Netherlands, Supreme Court of the Netherlands, 12 February 2016 15/03359
Case summary
Deciding Body
Hoge Raad der Nederlanden
Netherlands
National case details
Area of law
Consumer credit
Safeguards for access to justice
Relevant principles applied
Identification of the case
- Right to an effective remedy and to a fair trial (art. 47 CFREU)
- Article 6:203 of the Dutch Civil Code (DCC) – obligation to repay or undo an undue performance
- Article 6:231 DCC – definition of standard terms and conditions
- Article 7:61 DCC – information to be included in credit contract
- Article 7A:1576 DCC – definition ‘contract of sale on instalments’
- Directive 93/13/EEC – Unfair Terms in Consumer Contracts
- Directive 2008/48/EG – Consumer Credit
Summary of the case
The consumer subscribed for two memberships with telecommunication company KPN B.V., for which she received two ‘free’ mobile devices. This is also known as an ‘all-in’ price, in which subscriptions to the network of the provider and a mobile device are combined. In a previous case (HR 13 juni 2014, ECLI:NL:HR:2014:1385, Lindorff/Statia) the Supreme Court of the Netherlands already decided (in a preliminary ruling) that such a membership, qualifies as a purchase-in-instalment as well as a credit contract because an ‘all-in’-membership actually also involves amortizing the payment for the mobile device.
Debt collector Lindorff, B.V followed up KPN B.V.’s claim and wants the defendant to pay for the ‘all-in’ membership. In the preliminary ruling considered here, the court asked the Supreme Court of the Netherlands a number of questions concerning such ‘all-in’-subscriptions.
First of all, the court wants to know if book 7 and 7A of the DCC require consumers to pay for their ‘free’ mobile devices separately or if an ‘all-in’-membership is allowed as well. These provisions declare that credit contracts should clearly mention everything the consumer signs up for (these provisions are derived from European consumer law).
Secondly, the court wonders if the court should ex officio judge if contracts fulfil these requirements set by the DCC. The court emphasizes that this provision is mandatory, implying that if the parties do not fulfil the requirements, the court is ex officio obliged to deem such a contract null and void.
It therefore also wants to know what the consumers’ further obligations are: should she receive a court order to return the ‘free’ phone to the telephone company, due to the annulment of the contract?
Lastly, it wants to know if an ‘all-in’ subscription is to be considered an unfair term in a consumer contract, in which case Directive 93/13/EEG applies. If so, is such a term unfair because of the uncertainty regarding which price the consumer is paying for the actual device?
- Civil judicial enforcement
The Supreme Court’s judgment addresses multiple issues. For the purpose of the present project, two main issues are differentiated here:
1. Provisions on credit contracts as well as purchases-in-instalment require individual mentioning of the purchase of the phone as well as the subscription to the network ex. art. 7:61 (2) DCC as well as art. 7a:1576 (2) DCC). In this case, the contract does not meet these requirements and therefore may be deemed void. The Supreme Court further states that courts are required to ex officio judge if contracts meet these requirements and to mention to parties that the contract can be deemed void if it turns out contracts do not meet the requirements.
The Supreme Court further explains what the obligations of consumers and the telephone company are, after ex officio deeming the contract to be null and void. The consumer may return the phone, without having to pay any costs for using the phone or decrease in value. Damages would only be due if the consumer does not behave as a ‘careful debtor’ or fails to return the phone (art. 6:204 DCC). The mobile service provides has to pay back the part of the price (and costs) the consumer has already paid for the phone. The mobile service provider cannot institute a counterclaim on the basis of unjust enrichment (art. 6:212 BCC), says the Supreme Court, as this would be contrary to the effective protection of consumers.
Role of the Charter and role of the general principles on enforcement
The Supreme Court often mentions the principle of effectiveness (without actually naming art. 47 CFREU). See next paragraph.
- Right to a fair trial
Principle of fair trial
The court’s decision is mainly based on the principle of effectiveness, in order to compensate the (likely) weak position of the consumer in a trial. It fears that because consumers most of the times do not have enough information about the rights they could make use of, they will not use the rights offered by European consumer law. The Court further mentions that even if judgement is passed in default, courts may ex officio apply provisions mentioned above. Judges that consider to deem a contract void, should bear in mind the principle of the right to be heard, and give parties the opportunity to once more state their position and perhaps change their claims (following Heeaskker/Voets, ECLI:NL:HR:2013:691). If the parties do show up, they will have the opportunity to resist against the contract being deemed null and void. The judge shall respect this decision (following Asbeek Brusse; C-488/11).
- Equivalence
- Effectiveness
- Dissuasiveness
The Dutch provisions on purchase-in-instalments and credit contracts are not of European origin, but the Supreme Court puts them on an equal footing for the sake of 'manageability'.
