Poland, Court of Appeals in Warsaw, 19 January 2015 VI ACa 165/14

Identification of the case

• Right to an effective remedy and to a fair trial (art. 47 CFREU)

• Article 47936-45 of the Code of Civil Procedure

• Directives 93/13/EEC and 2009/22/EC
• Charter of Fundamental Rights

Summary of the case

The plaintiff – Biuro Podróży Partner (a travel office) – brought a claim to the Court of Competition and Consumer Protection to challenge a decision of the President of the Office of Competition and Consumer Protection. It imposed a financial fine upon a plaintiff for using an abusive contract clause. The President found the clause used by the Biuro Podróży Partner to be equivalent to the clause applied by another travel office that has been previously found abusive and entered into the public register of abusive terms. After dismissal of the claim in the first instance, the plaintiff brought an appeal to the Court of Appeals in Warsaw.

The Court of Appeals referred to the CJEU a preliminary question, asking whether “in the light of Article 6(1) and Article 7 of [Directive 93/13], in conjunction with Articles 1 and 2 of [Directive 2009/22], can the use of standard contract terms with content identical to that of terms which have been declared unlawful by a judicial decision having the force of law and which have been entered in the register of unlawful standard contract terms be regarded, in relation to another undertaking which was not a party to the proceedings culminating in the entry in the register of unlawful standard contract terms, as an unlawful act which, under national law, constitutes a practice which harms the collective interests of consumers and for that reason forms the basis for imposing a fine in national administrative proceedings.” (Case C-119/15, Biuro Podróży Partner).

• Civil judicial enforcement
• Administrative judicial enforcement
• Collective enforcement - Class Action
• Collective enforcement - Consumer association's action

Annulment of the administrative decision, administrative fine, judicial review of abusive clauses (in abstracto)

The case was decided by the CJEU as Biuro Podróży Partner (C-119/15). In the judgment of 21.12.2016 the Court concluded that:

“Article 6(1) and Article 7 of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, read in conjunction with Articles 1 and 2 of Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests and in the light of Article 47 of the Charter of Fundamental Rights of the European Union, must be interpreted as not precluding the use of standard contract terms with content identical to that of terms which have been declared unlawful by a judicial decision having the force of law and which have been entered in a national register of unlawful standard contract terms from being regarded, in relation to another seller or supplier which was not a party to the proceedings culminating in the entry in that register, as an unlawful act, provided, which it is for the referring court to verify, that that seller or supplier has an effective judicial remedy against the decision declaring the terms compared to be equivalent in terms of the question whether, in the light of all relevant circumstances particular to each case, those terms are materially identical, having regard in particular to their harmful effects for consumers, and against the decision fixing the amount of the fine imposed, where applicable.”

The reasoning of the CJEU has been based upon the reference to fundamental rights. Reminding, first and foremost, that fundament rights are relevant for the entire domain of EU law, the Court referred to Article 47 – concluding that this provision ascertains the right to effective judicial remedy on the grounds of the EU directives 93/13/EEC and 2009/22/EC (in the lack of any particular rules in these acts that would declare this right). The right in question should be applicable also to business parties who claim that a particular clause – declared previously abusive with regard to another seller or supplier – is not abusive for him.

Upon the grounds of in abstracto review, the CJEU accentuated particularly the need to provide every business party – accused of using unfair clauses and subjected therefore to administrative fine – with the right to challenge the decision on imposing this sanction. The right in question, which constitutes a component of the right to effective judicial remedy (in the sense of Article 47), should allow for questioning not only the fine itself, but also the grounds of its application – namely, the decision declaring a clause abusive.

Bearing this in mind, the Court concluded that a domestic system that meets the said prerequisites derived from the Article 47 of the Charter, cannot be deemed to be unlawful.

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

The case was found within the scope of application of the Charter due to the direct link of the domestic provisions with EU law (as the implementation of 93/13/EEC and 2009/22/EC directives).

• Explicit reference to Art. 47, CFREU (right to an effective remedy and a fair trial)

The reasoning of the CJEU has been based upon the reference to fundamental rights. Reminding, first and foremost, that fundament rights are relevant for the entire domain of EU law, the Court referred to Article 47 – concluding that this provision ascertains the right to effective judicial remedy on the grounds of the EU directives 93/13/EEC and 2009/22/EC (in the lack of any particular rules in these acts that would declare this right). The right in question should be applicable also to business parties who claim that a particular clause – declared previously abusive with regard to another seller or supplier – is not abusive for him.

Upon the grounds of in abstracto review, the CJEU accentuated particularly the need to provide every business party – accused of using unfair clauses and subjected therefore to administrative fine – with the right to challenge the decision on imposing this sanction. The right in question, which constitutes a component of the right to effective judicial remedy (in the sense of Article 47), should allow for questioning not only the fine itself, but also the grounds of its application – namely, the decision declaring a clause abusive.

