Roam like at home default for all - CJEU in C-539/19

Dear readers, 

as you may have suspected already, the CJEU went back in session this past week and delivered a good number of judgments and opinions of interest to consumer law aficionados. While other cases may deserve complex scrutiny, hereby a short notice on a less complicated, but still somewhat impactful, decision: Verbraucherzentrale Bundesverband v Telefónica Germany.

The case concerns the interpretation of Regulation 2015/ which introduced "Roam like at home" (RLAH) as the rule within Europe, effectively ending roaming charges in the EU for most telecom customers. Unlike other companies, Telefonica Germany (OZ) had not immediately transferred all its customers to a RLAH regime on the day (15 June 2017) the regime was supposed to enter into effect. In particular, customers who, prior to that date, had acquired a special roaming package with the company were not automatically transferred: instead, they were asked to opt in for RLAH - lacking such express action, their previous contractual conditions were kept in place. 

Offering specific roaming packages tailoring to the needs of particular groups of consumers is allowed after 15 June 2017 under art 6e(3) of the regulation, providing that  roaming providers may offer, and roaming customers may deliberately choose, a roaming tariff other than the one offered under RLAH terms. 

In practice, Telefonica maintained that an invite to customers to opt in RLAH was enough to guarantee that staying with the alternative tariff was a deliberate choice as required by the provision; the Verbraucherzentrale disagreed and the CJEU concurred in such disagreement. 

The court considered the possible advantages and disadvantages of opt-in and opt-out for introducing RLAH and concluded that nothing - from the letter of the regulation to the intention of abolishing roaming charges - could be read to suggest an interpretation of deliberately not requiring RLAH to be the default option in case of consumer inaction. 

The fact that no AG opinion was submitted on this case suggests not many sleepless nights were required to reach this conclusion, which may or may not open a complicated file for Telefonica: since the original proceedings were an injunction against the company's implementation of the Regulation, it is unclear whether other remedies will be sought. 

Zotero database: Consumer Law Female Collective

Research shows that works of female scholars are less likely to be referred to than publications written by male authors (see e.g. on gender gap citations here). Is this the case in the field of consumer law studies, as well? These questions were raised in a conversation of my colleagues: Prof Vanessa Mak (University of Tilburg, the Netherlands) and Dr Christine Riefa (Brunel University, UK). They decided to organise an online meeting with a few other female scholars working in the field of European consumer law to discuss whether we could see any potential gender gaps, as well as brainstorm ideas on how to address them. This led to the beginning of the Consumer Law Female Collective this summer.

One of the ideas coming from the meeting was to create a database for female (at least co-)written scholarship and share it publicly. This should raise the awareness of female scholarship in this field, hopefully increasing the amount of citations to this body of work. I found some time over the past few weeks to set it up on Zotero, as it allows for an easy way to share it publicly. The database is open, which means all our readers can have access to it (although registration with Zotero will be necessary to do so). You may (and we hope you will) share this database with your students, colleagues, co-workers and anyone interested. We hope that this will help to diversify the curriculum for many consumer law classes, too.

 

We have introduced a detailed structure, hopefully allowing for an easy overview of sources, but the search function of the Zotero app facilitates an easy access, too. At the moment, we have over 100 sources in the database and many different sub-collections, but this is just the beginning. Therefore, dear readers, please feel free to send us suggestions what sources should further be added, what collections (sub-collections) you are still missing, etc. Our email address is: conlaw.fc[at]gmail.com When you are sending us your suggestions, please do so by giving us links to the publisher's websites for any journal articles, book chapters or books, as this facilitates adding these sources to Zotero. The main collections contain sources published in the English language but we are not opposed to the idea of creating sub-collections to sources written in other languages. The database is focused on European consumer law. With time we may, however, want to add sub-collections on other consumer legal systems.

