Wednesday 13 March 2024

1st European Conference of the International Association of Consumer Law (IACL)

Good news for European consumer law enthusiasts: The First European Conference of the International Association of Consumer Law (IACL) will take place this September (17-18) in Cambridge, UK, on the topic of "Global challenges for consumer law and policy in contemporary Europe". The event will also honour the work of Prof. Iain Ramsay. There will be 3 streams devoted to 'Digital environments', 'Financial services' and 'Sustainable consumption'. Looking forward to meeting many colleagues in Cambridge this fall! 

Details of the call for papers may be found at this website.

Saturday 10 February 2024

Limitations to the Action for Restitution after Annulment for Unfairness of the Term - The CJEU in Caixabank (C-801/21 to 813/21)

With ruling of January 25th, the Court of Justice (CJEU) ruled on the consequences of the annulment of an unfair term in mortgage loan agreements and in particular on the limitations that an action for restitution may be subjected to. 

The Provincial Court of Barcelona referred to the CJEU three joined cases dealing with the same circumstances. Consumers concluded mortgage loan agreements in the early 2000s with Spanish banking institutions. They were charged for the notarial and administration charges related to those contracts. All of them brought an action for annulment of the term by which they were charged before the court of first instance in Barcelona, after slightly more than ten years. The banks, instead, objected that the action was time-barred because of the ten-year limitation period established under Article 121-20 of the Catalan Civil Code. In all cases but one, the court rejected the plea of limitation (and ordered to pay back the sums) and the cases arrived on appeal before the Provincial Court of Barcelona, the referring court. 

The case law of the Court of Justice does not exclude that an action for restitution may be subjected to some limitations: the question at stake is rather at which limitations. 

In particular, the referring court asks whether Articles 6(1) and 7(1) of the Unfair Contract Terms Directive must be interpreted as precluding a judicial interpretation of national law according to which, after the annulment of the term like the one at stake, an action of restitution is subject to a limitation period of 10 years which starts to run from the moment the term exhausts its effects (i.e., when the last payment is made), without it being relevant that that the consumer is aware of the unfairness of that term and, ‘if so, whether those provisions must be interpreted as meaning that that knowledge must be acquired before the limitation period begins to run or before it expires’ (para 41). 

To address the question, the Court begins by recalling its case law on limitation: provided that consumers are guaranteed equivalence effectiveness in the enforcement of the rights they derive from Directive 93/13 (i.e., it is not impossible in practice to exercise such rights), an action for restitution may well be limited in terms of time (see BNP Paribas Personal Finance, C-776/19 to C-782/19). 

The case law concerning the limitation period at issue in the main proceedings, observes the Court, has established that to assess whether the consumers were given the possibility to exercise the rights conferred to them under EU law it must be evaluated the duration of the limitation period (ten years), and the ‘mechanism adopted to start the period running’ (para 46). For the starting period to be in compliance with the principle of effectiveness the consumer must have had the ‘opportunity to have become aware of his or her rights before that period begins to run or expires’ (para 48). Whenever, like in the cases at issue, the consumer lacks knowledge regarding the unfairness of the term – irrespective of whether the consumer is aware of the existence of the terms, the limitation period cannot begin to run. The legal assessment is thus decisive. The Court proceeds and states that not only must the consumer have knowledge of the rights he or she holds, but that he or she must also have ‘sufficient time to be able effectively to prepare and bring an action in order to assert those rights’. (para 50). 

The Court thus ruled that Articles 6(1) and 7(1) of the UCTD must be interpreted as certainly precluding a judicial interpretation of national law which would allow the limitation period to start running prior to the consumer knowing that the term is unfair. 

The question of the Catalan court comprised of a second part: is the condition relating to the consumer’s knowledge of the unfairness of the term fulfilled when there exists established national case law on the matter? 

