Reflecting on EU (package) travel law in 2021: travel platforms in a regulatory blind spot?

The EU legislature has been pushing for the harmonisation of consumer protection in the travel sector for several decades now. The entire process has progressed in a piecemeal fashion, with a focus on selected transport services as well as package tours. Typically, after putting in place a set of common norms in one area, the EU would shift its attention to another, trying to build upon prior experience while also addressing new issues. Over time, discrepancies between harmonised norms across the different areas would become apparent and discussions would centre on the needed revisions. The Court has also remained quite busy responding to the questions posed by referring courts, especially in the field of air transport. References made in relation to other transport modes and package travel have been more limited, but not without importance, as the recent judgment in Kuoni Travel shows (see: Somber CJEU case on package travel...).

By contrast, travel services not covered by the main strand of regulatory debate (i.e. not qualifying as transport by air, rail, bus or coach, or as a package tour) have long escaped EU attention, partly for competence reasons. This has slightly changed when online travel platforms, such as Booking.com, Airbnb and Uber, entered the scene. First, the new Package Travel Directive of 2015 promised to take account of the ongoing developments in online travel markets. Second, in 2016 the European Commission adopted its agenda on collaborative economy, highlighting, among others, the associated challenges for consumer protection. Five years later, however, the EU law continues to have little to offer to consumers who plan their trips via online travel platforms. The 2015 Package Travel Directive (PTD) and its concept of linked travel arrangements (LTAs)* appears to complicate the regulatory landscape without bringing significant value to consumers, and travel platforms are only marginally affected (and some of them not at all - like Uber) by the recent work streams on consumer protection and online platforms. Finally, the impact of COVID-19 pandemic on EU travel law is yet to be seen, but a renewed focus on the well-established fields of EU travel law seems likely. 

Report on the Package Travel Directive

To get an idea of the current EU position on travel law it is worth taking a look at the Commission's report on the application of Package Travel Directive published earlier this year. The report is already several months old but remains worthy of attention, as it reflects the Commission's appraisal of the existing acquis and reveals the directions of future regulation.

 

Different services and consumer protection norms

The report begins with some illustrative stats. It notes that "in 2017, packages represented around 9% of all tourism trips of EU27 residents and had a share of around 21% of the total tourism expenditure." More recent numbers are not provided and even those given are not put into perspective, e.g. taking into account the corresponding shares of various stand-alone services and related trends.

To its credit, the report does recognize that the concept of a 'linked travel arrangement' and its distinction from a 'package' are somewhat problematic. In particular, with regard to 'click-through bookings' it seems very difficult to establish whether a package, an LTA or none of them was concluded. As the Commission admits:

"A travel service provider who, after completion of a booking, transfers the traveller’s name, payment details and e-mail address to another trader with whom a second service is booked within 24 hours of the confirmation of the first booking, is the organiser of a package and hence liable for the performance of both services. If one of those data elements is not transferred, the first trader facilitates a LTA and is only liable for the performance of its own service, provided the second booking happens within 24 hours. If it happens later, the PTD is not applicable at all" (p. 6). [Of course, there is also no LTA where the contract conclusion was facilitated for just one travel service, e.g. transport or accommodation. - AJ]

The report further points out that concerns have been raised as to what kind of obligations should be placed on the traders facilitating LTAs. These, for the time being, concern primarily insolvency protection and pre-contractual information. As regards the latter, several industry stakeholders argued that the information LTA facilitators are required to provide "could be considered confusing and deterrent, as travellers are primarily informed that they do not benefit from rights applying to packages" (p. 7). The Commission responded that it "was precisely the aim of this information requirement to draw the attention of consumers to the different level of protection offered by packages as opposed to LTAs and thus give them an informed choice between the two models." It is likely that a similar logic applied to the information duty which was recently added in Article 6a of the Consumer Rights Directive (CRD), concerning a different standard of protection in business-to-consumer (B2C) and peer-to-peer (P2P) contracts concluded via online marketplaces.  