The Supreme Court mentions that in order to ensure the effectiveness of these consumer protection provisions, a measure such as deeming a contract null and void can be appropriate. It mentions Martin Martin and Duarte Hueros /Autociba in order to emphasize that a certain dissuasiveness as to not fulfilling consumer protective requirements is needed. These provisions are essential for determining consumers’ decisions and to achieve the level of protection for consumers wanted by the European Union legislator. (§3.8.2)
The judgement that the mobile service provider cannot institute a counterclaim on the basis of unjust enrichment (art. 6:212 BCC), is based both on the principle of effectiveness as well as the principle of dissuasiveness. The Supreme Court states that it would be in violation of the effective consumer protection if consumers should, next to returning phone and possible fees, to also pay for the pleasure of having used the phone. It would, the Court states, also impair the requirements that sanctions should be effective and dissuasive (§3.18)
The judgement that the mobile service provider cannot institute a counterclaim on the basis of unjust enrichment (art. 6:212 BCC), is based both on the principle of effectiveness as well as the principle of dissuasiveness. The Supreme Court states that it would be in violation of the effective consumer protection if consumers should, next to returning phone and possible fees, to also pay for the pleasure of having used the phone. It would, the Court states, also impair the requirements that sanctions should be effective and dissuasive (§3.18)
Elements of judicial dialogue
- Horizontal
- Vertical
- Dialogue among same level national courts within the same Member State
- Direct dialogue between CJEU/ECtHR and National court (out of preliminary reference procedure)
- CJEU C-449/13, CA Consumer Finance/Bakkaus
- CJEU C-429/05, Rampion
- CJEU C-76/10, Pohotovost
- CJEU C-227/08, Martin Martin
- CJEU C-32/12, Duarte Hueros/Autociba
- CJEU C-488/11, Asbeek Brusse
The Supreme Court refers to HvJEU 18 decembre 2014, C-449/13, ECLI:EU:C:2014:2464 (CA Consumer Finance/Bakkaus) in order to underline that the European legislator intended a high level of protection for consumers with Directive 2008/48/EG.
The Supreme Court referred to HvJEU 4 oktober 2007, C-429/05, ECLI:EU:C:2007:575, NJ 2008/37 (Rampion) and HvJEU 16 november 2010, C-76/10, ECLI:EU:C:2010:685 (Pohotovost) in order to emphasize the ex officio judgement of the national judge in order to effectively guarantee consumer rights protected by directives (especially Directive 87/102/EEG, now 2008/48/EG). The Supreme Court especially emphasizes HvJEU 4 juni 2015, C-497/13, ECLI:EU:C:2015:357 (Faber/Hazet Ochten), in order to illustrate that the principle of effectiveness is the reason why it is important to ex officio apply provisions that protect consumer rights. As to the reasons of its importance, it especially (once more) refers to Rampion.
As to the sanction of deeming a contract null and void, the Court refers to HvJEU 17 December 2009, C-227/08 (Martín Martín) and HvJEU 3 oktober 2013, C-32/12, ECLI:EU:C:2013:637 (Duarte Hueros/Autociba) in order to demonstrate that in the light of the principle of effectiveness, not fulfilling requirements of the European Union legislator to reach a certain level of protection for consumers, should have sanctions.
The court mentions HvJEU 30 may 2013, C-488/11 (Asbeek Brusse) to note that if consumers nevertheless decide they do want to be bound by the term that was founded as unfair, the judge should respect that decision. In this respect, the Supreme Court also referres to another judgment of the Supreme Court, Heesakkers/Voets (see our ACTIONES templates), containing extensive references to the case law of the EU Court of Justice on the principle of audi alteram partem.
Horizontal Judicial Interaction: The Supreme Court answered preliminary questions asked by the court of The Hague.
Vertical Judicial Interaction: It referred to a lot of European Court Case Law as well as national law based on other European Court Case Law. See the use of judicial interaction technique(s) above.
The decision has shown mobile service providers that the Supreme Court is not afraid to use dissuasive measures in order to get mobile service companies to abide to the European consumer directives.
Additional notes on the decision
The case has been extensively discussed by legal academics. The decision also didn’t stay unnoticed with mobile providers and claim organisations. Multiple mobile service providers are being summoned.
After this preliminary ruling, more cases have followed in which claimant is allowed to return the phone for free and in which consumer is not obliged to pay the sum for the remaining period, after the contract is terminated (see for example judgements of 2 September 2016, ECLI:NL;RBDHA:2016:11790; ECLI:NL;RBDHA:2016:11791; ECLI:NL;RBDHA:2016:11794; ECLI:NL;RBDHA:2016:11799)