The Court answers the question negatively, by referring to the principle that is at the very core of consumer protection law, namely the asymmetry of information between consumers and businesses. While businesses, by virtue of their profession, are presumed to be highly informed including on the case law concerning the contracts and the specific term at issue, the same cannot apply to consumers ‘given the occasional, or even exceptional, nature of the conclusion of a contract containing such a term’ (para 60).

Wednesday 7 February 2024

'Teaching Consumer Law in a Changing Environment' conference - call for papers

The Teaching Consumer Law conference returns to Santa Fe this year on 17-18 May. You may reply to the call for papers for another week, with the deadline set on February 15.

Further details of the call for papers may be found here and of the conference - here

Friday 2 February 2024

Passengers acting to avoid flight delay = no compensation

In two judgments issued on 25 January, the CJEU addressed questions related to the passengers’ right to claim compensation for a long flight delay. The unusual aspect of both cases is that in neither of them passengers actually experienced the delay, having decided to forego the delayed flight. Unsurprisingly, the CJEU decided in both cases that they could not then claim compensation from Regulation 261/2004.

C-474/22 - Laudamotion 

In this case, a passenger in expectation of the delay, which would have led him to not make the business meeting he was to travel for, decided to stay home rather than go to the airport. His flight arrived at the final destination with a delay of 3 hours 22 minutes.

The CJEU emphasised that the loss of time that the compensation aims to alleviate is „not damage arising out of delay” but an inconvenience (para 27). All passengers experience it the same way, which allowed to standardise the compensatory measure. Contrary, however, to cancelled flights in case of a flight delay to be eligible for claiming compensation passengers need to present to check-in at the airport (para 30). In this case, the passenger was then not eligible for compensation as he did not present himself for check-in. However, the Court reminded that the passenger could claim further compensation pursuant to Art. 12 Regulation 261/2004 for individual damage, e.g., arising due to having missed the business meeting (paras 32-33).

C-54/23 - Laudamotion and Ryanair 

Here, the passenger avoided the flight delay of 6 hours by booking themselves on an alternative flight, which arrived at the final destination with a delay of fewer than 3 hours.

The CJEU focuses on the fact that the passenger did not experience the inconvenience of a long delay, the loss of time, and therefore is also not eligible for the compensation (para 22). The Court notes that the passenger could have experienced an inconvenience as they had to find an alternative means of transport themselves, but that is not a serious inconvenience pursuant to the Court (para 23). It should be mentioned that also in this case the passenger received some form of redress as they could claim reimbursement for the flight ticket pursuant to national law. 


Both cases then limit the application of the Regulation 261/2004 but in a way consistent with the objective of high level of passenger protection. Passengers are not left without a recourse for claiming compensation for individual damages.

Thursday 25 January 2024

Consumer law and automated decision making: the work of ELI

At the end of 2023, the European Law Insitute published its Interim Report on EU Consumer Law and Automated Decision Making, answering whether EU Consumer Law is ready for automated decision-making, and observing this question through the lens of a relationship between the consumer, the digital assistant and the trader. The Report sets out eight Principles that should be followed to make EU consumer law ready for automated decision-making. 

On the 31st of January 2024, ELI will host a webinar that is open to everyone. 

For more information, follow this link.

Saturday 20 January 2024

Facilitating enforcement of unfairness control - CJEU in Getin Noble Bank and Others (C-531/22)

Happy 2024 Dear Readers!

We are starting a new year of reporting with the reference to the last week's judgment in the Polish case referred to the CJEU as Getin Noble Bank and Others (C-531/22 - not yet available in English, but accessible in other languages). This judgments continues to provide guidance on the application of the Unfair Contract Terms Directive to terms in mortgage contracts indexed in Swiss Francs. The CJEU considered two questions/issues: 


1. Ex officio judicial authority to test unfairness while overseeing enforcement of a final payment order with res judicata status

To not keep you in suspense: The CJEU decided that national courts may ex officio assess unfairness in such circumstances, provided that: 1) national law did not allow for unfairness test at the moment of issuing of a payment order, or 2) if such unfairness test is only allowed if a consumer would have objected to the issued payment order, provided that there is a significant risk that a given consumer is not going to issue an objection. This risk could result from: the short time allowed for filing the objection, objection's costs compared to the debt amount, or the lack of obligation to provide consumer with all the information necessary to determine their rights in this respect (para 61). This is, in large extent, confirming Court's previous judgment in Leasing România judgment (C-725/19) (paras 50-51).