Prima facie, the above regulatory approach seems reasonable, leaving consumers a variety of options at hand while providing them with information about relevant differences. However, on a closer look information duties in neither PTD (on LTAs), nor CRD (on the supplier's status) truly bring added value to consumers in online travel markets. In the Package Travel Directive, a choice is offered between broadly similar products (in both cases a combination of at least two travel services) with a key difference pertaining to the level of protection. That's fair enough, but in reality consumers may prefer to choose particular travel services at different points in time or from different providers, which is precisely what online platforms make possible. For this (arguably growing) group of consumers the choice between a higher and a lower level of protection is not available. Moreover, the recently amended Consumer Rights Directive could suggest that the level of consumer protection offered by EU law is higher in case of B2C contracts for stand-alone travel services as compared to P2P transactions. On a closer look, however, also this is does not really hold true. When we delve deeper into stand-alone travel services offered by businesses and by peer providers via online platforms (thus, e.g. excluding air or rail transport, for which P2P markets do not exist), we find that the protection offered to the consumers of those services by the EU acquis is almost non-existent, regardless of the supplier's status. Elsewhere in the report the Commission recognizes that a question remains open whether harmonised norms for linked travel arrangements should not be broadened, e.g. so as to also cover liability for the performance of relevant services and not only insolvency and information. Traders facilitating the conclusion of contracts for stand-alone travel services as well as individual providers of such services, however, are left out of the picture. As for the latter, one could think that the EU may not want to enter into the business or regulating small providers. These, nonetheless, can already be covered by the provisions of package travel law, as the commented report explicitly acknowledges (p. 5). Overall, the discussion about the scope of EU travel law and the corresponding role of package travel framework has not moved any further through the cited report.

Thomas Cook bankruptcy and COVID-19 pandemic

While reflection on the scope of the PTD, and EU travel law more generally, contained in the report falls short of expectations, the opposite is true for the extensive sections devoted to the impacts of Thomas Cook bankruptcy and the COVID-19 pandemic on the package travel sector. The analysis of both events is solid and contains valuable insights. For example, the Commission admits that the burden of Thomas Cook bankruptcy has been shared by the various travel guarantee funds and insurance companies, since the company continued to have insolvency protection in different Member States and did not rely on the PTD's mutual recognition mechanism. Nonetheless, the bankruptcy has not been without impact on the market for insolvency protection for package travel organisers and reportedly prompted a number of banks and insurance companies to pull out of the market. With this in mind, the report points to the need of new solutions to effectively protect travellers against the risk of insolvency, such as a "pan-EU guarantee fund as a kind of re-insurance for the first line guarantors" (p. 11). Moreover, following the disruptions caused by the COVID-19 pandemic, some stakeholders had argued that the protection of consumer refund claims should be extended beyond insolvency, and also cover termination due to unavoidable and extraordinary circumstances (p. 20-21). The Commission seems open to the idea and it seems, in general, that protection of the travellers in case of supplier's insolvency (in package travel and beyond) as well as, possibly, in case of major liquidity problems will be one of the upcoming goals for regulation. Indeed, it may be the lack of corresponding mechanisms that had led many travel service providers to withhold refund payments or to push consumers to accept vouchers instead of monetary refunds during the peak of COVID-19 crisis. The result of this was a serious mess, which consumer organisations are still working to clear up (see e.g. a recent press release by BEUC: Major airlines told to comply with passenger rights...).

Finally, the report can also be credited for drawing attention to characteristics of the value chains in the "travel ecosystem". For example, when discussing the possibility of limiting pre-payments and requiring travellers to pay only when they receive the service, possible negative impacts on suppliers' liquidity and ability to operate at scale are discussed. Moreover, a question has been raised whether suppliers of travel services (e.g. air transport) that are ultimately not provided to a given consumer following the latter's termination of a package travel contract should have a refund obligation towards the package organiser who reimbursed the traveller. Such an obligation is currently not in place, which - the report suggest - could lead to an unfair sharing of the burden among economic operators. Travel could therefore become another area in which B2B unfairness becomes a regulatory topic - after agriculture, food supply and online intermediation.

Concluding thought

 

The EU travel law is in need of rethinking. The current regulatory landscape looks like an increasingly complex patchwork, with some issues being addressed meticulously and other being resolved only at the surface. Admittedly, the analysis of well-established business models, such as package travel, is rich and detailed, yet the share of package tours in the overall travel sector pie is shrinking. While one can hardly imagine a field more fit for harmonisation, the EU approach to (online) travel markets remains fragmented. Clearly, the COVID-19 pandemic has surfaced challenges which we had previously not reckoned with and which now will need to be addressed. The Commission intends to do that as part of its upcoming analysis of EU package travel and transport law planned for 2022. It would be a waste of potential if stand-alone travel services and online travel platforms were to be kept, yet again, out of Commission's view.