We have now seven registered members of the Zotero Consumer Law Female Collective database group, with rights to add/edit the database, these are: Dr Andrea Fejos (University of Essex, UK), Dr Lorna Gillies (University of Strathclyde Glasgow, UK), Dr Joasia Luzak (University of Exeter, UK), Prof Vanessa Mak (University of Tilburg, the Netherlands), Dr Kristin Nemeth (Universität Innsbruck,  Austria), Prof Charlotte Pavillon (University of Groningen, the Netherlands), Dr Christine Riefa (Brunel University, UK). If you were interested in having the rights to edit the database, please let us know, as we may want to add a few members to the editorial group.

Quality of hotel accommodation - of some concern to airlines - CJEU in Niki Luftfahrt (C-530/19)

Another judgment issued today also elaborates further on the provisions of Regulation No 261/2004 - in the case Niki Luftfahrt (C-530/19). Here, the question was raised by an Austrian court as to the interpretation of Article 9(1), which provides passengers with the right to care from the air carriers when there are hindrances to the scheduled flight. This right to care includes an obligation for air carriers to offer passengers free of charge hotel accommodation, when an overnight stay or a stay additional to the one intended by the passenger becomes necessary.

The passenger's flight from Mallorca to Austria was cancelled and the passenger was rebooked for the following day. The air carrier offered accommodation free of charge to the passenger in a local hotel. The issue arose as to the quality of this accommodation. The passenger used a wheelchair, the front wheels of which got caught in a pathway of the accommodation, resulting in the passenger falling and becoming seriously injured. The passenger raised a claim for damages from the operating air carrier for the negligent behaviour of the hotel employees.

The national courts were in disagreement whether the air carrier should bear responsibility for this consequential damage on the basis of Article 12 Regulation No 261/2004; whether for example the facts could classify this situation as a poor performance of obligations from Article 9(1), which could be seen as non-performance of this obligation (para 16). Overall, the national courts wanted to know how far the obligations of the air carrier stretch under this provision - only to the selection of the accommodation and offering it to passengers, or do they also cover performance of this service (which could make the air carrier liable for the conduct of the hotel employees) (para 17).

The Court's judgment essentially limits the liability of the air carriers to selecting the hotel accommodation and offering it to passengers. The air carrier does not have any responsibility to 'take care of the accommodation arrangements as such' (para 31). This is justified by the CJEU by the wording of Article 9(1)(b), which aims at taking away the burden from stranded passengers of finding accommodation and paying for it (para 24). This signifies, in fact, that the airline presents an option to passengers, but it will be the passengers who are contractual partners of the hotel (to that extent: para 28). Still, the CJEU highlights the air carriers obligations towards passengers with reduced mobility following from Article 9(3) and Recital 13 Regulation 261/2004. The air carrier should check whether the offered accommodation is capable of meeting reasonable expectations of passengers with reduced mobility and, where appropriate, notify the hotel of such needs of the passengers (para 29). Consistently, the CJEU further rejects the premise of the liability of air carriers for the damage that passengers experience in the accommodation due to the fault of the hotel employees (para 40). One interesting observation made is attention given to reiterate the rule that Regulation No 261/2004 does not allow for claims for individual compensation/damages, but only provides for standardised and immediate compensatory measures (paras 36-39).

Paragraph 29 of the judgment is the most relevant for consumer protection, as it does emphasise the need for the airlines to pay at least some attention to the quality of hotel accommodation they are offering to more vulnerable consumers. However, even if the airlines failed in performance of this obligation, paragraphs 36-39 clarify that passengers would not be able to claim full damages for the harm that they have suffered as a result.

Compensating passengers in national currencies - CJEU in Delfly (C-356/19)

The CJEU is back after the summer holidays and we are as well. One of the judgments issued today was in the Polish case Delfly (C-356/19), in which a Polish court asked for clarification of the provisions on the payment of compensation for cancelled/delayed flights pursuant to Regulation No 261/2004.