This is an important judgment to address some inefficiencies of the Polish civil law procedure that may limit the scope of the unfairness testing. Specifically, payment orders may be issued by Polish courts upon an electronic request by creditors, without the courts having either legal or technical access to contractual documents, on the basis of which this payment order is issued. If the debtor does not file an objection to the issued payment order within 2 weeks from its delivery, they become final with the res judicata status. This means that they may not be further questioned in enforcement proceedings (para 49). As the CJEU previously considered a 2 week timeframe too short to reasonably give a chance to consumers to file an objection (paras 54-55), this judgment clearly indicates the lack of compliance of the Polish civil procedural rules with the effective consumer protection framework against unfair contract terms. This finding is not weakened by the inertia of the consumer during previous judicial proceedings with them as a party, as the option to file an objection to the payment order is the only opportunity for the consumer to procedurally stop the enforcement proceedings, and as such the consumer needs to be given a real chance to do so (considering the timeframe, costs etc.) (para 60).

2. Recognition of an unfair character of a contract term, upon it having been entered into a register of unfair contract terms, also in subsequent judicial proceedings against a given consumer, even with a different trader involved and when the term has been differently drafted, but when it retained the same substance and led to the same consequences.

The CJEU first (paras 69-73) recalls the conditions for the validity of a register of unfair contract terms in national legal systems, which were first discussed in the Biuro case (see our comment here). Pursuant to the Court, the opportunity for national courts to compare a given contract term to a term already entered into a register after previous judicial proceedings, may lead to a more efficient and faster enforcement of the unfairness control, freeing consumers from harmful consequences of unfair terms in many contracts simultaneously (para 75). The finding of unfairness of a given term could then indeed be recognised and applied also in subsequent judicial proceedings - even with a different trader involved, and when the term has been differently drafted, but when it retained the same substance and led to the same consequences (para 78).

Sunday 10 December 2023

Consequences of unfair core terms - CJEU in mBank (C-140/22)

Last Thursday the CJEU issued a new judgment in the saga of Swiss francs mortgage loan contracts (C-140/22 - there is no English language text available yet). It was a Polish court who asked for a clarification of a few issues related to voiding such contracts as a result of them containing an unfair contract term, the removal of which would not enable the contract to remain in force.

Declaring unfairness 

The CJEU recalls its past judgment emphasising the obligation of national courts to assess (un)fairness of contract terms and ensure that any finding of unfairness results is fully remedied (Karel de Grote-Hogeschool Katholieke Hogeschool Antwerpen C-147/16 - with our comment - and Abanca C-70/17 - with our comment) (paras 53-55). Previous case law mentioned that consumers could, however, object to national courts attaching all the consequences resulting from finding of an unfair contract term, pursuant to the UCTD. Namely, when consumers are informed by courts about the presence of an unfair contract term in their contract, they could then decide, while fully informed, to still be bound by that term, which would give effect to the freedom of contract  and the UCTD's protection (para 57). The CJEU rightly emphasises now that this right for consumers to object to courts applying the UCTD provisions should not be interpreted as placing an obligation on consumers to declare that they do not object to the UCTD's application (para 56). This could deter consumers from benefiting from the scope of the UCTD's protection and further discourage traders from agreeing to consumers' out-of-court settlement claims (para 61). The CJEU reminds also that even if consumers are not present at court, the CJEU has an obligation to ex officio assess the unfairness of a contract term and apply the consequences following from the UCTD (para 60).

