profession', which defines the status of the 'seller or supplier', AG Bobek concluded that in the present case too, the employer provided an ancillary service that was connected to its main activity. While in Karel de Grote the educational institution directly provided the loan to consumers, in the present case the connection is more indirect, since the employer only provided the loan and not the property- that had to be purchased from a third party seller. Regardless of the indirectness of the connection, the AG argues that the connection is not too remote to push the contract outside the scope of the UCTD. Especially since providing loans to employees is part of the companies' social policy that is used to attract high quality employees and as such is essential for a running a successful business.

Second, AG Bobek argued that giving a broad meaning to the notions of 'seller and supplier' is in line with the UCTD's intention that provides for 'any' natural or legal person acting for the purpose relating to his trade, business or profession. Both the words of 'any' and 'relating' provide additional strong basis for the definition to conclude that the UCTD's intention is to include ancillary services, not just the core activities, those that squarely fall within the 'sphere of professional competence' of the business.

Can employees be considered 'consumers'?
The second question that AG Bobek needed to answer is whether Mr Pouvin who is an employee of EDF can be considered a consumer.  Again, the AG proposed a broad interpretation of Art. 2(b).

Although one of the recitals of the UCTD expressly excludes employment contracts from its scope, AG Bobek dismissed the applicability of the exclusion in the present case. First of all, he contends that the recital has no biding force and that in any way it only provides an illustration of a sort of contracts that should be excluded because the parties to them are not acting as 'consumers' or 'sellers or suppliers' in the sense of the UCTD. In the present case the loan agreement does not form part of the employment contract and does not regulate the employer-employee relationship; the loan is merely provided in connection with the employment contract of Mr Pouvin. Therefore, the fact that the loan was reserved only for employees does not change the characterization of the parties as a 'consumer' or 'seller or supplier'.

Conclusion 

AG Bobek proposes the following answers:

1) Art. 2(c) of the UCTD should be interpreted as meaning that where a company grants a mortgage loan to an employee and the employee's spouse that is covered by a scheme only available for the employees of the company, it is acting as a 'seller or supplier'.

2) Art. 2(b) of the UCTD is to be interpreted as meaning that an employee of a company and the spouse of such employee, who entered into a loan agreement with the employer to purchase a home, is acting as a 'consumer'.

Evaluation 

AG Bobek's proposed wide interpretation of the two notions is a welcomed approach that is likely to serve the UCTD's intention to deliver a high level of consumer protection. The Opinion is well reasoned and the relevant connection is made between the two notions and the UCTD's broader policy aim to protect consumers that are in a weak(er) position compared to businesses (general inferiority vis-à-vis businesses, weak bargaining power and information asymmetries). It is particularly interesting to read AG Bobek's rejection on the decisive role of these rationales in the present case. The core of AG Bobek's thinking seems to be that the rationales are not decisive per se whether the employer acted as a seller or supplier, and that applicability of the UCTD does not depend on a balancing exercise between the interest of the parties, since this has already been done by the legislator and is included in the broad wording of the relevant provisions. These are certainly compelling arguments that invite the reading of the relevant parts for our readers interested in the role of the UCTD in the society (paras. 24-29).

Becoming a 'trader' in the platform economy: CJEU rules in Kamenova

It is trite but true that online platforms have blurred the lines between the positions of particular market actors. In doing so, they have put the traditional status-based European rules to a test. While the issue itself is not particularly new, the scope of the basic notions such as 'consumer' or 'trader' has attracted renewed attention in recent times. The Commission specifically addressed the interpretation problems related to these terms in its 2016 communication on collaborative economy. Around the same time two preliminary references, related to this very basic distinction as well, were directed at the Court of Justice. The Schrems case, on which the CJEU ruled several months ago (see our post here), provided the Court with an opportunity to clarify the notion of a 'consumer' in the context of social media. Yesterday's judgment in case C-105/17 Kamenova addressed a corresponding matter, namely at which point a person offering goods or services via an online platform can be qualified as a 'trader'.

