ECJ: Also lawyers have to abide the Unfair Terms Directive ...

Today, the ECJ delivered its decision in Case C‑537/13, Birutė Šiba v Arūnas Devėnas.

The case concerned a series of non-negotiated contracts concluded by the parties and concerning legal assistance to be provided in the context of a series of court proceedings concerning Ms Šiba's private life. 

Later on, some controversy arose regarding the fees to be paid for such assistance and the matter ended up in a series of court decisions. In challenging the Appelate Court's decision in cassation,

Ms Šiba (or, we guess, her new lawyer!) argued that the previous courts failed to take into account her consumer status, which would have required the contracts to be interpreted to her advantage. 

Hence the questions raised by the referring court, which the ECJ summarised as follows:

whether Directive 93/13 must be interpreted as applying to standard-form contracts for legal services, such as those at issue in the main proceedings, concluded by a lawyer with a natural person who is acting for purposes outside his trade, business or profession.

 The Court concluded that the Directive is applicable, as no specific characteristic of the legal profession requires that contracts between lawyers and "client-consumers" (para 23) are exempted from unfair terms control. Except when such characteristics suggest otherwise, "[it] is [...] by reference to the capacity of the contracting parties, according to whether or not they are acting for purposes relating to their trade, business or profession, that the directive defines the contracts to which it applies" (para 21).

The lawyer herself renounces to this line of argument when she decides to "use standard terms which do not reflect mandatory statutory or regulatory provisions within the meaning of Article 1(2) of Directive 93/13" (para 27).

In particular, although the fact is not clearly spelled out in the decision, it seems likely that Mr Devėnas had argued that the confidential nature of the lawyer-client relationship stands against the disclosure of contracts for legal advice before a court (see para 31). The Court finds this defence ulikely to have a meaning, since "contractual terms which have not been individually negotiated, in particular those which are drafted for general use, do not contain, as such, personal information relating to lawyers’ clients, disclosure of which might undermine the confidentiality of the legal profession." (ibidem). Should such terms be specific to a particular client, there would be reason to consider them as negotiated terms- which would in turn make them exempt from control.

As such, however, the terms are generally subject to scrutiny.

This new decision joins Asbeek Brusse in expanding the reach of Directive 93/13 beyond its more straightforward domain of application- consumer sales and commercial services- into less explored domains. It will be interesting to see whether the ECJ's stance will influence consumer's attitudes to contracts for legal assistance- especially considered that this would require lawyers to challenge the terms adopted by some of their colleagues...

Towards even more transparent air fares - CJEU in C-573/13 (Air Berlin)

15 January 2015: CJEU judgment in case C-573/13 (Air Berlin)

The Court of Justice decided today in another case on price transparency of air fares that originated in Germany. Again, provisions of the Regulation 1008/2008 on common rules for the operation of air services in the Community have been addresses (previously a subject of a judgment in the ebookers.com and Vueling Airlines cases).

The online selling practices of the airline Air Berlin were at issue here. When consumers open a website of this airline they may select their flight destination and a date and then are re-directed to a website showing all possible flight connections fulfilling their requirements in a table. The computerised system automatically pre-selects the cheapest flight connection for the consumer and for that option indicates the air fare, separately surcharges, as well as the total flight price, incl. the service charge. If the consumer selects a different option, then the prices are adjusted to reflect prices of that connection. However, only the final price of the selected flight is showed at any given time.

German consumer organisations questioned this practice on two grounds: 1. they claimed that the Regulation obliges the airlines to indicate the full price for air services when the prices of air services are shown for the first time; 2. they claimed that the Regulation obliges airlines to indicated full price for air services for all possible connections and not only for the connection selected by a consumer.

The CJEU agreed with this interpretation in its judgment today. Article 23 of the Regulation indicates that the final price to be paid must be showed to the consumer "at all times", without a distinction between the moment when the price is indicated for the first time, when the consumer selects a particular flight or when the contract is concluded. (Par. 25) This reasoning is supported by the aim of the Regulation to enable effective price comparison to consumers. (Par. 34)

In practice this should mean that when we are in the future booking flight tickets online we should no longer have to click between different connections offered by the airline to see how the final price would change if we decided to take a different flight than the one recommended by the airline or selected by us (see the picture). Final prices for each and every connection change should be automatically listed from the start, next to that connection. Showing differences among the air fares is insufficient.