The judgment gives, therefore an interesting view into interrelation between the administrative and judicial enforcement in consumer law. First of all, it ascertained that judicial decisions declaring a clause abusive may have direct impact on decisions of administrative bodies. It pertains, especially, to the cases, where administrative enforcement applies to further market consequences of using an abusive term – especially to unfair commercial practices in B2B and B2C context (which was the case also for Biuro Podróży Partner judgment). From this perspective, CJEU provides guidelines as to the premises of this relation. In particular, it pointed out that administrative enforcement related to unfair clauses in dependable on meeting particular standards and guarantees in civil proceedings, where a clause has been declared abusive. Only upon this condition administrative measures (including, in particular, fines for using a clause declared abusive with respect another business party) can be applied, adopting as a prerequisite a previous civil court’s judgment. 

• Effectiveness
• Proportionality

The Court of Justice of the EU (in Biuro Podróży Partner case), as well as the Supreme Court of Poland (in III CZP 17/15 case) referred to effectiveness as the overriding principle of the regulation of abusive clauses. It has been derived directly from the directive 93/13/EU, as well as by reference to the Invitel case. The latter has been based by the Supreme Court on three provisions declaring this right explicitly: art. 45 of the Constitution of the Republic of Poland, art. 6 section 1 of the ECHR and the art. 47 section 2 of the CFREU.

In the context of the ratione personae scope of abusiveness, the Courts perceived effectiveness as a reason for granting the judicial review with a possibly broad scope of effects. This initial assumption has been, subsequently, moderated by use of principle of proportionality (see below).

Principle of effectiveness has been used also, implicitly, as a guideline for governing the interrelation between judicial and administrative enforcement, that was a crucial for the background of the preliminary question in Biuro Podróży Partner case. Effectiveness provides a clear rationale for extending the scope of intersection, allowing administrative authorities to adopt regulatory measures (especially to impose sanctions) on the broad group of business parties, who introduced an unfair clause into their contracts. This outcome will obviously increase the level of consumer protection, strengthening the remedies available in the entire system.

The principle of proportionality was referred to directly only in the Resolution of the Supreme Court (III CZP 17/15) as a mitigating criterion, to reconcile effectiveness of consumer protection (in the aforementioned dimensions) with guarantees of fair trial. As has been ascertained by the Supreme Court, “effectiveness of the judgment in question in favour of anyone, but with respect to the particular entrepreneur, being a defendant in the proceedings, is proportionate, as it allows to maintain balance between a need of guaranteeing effectiveness of an abstract control [of contract clauses] and the need to respect the right to be heard, as a fundamental element of the right to fair trial, arising from the right to due process”.

As a consequence of the aforesaid relevance of effectiveness for civil/administrative enforcement intersection, proportionality works as a tempering factor also towards opening a gateway for administrative enforcers in consumer law. Due to the standpoint adopted in Biuro Podróży Partner case (expressed clearly also by the Supreme Court in III CZP 17/15), the administrative intervention based upon the prior judicial decision, cannot ignore the threshold established by fundamental right of access to a court. In other words, it would be disproportionate, if administrative measures were triggered by a civil judgment, which scope of application would be ascertained contrary to fundamental rights and the associated guarantees.

Elements of judicial dialogue

• Direct dialogue between CJEU and National court (preliminary reference)
• Dialogue between high court - lower instance court at national level

• CJEU C-472/10, Invitel (ECLI:EU:C:2012:242)

• Preliminary reference
• Conform interpretation with EU law as interpreted by the CJEU
• Proportionality

To establish a precise scope of the national rule enacted as an element of transposition of a EU directive.

The Court of Appeals tended to clarify and amplify the Invitel case by obtaining a direct clue as to the personal scope of effects of declaration of abusiveness, with regard to business parties who have been not involved in the in abstracto reviewing procedure.

Additional notes on the decision

No direct impact.

The legislative framework discussed in the Biuro Podróży Partner case and in the III CZP 17/15 resolution, has been repealed as of 17 April 2016. The new act cancelled almost entirely the former provisions of the Code of Civil Procedure, introducing a new model of in abstracto review (Articles 23a – 23d of the Act on Competition and Consumer Protection). The key element of the amendment was replacing the former judicial review, carried out by the Court of Protection of Competition and Consumers, with the administrative control, performed by the President of the Office of Competition and Consumer Protection (the central market regulatory authority in Poland). The reform centralizes sanctioning for using unfair contract terms, as the President is still competent to impose fines for applying contract terms that have been declared abusive previously.

The new regulation sets forth a general prohibition of using abusive clauses in contracts concluded with consumers (Article 23a) and confers upon the President of the Office a competence to issue a decision that declares a particular clause abusive in abstracto (Article 23b). The decision may also provide other specific remedies that allow to remove the effects of using such clause (for instance, by obliging a business party to publish a statement). Under the section 4 of Article 23b, the remedies chosen by the President ought to be proportionate to the gravity and the type of breach, as well as necessary for removal of its consequences. The consequences of using an unfair term may be also self-remedied by a business party, who obliges himself to take particular actions – prior to issuing a decision declaring a clause abusive under the aforesaid Article 23b. The President of the Office issues a decision that obliges the entrepreneur to fulfil these obligations (Article 23c). Finally, Article 23d determines the ratione personae outcomes of declaration of abusiveness. It shall be effective regarding the entrepreneur, against whom the abusiveness has been declared, and all the consumers, who concluded with him a contract, using standard terms indicated in the decision.