Background of the case

We already reported on the opinion delivered by the Advocate-General Szpunar in June this year. To recall: the request for a preliminary ruling was submitted by a Bulgarian court adjudicating a dispute between Ms. Kamenova and the national consumer protection authority. Specifically, Kamenova, who had been engaged in the sale of goods via an online platform olx.bg, and had published eight different listings at the same time, did not provide information required by the Bulgarian act on consumer rights, which implemented Directive 2011/83/EU into national law. According to the consumer protection authority, in doing so Kamenova failed to fulfil her duties as a trader and engaged in an unfair business-to-consumer commercial practice. The defendant argued that she did act in a professional capacity and, therefore, her activities fell outside the scope of the invoked legal act. 

Judgment of the Court

The Court essentially followed the reasoning expressed by the AG in his opinion. This is true in the following three respects:

Firstly, the Court upheld the view that the concept of a 'trader' used in Directives 2005/29/EC on unfair commercial practices (UCPD) and 2011/83/EU on consumer rights (CRD) had to be interpreted uniformly (paras. 25-29). I will return to that point later on.

Secondly, it essentially repeated the criteria determining the threshold for becoming a trader elaborated by the AG and stressed the need for a case-by-case assessment. In light of the judgment the relevant factors are, among others, whether:

• the sale on the online platform was carried out in an organised manner, 
• that sale was intended to generate profit, 
• the seller had technical information and expertise relating to the products which the consumer did not necessarily have, resulting in a more advantageous position of the seller compared to that of the consumer, 
• the seller had a legal status which enabled her to engage in commercial activities and to what extent the online sale was connected to the seller’s commercial or professional activity, 
• the seller was subject to VAT, 
• the seller, acting on behalf of a particular trader or on her own behalf or through another person acting in her name and on her behalf, received remuneration or an incentive, 
• the seller purchased new or second-hand goods in order to resell them, thus making that a regular, frequent and/or simultaneous activity in comparison with her usual commercial or business activity, 
• the goods for sale were all of the same type or of the same value, and, in particular, whether the offer was concentrated on a small number of goods (para. 38).

Thirdly, the Court underlined that the list is neither exhaustive, nor exclusive and, as a consequence, compliance with one or more of the listed criteria is not, in itself, decisive for establishing the seller's status (paras. 39-40).

With regard to the present dispute the Court shared the scepticism of the Advocate-General as to whether Kamenova should be qualified as a 'trader'. While the final assessment was left to the national court, the CJEU made it clear that "the mere fact that the sale is intended to generate profit or that a natural person publishes, simultaneously, on an online platform a number of advertisements offering new and second-hand goods for sale" is not, by itself, sufficient to make such a classification (paras. 40 and 44).

Comments

The judgment does not come as a huge surprise. What is perhaps more surprising is that it comes so late. National courts, including at the highest level (see e.g. the 2008 judgment of the German Federal Court of Justice), have already dealt with similar questions years before. Apparently, however, they did not consider the CJEU's involvement necessary.

The ruling itself does not affect the discretion of national courts in a far-reaching way. Establishing the facts and assessing their respective relevance remains in their hands and continues to be crucial for the final assessment. The comparably broad menu of criteria set out in para. 38 of the Court's judgment could facilitate this analysis to some degree, as can the Court's conclusion that the profit-driven motive and the number of offers are, in themselves, not sufficient to consider someone a 'trader'. It is also worth noting that the Court (once again following the AG) attempted to connect the discussion about determinants of one's status with the consumer law's traditional weaker party protection rationale (paras. 33-34).

A further element of the judgment, which could be of interest to the readers, concerns the uniform interpretation of the notions used in the CRD and UCPD. Following the Advocate-General, the CJEU found that the concept of a 'trader' laid down in both acts was to be interpreted uniformly. To make this observation the Court even reformulated the question asked by the referring court. From the point of view of legal clarity, such an effort should certainly be welcomed.

The reasons supporting the Court's finding are not discussed extensively. Essentially, they concern the correspondence between the wording of both definitions and between the objectives of both acts. We could probably debate to what extent the fact that both directives are based on Article 114 TFEU actually bears out the identity of their objectives, considering how broadly this legal basis came to be used in EU legislation. However, in the present context, the conclusion of the Court seems sound.

One could still wonder in which domains a requirement for a uniform interpretation would not necessarily be fulfilled. A possible candidate is the context considered in the Schrems case mentioned before. Indeed, it has been pointed out in the literature that in the conflict of laws sphere other objectives, such as ensuring procedural certainty, may be of greater relevance than contributing to the "proper functioning of the internal market" and ensuring "a high level of consumer protection". This could explain the apparent discrepancy between the Court's case law on dual purpose contracts (see the judgments from Gruber onwards) and the more recent legislative developments related to this issue (see e.g. recital 17 of the CRD). Notably, neither Rome I, nor Brussels I (bis) regulations are based on Article 114 TFEU.