The consumer in this case had a flight delayed for more than 3 hours from a third country to Poland, which entitled her to 400 Euro compensation pursuant to Article 7(1) Regulation No 261/2004. The question raised in this case was whether the consumer could claim the amount of this compensation in another currency than Euro, namely in Polish zloty (PLN). Polish law - Article 358 Civil Code - specifies that for obligations denominated in foreign currency without an agreed conversion to PLN, the creditor may demand only payment in that foreign currency and it is up to the debtor to choose/agree to a payment in PLN instead. Polish procedural law prevents the consumer further from adjusting the claim that has already been made in PLN to the one expressed in EUR. Unsurprisingly, the air carrier used these legal provisions to reject the passengers' claim.

The CJEU is asked whether Polish law complies here with the provisions of Regulation No 261/2004 and the answer also does not come as a revelation: national law should not stand in the way of passengers claiming their compensation pursuant to Regulation No 261/2004 in national currencies of their place of residence, not just in Euro.

It is worth noting that Regulation No 261/2004 determines the compensation amounts in Article 7(1) Regulation 261/2004 in Euros, without further addressing a possibility of passengers making claims in other currencies, methods of conversion etc (para 20). This should not lead to a contrario reasoning, however, that without an express mention of claims calculated in other currencies such claims are prohibited (para 21). As the CJEU has many times observed Regulation intends to award a strong protection framework to air passengers and their rights should be interpreted broadly (paras 22-24). The CJEU is of the opinion that considering the standardised character of the compensation, and that it is supposed to apply to passengers irrespective of their nationality and place of residence, if it were limited to payment in Euro it could restrict the way this right was exercised (para 26) and it could lead to different treatment of passengers in comparable situations (para 30). The principle of equal treatment could be infringed if compensation could only be paid out in Euro, as only for some passengers that would be the currency of their place of residence. It is for the national law to determine how the conversion from Euro to national currency should take place (para 33).

Commission's public consultation on the New Consumer Agenda

European Commission published a survey, answers to which will inform the future policymaking in the area of consumer protection. The first part of the questionnaire asks more general questions about the New Consumer Agenda (what should be prioritised), whilst the following three parts are devoted to various specific issues: sustainability/green consumption, review of consumer credit instruments, review of product safety framework. The survey is open until 6 October and all stakeholders, including (vulnerable) consumers, are invited to participate and express their opinion. Not all questions require an answer to submit the survey and it can be filled in stages, as it facilitates saving a draft of the answers. The link may be found here. Speak up!

Don't forget about the price tag: judgment in Spanish cases on mortgage costs and legal costs

Another judgment we haven't yet reported on this blog is the CJEU's judgment in Joined Cases C-224/19 CY/Caixabank and C-259/19 LG and PK/BBVA. In short, the judgment pertains to a clause that imposes the costs of vesting and cancelling a mortgage on the (consumer-)debtor, which can be viewed as an unfair term. Moreover, the judgment pertains to the limitation period that applies to claims for reimbursement - the topic of the day, see our previous blog - and legal costs.

The cases on mortgage costs, "gastos hipotecarios", have drawn a lot of attention in Spain. The CJEU 's judgment of 16 July 2020 in Caixabank opens the door to an estimated 8 million consumers who have taken out a mortgage and can now bring a reimbursement claim against their bank. Click here for an overview of costs that may be involved, including a registration fee. From the perspective of EU consumer law, the first part of the judgment is not even that revolutionary: if the cost clause at issue is found to be unfair, the consumer is entitled to reimbursement of the costs paid on the basis of that clause. In this respect, the CJEU confirms what it held earlier in Gutiérrez Naranjo: nullity is nullity. An exception is only possible if there is a national legislative provision - i.e., not the clause itself - that serves as a basis to impose costs on the consumer. In Spain, such an exception only exists for the so-called "Impuesto de Actos Jurídicos Documentados" (IADJ, a mortgage tax).

The second part of the judgment confirms earlier case law, in particular Gómez del Moral Guasch and Kiss and CIB on core terms and transparency. Articles 4(2) and 5 of the Directive preclude national case law that deems a contractual clause to be transparent in itself, without an analysis of whether it constitutes a core term and whether it is drafted in plain and intelligible language. The CJEU adds that the mere fact that the costs involved are part of the total price of a mortgage loan does not mean that they must be considered as relating to the main subject matter of the contract. In respect of opening costs - a fixed fee for setting up the mortgage - the CJEU concludes that the clause may cause a significant imbalance to the detriment of consumers when the bank cannot prove those costs reflect actual services or expenses.

