Sunday, 16 July 2017

Time limits for consumer claims under Consumer Sales Directive - CJEU in Ferenschild

Setting the scene

The European debate on consumer sales law has taken an interesting turn these days. Its legislative dimension appears to be fixated on the two digital proposals tabled in 2015: on online and other distance sales of goods and on the supply of digital content. By contrast, case law on the good old Consumer Sales Directive has become awkwardly dominated by disputes related to the sales of used cars (see e.g. the widely commented Wathelet case from last year). Of course, legal questions addressed in this context remain of much broader relevance. This was also the case in C-133/16 Ferenschild, on which the Court of Justice ruled this Thursday.

In the commented case the CJEU was called upon to provide its guidance on several procedural stipulations of Directive 1999/44/EC. As indicated above, the case involved a purchase of a second-hand car which did not work out quite as planned. The source of non-conformity was rather unusual: the vehicle itself worked well, but could not be registered directly after delivery since its documents had earlier been used as a cover for a stolen car. Nevertheless, the actual crux of the dispute lied in its specific timing: although the defect became apparent shortly after delivery, formal claim for compensation was only made over one year later. 

This would not have been an issue had we been dealing with a regular sale of brand new products. After all, Article 5(1) read in conjunction with Article 3(1) of Directive 1999/44/EC provides that the seller shall be liable for the lack of conformity which exists at the time the goods were delivered and which becomes apparent within two years from delivery. It further clarifies that the limitation period for claims arising from the lack of conformity, if laid down by national law, shall not expire within an analogous period of two years. 

The situation can nevertheless be different with respect to contracts for the sale of second-hand goods. Article 7(2) of Directive 1999/44/EC allows Member States to provide, by way of derogation, that the seller and consumer may agree on a shorter time period for the liability of the seller arising from such contracts (although no less than one year). At the same time, the directive remains silent as to the duration of the limitation period which should apply in this situation. Since that question appeared to be of direct relevance to the unfortunate buyer in the case at hand, the referring court decided to stay the proceedings and seek guidance from the CJEU. 

The question referred can be summarised as follows (para. 32):

Must Article 5(1) and the second subparagraph of Article 7(1) of Directive 1999/44/EC be interpreted as precluding a rule of a Member State which allows the limitation period for action by the consumer to be shorter than two years from the time of delivery where the Member State has made use of the option given by the latter of those two provisions, and the seller and consumer have agreed on a period of liability of the seller of less than two years for the second-hand goods concerned?

Judgment of the Court

The Court largely followed the pro-consumer interpretation proposed by Advocate-General Szpunar earlier this year (see also our earlier post here), holding that a national rule, which would allow the limitation period afforded to consumers to be shortened as a consequence of the reduction of the period of liability of the seller to one year, is precluded by Article 7(1) of Directive 1999/44/EC.

In reaching that conclusion the CJEU relied on the following set of arguments. Firstly, it drew a distinction between two types of time limits referred to in Article 5(1), namely the period of liability of the seller and the limitation period (para. 33-35). The Court further emphasised the difference between aims pursued by both types of time limits as well as other factors which, in its view, supported the claim that duration of the limitation period was not contingent on that of the period of liability (such as the fact that the former does not necessarily commence at the time of delivery or that no reference to the first sentence of Article 5(1) is made in the second sentence of that provision). It then went on to discuss the wording on Article 7(1), read in conjunction with recital 16, and concluded that the derogation provided therein concerns only the period of liability of the seller and not the limitation period (para. 42-45). This interpretation was further supported by the fact that the second subparagraph of Article 7(1) constituted an exception to the rule expressed in its first part (on binding nature) and, as such, had to be interpreted strictly.

Concluding thought

By holding that the duration of the limitation period for action by the consumer should, in all cases, not be shorter than two years from delivery, the Court confirmed its strongly pro-consumer stance, which had already been visible in its earlier judgments - both on Consumer Sales Directive (Wathelet) and on Unfair Contract Terms Directive (from Aziz to Banco Primus). In the commented case, the Court relied heavily on the advice of the Advocate-General. However, as seen from the recent opinion in case C-598/15 Banco Santander (see also our post here), AGs are not always arguing in a similar vein. Therefore, even if the Court has so far remained largely consumer-friendly, and probably rightly so, one has to wonder if this pro-consumer direction is not going to reach its limit sometime soon. 



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