Unfair terms, mortgage enforcement and a consumer's fundamental right to accomodation - CJEU in Kušionová (C-34/13)

10 September 2014: CJEU judgment in Kušionová (C-34/13)

Today the CJEU handed down another important judgment in the field of mortgage enforcement (for previous case law have a look at Aziz and Sánchez Morcillo). This time it was not the Spanish, but the Slovak law of mortgage enforcement that was looked at by the CJEU. Contrary to the previous judgments, the national legislation was deemed to be in line with EU law.

In 2009, Mrs Kušionová took up 10.000 Euros. The loan was secured with the family home. The terms of Mrs Kušionová's bank (SMART Capital A.S.) contained a clause relating to extrajudicial enforcement of the charge on immovable property. This specific term stated that the creditor is able to enforce the charge without a court having the opportunity to review the clause. 

Under Slovak law, the sale by auction may be contested within 30 days of the notice of enforcement of the charge. After a public auction, the contesting person has a period of three months to take steps against the conditions under which the sale took place. According to Slovak civil procedure law, national courts may furthermore adopt any interim measure to prevent an auction from going ahead during an extrajudicial enforcement of a charge (like the one in the proceeding).      

The CJEU suggests that interim measures stopping the auction of a family home are adequate and effective means to prevent the continued use of unfair terms and are thus in line with the Unfair Terms Directive. Interim measures in general constitute an effective and dissuasive penalty for businesses infringing EU law. They are furthermore a proportional penalty if the national court deciding over the measures takes into account the fact that the property subject to the charge is immovable property forming the consumer's family home, the right to accomodation being a fundamental right guaranteed under the Charter of Fundamental Rights of the EU.

Although the Slovak legislation has already been changed (see nr 31 and 32 of the judgment), the CJEU's decision is interesting on a theoretical level as it  puts a strong emphasis on consumers' fundamental rights under EU law.

No delivery of EU order for payment = invalidity grounds - CJEU in joined cases eco cosmetics (C-119-121/13)

4 September 2014: CJEU judgment in joined cases eco cosmetics (C-119/13), Raiffeisenbank St Georgen (C-120/13) and Rechtsanwaltskanzlei CMS Hasche Sigle (C-121/13) 

 We have previously discussed the opinion of AG Bot in these cases on our blog (see You have been served!...). The three German cases concerned the possibility (or lack of) for a consumer to question the fact of the delivery of the order for payment after it has already been pronounced enforceable. The AG Bot argued that due to the specific character of the claims raised in this procedure of Regulation No 1896/2006 (pertaining non-contested monetary claims) and extraordinary form thereof (facilitating fast reimbursements), the defendant has to be given a real possibility of defence, which means ensuring he was properly and timely served with the order for payment. The CJEU agrees with the AG Bot that the balance between the defendant's right to defence and the claimant's interest in speedy and efficient procedure need to be observed. (Par. 37) If the defendant is not properly informed of the existence and basis of the EU order for payment issued against him, obviously he may not have all the necessary information to oppose it. (Par. 41) It has to, therefore, be established that if the defendant is not (or improperly) served the order for payment, the period for contesting the claim of Article 16 (2) never starts running, which means that even if the status of enforceability was given to the order, it may need to be invalidated. (Par. 43 and 48) Other remedies will need to be determined by national laws. (Par. 46-47) Practically speaking, if the order for payment is delivered to the defendant's address, the defendant does not contest it, so that it becomes enforceable pursuant to Article 18, the defendant may still refuse to pay and instead try to claim in front of the national court that the delivery of the order never took place. (Par. 49)

Financial Services and Jurisdiction: AG Szpunar in Kolassa (C-375/13)

3 September 2014: Opinion of AG Szpunar in Kolassa (C-375/13)

The Austrian resident Kolassa made claims against the British Barclays Bank based on prospectus liability (amongst others). He had acquired a bearer bond which lost all its value. The bonds had been issued by Barclays' German agency bank and were solely sold to institutional investors, not to private persons. The German DAB Bank AG bought some of these bonds and transmitted them to their Austrian subsidiary (direktanlage.at AG), who then sold it to the private investor Kolassa. Mr Kolassa himself was not the holder of the bond, but direktanlage.at, who held the bond in his own name and owed Mr Kolassa only a contractual obligation of delivery. The Austrian court dealing with the case had doubts about its jurisdiction and submitted several questions regarding the Brussels I Regulation to the CJEU.