In short, the CJEU decided that the Unfair Contract Terms Directive should not be interpreted by national courts as requiring consumers to declare: 1) their consent to voiding an unfair contract term; 2) their awareness of the consequences that this voidness would have (voiding the whole contract); and 3) their consent to voiding the whole contract.

Financial consequences of unfairness

The CJEU recalls that when a mortgage loan contract is declared void, due to the finding of an unfair core term, consumers should only reimburse the bank by the amount of a borrowed loan, and possibly also statutory interest if they delay this reimbursement (para 62; also Bank M, C-520/21 - see our comment). Any further claims for reimbursement by banks would limit the deterrent effect of the UCTD (para 63).

Consequently, if as the result of finding an unfair core contract term the entire mortgage loan contract is voided, the UCTD prohibits national courts from calculating the impact of that voidness in a way that deducts from the consumer compensation of loan amounts paid to the bank, amounts of interest that the bank would have received if the contract remained in force.

Thursday 7 December 2023

Ecodesign: trialogue agreement reached

While all eyes are on the trialogue negotiations for the AI act, another very important negotiation round has just closed in Brussels - namely the one concerning the proposed Ecodesign regulation. We have become more and more aware that most of the environmental impact of products is generated at production stage - making it necessary that we buy less products and use them for longer. Improving product durability is one of the core objectives of the proposal, which may now get turned into legislation by the end of the current parliamentary term. 

The new draft Regulation builds on the Ecodesign directive, which prescribed energy efficiency requirements for a variety of electricity-connected devices, by expanding both the range of potentially covered products and the sustainability requirements. According to the Commission,

"The new Ecodesign requirements will go beyond energy efficiency and aim to boost circularity, covering, among others:

  • product durability, reusability, upgradability, and repairability
  • presence of chemical substances that inhibit reuse and recycling of materials
  • energy and resource efficiency
  • recycled content
  • carbon and environmental footprints
  • available product information, in particular a Digital Product Passport."
The proposal is not only meant to assist consumers in accessing better products and shopping better - think in particular of the use of "Digital Product Passports" - but also to change producers practices that have been identified as particularly unsustainable, such as the destruction of unsold goods. In this and other areas, the regulation operates at two speeds: some rules will be immediately applicable, for instance a ban on destruction unsold clothing and footwear, whereas other rules will be adopted at a later stage. 

The passport, that needs to provide consumers "information on the product's sustainability", entails advancing EU rules on sustainability information - what counts as sustainability information? In this sense, it is easy to see that the draft Regulation is in a tight relation to the green claims rules, which seek to standardise claims but also relies on industry understanding different dimensions of sustainability information. 

Crucially, the ecodesign rules are the basis for reparability requirements under the Right to Repair proposal, which however is much less far along the legislative procedure - will the whole package become law before the next elections? 

Wednesday 6 December 2023

Revision of EU travel rules

By Alex Azabache on Unsplash
Last week, on November 29th, the European Commission announced the forthcoming (long-awaited) revision of EU travel rules (Improved rights and better information for travellers). This concerns a few legislative measures: 

1. Revision of Regulation 261/2004 on Passenger Rights through a newly proposed Regulation as regards enforcement of passenger rights in the Union