 

* For a definition, see Article 3(5) PTD. Essentially an LTA means at least two different types of travel services purchased for the purpose of the same trip or holiday, not constituting a package, resulting in the conclusion of separate contracts with the individual travel service providers and facilitated by one trader in a specific way.

 

** 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.

Waves of change - CJEU in Irish Ferries (C-570/19)

Usually, we focus on and discuss air passengers' rights on this blog, as Regulation No 261/2004 is one of the instruments of consumer protection that seems to raise a lot of questions. Last week, however, the CJEU issued a judgment in the Irish Ferries case (C-570/19) pertaining to the rights of passengers of the sea transport. This time it was then Regulation No 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway that required clarifications. We have elaborated on the facts of the case in our previous blog post addressing AG Szpunar's opinion, see here: The Tide Is High.... 

Just like the AG's opinion, the judgment is lengthy. The detailed approach can very well be explained by the novelty of interpreting provisions of this Regulation No 1177/2010. Generally, the CJEU confirms AG Szpunar's findings:

1. Regulation No 1177/2010 applies when a carrier cancels a passenger service with a several weeks' notice prior to the originally scheduled departure time due to the vessel, which was supposed to provide that service, not having been delivered in time and which could not be replaced. This means that the CJEU considers the notion of passengers 'travelling on' the service to be a broad one, encompassing also passengers who made a reservation or purchased a ticket for the service (para 51).

2. Article 18 obliges carriers to offer a re-routing option to passengers of the cancelled service. Re-routing could take a form of offering a maritime service on a different route combined with the use of other transportation modes (rail or road), thus carriers retain flexibility as to how they would want to organise re-routing (para 64). Carriers are to bear any additional costs, which passengers were subject to when re-routed to their final destination, e.g. costs of fuel or road tolls to reach a different embarkation/disembarkation port or costs of using a landbridge (paras 66-67). Passengers need to be able to demonstrate that they incurred such costs.

3. Articles 18 and 19 may be applied together. This means that re-routed passengers have a right to compensation if their re-routed journey leads to a delay in reaching the final destination, which would cause a serious inconvenience (para 89). If passengers of a cancelled service decide to choose reimbursement rather than re-routing, they are not entitled to claim compensation for a delay (para 88).

4. Compensation mentioned in Article 19 is calculated based on the 'ticket price'. This notion includes costs relating to the additional optional services chosen by the passenger, e.g. booking of a cabin or a kennel, or access to premium lounges (para 95). This means that the amount of compensation owed to passengers may differ amongst passengers of the same cancelled service.

5. Late delivery of the vessel does not qualify as 'extraordinary circumstances', which would release the carrier from the obligation to pay compensation. The CJEU borrows the interpretation of this notion from the air passenger rights' area, which means that only events not inherent in the normal exercise of the activity of the carrier and beyond their actual control would qualify as extraordinary circumstances (para 107, 112).

6. The complaint handling procedure of Article 24 is not applicable to compensation claims on the basis of Article 19, as that complaint handling procedure provides carriers with certain discretion as to what actions to take upon receiving a complaint, which lacks when the compensation is triggered (para 118 and 121).

The Tide Is High... - AG Szpunar on rights of passengers in maritime transport in Irish Ferries (C-570/19)

AG Szpunar issued an interesting opinion today in the case Irish Ferries (C-570/19), which required interpretation of Regulation 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway. With the majority of the attention of the courts on the interpretation of the provisions of Regulation 261/2004 awarding air passengers with various rights in case of flights delays and cancellations, as well as denied boarding, passengers of other modes of transport might have felt forgotten. Well, perhaps the tide is now changing for passengers of maritime transport.

Just by looking at the provisions of Regulation 1177/2010 we can see many similarities to Regulation 261/2004. In case of interrupted maritime travel, passengers are also supposed to be properly informed by their carriers about this, have a right to assistance (refreshments and snacks, as well as overnight accommodation, although the latter right is limited, see Art 17(2)), as well as a right to re-routing and reimbursement (Art 18). There is also a right to compensation in case of a delay in arrival - Article 19 - with the extraordinary circumstance releasing the carrier from this obligation, e.g. bad weather conditions or other circumstances which could not have been avoided even if all reasonable measures had been taken (Art 20(4)).