Contestable notice on contesting jurisdiction

The new Brussels I Regulation (1215/2012) (recast) intends to improve protection granted to weaker contractual parties in cross-border cases by obliging the national courts in Art. 26 Par. 2 to inform, among other weaker parties, the consumer that he has the right to contest the jurisdiction of the court if this is not the court of the Member State in which the consumer is domiciled. This needs to occur before the court assumes jurisdiction due to the consumer's appearance in this court. Alongside with the warning to the consumer, she should receive an information what happens if she enters or doesn't enter an appearance. The European Judicial Network in civil and commercial matters established a (luckily) non-mandatory standard text for this information (may be found here). I sincerely hope that national courts decide not to follow this advisory text, since in my opinion it fails to provide the most important part of this warning: namely inform the weaker party that it may be a weaker party and therefore could question the jurisdiction under rules as outlined above. See yourself:

"You are being sued before the court of a Member State of the European Union under Regulation 1215/2012.
Under Article 26 of this Regulation the court before which a defendant enters an appearance shall - in principle - have jurisdiction even if jurisdiction cannot be derived from other provisions of the Regulation.
This rule, however, does not apply where appearance was entered to contest jurisdiction.
If you are certain that the court has no jurisdiction under the other provisions of the Regulation, you need not respond to the lawsuit in any way. If you have doubts about the issue of jurisdiction, it is advisable that you challenge jurisdiction of the court prior to entering into the subject-matter of the lawsuit."

How is the consumer to be certain that the court has no jurisdiction if she is not informed that:

1. special jurisdiction rules apply to consumers;

2. what these rules are?

Are we now assuming that every EU consumer is familiar with Brussels I Regulation (recast) and can understand its provisions?

And even if by chance the consumer had doubts about the jurisdiction, the information on how to challenge jurisdiction is missing from the notice. While short information notices are to be recommended, in the interest of brevity the most important information should not be left out.

Press digest

Food

An interesting article in Newsweek on food consumption in the EU, health concerns as well as environmental issues related to our eating habits: Why Europeans Should Be Paying More for Their Food.

Electronic payments

Forbes addresses the opposition of European consumers supported by the American lobby toward the newly agreed on EU plans to cap interchange fees for electronic payment transactions. Apparently, similar laws previously adopted in the US didn't lead to any savings for the consumers but only contributed to raising products' prices: EU's Plan To Implement Interchange Fee Caps Will Raise Costs for Consumers. Interestingly, BEUC supports the change: EU deal struck to curb card transaction fees.

The European Banking Authority published its guidelines on the security of Internet payments in December 2014 (see here) that are to apply at the latest as of 1st of August 2015. Payment Service Providers will have to among other strengthen the consumer authentication process online to prevent fraud. Guidelines to strengthen requirements for the security of internet payments.

Energy efficiency of household appliances

New EU rules on how to save energy on the consumption and use of household appliances started binding as of 1 January. These rules require that household appliances switch to a stand by mode, requiring lower energy consumption after a short period of inactivity. The average saving on electricity per year for a household should amount to ca 30 GBP. E.g.: Tepid coffee anyone?..., Smart TVs will have to switch themselves OFF overnight... .

Apple

Apple has adopted its terms and conditions for European consumers that fall in line with the Consumer Rights Directive. Contrary to customers e.g. in the US, European consumers of e.g. iTunes are granted the 14-day right of withdrawal from a digital purchase, except when they purchase digital gift cards that have been redeemed in this period. E.g.: Apple gives EU consumers refund option for apps, music. While the Directive allows for already consumed digital content to be excluded from the application of the right of withdrawal Apple doesn't seem to introduce such a distinction. Apple's Lenient Return Policy in Europe for Digital Purchases Draws Ire of Developers.

More GMO products for EU consumers?

This morning the European Parliament debates a possibility to grant more flexibility and authority to the Member States with respect to regulating GMOs on their own territory. So far the EU laws were quite strict as to the risk assessment that needed to be conducted by the European Food Safety Authority prior to allowing the GMOs on the territory of the EU. Currently only one GMO crop is allowed in the EU, but some Member States prohibited even this crop (GMO cultivation in the EU).