According to the Spanish Supreme Court, the bank must pay 100% of the registration fee; the notary fee and administration costs must be split 50/50 between the parties. One of the referring judges in the Court in First Instance of Palma de Mallorca doubts this, because administration and taxation costs are made in the interest of the bank and the consumer has no other choice.

Your blogger is not the only one who finds the part of the judgment on the limitation period for reimbursement claims more interesting. Such a limitation period should not make it practically impossible or excessively difficult for consumers to exercise their rights. The CJEU reiterates that if the limitation period would start at the conclusion of the contract, irrespective of consumers' knowledge or awareness of their rights, this could run counter to the principle of effectiveness and the principle of legal certainty. In national case law, a 5-year period is applied that starts running from the moment a term is found to be unfair. The first time the cost clause at issue was declared unfair by the Spanish Supreme Court was on 23 January 2019. This would mean the limitation period does not expire until 5 years later, but there is no legislative provision currently governing this.

As regards legal costs, the CJEU holds that they may be an obstacle that deters consumers from exercising their rights. Pursuant to Article 394 of the Spanish Code of Civil Procedure, no cost order is issued - and the parties bear their own costs - if the claim is only partially awarded. If the consumer's request for nullity is granted, but the cost order is made dependent on the amount to be reimbursed by the bank, this may have a deterrent effect. Therefore, the principle of effectiveness precludes the application of Article 394 along these lines. Once the clause is found to be unfair, the bank should pay the legal costs.

Knowledge is key: judgment in Joined Cases C-698/18 and C-699/18 Raiffeisen Bank and Société Générale

Earlier this month, the Court of Justice of the European Union gave judgment in Raffeisen Bank and Société Générale, two joined cases from Romania on limitation periods and Directive 93/13/EEC. This is not the first time we write about this topic; see e.g. our blog on Cofidis II, where it was observed that limitation periods as such are not necessarily incompatible with the principles of equivalence and effectiveness in EU law.[1] But they can be, as the CJEU's judgment of 9 July 2020 demonstrates, where they prevent consumers from claiming reimbursement of amounts paid on the basis of unfair terms in a credit agreement.

Source: wikipedia.org

Earlier case law of the CJEU reveals that knowledge or awareness on the part of consumers of their rights plays a crucial role in the assessment of cases on limitation periods.[2] Raiffeisen Bank confirms this.The CJEU reiterates that reasonable time limits for bringing proceedings, laid down in the interests of legal certainty, do not make it practically impossible or excessively difficult as such for consumers to exercise their rights conferred by EU law, if such time limits are sufficient in practical terms to enable them to prepare and bring an effective action. Under the rules at issue in Raiffeisen, however, a three-year limitation period started to run from the time when the contract - here: a credit agreement - had been performed in full. That is when the consumer was presumed to have known of the unfair nature of one or more unfair terms of that agreement. According to the CJEU, it is nevertheless possible that the consumers involved are not aware of this, which means the limitation period is likely to have expired before they can take action. This runs counter to the principle of effectiveness. Moreover, performance of the contract does not retroactively alter the fact that the consumer was in a weak position at the time it was concluded. The protection of Directive 93/13 is therefore not limited solely to the duration of the performance of the contract in question.

Under Romanian law, the unenforceability of unfair terms is equated with absolute nullity, the effect of which is restitutio in integrum. The limitation period normally begins to run when the court establishes the cause of action, not on the date of full performance of the contract. The CJEU holds that such a difference in treatment of consumers cannot be justified on grounds of legal certainty. Thus, the rules appear to run counter to the principle of equivalence as well.