All in all, the judgment does shed a bit more light on the notion of the trader in the platform economy, but it certainly does not bring an end to the legal uncertainty in this domain. Achieving the latter result, however, does not seem to be a task for the judiciary. Should one wish to address the issue of the problematic boundaries between 'consumers' and 'traders' in online markets more effectively, a legislative solution would be needed. The amendments proposed by the Commission as part of the so-called New Deal for Consumers package represent one of the possible approaches.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

When does an online seller become "a trader"? AG Szpunar in Kamenova

Last Thursday the Advocate-General Szpunar delivered an opinion in case C-105/17 Kamenova, in which the Court of Justice was asked to provide interpretation of Article 2(b) and (d) of Directive 2005/29/WE on unfair business-to-consumer commercial practices (UCPD) in the context of a sale of goods via an online platform. The provisions included in the preliminary reference contain definitions of the very basic concepts used throughout the UCPD and in the European consumer law more generally. The broader relevance of the guidance to be provided has been recognised by the Advocate-General who decided to extend the the scope of the questions referred to also cover a provision of Directive 2011/83/EU on consumer rights (CRD).

Facts of the case

The defendant was offering her goods via olx.bg

The request for a preliminary ruling was submitted by a Bulgarian court adjudicating a dispute between Ms. Kamenova and the national consumer protection authority concerning a potential breach of consumer law by the former. More specifically, Ms. Kamenova, who had been engaged in the sale of goods via an online platform, and had published eight different listings at the same time, did not provide information required by the Bulgarian act on consumer rights, which implemented Directive 2011/83/EU into national law. The defendant argued that, when offering used goods via olx.bg, she was not acting in a professional capacity and, consequently, her activities remained outside the scope of that act. The consumer protection authority held an opposite view and insisted that, by acting in breach of the act on consumer rights, Kamenova engaged in an unfair business-to-consumer commercial practice.

"Trader" in the UCPD and in CRD: a uniform interpretation?

Before addressing the crux of the case, AG Szpunar considered it necessary to establish whether the notion of a trader used for purposes of Directives 2005/29/WE and 2011/83/EU is to be construed in the same way. Indeed, as observed in the opinion, the wording of respective provisions is almost identical. The AG did not stop here, however, but observed that further factors had to be considered. These included, in particular, the level of harmonisation provided by respective Directives, which, in turn, should be assessed by reference to the wording, meaning and purpose of the interpreted acts. The AG eventually responded in the affirmative, finding that both Directives aimed to fulfil the same objectives, namely to contribute to the functioning of the internal market and to ensure a high level of consumer prtoection, and that both of them established a full level of harmonisation. To ensure coherent application of the two sets of rules, according to the AG, the notion of the trader used in the UCPD and the CRD had to be interpreted uniformly.

The threshold for becoming a "trader"

The subsequent part of the opinion concerns the substantive interpretation of the trader's notion as provided in the two legal acts. In this respect, Article 2(b) of the UCPD (and similarly Article 2(2) of the CRD) defines the notion of a trader as "any natural or legal person who, in commercial practices covered by this Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader". The opinion of the AG provides for some useful points of reference in that regard. Most notably, it does not only list the criteria to be considered in the analysis of one's activity, but also points to the deeper normative rationale of the analysed provisions - namely the weaker position of the consumer resulting in the trader's comparative advantage. 

As discussed in paragraph 51 of the opinion, assessment of the purpose of the seller's activity should depend, among others, on questions whether:

• the sale was made as part of an organised activity and with a profit-seeking motive;
• the sale was subject to a specific timeline and frequency;
• the seller had a legal status which allowed him to conduct trading activity and to what extent online sale was linked to such activity;
• the seller was a VAT taxpayer;
• the seller was acting in the name or on behalf of another trader or through any other person acting in his name or on his behalf and obtained remuneration or a share in profit in this connection;
• the seller had purchased new or used goods for pursposes of their resale, as a result of which his activity became organised, frequent or concurrent to his professional activity;
• the level of profit generated from the sale confirms that the transaction belonged to the seller's trading activity;
• all products offered for sale by the trader were of the same type and value, in particular, whether the offer concerned a limited number of products.

