Judicial Decisions on Private International Law (pdf)

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Judicial Decisions on Private International Law

Neth Int Law Rev DOI 10.1007/s40802-017-0084-3 CASE NOTE Judicial Decisions on Private International Law Court of Justice of the European Union 28 July 2016, Case C-191/15 Verein für Konsumenteninformation v. Amazon EU Sàrl ECLI:EU:C:2016:612 Jacobien Rutgers1 The Author(s) 2017. This article is an open access publication Abstract In Amazon the CJEU decided which conflict rules applied to a claim in collective proceedings that was initiated by a consumer organization to prohibit allegedly unfair terms contained in the general terms and conditions of a seller. The terms were used in electronic b2c contracts, where the seller targeted consumers in their home country. The CJEU distinguished between the conflict rule concerning collective action, Article 6(1) Rome II, and the conflict rule concerning the fairness of the term, Article 6(2) Rome I. In addition, the CJEU introduced a new test to assess the fairness of a choice-of-law term under Directive 93/13 on unfair contract terms. In the note, it is argued that the CJEU’s distinction between those two conflict rules is unnecessary and that the test that the CJEU formulated to assess whether a choice-of-law term is unfair, is less favourable to the consumer than the tests formulated in prior decisions. Keywords Conflict rules Collective action Unfair terms in b2c contracts Unfairness choice-of-law term 1 Introduction In the general conditions of Amazon Europe Core Sàrl, a company established in Luxembourg, which owns and exploits Amazon.de, a choice-of-law clause for Luxembourg law is included.1 A similar text was the subject of preliminary 1 The English translation of the text under scrutiny was: ‘These conditions are governed by and construed in accordance with the laws of the Grand Duchy of Luxembourg, and the application of the United Nations Convention of Contracts for the International Sale of Goods is expressly excluded. […]’. CJEU 28 July 2016, Case C-191/15 VKI v. Amazon ECLI:EU:C:2016:612, para. 30. & Jacobien Rutgers 1 Law Faculty, Vrije Universiteit, Amsterdam, The Netherlands 123 J. Rutgers questions which the Austrian Supreme Court, the Oberster Gerichtshof (OGH), referred to the Court of the Justice of the European Union (CJEU or the Court). It asked, amongst other things, whether Article 4 Rome II2 governed a collective action started by an Austrian consumer organization, Verein für Konsumenteninformation (VKI). It sought an injunction to prohibit terms in the general conditions of a Luxembourg company that directed its activities at Austrian consumers through a website in German. VKI considered the clauses to be contrary to the law. To have a better understanding of the issues raised, the facts and the decisions by the Austrian courts at first instance and on appeal will also be discussed. Subsequently, the CJEU’s decision will be commented upon. These comments will focus on the choice-of-law clause in general conditions in business to consumer contracts (b2c contracts). 2 Facts and the Decisions by the Austrian Courts Amazon EU Sàrl (Amazon),3 a company established in Luxemburg, owned and exploited the website Amazon.de. This website in German addressed consumers, who had their habitual residence in Austria. Moreover, Amazon concluded electronic contracts with those consumers in Austria. Up until mid-2012, it used the general terms and conditions under scrutiny. Term 12 of those terms and conditions concerned a choice of law for Luxembourg law, the legal system of Amazon’s place of establishment.4 VKI started a collective action against Amazon and requested an injunction within the meaning of Directive 2009/225 to prohibit the use of some of the general terms and conditions, because VKI considered them to be against the law.6 The proceedings before the CJEU focused, in particular, on the choice-of-law clause. Since it concerned an international situation, it had to be determined which conflict rule or rules applied in the case of a collective action against a trader who targeted consumers in their country of habitual residence and in which an injunction was sought to prevent the use of allegedly unfair terms. Both the court at first instance and the court of appeal held that this issue fell within the scope of Rome I, the Regulation on the law applicable to contractual obligations.7 However, they applied different provisions. 2 Regulation (EC) No. 864/2007 on the applicable law to non-contractual matters (Rome II) [2007] OJ L 199/40 (hereafter: Rome II). 3 The company that now exploits the website Amazon.de is Amazon Europe Core Sàrl. Amazon EU Sàrl was the defendant in the proceedings that led to the CJEU’s decision. 4 See n. 1. 5 Directive 2009/22 on injunctions for the protection of consumers’ interests [2009] OJ L 110/30 (hereafter: Directive 2009/22). 6 Under Austrian law, the clauses are considered to be contrary to legal prohibitions or accepted principles of morality. 7 Regulation (EC) 59/2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L177/6 (hereinafter: Rome I). 123 Judicial Decisions on Private International Law The court at first instance applied Article 6 Rome I, which provides a specific conflict rule with respect to consumer contracts. To be applicable, certain requirements must be met. First, it must concern a b2c contract, which means a contract between a seller or a service provider, that acts in the course of his trade or professional activity (the professional), and a consumer who acts outside his trade or profession. Secondly, only the consumer who is addressed by the professional in the country of his habitual residence will be protected (the passive consumer).8 Both Amazon and VKI acknowledged that the Austrian consumer was addressed by Amazon in Austria. Under Article 6(2) Rome I, a choice of law is allowed, but it cannot deprive the consumer of the protection of the mandatory rules of the legal system of his habitual residence.9 In other words, it concerns a qualified choice of law. In the absence of a choice of law, the legal system of the consumer’s habitual residence applies. Thus, in this case, a choice for Luxembourg law cannot set aside the mandatory rules of Austrian law. Applying this rule, the court at first instance held that the choice-oflaw clause was invalid and that the contract was subject to Austrian law. Consequently, Austrian law governed the validity of the conditions included in the general terms and conditions. Both Amazon and VKI appealed against this decision. On appeal, the court held that Article 10 Rome I should be applied with respect to the validity of the choiceof-law clause. Under this provision, the validity of a choice-of-law clause must be assessed according to the legal system which would have been applicable under Rome I, had the clause been valid. In this case, it resulted in the application of Luxembourg law. However, the Court of Appeal also held that if the term was valid (...truncated)