Judges in Utopia

Happy New Year, dear readers! For those among you whose interest in European consumer law extends to the broader theoretical framework within which developments in this field may be embedded, I would like to take the opportunity to combine good wishes for an eventful consumer law year with an announcement of my new blog on 'judicial law-making in European private law'. 

The blog will present results of a research project named 'Judges in Utopia', which is funded under NWO's Vidi scheme and aims to further develop private law theory on the interaction among European and national judges in the resolution of private legal disputes within the EU, including cases on consumer contracts.

You can visit my blog on judgesinutopia.blogspot.com

Readers with an interest in possibly joining the research project might also wish to check out two current vacancies in the project, one for a PhD researcher and one for a post-doc researcher (deadline for applications: 30 January 2015).

Finally, blog entries with a relevance to both European consumer law and the role of the judiciary will be posted on both blogs.

Merry Christmas to all our readers!

All the best wishes for the upcoming festive season to our readers! Enjoy your Christmas shopping, delicious meals and family time. Be aware of your consumer rights, too!

Burden of proof of fulfilment of pre-contractual information duties on credit provider - CJEU judgment in Case C-449/13 CA Consumer Finance

Today, the Court of Justice of the EU delivered its judgment in the case of CA Consumer Finance v Bakkaus and Bonato, concerning the pre-contractual obligations of credit providers. For a summary of the facts of the case, I refer to an earlier blog post on AG Wahl's opinion in the case ('Evidence of disclosure in consumer cases').

In line with the AG's opinion, the Court places the burden of proof of having fulfilled pre-contractual information duties on the credit provider. Moreover, the credit provider cannot shift the burden of proof to the consumer through a standard term. 

The Court rules:

'1.      The provisions of Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC must be interpreted to the effect that:

–        first, they preclude national rules according to which the burden of proving the non-performance of the obligations laid down in Articles 5 and 8 of Directive 2008/48 lies with the consumer; and

–        secondly, they preclude a court from having to find that, as a result of a standard term, a consumer has acknowledged that the creditor’s pre-contractual obligations have been fully and correctly performed, with that term thereby resulting in a reversal of the burden of proving the performance of those obligations such as to undermine the effectiveness of the rights conferred by Directive 2008/48.

2.      Article 8(1) of Directive 2008/48 must be interpreted to the effect that, first, it does not preclude the consumer’s creditworthiness assessment from being carried out solely on the basis of information supplied by the consumer, provided that that information is sufficient and that mere declarations by the consumer are also accompanied by supporting evidence and, secondly, that it does not require the creditor to carry out systematic checks of the veracity of the information supplied by the consumer.

3.      Article 5(6) of Directive 2008/48 must be interpreted to the effect that, although it does not preclude a creditor from providing the consumer with adequate explanations before assessing the financial situation and the needs of that consumer, it may be that the assessment of the consumer’s creditworthiness means that the adequate explanations provided need to be adapted, and that those explanations must be communicated to the consumer in good time before the credit agreement is signed, without this, however, requiring a specific document to be drawn up.'

See also the CJEU's press release.

European scrutiny of data processing by natural persons - CJEU judgment in Case C-212/13 Ryneš

This morning, the Court of Justice of the EU handed down a judgment that has important implications for the processing of personal data by private persons. In the Czech case of Ryneš v Úřad pro ochranu osobních údajů the Court established that the European Data Protection Directive applies to a video recording made with a surveillance camera installed by a person on his family home and directed towards the public footpath. It thus clarified to what extent horizontal legal relationships among natural persons fall within the sphere of scrutiny of the Directive.

The case concerned Mr Ryneš, whose family and home had been subject to attacks by unknown individuals between 2005 to 2007. In response to the attacks, he installed a surveillance camera under the eaves of his home, which recorded the entrance to his home, the public footpath and the entrance to the house opposite. A video recording made it possible for the police to identify two people who attacked Ryneš's home in October 2007, breaking a window by a shot from a catapult. In the criminal proceedings against the two suspects the question arose whether the Data Protection Directive applied to Ryneš's use of the camera. This question is of relevance for private legal relationships, since the 'processing of data in the course of a purely personal or household activity' is excluded from the scope of the Directive and, therefore, not subject to the rules on data protection laid down in this instrument.