In Irish Ferries a vessel that was to serve a particular maritime route - Dublin (Ireland) and Cherbourg (France) - was not built and deployed on time, despite expectations to the contrary. This meant that although the route has been advertised and tickets for journeys on this ferry have been sold, the company found itself a vessel short and decided to cancel previously made bookings. Affected passengers were notified 7-12 weeks in advance, received full reimbursement or a re-booking option. In the case re-routing was chosen, passengers did not have to pay any additional costs if the ticket price was higher for the new journey, but they were not compensated e.g. for traveling to/from the alternative port of departure (para 24). Passengers who chose to travel via the UK through a land bridge could claim compensation for their fuel costs (paras 29-31). The contested part was that Irish Ferries decided that the awarding passengers with the right to re-routing and reimbursement was mutually exclusive with paying them compensation for a delay. They claimed that Art 18 and 19 did not apply simultaneously.

The Irish National Transport Authority considered that Irish Ferries should have paid compensation to passengers whose journey was delayed - in compliance with Art 19 - and should have compensated all additional costs related to re-routing - in compliance with Art 18.

AG Szpunar's advice is first that Regulation 1177/2010 indeed applies to this case scenario (see for the detailed analysis paras 45-74). 

Second, he confirms that re-routing should come at no additional costs to passengers, and costs of travel to/from alternative ports of embarkation and disembarkation should be included in this (paras 84-85, 94). 

Third, AG Szpunar confirms that passengers who have been re-routed may claim compensation in the delay of arriving at their final destination, contrary to passengers who chose reimbursement (para 108). Both the legislative history as well as other provisions of the Regulation, e.g. Recital 14, indicate this (paras 105-106). The delay should be calculated by comparing the arrival time laid down in the contract and the actual time of arrival at the final destination - and not at the port of disembarkation (paras 115-116).

The compensation amounts to 25% of the ticket price, and the ticket price should be seen as encompassing all additional optional services chosen by the passenger (e.g. for a booking of a cabin, or a kennel, or access to premium lounges) (para 124). This differs from a standard, flat-rate compensation that air passengers are granted under Regulation 261/2004 (para 125). However, AG Szpunar recognised the option for maritime carriers to separate clearly services provided under the contract that are not part of 'passenger services', which would exclude them from the ticket price (para 126).

Further, the late delivery of the vessel does not amount to extraordinary circumstances, as it should be seen as being inherent in the normal exercise of the activity of the carrier. The concept of extraordinary circumstances is thus the same as under Regulation 261/2004 (paras 134-135). (see for more elaboration on the test under the given circumstances: paras 138-157).

The last two findings pertain to who has jurisdiction over enforcing Regulation 1177/2010 and whether the claim for a right to compensation is time-barred if the passenger did not demand it within two months from the date on which the transport was supposed to be performed.

This is a detailed case law as it explores a new terrain of passengers' rights and treads carefully on it. The interpretation of various provisions of Regulation 1177/2010 is very much welcomed, as it not only introduces more legal certainty to this field, but also allows for an easier comparison between rights of passengers of various modes of transportation. Let's see what the CJEU will have to say in this case!

Nihil novi from the CJEU in Uber France

In a judgment delivered yesterday the Court of Justice once again looked at the legal environment of Uber’s business model. Similarly to its earlier ruling (see our post CJEU gives Member States a green light to regulate Uber), the Court classified the services provided by Uber not as information society services, but rather as services in the field of transport and denied the applicability of the European framework on services liberalisation to the analysed context. 

Setting the scene

The background of Uber France was analogous to Uber Spain. Both cases referred to the UberPOP business model, i.e. the one in which the smartphone app provided by Uber Technologies Inc. is used to connect passengers with non-professional drivers (the situation is different in a yet another pending case concerning Uber Black). The differences were subtle: in Uber Spain, the case referred to the civil proceedings brought against Uber by a taxi drivers’ association based on general rules on unfair competition. By contrast, Uber France dealt with a private prosecution and a civil action brought against Uber by a specific taxi driver based on a newly introduced provision of French criminal law. On both occassions the provider of the contested smarthphone app sought to rely on EU law to protect its freedom to provide information society services across EU. Both times - in vain.