In Case C-698/18, the action for reimbursement was brought within three years after the agreement had expired. The CJEU's judgment suggests that this does not matter; it is inconceivable that a limitation period would expire when the consumers involved are not even aware of the unfair nature of the terms of the agreement.
In Case C-698/18, the action was brought 11 years after the agreement had expired. But the agreement was concluded in 2003, i.e. before Romania's accession toe the EU in 2007. Thus, the CJEU did not have jurisdiction.

An important difference between Raiffeisen and Cofidis II is that in Cofidis, the consumer was the defendant, not the claimant. In that case, consumers should not lose their rights merely because a claim against them is brought after expiration of a limitation period. Again, what is decisive here is the risk that they have never been aware of their rights before they were able to invoke them. Knowledge is key.


[1] See also our blog on OPR-Finance. 
[2] See further this contribution by Daniël Stein, available only in Dutch. 

EuCML journal: call for a new editor

EuCML is growing and looking for a new member of its editorial team – to join the articles’ editors.

EuCML (Journal of European Consumer and Market Law) has grown from strength to strength. The journal is now a well known fixture in the consumer and market law landscape, attracting high quality pieces and established authors from all over Europe. We receive a high volume of contributions.

EuCML is a flat structure journal. The editors attend regular Skype Meetings to prepare new issues. The current editors are split in teams corresponding with the section of the journal and all handle pieces and contact with authors. We are looking for an academic to join us (with a specialisation in data protection – broadly understood). The new editor would join the articles’ team and help us handle the new articles coming in. The process includes:

-    Receiving articles, contact with authors,
-    Identification of potential reviewers, contacting reviewers, management of review process (ensuring reviewers stick to deadlines), feedback to authors
-    Checking new versions of articles and use of reviewers’ comments
-    Advice on use of OSCOLA (our referencing system) to authors
-    Editing pieces (all in English)

To apply, please send a CV and covering letter to Christine.riefa@brunel.ac.uk by 30 September 2020. The EuCML editors will interview in the first week of November. The position is open and will start immediately upon appointment (unless otherwise agreed with the successful candidate). All editors are unpaid for their work.

The EuCML editors.
Christoph Busch, Alberto De Franceschi, Mateja Durovic, Joasia Luzak, Vanessa Mak, Jorge Morais Carvalho, Kristin Nemeth, Rupprecht Podszun, Christine Riefa.

Loan extension fees are within 'total cost of credit' - the CJEU in C-686/19 Soho Group

Yesterday the CJEU delivered another interesting judgment on consumer credit, C-686/19 Soho Group v Pateretaju tiesibu aizsardzibas centrs. This time the case involved the interpretation of Art. 3(g) of Directive 2008/48/EC and the question whether the term 'total cost of credit' includes loan extension fees.

The facts

Soho Group is a Latvian high cost short term credit provider, specializing in loans between 70-425 EUR for the duration of 30 days to 12 months. In performing its supervisory function the Latvian Consumer Protection Authority discovered that the firm charged high fees for extending the duration of the loan, breaching the relevant Latvian law that capped the total cost of credit. Consequently, the authority imposed a 25000 EUR fine on the firm that triggered the relevant national court process for the preliminary reference.

The legal question

The legal question in front of the court was whether the contract extension fee was within 'total cost of credit' provided by  Art. 3(g) of the Directive and implemented into the relevant national law. 

The ruling

The CJEU ruled in favor of the Consumer Protection Authority finding that the term 'total cost of credit' needs to be interpreted to include fees for the extension of the duration of the loan provided: the conditions for the possibility of the extension are laid down clearly and precisely in the relevant standard terms and conditions of the contract and that the costs are known to the creditor. 

In reaching this conclusion, the CJEU was guided by four considerations. 

First, the fairly broad language of Art. 3(g) provides that the 'total cost of credit' includes all costs, including interest, commissions and taxes and any other fees which the consumer is required to pay except notarial fees. The definition even includes ancillary services such as insurance, if they are compulsory for obtaining the loan. Thus, the provision broadly includes all costs except notarial fees.

Second, referring to its previous case-law and the recitals of the Directive, the CJEU concluded that the provision applies not only to the understanding of total cost of credit necessary for the conclusion of the contract but also for its use, that is, performance.