  • new rules for passengers who booked flights via an intermediary
    • an intermediary being defined as any ticket vendor, organiser or retailer other than a carrier
    • new Article 8a adds a reimbursement right 
      • passengers will need to be clearly informed by the intermediary and air carrier about the reimbursement process
      • free of charge
      • if reimbursement occurs through intermediaries: Air carriers shall reimburse intermediaries within 7 days, with intermediaries reimbursing passengers within further 7 days
      • if passengers do not receive reimbursement within 14 days of choosing for this remedy, the air carrier contacts passengers to receive payment details and reimburses them within further 7 days
    • new Article 14a adds rules on the transfer of passenger information, its safeguarding and when to delete it
      • this will facilitate intermediaries sharing passenger information with air carriers, so that air carriers can be in contact with passengers about their flights
  • strengthening enforcement mechanisms (similar mechanisms have been proposed to be added also to Regulation 1107/2006, Regulation 1177/2010, Regulation 181/2011, and Regulation 2021/782)
    • new Article 15a requires air carriers to establish 'service quality standards' (Annex II contains a minimum list thereof) and implement 'a quality management system'
    • new Article 16a specifies that the Commission will adopt a common form for reimbursement and compensation requests under Articles 7 and 8 Regulation 261/2004
      • passengers will retain the right to submit their refund requests by other means
      • passengers shall be free to provide information in any of the EU languages
    • new Article 16b specifies that national enforcement bodies should adopt a risk-based approach to monitoring compliance with passenger rights
      • this should allow detection and correction of 'recurrent non-compliance'
    • new Article 16bb determines that carriers shall share information with national enforcement bodies within 1 month from the request (max 3 months in complex cases)
    • new Article 16bc requires informing consumers about ADR

2. Revision of Regulation 1107/2006 on Rights of Disabled Persons and Persons with Reduced Mobility when Travelling by Air through a newly proposed Regulation as regards enforcement of passenger rights in the Union

  • special right to assistance for persons with reduced mobility 
    • including right for free of charge travel for a companion (if necessary to comply with safety procedures) - in Article 4(2)

3. New proposal for a Regulation on passenger rights in the context of multimodal journey

  • multimodal journey is defined as a 'journey of a passenger between a point of departure and a final destination covering at least two transport services and at least two modes of transport' (Art 3(1))
  • whilst the new provisions will apply to various types of multimodal journeys (single contract, combined contract, separate tickets) the unifying link between them (and limitation to scope) is that all transport contracts need to be offered by a carrier or intermediary
    • whether payment takes place together for all services or separate is irrelevant though
    • still, this means that the Regulation will not apply when it is the traveller who seeks out various connection between travel modes on their own
  • Art. 4 - establishes the right to non-discriminatory contract conditions and tariffs
    • discrimination is not allowed on the basis of passenger's nationality or the place of establishment of the carrier or intermediary
  • Art. 5 - better information for passengers combining different travel modes (air, rail, road) in one trip
    • e.g. on minimum connecting times between different transport modes, time schedules and conditions for the fastest trip, highlighting the lowest fares, disruptions and delays, complaint procedures
    • intermediary transfers passenger data to all carriers involved to facilitate direct communication between them
    • caveat: SMEs are exempted from having to provide real-time information
  • right to assistance in case of missed connections
    • Art. 7 - right to reimbursement and re-routing
      • re-routing with the same (or another commissioned) carrier should not bring with it additional costs to passengers
      • reasonable efforts should be made to ensure short delays in total travel time and to avoid additional connections
      • reimbursement should be paid within 14 days (and may include vouchers, provided passengers agree to this)
    • Art. 8 - reimbursement through intermediaries
      • provided carriers agree, travellers could request reimbursement from intermediaries
      • carriers then reimburse intermediaries within 7 days, and intermediaries have further 7 days to reimburse passengers
      • if passengers do not receive reimbursement within 14 days of choosing for this remedy, the carrier contacts passengers to receive payment details and reimburses them within 14 days
    • Art. 9 - right to assistance
      • free of charge
      • means and refreshments - reasonable to waiting time
      • accommodation (and transport to it) - up to 3 nights
    • Art. 10 - liability for combined multimodal tickets (with a single point of payment for all services) in case of missed connections
      • carrier/intermediary liable to reimburse total amount paid for combined multimodal ticket + compensation (75% of the total ticket price) 
      • unless clear information that the combined multimodal ticket consists of separate transport contracts
    • Art. 11 - common form for reimbursement and compensation requests
  • Chapter IV - contains rights for passengers with reduced mobility
  • Chapter V - contains provisions on assuring quality of services
  • Chapter VI - information and enforcement provisions

