Austria, Supreme Court, 9 April 2015

Identification of the case

• Austrian Konsumentenschutzgesetz (8 March 1979, BGB1. 140/1979), art. 6(3) and 13

• Rome I Regulation n°593/2008: Recital 7, art. 1(1) & (3), art. 4, art. 6, art. 9, art. 10
• Rome II Regulation n°864/2007: Recitals 7 & 21, art. 1(1) & (3), art. 4, art. 6, art. 14, art. 16
• Regulation n° 2006/2004: art. 3, art. 4
• Directive 2009/22/CE: art. 2(2)
• Directive 93/13: Recital 5 & 6, art. 3, art. 5, art. 6, art. 7, art. 8 + Annex

Summary of the case

Amazon EU, a company incorporated in Luxembourg, addresses consumers residing in Austria via a website with a domain name with the extension .de ; Amazon has no registered office in Austria.

VKI, an entity qualified to bring actions for injunctions within the meaning of Directive 2009/22, alleges the illegality and unfairness of several clauses of the general terms and conditions in the contracts, including a choice-of-law clause according to which Luxembourg law shall apply to the contracts.

VKI brings an action before the Austrian courts for an injunction to prohibit the use of the unlawful terms in those general terms and conditions and for publication of the judgment to be delivered.

The tribunal of first instance decided to allow the claims, finding the contractual terms and conditions incompatible with mandatory provisions of Austrian consumer law. The Appeal Court decided, on the contrary, that the unfairness of the contractual terms and conditions were to be assessed according to the law of Luxembourg designated as the applicable law by the choice-of-law clause included in the contract.

The OGH requires the CJEU to determine what should be the law applicable to the action for an injunction brought by the association (Directive 2009/22), and what should be the law applicable to the assessment of the alleged unfairness of the contractual terms. Is the choice-of-law provision according to which the law applicable to the consumer contract is the law of the State where the professional has his establishment, an unfair term?

• Civil judicial enforcement
• Collective enforcement - Consumer association's action

- Injunction to refrain from using unlawful contractual terms included in the general terms and conditions of the sellers

- Publication of the judgment

For the CJEU, the law applicable to an action for an injunction within the meaning of Directive 2009/22/EC, directed against the use of allegedly unfair contractual terms by an undertaking established in a Member State which concludes contracts in the course of electronic commerce with consumers resident in other Member States, in particular in the State of the court seised, must be determined in accordance with Article 6(1) of Regulation No 864/2007 (Rome II), whereas the law applicable to the assessment of a particular contractual term must always be determined pursuant to Regulation No 593/2008 (Rome I), whether that assessment is made in an individual action or in a collective action.

Article 3(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as meaning that a term in the general terms and conditions of a seller or supplier which has not been individually negotiated, under which the contract concluded with a consumer in the course of electronic commerce is to be governed by the law of the Member State in which the seller or supplier is established, is unfair in so far as it leads the consumer into error by giving him the impression that only the law of that Member State applies to the contract, without informing him that under Article 6(2) of Regulation No 593/2008 he also enjoys the protection of the mandatory provisions of the law that would be applicable in the absence of that term, this being for the national court to ascertain in the light of all the relevant circumstances (§71).

When such unfairness of the choice-of-law provision is verified, the judge shall apply the mandatory statutory provisions of the law of the consumer’s country of residence.

Role of the Charter and role of the general principles on enforcement

The Charter is not explicitly referred to, neither by national courts nor by the CJEU. However the right of the consumer to an effective remedy is driving the CJEU reasoning.

• Right to an effective remedy before a tribunal

The principle of effectiveness of the EU consumers’ protection is used in order to better deal with choice-of-law provisions included in cross-border consumer contracts. Even if such clauses are legal (art. 6 Reg. Rome I), they may be unfair and if so, they should be set aside and the law of the country where the consumer has its residence should apply instead.

• Effectiveness

In this decision, the principle of effectiveness :

1)     Allows (implicitly) the CJEU to justify its refusal to admit any implementation of the exception clause in order to set aside the law of the residence of the consumer made applicable, by art. 6(2) Reg. Rome II, to the action for an injunction.

The protection of collective interests would be impaired if the exception clause was to be applied, in particular for the purpose of favouring the law which is, as the result of a choice-of-law clause included in the consumer contracts, ruling such contracts. It would allow the professional to choose the law to which a non-contractual obligation is subject, and thereby to evade the conditions set out in that respect in Article 14(1)(a) of the Rome II Regulation

2)     Justifies that the unfairness of contractual terms is necessarily assessed pursuant to Regulation No 593/2008 (Rome I), even when dealt with in the course of a collective action subjected to another law pursuant to Regulation Rome II.

Any variation in the applicable law would abolish the consistency of assessment between collective actions and individual actions which the Court has established by requiring the national courts of their own motion to draw, including for the future, all the conclusions provided for in national law that follow from the finding, in an action for an injunction, that a term included in the general terms and conditions of consumer contracts is unfair, in order that such a term should not bind consumers who have concluded a contract containing those general terms and conditions (§56). Such inconsistency would jeopardise the objective pursued by Directives 2009/22 and 93/13 of efficaciously putting an end to the use of unfair terms (§57).

3)     Imposes to judges dealing with a choice-of-law clause designating the law of the State where the professional is established, to verify is such clause is unfair and if so, to apply the statutory provisions of the MS of the consumer’s residence which cannot be derogated from by agreement.

The protection awarded to consumers by art. 6(2) of Regulation Rome I would be ineffective if professionals could let consumers believe that, when a choice-of-law clause designates the law of the country where they have their own establishment as the applicable law, consumers cannot rely on the protection of the mandatory provisions of the law of their State of residence.

Elements of judicial dialogue

• Direct dialogue between CJEU and National court (preliminary reference)

• CJEU C-

Preliminary reference.

Consistent interpretation of EU Rules.

Consistent interpretation of EU Rule.

Fostering the protection of consumers.

Additional notes on the decision

Possible impact on ex officio powers of judges in the application of European conflict-of-law rules.

In France, the collective action seems to be subjected to French law as the law ruling the procedure (C. cass., 14 April 2010, n°08-70-229). Will it Change?

In France, the rule is that, when dealing with litigation relating to international consumer contracts, judges have no commitment to apply ex officio the protective conflict-of-law rule set by art. 6(2) of the Rome I Regulation.

Following the CJEU decision, French judges should apply ex officio the protective rule, at least when the choice-of-law clause designates the law of the State where the professional is established.

Still some issues remain questionable. What should the judge do:

- When the law applicable is neither the law of the State where the professional has its establishment, nor the law of the country of residence of the consumer?

- When the law of the State where the professional is established is made applicable not by an express choice-of-law clause, but by an implicit procedural agreement of the parties (no unfair term)?