Thirdly, the CJEU took into account that the 'total amount payable by the consumer' under Art. 3(h) means the sum of the total amount of the credit and the total cost of credit. Thus the CJEU reasoned that the two notions, the notion of a 'total cost of credit' and the 'total amount of credit' are mutually excluding concepts and consequently the 'total amount of credit' cannot contain any cost elements comprising the 'total amount payable by the consumer'. 

Finally, the CJEU also considered the aim of the Directive to provide a high level of consumer protection and to facilitate the creation of the internal market in consumer credit.

Our evaluation

This is another important decision on the clarification of the scope of the Directive. It is particularly important that it raises and answers a substantive question on the content of the contract rather than the provision of information. Most of the CJEU case -law tackles the meaning and scope of the creditors many information obligations. Understandably so given the overwhelmingly information approach of the Directive. In practice however many cost-related questions arise, and this is now a welcomed development that the CJEU had a chance to clarify the meaning of one of these provisions.

The 'consumer friendly' approach is positive and is also justified not just by the above reasoning of the CJEU but also the broader socio-economic circumstances in which these loans are consumed. High cost short term loans are usually used by the less well of or poor(er) consumers (see more here) and it is particularly unfair to charge high fees for them because they had to extend the duration of their loans. As the facts of the case state, and this is a common practical situation, consumers would normally ask for the extension of the loan to avoid default (that would trigger even higher fees and other unwanted circumstances such as  the effect of default on ones credit rating). 

Looking broader than the high cost short term loans in question, regulating ancillary fees is always a positive approach. Financial firms would use these to covertly achieve high profits, with very little market control over the amount of these fees and with uncertain application of legal control mechanisms such as the unfair terms legislation. Therefore, bringing loan extension fees under the control of the Directive via the notion of  the 'total cost of credit' may be necessary to provide the envisaged high level of protection for consumers.

* This comment is based on the Hungarian language version.

Dutch Authority for Consumers and Markets to take action against fake online reviews

At the end of last month, the Dutch Authority for Consumers and Markets (ACM) announced that it would be taking action against fake reviews, fake likes, and fake followers active on the Internet (here). The ACM identified these practices on platforms such as Facebook, Instagram, YouTube, and Google. This puts social media and influencer marketing – and associated practices perceived as harmful for consumers - in the spotlight. According to the ACM, these practices are harmful for consumers since they undermine the consumers’ confidence in the market, and they provide consumers with unreliable information. This is an important step in the regulation and enforcement of legal rules regarding online review mechanisms. It is not the first time that the ACM devotes attention to this problem. In 2017, the ACM published a study regarding online reviews mechanisms and suggested that their transparency should be increased to fight reliability concerns. The decision to take action against fake reviews and other misleading practices follows up on the guidelines on the protection of the online consumer developed by the ACM earlier this year (here). In these guidelines, the ACM explained that, among other aspects, a business cannot post fake reviews or instruct others to do so nor can it highlight only positive reviews or delete negative reviews. The ACM stated that it will reprimand businesses, influencers or other market participants that offer ‘misleading endorsements’ and, in case of refusal to stop their illegal activity, the ACM admits the possible imposition of fines.

Although online review-related commercial practices are covered by existing EU legislation (such as the E-Commerce Directive and the Unfair Commercial Practices Directive), the enforcement of such rules in this context is not frequent, although growing in the last couple of years. However, fake online reviews (or misleading online reviews that, not being necessarily fake, are biased due to, for example, social pressure, leading to a problem of reputation inflation) are a problem that affects many consumers. For example, a 2014 study conducted at the request of the European Commission (here) estimated that around 82% of consumers consult online reviews before purchasing a good. The EU consumer law regulation of online review mechanisms has been recently strengthened by the Omnibus Directive that, for the first time, explicitly imposed duties on traders regarding online reviews (see our blogpost on the Directive here). It will be interesting to see how Member States will transpose these measures and what framework will be applicable to online reviews at national level (e.g. competition law, contract law, advertising law).