In formulating the aforementioned list the AG relied, among others, on the submissions of the German government and of the European Commission. The involvement of these two actors in the proceedings is not surprising - German courts have been called upon multiple times to decide on similar cases and the Commission tried to come up with a similar list in its 2016 communication on collaborative economy. According to the AG, the criteria mentioned above are neither exhaustive, nor exclusive, meaning that fulfilling one or more of them does not, in itself, determine whether a seller should be qualified as a trader. The relevant assessment should be made on a case-by-case basis, taking into account the normative rationale mentioned above. With respect to the analysed case, the AG expressed scepticism whether publication of eight listings on an online platform could be qualified as an activity of the "trader" and, consequently, a "business-to-consumer commercial practice". Which factors the AG found decisive for reaching this conclusion is not clear, which may be a point of criticism addressed at her otherwise helpful guidance. Another possible takeaway from the analysed case is that national legislators may want to think twice before establishing strict thresholds between professional and non-professional activity. As for now, it remains to be seen whether the Court of Justice will follow the opinion of its advisor and how specific the Court's judgment will be. Most likely, a case-by-case assessment - first undertaken by the sellers themselves and then verified by the courts, enjoying a wide marging of appreciation - will remain the norm for the future. This would be a rather conventional way of striking the balance between certainty and flexibility with no special treatment being granted to the digital economy. Such an assessment is also substantiated by the amendments to the CRD proposed recently by the Commission, which generally leave the allocation of responsibility for establishing the status of the contracting parties unaffected. As mentioned in our previous post (see: New Deal for Consumers...), new provisions would impose an obligation on online marketplaces to provide information whether the third party offering the goods, services or digital content is a trader or not, on the basis of the declaration of that third party. Bolder measures proposed in the literature, aimed at levaraging the potential of data collected by the operators of online platforms, as for now remain off the table.

If it talks like a seller... - CJEU in Wathelet (C-149/15)

Last week the CJEU also issued a judgement in the Wathelet case (C-149/15) concerning interpretation of the Consumer Sales Directive (CSD) with regard to a sale of a second-hand vehicle in Belgium.

Ms Wathelet has purchased a second-hand vehicle for 4.000 Euro as a consumer from a professional garage and did not obtain any receipt, proof of payment or a sales invoice for this purchase. The garage paid for the roadworthiness test, while Ms Wathelet paid for the registration of the vehicle. The car has promptly broke down, before the consumer received the invoice for the purchase. The garage found that the fault was with the engine and charged Ms Wathelet for 2.000 Euro for its repair. She has refused to pay this repair price, claiming that the garage as the seller of the vehicle was responsible for this fault. At this point, Ms Wathelet was informed that the garage has never owned the car and has sold it on behalf of Ms Donckels, another consumer. Ms Donckels has, however, never received the full purchase price, as the garage withheld 800 Euro to credit repairs that have been conducted on the vehicle. The garage sent then a letter to Ms Wathelet, confirming its capacity as an intermediary, stating that the engine failure is an 'ordinary risk' when buying a second-hand car from another consumer, and attached an invoice for the purchase price of 4.000 Euro on which it was handwritten that Ms Donckels was the seller. The invoice only had the signature of Ms Donckels. The garage refused to return the car until the repair price of 2.000 Euro is paid in full and brought proceedings against Ms Wathelet for payment of this invoice. Ms Wathelet counter-claimed demanding termination of the contract of sale and damages.

The Court of Appeal in Liege, Belgium, finds that there is strong evidence that Ms Wathelet was never informed that it was a private sale and, therefore, asks the CJEU whether the notion of a 'seller' encompasses not only professional traders who transfer ownership of consumer goods to consumers, but also traders acting as intermediaries for private parties, and whether the answer would differ depending on whether they are remunerated for their services and whether the consumer was informed of the fact that the sale was a C2C sale.