The legal dilemma in Uber France

The more specific question in the commented case was whether the aforesaid provision of French law - which prohibited and penalised the organisation of a system for putting customers in touch with persons who engage in the carriage of passengers in breach of applicable market access requirements - constituted "technical regulation" within the meaning of Directive 98/34/EC as amended by Directive 98/48/EC (later replaced by Directive 2015/1535). Relying on such an interpretation, Uber argued that the provision could not be enforced against it because it had not been notified to the European Commission.

Indeed, Article 8(1) of Directive 98/34/EC, as amended, required Member States to immediately communicate to the Commission any draft technical regulation including any "rules on services". Article 1(5) defined a rule on services as "requirement of a general nature relating to the taking-up and pursuit of [information society] service activities ..., in particular provisions concerning the service provider, the services and the recipient of services, excluding any rules which are not specifically aimed at [information society] services". The directive did not elaborate on the consequences of a failure to notify; however, according to the settled case law of the Court, such a failure renders the adopted technical regulation inapplicable and therefore unenforceable against individuals (see paras. 35-39 of Advocate-General's opinion).

Against this background the national court decided to stay the proceedings and ask the Court of Justice for an interpretation of Directive 98/34/EC, as amended.

Judgment of the Court

The judgment in Uber France does not come as a big surprise - indeed, the Court decided to follow its earlier line of reasoning as well as the argumentation of AG Szpunar (see also our post The Uber saga continues) and refused to provide the defendant with a helpful hand. The Court, once again, focused on the classification od services provided by Uber and found them to fall outside the scope of Directive 98/34/EC, as amended, and Directive 2006/123 on services in the internal market. Consequently, to the extent the national provision applied to services of this kind, the provision itself fell outside the scope of both liberalisation directives.

In this short entry I will not argue either in favour or against the classification made by the Court - the issue is by no means black-and-white and continues to divide the academic community. Instead, I will focus on the quality of legal reasoning in Uber France, of which, I believe, one could have expected more.

Comment

The questions referred by the national court in the commented case revolve around the nuanced terminology used in Directive 98/34/EC, as amended, particulary the notion of a "rule on services". One problematic element of this term - the quality of not being "specifically aimed" at information society services - was already highlighted before. In the subsequent paragraph Article 1(5) provides for further interpretative elements, which the referring court seemed to consider relevant.

The Court of Justice, however, did not elaborate on any of these elements. It limited itself to rejecting the qualification of services provided by Uber as information society services, holding that the intermediation service provided by that company was "inherently linked" to the offer transport services and thus constituted a service in the field of transport. In doing so, it relied on two criteria: the fact that the drivers and passengers would not have been led to provide or use the transport services without the Uber app and - the criterion which I personally find more convincing - the fact that Uber exercised "decisive influence" over the conditions under which the relevant transport services were provided (para. 21). The Court went on to recall that services provided by Uber also fell outside the scope of Directive 2006/123 on services in the internal market, which does not apply to transport. Because the judgment is essentially limited to these insights it does not bring anything new beyond what we already know from Uber Spain.

The Court's self-restraint may be frustrating to the reader, who may be tempted to look for more clues that the judgment actually provides. What, in my view, does not follow from Uber France is that an existence of a business model which falls under the national provision while not qualifying as an information society service automatically disqualifies such a provision as being "specifically aimed" at information society services. Assessment of the detailed wording of Article 1(5) of Directive 98/34/EC, as amended, including references to the statement of reasons of national provisions as well as to an implicit or incidental effect of such provisions on information society services can still be relevant. But does this make any difference for the procedural situation of Uber? The judgment in Uber France does not really tell.

* 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.

CJEU gives Member States a green light to regulate Uber

Just yesterday the Court of Justice delivered its judgment in one of the two high-profile cases brought before it with respect to the European operations of the US-based digital multinational Uber. The ruling in C‑434/15 Asociación Profesional Elite Taxi (or Uber Spain) comes as a serious blow to the company, which has continuously insisted to act merely as a provider of an online intermediation service. The Court has, however, largely followed the earlier opinion of the Advocate-General Szpunar (see our posts on both opinions here and here) and classified the activities of Uber as "services in the field of transport".

