On 28 July 2016, the Court of Justice of the European Union
("ECJ") ruled that a standard choice of law clause in
favour of the law of the EU Member State in which the seller or
supplier is established, is unfair in so far as the clause fails to
specify that under EU law the consumer also enjoys the protection
of the mandatory provisions of law that are applicable in the
consumer's home country (ECJ, 28 July 2016, Case
C‑191/15, Verein für Konsumenteninformation v.
Amazon EU Sàrl).
The ECJ delivered its judgment in response to a request for a
preliminary ruling from the Austrian Supreme Court (Oberster
Gerichtshof) in the context of legal proceedings between the
Austrian consumer protection organisation Verein für
Konsumenteninformation ("VKI") and the Luxembourg company
Amazon EU sàrl ("Amazon EU"). Amazon EU is the
entity which conducts Amazon's online businesses in Europe via
websites aimed at consumers in the different EU Member States, such
as www.amazon.fr, www.amazon.nl and www.amazon.de.
VKI sought an injunction to prohibit Amazon EU from using its
general terms and conditions of sale in Austria, including, amongst
others, the clause specifying that "Luxembourg law shall
apply, excluding [the United Nations Convention on the
International Sale of Goods]" (the "Clause").
VKI argued that the Clause breaches Article 3(1) of Council
Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer
contracts ("Directive 93/13"). This Article 3(1) provides
that "[a] contractual term which has not been individually
negotiated shall be regarded as unfair if, contrary to the
requirement of good faith, it causes a significant imbalance in the
parties' rights and obligations arising under the contract, to
the detriment of the consumer".
The case went up to the Austrian Supreme Court, which decided to
stay the proceedings and to question the ECJ on, amongst other
matters, this point.
In its judgment, the ECJ notes that a term may be unfair within
the meaning of Article 3(1) of Directive 93/13 if it is not drafted
in plain and intelligible language. It continues that where the
effects of a term are specified by mandatory statutory provisions,
it is essential that the seller or supplier informs the consumer of
those provisions. The ECJ further adds that that is the case of
Article 6(2) of Regulation (EC) No 593/2008 of 17 June 2008 on the
law applicable to contractual obligations (the "Rome I
Regulation"), which provides that the choice of applicable law
in consumer contracts must not have the result of depriving the
consumer of the protection afforded to him by provisions that
cannot be derogated from by agreement by virtue of the law which
would have been applicable in the absence of choice of law
(i.e., by virtue of the law of the country where the
consumer has his habitual residence).
In view of the above, the ECJ finds the Clause to be unfair in
so far as it leads the consumer into error by giving him the
impression that only the law of Luxembourg applies to the contract,
without informing him that under Article 6(2) of the Rome I
Regulation he also enjoys the protection of the mandatory
provisions of Austrian law. However, the ECJ leaves it to the
Austrian Supreme Court to ascertain this in the light of all the
relevant circumstances of the case.
In view of this ruling, companies trading cross-border with EU
consumers on terms which do not apply the law of the consumer's
home country are well advised to review and, if need be, update
their standard choice of law clauses. These clauses should explain
in plain and intelligible language that consumers will always
benefit from any mandatory consumer protection rules applicable in
the country where they live.
The ECJ's judgment is interesting in that it also clarifies
which EU Member State's data protection legislation applies to
a data processing operation established within the EU but directed
at a number of EU Member States (See VBB on Belgian Business
Law, Vol. 2016, No. 8, p. 7, where the data protection aspects
of the judgment are discussed, available atwww.vbb.com).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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BIS, the Department for Business Innovation & Skills has published a quick start guide and more detailed guidance on the regulations implementing the Consumer Credit Directive.
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