3. Revision of Package Travel Directive (2015/2302)

  • Package organisers granted a right to a refund from service providers in case of cancellation or non-provision of a service within 7 days (Art. 22)
    • to facilitate reimbursement of travellers within 14 days
  • Downpayments for packages limited (new Article 5a)
    • to max 25% of the package price, unless higher downpayment is justified by package organisers having to pay upfront for service provision
    • total payment should not be requested until 28 days before the start of the package
    • this is to protect consumers against risk of bankruptcy of organisers
  • Revised Art. 12 clarifies termination rights in case of extraordinary circumstances (such as Covid-19)
    • e.g. the need to consider official warnings against travel, but also serious restrictions that would have applied to travellers' travel at destination or upon return from travel at home country - when looking for justified termination
  • New Art. 12a clarified vouchers policies 
    • travellers transparently informed on the right to insist on a refund and voucher characteristics (validity period)
    • voucher's amount should at least equal the amount of the refund right
    • vouchers shall be valid min 12 months from the day travellers' accept them (with an option to extend by 12 months - once)
    • refunded automatically (within 14 days) if not used before the end of the validity period
    • vouchers shall be transferable to another traveller without any additional cost
    • vouchers and refund rights covered by insolvency protection

Additional proposals have been adopted that aim to facilitate better provision of information to travellers on available travel modes, incl. combining different types of travel (revision of Delegated Regulation 2017/1926 on the provision of EU-wide multimodial travel information services). This new service intends to provide real-time information and updates, also on delays and cancellations, as well as specific information, e.g. on possibilities of taking bikes on a train (see more here).

Thursday 30 November 2023

BEUC and NOYB oppose Meta's pay-or-consent model

Freepik

I am sure you have noticed that in early November, Meta launched paid subscriptions for its social media. Now you may choose to stop receiving targeted advertisements on Facebook and Instagram under one condition -  you have to pay €9.99/month on the web or €12.99/month on the iOS and Android versions of the apps. Of course, without payment, you can still use the services, but then you have to accept the personalised advertisements, which means you accept that your data is processed for this purpose. This Meta policy is the result of various disputes with European institutions and national supervisory authorities related to Meta's practices of processing users' personal data (including the July ruling in case C-252/21 where the CoJ criticised some of Meta's illegal approaches to personal data)*.

The very announcements of paid subscriptions have already triggered a wave of criticism. So it didn't take long for the first steps to challenge the legitimacy of the Meta's actions. A few days ago NOYB, which is a non-profit organization led by privacy activist Max Schrems, announced that it filed a GDPR complaint against Meta over "Pay or Okey". According to NOYB, such a "privacy fee" is not only illegal, since you cannot be forced to pay for exercising your fundamental right to privacy, but moreover, it risks having a domino effect and being taken over by other leading players in the digital services market as well. 

But this is not the only step against Meta's new practice. Today BEUC, which is a European Consumer Organization, also has voiced its opposition to this practice, stating that it is "an unfair choice for users, which runs afoul of EU consumer law on several counts and must be stopped". Thus, BEUC together with its 19 members filed a complaint on grounds of Meta engaging in unfair commercial practices in multiple ways. As BEUC stated, partially blocking the use of Facebook and Instagram until users have selected one option or the other constitutes an aggressive practice under European consumer law. What is more, opting for the paid subscription doesn't guarantee that a user gets a privacy-friendly option involving less tracking and profiling - user's personal data still may be collected and used but for purposes other than ads. More detailed assessment of Meta's subscription model you can find here

It remains to be seen how these actions will affect the Meta approach in the future. One thing is certain - the story will have its continuation, perhaps before the Court of Justice.

*The Court, inter alia, questioned Meta's legal grounds for processing personal data for personalization purposes, i.e. Article 6(1b) of the GDPR (the necessity of processing data for the performance of a contract), and Article 6(1f) of the GDPR (the processing of data on the basis of legitimate interests of the controller or a third party) - see paragraphs 97-126 of the ruling.