Why is this relevant?

Due to its socio-economic importance - both at the national level and from the internal market perspective - as well as specific features - particularly with respect to the (former) public or quasi-public transport networks - transport sector has traditionally been given a special treatment under the EU Treaties. For the similar reasons Member States have long been reluctant to open their national transport markets to liberalisation. As a matter of fact, it required an action brought by the Parliament against the Council to confirm the positive obligation of the latter to extend the freedom to provide services to that sector (case C-13/83 Parliament v. Council). This has led to an intensification of the legislative efforts aimed to remove the barriers to cross-border provision of different transport services - air, road, rail and water - and at the same time reaffirmed the specificity of the path taken in that area, resulting inter alia in the exclusion of "services in the field of transport" from the scope of Services Directive.

In the case at hand the specificity of the transport sector meets with another special area of the EU law - that related to the provision of the so-called "information society services". This domain, associated mainly with online activities, has been subject to a separate legal scheme - the E-Commerce Directive. 

The question thus appeared whether the activity of Uber - that is the provision of a paid service, by means of a smartphone application, consisting of connecting non-professional drivers using their own vehicles with persons wishing to make urban journeys - should be qualified as a service in the field of transport, an information society service, neither or both. Should the services in question fall under the scope of either Services or E-Commerce Directive, the liberalisation regime established in those acts would kick in, meaning that Member States would only be allowed to restrict their provision if specific conditions set out in those directives were fulfilled.

Judgment of the CJEU

The Court opted for an interpretation which is least favourable to Uber and leaves the widest margin of discretion to the Member States. Its reasoning appears to be largely based on the AG opinion, even though no direct references to that document are made. The following points are worth highlighting:

• The intermediation service consisting of connecting non-professional drivers with the passengers by means of a smartphone application is, in principle, a separate service from the underlying transport service and, again in principle, meets the criteria for classification as an "information society service" (paras. 34-35).
• However, the concrete service provided by Uber is more than an intermediation service. In the specific case at hand, the service of intermediation is rather an integral part of an overall service whose main component is a transport service (paras. 38, 40).
• This is because, as explained in paragraph 39, firstly, the intermediation service is "based on the selection of non-professional drivers using their own vehicle, to whom the company provides an application without which (i) those drivers would not be led to provide transport services and (ii) persons who wish to make an urban journey would not use the services provided by those drivers" and, secondly, Uber exercises "decisive influence" over the conditions under which that service is provided by the drivers (infuences prices, processes payments, engages in quality control).

Consequently, services provided by the company cannot be classified as information society services, but rather belong to services in the field of transport. This means that the activities of Uber fall outside the scope of the E-Commerce and Services Directives as well as Article 56 of the Treaty on the Functioning of the European Union. They are, by contrast, covered by Article 58(1) TFEU and further provisions applicable to the area of transport. This is of limited help to Uber as no common rules coverning the type of services provided within its business model (i.e. non-public urban transport) currently exist at the EU level. Member States, therefore, enjoy a wide margin of discretion when it comes to regulating the conditions under which services of that type can be provided. 

Concluding thought

The judgment is a significant defeat for Uber, which should probably brace itself for the upcoming ruling in the parallel French case. Its implications for other businesses belonging to the so-called "platform economy" may, nevertheless, be less far reaching than it can seem at first sight. After all, it is the specificity of the transport sector that left the services provided by the company outside the scope of both directives. Additionally, the reference to a "decisive influence", while not legally uncontroversial, suggests that it is only in fairly specific circumstances that an online service may fall outside the scope of the information society framework. Negative consequences of the judgment thus appear to be largely Uber-specific - at least for the time being. Or, as its critics might say, what goes around comes around.

* 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.

The Uber saga continues

Roughly two months ago we commented on the opinion of Advocate-General Szpunar in case C-434/15 Uber Spain. His conclusion that the popular ride-hailing platform should not be considered as an information society service, but rather as a transport service was very bad news for Uber. We also wrote that the same AG was currently drafting an opinion in a related case, C-320/16 Uber France, which left the provider of the (in)famous transport app with little grounds for optimism. The opinion was eventually published this Tuesday and, indeed, comes as no surprise.