As regards the application of Art 15 Brussels I Regulation, AG Szpunar suggested that Mr Kolassa himself is qualified as a consumer and that Barclays had directed its activities to the Member State of Mr Kolassa's domicile by having published the bond's prospectus in Austria. However, AG Szpunar answers in negative the question whether a contract was concluded between the parties of the dispute ('In matters relating to a contract...'). As a consequence, he deems Art 15 Brussels I Regulation not to be applicable.

The AG's reasoning why Art 5 Nr 1 lit a Brussels I Regulation is not applicable either is quite similar. He stresses the fact that, in the relation between Mr Kolassa and Barclays, there was no obligation freely assumed by one party towards another. The obligations Barclays had towards Mr Kolassa were thus not contractual in nature, but rather claims in tort, delict or quasi-delict within the meaning of Art 5(3) Brussels I Regulation. Prospectus liability clearly falls under Art 5(3) Brussels I Regulation. According to the AG, the harmful event occurred in the Member State of domicile of the 'holder' of a certificate, if the certificate's prospectus was published in this Member State and caused the holder's financial loss. Transferring this reasoning to the actual case, the Austrian court would have jurisdiction over the case. 

Finally, the Austrian court asked if, while determining its jurisdiction, national courts should only take into consideration the facts asserted by the applicant or whether they should rather conduct a comprehensive taking of evidence. On this topic, the AG suggested that national courts should evaluate the arguments of both sides, the applicant and the defendant, while not delaying the procedure with a comprehensive taking of evidence, which seems to be a reasonable solution.

Another preliminary procedure on financial services, this time in relation with the Brussels I Regulation. Let's see how the CJEU will decide!

CJEU in Germanwings (C-452/13): you have not arrived yet until you can actually get out of the plane

Imagine you are to travel on a flight scheduled to leave at 11:00 am and arrive at 1:00 pm. The flight is delayed, so you are wondering whether- under EU law, you might be entitled to compensation. Regulation  261/2004, as previously interpreted by the Court of Justice, establishes that compensation is due when the delay *at arrival* amounts to at least three hours.

The flight has touched ground at  3:58 pm, it has reached the terminal at 4:05 and the doors opened at 4:10. 

The answer to the question whether you can claim compensation depends on one basic issue: when has the plane actually "arrived"?

This was the question posed to the CJEU in Germanwings (C-452/13). Four possible answers were listed by the referring court:

(a)    the time that the aircraft lands on the runway (‘touchdown’);

(b)    the time that the aircraft reaches its parking position and the parking brakes are engaged or the chocks have been applied (‘in-block time’);

(c)    the time that the aircraft door is opened;

(d)    a time defined by the parties in the context of party autonomy.

The CJEU started with excluding the last option, absent any indication to this effect in the Regulation. Subsequently, it answered the question starting with the reason why compensation (as the Court had previously decided) is to be awarded in the first place, ie the fact that the travelers  have to endure an irreversible loss of time. Now, this loss of time is caused by the fact that, while on board of the airplane, the passengers' ability to communicate, move and attend to their normal activities is restricted. Such restriction is inevitable during the regular duration of a certain journey, but turns into damage when this duration is exceeded, originating a claim for compensation (see paras 19-21).

The restrictions that passengers have to endure, however, only come to an end when the latter are able to leave the aircraft- that is, when the doors open. For this reason, in the context of Regulation 261/2004 , whose sole aim is to grant "minimal rights" to passengers suffering various inconveniences when travelling (para 26), the notion of "arrival" has to be interpreted to mean the time that the aircraft door is opened- and the passengers are subsequently free to leave. 