The CJEU reaches the conclusion that Mr Ryneš's use of the surveillance camera cannot be included in the exemption and, therefore, falls within the scope of the Directive:

'The second indent of Article 3(2) of Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data must be interpreted as meaning that the operation of a camera system, as a result of which a video recording of people is stored on a continuous recording device such as a hard disk drive, installed by an individual on his family home for the purposes of protecting the property, health and life of the home owners, but which also monitors a public space, does not amount to the processing of data in the course of a purely personal or household activity, for the purposes of that provision.'

According to the Court, the use of the camera does not qualify as 'processing of data in the course of a purely personal or household activity', since this provision should be narrowly interpreted:

'27. As is clear from Article 1 of that directive and recital 10 thereto, Directive 95/46 is intended to ensure a high level of protection of the fundamental rights and freedoms of natural persons, in particular their right to privacy, with respect to the processing of personal data (see Google Spain and Google, C‑131/12, EU:C:2014:317, paragraph 66)

28. In that connection, it should be noted that, according to settled case-law, the protection of the fundamental right to private life guaranteed under Article 7 of the Charter of Fundamental Rights of the European Union (‘the Charter’) requires that derogations and limitations in relation to the protection of personal data must apply only in so far as is strictly necessary (see IPI, C‑473/12, EU:C:2013:715, paragraph 39, and Digital Rights Ireland and Others, C‑293/12 and C‑594/12, EU:C:2014:238, paragraph 52).

29. Since the provisions of Directive 95/46, in so far as they govern the processing of personal data liable to infringe fundamental freedoms, in particular the right to privacy, must necessarily be interpreted in the light of the fundamental rights set out in the Charter (see Google Spain and Google, EU:C:2014:317, paragraph 68), the exception provided for in the second indent of Article 3(2) of that directive must be narrowly construed.'

Natural persons can, therefore, not easily escape scrutiny of data processing under the Directive. Only such activities as correspondence or keeping an address book are exempted. Camera surveillance, insofar as it, even partially, covers a public space is 'directed outwards from the private setting of the person processing the data in that manner' and is therefore not excluded from the Directive's scope.

Importantly, the Court adds that the national court, when assessing the data processing, should take into account legitimate interests pursued by the data controller (in casu, Mr Ryneš) in protecting the property, health and life of his family and himself. Thus, it is up to the national court to balance the interests of the parties within the legal framework set out by the Data Protection Directive. An interesting example of both Europeanisation and constitutionalisation of private legal relationships.

See also AG Jääskinen's Opinion in the case and the CJEU's press release.

Ex Officio Examination of the Status of the Buyer and Burden of Proof in Consumer Sales - Opinion AG Sharpston in case Froukje Faber (C-497/13)

27 October 2014: Opinion AG Sharpston in case Froukje Faber (C-497/13)

Today AG Sharpston handed down her opinion in a case where the consumer Froukje Faber bought a used car from Autobedrijf Hazet. The Dutch court of second instance dealing with the case asked for an interpretation of the  consumer sales directive. 

The car caught fire four months after having been handed over to Ms Faber. Neither in the proceeding in the first nor in the second instance Ms Faber claimed that she had bought the car for private purposes. The court asked if it had to examine out of his own motion - in violation of national rules and as a duty arising from the directive - whether the purchaser is a consumer. Unsurprisingly, GA Sharpston argued that national courts have this duty (due to the principle of effectiveness).

The wreck had been dismantled before the cause of the fire was found out. The Dutch court asked if it had to apply Art 5 (3) which partially reverses the burden of proof for the benefit of consumers ex officio, a question the GA answered in the affirmative. According to GA Sharpston, the consumer has to proof the lack of conformity if the latter becomes apparent within six months of delivery. He or she, however, does not have to show the cause for the lack of correspondence. For the present case this means that Ms Faber has to show that the fire occurred and '...why, as a result of the fire, she considers that the car which was delivered to her did not correspond with the car which, based on the contract and other relevant information, she had expected to receive. ... in the present case, it may be sufficient for Ms Faber to show that the product can no longer (properly) perform the function for which it was purchased...'. It is then up to the seller to proof that the car was in conformity with the contract at the moment of delivery. 

The Netherlands made use of the possibility to introduce a rule under which the buyer has to notify the seller about the presumed lack of conformity of the good in due time (Art 5 [2] consumer sales directive). The Dutch court asked how far this duty to notify goes. AG Sharpston highlighted that the buyer, when notifying the seller, does not yet have to proof the lack of conformity.