The CJEU first determines that the notion of the seller should be interpreted autonomously for the purposes of the Consumer Sales Directive, considering its objectives. The notion does not cover intermediaries (par. 33), however, that does not mean that it could not cover traders who act as intermediaries (regardless of whether they are remunerated for their services - see par. 43) but present themselves as professional sellers to consumers, giving consumers false impression that they are concluding a B2C contract (par. 34). The CJEU states that literal interpretation of art. 1(2)(c) of CSD does not prevent such an interpretation, teleological arguments - supporting high level of consumer protection - strengthen it (par. 35-36). It is essential for consumers to know the identity of the seller, and whether it is a professional party, as they will only have remedies for non-conformity of the purchased goods from a professional seller under CSD (par. 37). The consumer should have, therefore, been informed that the owner was a private individual, eliminating information imbalance between the parties. (par. 39-40)

"Therefore, in circumstances such as those at issue in the main proceedings, in which the consumer can easily be misled in the light of the conditions in which the sale is carried out, it is necessary to afford the latter enhanced protection. Therefore, the seller’s liability, in accordance with Directive 1999/44, must be capable of being imposed on an intermediary who, by addressing the consumer, creates a likelihood of confusion in the mind of the latter, leading him to believe in its capacity as owner of the goods sold." (par. 41)

"...The degree of participation and the amount of effort employed by the intermediary in the sale, the circumstances in which the goods were presented to the consumer and the latter’s behaviour may, in particular, be relevant in that regard in order to determine whether the consumer could have understood that the intermediary was acting on behalf of a private individual." (par. 44)

BKK Mobil Oil: public law body can be seen as ‘trader’ in the context of the Unfair Commercial Practices Directive

Can public law bodies fall under the personal scope of the Unfair Commercial Practices Directive? Since yesterday’s judgment in BKK Mobil Oil we know the answer is yes. Also the practices of public law bodies can thus qualify as unfair commercial practices. But what the criteria to determine public from commercial practices are in the end remains unclear.

BKK Mobil Oil is a German health insurance fund established as a public law body. BKK published on its website a message targeted at its own customers, trying to convince them not to switch to another health insurance. Without going into the details, the message contained false information and thus was found to mislead BKK’s customers. According to BKK, however, the German Gesetz gegen den unlauteren Wettbewerb (Act against unfair competition, UWG) nor the Unfair Commercial Practices Directive applied to this case, because BKK could not be seen as trader.

The Bundesgerichtshof filed a preliminary question at the CJEU, asking how the Unfair Commercial Practices Directive should be interpreted on this point: should BKK be seen as a proper business, or is it a body that pursues a social objective and the behaviour of which is thus not covered by the Directive?

In its answer, the CJEU emphasizes that this matter should be seen from a European perspective and that the question on whether an organization such as BKK should be seen as a ‘trader’ does not depend on its legal status in national law (par. 25-26).

In the Directive, ‘trader’ is defined as ‘any natural or legal person who, in commercial practices covered by [that] Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader’ (Article 2(b)).

The CJEU emphasizes that the term ‘trader’ should be seen as the diametrically opposed concept of ‘consumer’ (par. 33) and that BKK’s members can in fact be seen as consumers, taking into consideration that BKK’s misleading information prevent them from making an informed choice (par. 37). In line with this, the CJEU argues, BKK should be seen as a trader (par. 38).

This does not stand out as an example of clear legal reasoning. The definition of consumer tells us equally little as the term trader in this context. The Court (perhaps deliberately) does not give actual criteria to determine the border between ‘public’ and ‘commercial’ practices, which in the end seems to be the essential – and admittedly, difficult – question.

Functional concept of a 'trader' - AG Bot in case C-59/12 (BKK Mobil Oil)

4 July 2013: opinion of Advocate General Bot in case C-59/12 (BKK Mobil Oil)

Due to the holiday period we might have missed a case or two to report to you, dear readers, in the past month. And so on the 4th of July Advocate General Bot gave an opinion in the case BKK Mobil Oil which concerned interpretation of the term 'trader' used in art. 3(1) and art. 2(d) of the Unfair Commercial Practices Directive. The CJEU was asked whether if a public law entity circulates misleading advertising this could be seen as an unfair commercial practice carried out by a trader.

BKK Mobil Oil is a public law entity entrusted with a task of general public importance, namely it is a German sickness insurance fund. In December 2008 this insurance fund circulated an advertisement worded as follows: "Anyone leaving BKK … now will be committed to staying with his/her new [mandatory sickness] scheme for the next 18 months. This means that you will miss out on attractive offers that BKK … will be making next year, and you may end up having to pay more if your new scheme is unable to manage on the money allocated to it and therefore requires you to make a supplementary contribution." (Par. 14) The German Office for the Protection of Unfair Competition claimed that this was a misleading advertising and demanded withdrawal thereof. BKK Mobil Oil did not think it needs to apply provisions of the Unfair Commercial Practices Directive since it is a public law body, not acting for profit, and therefore should not be considered a 'trader'.

