The Court of Justice of the European Union (CJEU) has held that the special consumer protection provisions in Article 15(1)(c) apply even where the contract was not concluded at a distance in case C-190/11 Mühlleitner v Yusufi, a judgment given on 6 September 2012.
Background
The case concerned the purchase of a car. Ms Mühlleitner, domiciled in Austria, was looking on the Internet for a car of a German make for her own private use as a consumer and ended up using the search portal www.mobile.de. She entered the relevant characteristics in the search and found a car she was interested in on this web site. She was directed to the car sellers Yusufi in Hamburg, Germany and looked on their web site under www.yusufi.eu, where she found the international dialling code and phoned the car sellers. She was informed that the particular car she was interested in was no longer available, but was offered another car and was sent the details by email. The car sellers were aware that Ms Mühlleitner was domiciled in Austria. She subsequently travelled to Hamburg, inspected the car there and a contract dated 21 September 2009 was concluded in Hamburg, by which she bought the car for €11,500. She collected the car and drove back to Austria. There she noticed that the car was defective and wanted to rescind the contract.
She brought an action before her local court, the Landgericht Wels, for rescission of the contract. The Landgericht Wels, and on appeal also the Oberlandesgericht Linz, held that the Austrian courts did not have jurisdiction. On further appeal, the case was referred to the CJEU by the Austrian Supreme Court (Oberster Greichtshof).
The Law and the CJEU Judgment
The harmonised rules on jurisdiction in the EU provide special consumer protection rules for consumer contracts. A consumer contract is a contract concluded for purposes which can be regarded outside a person’s trade or profession with a person who pursues commercial or professional activities.[1] In other words, the consumer must be acting for private purposes and the other party must be acting in a business capacity.
As was decided in case C-464/01 Johann Gruber v BayWa, if the consumer enters into a contract partly for business and partly for private purposes, the special jurisdiction rules do not apply. However, this was not at issue in the present case, where it was clear that Ms Mühlleitner was buying the car purely for private purposes.
The special jurisdiction rules for consumers are asymmetrical, in that the consumer has a choice: he or she can bring an action in either his or her domicile (as Ms Mühlleitner had chosen to do) or in the place of establishment of the business (for the reason that enforcement may be more convenient there).[2] By contrast, the business party may sue the consumer only in the consumer’s place of domicile.[3]
However, the CJEU emphasized that the special jurisdiction rules for consumers are an exception to the general rules on jurisdiction that defendants must be sued at their domicile or place of establishment in Article 2(1) of the Jurisdiction Regulation and the special rules for contracts in Article 5(1), which provides jurisdiction for the courts at the place where the contractual obligation should have been performed. Therefore, according to the CJEU, the scope of application of special consumer rules on jurisdiction must be interpreted narrowly.[4]
The scope of application is (inter alia) where the business pursues professional or commercial activities in the Member State of the consumer’s domicile or by any means directs such activities to that Member State (or several states including the consumer’s domicile) and the contract falls within the scope of such activities.[5]
The meaning of ‘directs such activities’ had been further elucidated in the judgment of the CJEU of 7 December 2010 in joined cases C-585/08 and 144/09 Pammer & Alpenhof. Before that judgment, determining when a business directs its activities to consumers in a particular Member State (other than that of the business’ establishment) via an interactive web site was a subject of dispute. Essentially, in theory, there are four ways in which a business established in Member State A is deemed to have directed its activities to consumers in Member State B through a web site:
(i) if the web site is interactive and enables consumers in Member State B to enter into transactions whether or not the business is aware of where its customers are based; or
(ii) if the web site is interactive, enables consumer in Member State B to transact and the business is aware that consumers in Member State B are among its customers (through the delivery or invoice address or payment details, for example); or
(iii) if the web site actively targets consumers in Member State B (or several states including Member State B) by actively soliciting business from Member State B – this can be established by various facts and circumstances connected to the web site and the wider marketing activities of the business; or
(iv) only if the business intended to attract consumers specifically from Member State B.
It is now clear that the directing test in the Regulation is co-extensive with (iii): in joined cases C-85/08 and 144/09 Pammer & Alpenhof, the CJEU held that a trader operating via a web site (or the site of an intermediary, such as that of www.mobile.de) can be considered as ‘directing’ its activity to the Member State of the consumer’s domicile if before the conclusion of any contract with the consumer it is apparent from the web site(s) and the trader’s overall activity that the trader was envisaging doing business with consumers domiciled in one or more Member States, including the Member State of the consumer’s domicile.[6]
The Court furthermore held that national courts must look at all the circumstances of the case but the CJEU provided a list of evidence for when a trader is minded to conclude a contract with consumers in the consumer’s domicile (this list is not exhaustive):
-the international nature of the activity
-mention of itineraries from other Member States for going to the place where the trader is established
-use of a language or a currency other than the one of the Member State in which the trader is established
-mention of telephone numbers with an international dialling code
-outlay of expenditure on a Internet referencing service/search engine keywords pertaining to the country of the consumer’s domicile
-use of a top-level domain other than that of the Member State where the trader is established (including a .eu top-level domain)
-mention of customers/international clientele composed of customers in other Member States (for example endorsements or customer feedback/ratings).[7]
On the basis of the judgment in Pammer & Alpenhof, in Mühlleitner the Oberste Gerichtshof Austria held that the car sellers in this case had directed their activities to Austria. However the factual difference to Pammer in Mühlleitner was that the contract was concluded at the business’ place of establishment and was not a distance contract. Therefore the Oberste Gerichtshof referred the question to the CJEU whether Article 15(1)(c) applied only to contracts concluded at a distance. The CJEU answered this question in the negative.