Background of the case

The case deals with a specific provision of the French transport code, introduced in 2014. It prohibited and penalised the organisation of a system for putting customers in touch with persons who engage in the carriage of passengers in breach of applicable market access requirements. The provision was aimed as a new weapon for national authorities and private parties against providers of services such as UberPOP (part of the ride-hailing business model involving non-licensed private drivers). Soon after it came into force, the provision was put to test in the first proceedings.

Uber naturally fought back. It argued, among others, that the national provision invoked against it constituted a technical regulation within the meaning of Article 1(11) Directive 98/34/EC, as amended, and was therefore covered by the notification requirement laid down in Article 8(1) of that directive. According to the defendant, since no such communication had been made, the provision relied upon in the proceedings should be deemed inapplicable and hence unenforceable.

Two heavy blows from Advocate-General

"UberPOP not an information society service"

Advocate-General Szpunar was not convinced. He began the assessment by recalling his earlier opinion in Uber Spain, in particular the proposed guidelines as to how "composite services" (i.e. services consisting of a component provided by electronic means and a component not provided by such means) should be approached. What is more, he used the opportunity to make two additional points in support of his claim. First, he distinguished the type of activities pursued by Uber from the situation considered by the CJEU in case C-339/15 Vanderborght (see also our earlier blog post on that matter here). Furthermore, he drew a distinction between the case at hand and the legal relationship arising from a franchise contract. The AG concluded by reiterating his earlier view that services provided by Uber should not be classified as information society services, but rather as services in the field of transport.

"Either way, national provision at issue not a technical regulation"

The Advocate-General did not stop here, however. He went on to argue that the question of whether the contested provision of French law constituted a technical regulation could be resolved irrespectively of the classification of the UberPOP service. And, not surprisingly, also that line of reasoning was not very helpful to Uber.

The assessment focused on the wording of Article 1(5) of Directive 98/34/EC, as amended (on a side note, the act was recently repealed and replaced by Directive 2015/1535). The analysed provision defined "rules on services" as requirements of a general nature relating to the taking-up and pursuit of the activities of information society service providers, excluding any rules which are not specifically aimed at those services. It also clarified that "a rule shall not be considered to be specifically aimed at information society services if it affects such services only in an implicit or incidental manner".

The analysis started well for Uber. The Advocate-General agreed with the defendant that the contested national provision was "principally directed at systems for connecting the two parties by electronic means", thus rejecting arguments of the French government to the contrary. However, he went on to argue that - since the prohibition in question was limited to the organisation of a system for putting customers in touch with persons providing transport services illegally - the impact of that prohibition on information society services was merely incidental. 

In one of the most illustrative parts of the opinion the AG submitted: 

"If every national provision that prohibited or punished intermediation in illegal activities had to be regarded as a technical regulation merely because the intermediation most likely takes place by electronic means, then a great number of internal rules in the Member States, written and unwritten, would have to be notified as technical regulations. That would lead to an unwarranted extension of the obligation to notify without that really contributing to the attainment of the objectives of the notification procedure, the purpose of which is to prevent the adoption by the Member States of measures that are incompatible with the internal market and to enable economic operators to make more of the advantages inherent in the internal market. Instead of that, an excessive notification obligation, with the penalty of regulations that have not been notified being inapplicable, would facilitate circumvention of the law and engender legal uncertainty, including in relationships between individuals." (para. 31)

Concluding remark

The commented opinion deals with a delicate interface of regulation and innovation and is bound to attract mixed responses. One may wonder, for instance, how national provisions like the one at issue should be assessed in the light of Article 15 of Directive 2000/31/EC on electronic commerce and whether some sort of notification mechanism would not be desired to ensure compliance with this norm. The question would, of course, be devoid of meaning if the Court were to follow the AG's understanding of the nature of Uber's activity in the first place. In this respect the Advocate-General appears to share the view that the company, which he classifies as a transport company, should be distinguished from the "genuine sharing economy". Last but not least, it is worth noting that some of the criteria referred to by the AG in support of this claim overlap with the indicative benchmarks formulated by the Commission in its collaborative economy communication (particularly references to the level of control or influence exerted by the platform provider). Quite ironically, however, the Commission itself had reportedly been pleading - at least in Uber Spain - against the proposed line of reasoning. This shows that the matter remains highly controversial and its eventual resolution is far from clear. The doubts should be allayed by the end of this year.