Advocate General Bot advises the CJEU to adopt a broad interpretation of the definition of a 'trader', encompassing also bodies governed by public law entrusted with a task of general public importance, such as a sickness insurance fund, as long as they circulate commercial advertising to consumers. (Par. 5)

AG Bot reminds the previous case law of the CJEU in the competition law matters where it was decided that an undertaking should be defined as such when it conducts an economic activity of an industrial or commercial nature consisting of offering goods and services on a given market, regardless of the legal status and the way in which that undertaking is financed. (Par. 25-27) A sickness insurance fund could be excluded from this definition with regards to tasks it performed purely to achieve its social objectives. However, if such an entity conducted various activities, not only of an administrative but also of a commercial nature, a distinction should be made between them. (Par. 29) 

The concept of a 'trader' in consumer law has according to the AG Bot the same functional characteristics as the concept of an 'undertaking' in competition law. (Par. 32) The broad scope of the trader's definition should rely only on the fact that such a body conducts a commercial activity. (Par. 35) Therefore, it should be irrelevant what is the legal status of a trader and what tasks have been entrusted to him. (Par. 39) One of the supporting arguments for this statement is the definition of a trader in the new Consumer Rights Directive which explicitly states that a trader is 'any natural person or any legal person, irrespective of whether privately or publicly owned (...)'. (Par. 41)

Interesting side note: AG Bot notices that the concept of a 'trader' has no uniform meaning in various EU consumer legislation and argues for the adoption of a harmonised meaning of this term since there does not seem to be a justification for any differences therein. (Par. 23)

Unfair terms, ECJ reaffirms important principles

In two cases delivered today the Court of Justice had the chance to confirm its previous case law and add a new tile to the (ascertained) coverage of Directive 93/13.

To start with this last bit, in Asbeek Brusse and da Man Garabito v Jahani BV, the CJEU clarified that residential tenancy contracts concluded with professional landlords are also covered by the unfair terms directive.

In particular, the fact that the Dutch provision implementing the directive did not use a general term (  to identify the consumer counterpart (the English version is "seller or supplier"), but mentioned the "seller" (verkoper) instead, should not prevent the directive from applying to contracts which involve no sale.

As concerns the duties and prerogatives of courts faced with unfair terms, two important principles have been reaffirmed:

- first, on the ex officio nature of unfair terms control: appellate courts are not exempted from the duty to independently ascertain a term's unfairness under the Directive when they are allowed to act ex-officio to enforce public policy; in other words, the Directive and in particular its rules concerning the non-binding nature of unfair terms are equal to internal public policy rules;

- second, as concerns the consequences of unfairness, an effective implementation of the Directive requires that courts declare the terms wholly unbinding: reducing a penalty instead of considering it as never stipulated would "weaken the dissuasive effect on sellers and suppliers" (par.58) of the European rules.

This extension of ex officio control to second instance cases where the issue has not been raised in the first instance, was also reaffirmed in today's second case, Jőrös v Aegon. 

The most interesting part of this decision, though, concerns jurisdiction. The referring court asked in this case whether, having identified one term as unfair, it should proceed with a declaration of invalidity even though in principle the application of unfair terms control is demanded to a different and higher jurisdiction. 
After having paid lip-service to the Member States competence to "determine which court or tribunal has jurisdictions to hear disputes involving individual rights derived from European Union law" (par 50), the court  states that , once a court has found a term unfair, effective protection requires that the court "must draw all the consequences" from its finding. Thus, notwithstanding the national rules on jurisdiction, the "incompetent" court should still proceed to declare the term invalid and check whether the contract can still exist without that term. 

In both cases, the CJEU and the Advocate General agreed that there was no need to request an Opinion- which underlines how the Court considers the issues settled. On the other hand, the fact that cases keep coming in where the consumer (and her lawyer) did not seem to be aware of her rights under the (legislation implementing the) Directive seems to confirm the need for a judge-driven application of this branch of consumer protection.