First of all, the CJEU pointed out that Article 15(1)(c) did not limit its application expressly to distance contracts – from the wording it does not appear to be necessary for the consumer to transact remotely.[8]
The CJEU then referred to the ‘old’ version of Article 15(1)(c) in the predecessor to the current Regulation, namely the Brussels Convention 1968, Article 13, which required (inter alia) that the consumer undertakes the steps for concluding the contract in his or her domicile. The CJEU pointed out that the rationale of the Jurisdiction Regulation was precisely to update the Convention to take into account modern forms of distance communication and the Internet. It followed that it was deliberate that this requirement (that the consumer takes the steps to conclude the contract in his or her domicile)was abolished.[9]
In the Explanatory Memorandum to the Commission’s Proposal for the Jurisdiction Regulation,[10] the Commission stated that the changed wording means that the special consumer jurisdiction rules in Article 15(1)(c) now apply to contracts concluded in a state other than the consumer’s domicile.[11] The CJEU found that the application of Article 15 now depended solely on conditions related to the trader.[12] The CJEU also pointed to the discussions in the Committee on Legal Affairs and the Internal Market of the European Parliament when considering the draft Regulation. At one point, it considered an amendment to the effect that Article 15 applied only to distance contracts but this amendment was not adopted, which suggested that the intention of the legislator was that the Article should indeed apply to distance contracts.[13]
The CJEU concluded that therefore the application of Article 15(1)(c) was not limited to distance contracts but included contracts where the business directs its (marketing) activities to the consumer’s domicile, but the contract was then concluded in the presence of the trader and the consumer (either party travelling to meet the other).
Comment
Prima facie this result seems to be counter-intuitive, given that the purpose of this provision was to encourage e-commerce and distance sales. It is clear from the Jurisdiction Regulation that the special rules on consumer jurisdiction are not intended to apply to all business-to-consumer contracts where the parties are domiciled/established in different Member States. So imagine a scenario where a consumer from Germany goes on a holiday in Spain, and, while physically present there, sees a second-hand car advertised for sale, which he then buys and drives home and, on arriving back in Germany, finds that the car is defective and the Spanish seller is in breach of contract. In that scenario it is clear that only the competent Spanish court would have jurisdiction and Article 15(1)(c) would not apply.
How is the case of Ms Mühlleitner different from this scenario? The difference is that, according to the findings of the Austrian Oberste Gerichtshof, the German car sellers had actively directed their activities to the Austrian market and thereby enticed Ms Mühlleitner to travel to Hamburg to buy the car. There is a distance element in Ms Mühlleitner’s case, not the conclusion of the contract, but the distance marketing activities and remote communication of the sellers, which was targeted (amongst others) at Austrian consumers. The Jurisdiction Regulation thus protects a consumer from being targeted in his or her domicile with marketing remotely from another Member State. Where he or she is targeted in this way, an action can be brought before local court, provided that the marketing activities resulted in a contract (‘the contract falls within the scope of such activities’).[14]
Some may argue that a consumer who travels to the Member State of the business is less in need of protection, as (i) the consumer is aware that the trader is established in another Member State and (ii) the consumer has an opportunity to inspect and examine the goods before the purchase. This may be so but the wording of Article 15(1)(c) is clear, so that it is difficult to argue that the CJEU should have found otherwise. For a business, it is important to be aware that your business may be sued in another Member State by consumers, even if the contract was concluded at your own business premises. That is a state of affairs which most businesses would find surprising. If a business uses a web site to market their goods or services to several states, it may become liable for breach of contract in another jurisdiction, even if the contract was concluded at their premises.
Seller beware!
Dr Julia Hörnle is Senior Lecturer in Internet Law at the School of Law, Queen Mary University of London and Programme Director for the LLM/Diploma in Computer & Communications Law by Distance Learning.
[1] Article 15(1)(c) Brussels (Jurisdiction) Regulation EC/44/2001 of 22 December 2000, published in OJ L012 of 16 January 2001, pp 1-23.
[2] Article 16(1)
[3] Article 16(2)
[4] Para 27, see also Joined Cases C-585/08 and C-144/09 Pammer & Alpenhof para 53
[5] Article 15(1)(c)
[6] Joined Cases C-585/08 and C-144/09 Pammer & Alpenhof, para 92
[7] Joined Cases C-85/08 and 144/09 Pammer & Alpenhof, para 93
[8] Mühlleitner, para 35
[9] Para 38
[10] COM(1999) 3 Final of 14. July 1999
[11] See para 37
[12] Para 39, see also Joined Cases C-85/08 and 144/09 Pammer & Alpenhof, para 60
[13] Para 40
[14] Article 15(1)(c)