* 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.

Services provided by Uber are services in the field of transport, not information society services - Advocate-General says

Earlier today, the long-awaited opinion of Advocate-General Szpunar in case C‑434/15 Uber Spain was published. The analysis concerns one of the two cases brought before the CJEU in connection with the controversial mobile app. The key question addressed in both cases is whether services provided by Uber should be classified as information society services or as transport services. This categorization is of paramount importance from the point of view of EU law.

The opinion is bad news to Uber Technologies Inc. and its European subsidiaries. The Advocate-General took the view that services provided by Uber do not constitute information society services, but should rather be regarded as services in the field of transport. Consequently, the activity of Uber falls outside the scope of both E-Commerce Directive and Services Directive. Such an interpretation would allow Member States to subject Uber to a number of sectoral requirements.

The opinion is based on several factual assumptions about the practical operation of the analysed business model. Primary focus remains on the service marketed as UberPOP. These factual elements are, of course, for the national court to verify. More importantly, however, the opinion also includes a more abstract interpretation of the legal issues at hand. If followed by the Court of Justice, the framework proposed by the AG could be used in the assessment of other digital business models. 

The essential part of the opinion concerns the notion of an information society service. By way of reminder, the term refers to "any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services" (Article 2(a) of Directive 2000/31/EC in connection with Article 1(2) of Directive 98/34/EC). Since the business model at hand involves both electronically and non-electronically supplied services, the following questions have arisen: 1) which services are actually provided by Uber and 2) are these services provided at a distance and by electronic means.

According to the AG, the decisive question in this respect is whether the service which is not supplied by electronic means is economically independent of the service which is provided by that means. The relevant framework of assessment is set out in para. 35, which reads as follows:

"Where the provider of the service supplied by electronic means is also the provider of the service not supplied by such means or where he exercises decisive influence over the conditions under which the latter service is provided, so that the two services form an inseparable whole, it is necessary to identify the main component of the supply envisaged, that is to say, the component which gives it meaning in economic terms. For a service to be classified as an information society service, this main component must be performed by electronic means."

Assessment of the Uber business model led the Advocate-General to believe that, in that factual context, the connection of passengers and drivers is neither self-standing, nor the main supply in relation to the supply of transport. Consequently, the service provided by Uber cannot be classified as an ‘information society service’. The opinion cites the examples of other digital services, such as platforms for the online sale of goods (para. 36) and platforms for the purchase of flights or hotel bookings (paras. 57-60), and draws a distinction between operators of such platforms an Uber. The AG also points to the difference between Uber and ride-sharing platforms, but does not elaborate on that aspect any further (para. 42). He similarly distances himself from competition and labour law issues.

The overall line of argumentation along with the conclusions reached are summarised in paras. 71-72 of the opinion.

71. (...) In the case of composite services, consisting of a component provided by electronic means and another component not provided by such means, the first component must be either economically independent of the second or the main component of the two in order to be classified as an ‘information society service’. Uber’s activity must be viewed as a whole encompassing both the service of connecting passengers and drivers with one another by means of the smartphone application and the supply of transport itself, which constitutes, from an economic perspective, the main component. This activity cannot therefore be split into two, for the purpose of classifying a part of the service as an information society service. Consequently, the service must be classified as a ‘service in the field of transport’.

72. I therefore propose that the Court should answer the first and second questions referred for a preliminary ruling as follows:

– Article 2(a) of Directive 2000/31, read in conjunction with Article 1(2) of Directive 98/34, must be interpreted as meaning that a service that connects, by means of mobile telephone software, potential passengers with drivers offering individual urban transport on demand, where the provider of the service exerts control over the key conditions governing the supply of transport made within that context, in particular the price, does not constitute an information society service within the meaning of those provisions.

– Article 58(1) TFEU and Article 2(2)(d) of Directive 2006/123 must be interpreted as meaning that the service described in the preceding point constitutes a transport service for the purposes of those provisions.

On a final note

The same Advocate-General is drafting the opinion in the second case involving Uber, namely C-320/16 Uber France, which leaves the American company with little grounds for optimism. Publication of the other opinion is scheduled for 4 July. Since opinions of AGs are not binding on the Court, Uber can, however, still hope that the CJEU will not follow the proposed line of argumentation.

* 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.