In cases such as the one we started this post with, thus, having touched the ground a couple of minutes before the three hour "tolerance" period expires will no longer be an excuse for companies to deny passengers compensation   

The Data Brokers

Good video on dangers to consumers' privacy, on how data is gathered, trafficked and how we remain oblivious to it. See CBS' "60 Minutes - The Data Brokers" on YouTube or here.

Single Euro Payments Area (SEPA) a reality as of today

Today, the new Single European Payments area is officially in force. 

Based on the cooperation of European banks, the system provides a new way to make credit and debit payments (thus, including bank transfers) to any European country under the same conditions applicable to domestic payments. This should both enhance safety and decrease operation time. 

In practice, this implies that the costs of making a transfer/payment to another  SEPA-state (34 of them so far) should not exceed those charged for "internal" transfers. You should also be able to use your bank card to make payments abroad.

On the other side, if your system so far allowed you to make national transfers using only the receiver's bank account number (that is, without IBAN), that will no longer be possible.

More info? Take a look here!

Smart chips in your clothes, groceries, e-tickets

One of the worries with regards to consumers' privacy protection is that consumers often remain unaware of their data being gathered and processed by a specific party. This lack of awareness and/or knowledge reduces the consumers' ability to control their own data. With this in mind, a new EU-wide logo is being introduced that is meant to inform consumers which products/services they buy or use include a Radio Frequency Identification (RFID) technology, which means they contain a smart chip that allows traders' to track them. This technology is useful to traders since it benefits stock management and theft prevention. Still, it was questioned whether it sufficiently protected consumers, that is whether, for example, these smart chips were always successfully deactivated upon purchase and, therefore, consumer tracking was excluded. The new logo and data protection impact assessments that developers of RFID applications need to comply with are meant to ensure consumer privacy, pursuant to EU Data Protection rules. In general, the products will have to be more clearly labelled as containing these smart chips, consumers should be informed which data of theirs is being gathered and what devices could access it, etc. (Digital privacy: EU-wide logo and "data protection impact assessments" aim to boost the use of RFID systems)

Green paper on the Safety of Tourism Accommodation Services

The European Commission opened yesterday a public consultation with regard to the consumer safety when using tourism accommodation. While it is up to the Member States to assure the safety of tourism accommodation services, the European Commission recognizes that due to the often cross-border character of these services some quality and safety measures' standardisation could be needed. Even if as the result of the consultation it is decided that the measures used in different Member States do not need to be harmonised despite their variety, it may be necessary to ensure better information provision to tourists, so that they know what safety standards to expect in which countries and that their protection is adequate across Europe. The consultation is open until 30 November 2014 and the questionnaire may be filled by anyone interested in this matter on this website. The Green Paper is available here. We will report on the results of this consultation and any further steps taken in this legislative area next year.

IACL 2015 conference flyer and update

The talented Irene Falgueras López designed our first conference flyer (see below). Please feel free to share and drop me a line if you would like to receive a .pdf file version thereof. In the meantime, registration details for the conference have been added to our website. We expect registration to open around September this year. Remember that the call for papers is open until the 15th of November. We will be able to offer a few scholarships (conference fee waiver), at our discretion, to young authors (under the age of 35) coming from Asia, Africa and Latin America whose submissions distinguished themselves among all the answers to our call for papers.

EU Council on access to banking services and e-signatures

Yesterday the EU Council of Ministers adopted the Directive on the transparency and comparability of payment account fees, payment account switching and access to a basic payment account. As we have previously mentioned (Easy money), this new Directive aims to increase the transparency of payments in the EU, as well as ensure that EU citizens are able to open a basic account in any Member State regardless whether they are resident in it or what their financial situations looks like. The implementation deadline for the Member States is two years. (The right to a basic account for all European citizens: Commission welcomes Council adoption)

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The Council has also adopted a new Regulation on electronic identification, which aims at improving online cross-border transactions by enhancing trust in electronic transactions (see earlier post: Parliament endorsing proposed EU e-signature). It will allow parties involved in e-commerce to easily recognised and authenticate electronic transactions, and this mutual recognition is planned to occur in 2018. (Council adopts electronic identification rules)