Information
Cases
Content Services
[2012] EUECJ C-49/11
1. This case, arising from a reference for a preliminary ruling from the Oberlandesgericht, Vienna (Higher Regional Court, Vienna), will give the Court the opportunity to define the ways in which consumers who enter into distance contracts must receive the information required under European Union law, and specifically, in this case, under Directive 97/7/EC (2) (also ‘the Directive’). Article 5 of the Directive provides, in particular, that on conclusion of a distance contract, the consumer must ‘receive’ confirmation of certain information in a ‘durable medium’. The issue raised by the Oberlandesgericht is whether information available on the vendor’s website, that consumers can access by clicking on a link displayed at the time when the contract is concluded, must be regarded as having been given to the consumer in a durable medium.
I – Legislative context
2. Directive 97/7/EC contains a series of minimum provisions (3) designed to protect consumers entering into distance contracts.
3. Under Article 4 of the Directive, before concluding any distance contract, the consumer is to be provided with (4) a range of information concerning, in particular, the identity of the supplier, the characteristics of the goods or services, the price, the delivery costs, the arrangements for payment and the existence of a right of withdrawal.
4. Article 5 is headed ‘Written confirmation of information’ and lists certain information that the consumer must (again) receive, at the time of performance of the contract, in a ‘durable medium’. Article 5 is worded as follows:
‘1. The consumer must receive written confirmation or confirmation in another durable medium available and accessible to him of the information referred to in Article 4 (1) (a) to (f), in good time during the performance of the contract, and at the latest at the time of delivery where goods not for delivery to third parties are concerned, unless the information has already been given to the consumer prior to conclusion of the contract in writing or on another durable medium available and accessible to him.
…
2. Paragraph 1 shall not apply to services which are performed through the use of a means of distance communication, where they are supplied on only one occasion and are invoiced by the operator of the means of distance communication. Nevertheless, the consumer must in all cases be able to obtain the geographical address of the place of business of the supplier to which he may address any complaints’.
5. The Directive does not contain a definition of ‘durable medium’. That term is, however, defined by the European Union legislature in other legislative texts. (5) I shall now list the principal texts among them.
6. According to Article 2(f) of Directive 2002/65/EC, (6) durable medium means ‘any instrument which enables the consumer to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored’.
7. According to Article 2(12) of Directive 2002/92/EC, (7) a durable medium means ‘any instrument which enables the customer to store information addressed personally to him in a way accessible for future reference for a period of time adequate to the purposes of the information and which allows the unchanged reproduction of the information stored’. And, according to the next subparagraph, in particular, durable medium ‘covers floppy disks, CD-ROMs, DVDs and hard drives of personal computers on which electronic mail is stored, but it excludes internet sites, unless such sites meet the criteria specified in the first paragraph’.
8. Finally, Article 2(10) of new Directive 2011/83/EU, (8) which will, in future, take the place of Directive 97/7/EC too, defines a durable medium as ‘any instrument which enables the consumer or the trader to store information addressed personally to him in a way accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored’. According to recital 23 in the preamble to that directive, durable media ‘should enable the consumer to store the information for as long as it is necessary for him to protect his interests’ and ‘should include in particular paper, USB sticks, CD-ROMs, DVDs, memory cards or the hard disks of computers as well as e-mails’.
II – Facts, main proceedings and the question referred
9. The company Content Services runs the internet site opendownload.de, which is configured in German. The website can also be accessed, and the services it offers be used, by internet users in Austria. Opendownload.de is a website through which it is possible to download free software or trial versions of software which incur a charge. Moreover, the case-file shows that the company’s server does not store the files to be downloaded, but simply directs users to the official sites of the program manufacturers. In other words, the opendownload.de website consists of a collection of links to programs that are freely available on the net.
10. In order to be able to use the site, and so download the various programs using the links provided on opendownload.de, it is necessary to sign up to a subscription, and, at the time of the facts in the main proceedings, the cost was EUR 96 for one year. The contract is entered into online, with the customer filling in an interactive web page form on which, in particular, he declares, by ticking a box, that he accepts the general terms and conditions and waives the right of withdrawal. The information required under Articles 4 and 5 of the Directive, particularly the information concerning the right of withdrawal, is not shown directly to the customer who may, however, view it by clicking on a hyperlink on the contract sign-up page.
11. After concluding the contract on the website, the customer receives an email message containing a user name and a password in order to use the opendownload.de website. The message contains no information, in particular, with respect to the right of withdrawal. The customer subsequently receives an invoice for EUR 96 and reminding him that he has waived the right of withdrawal.
12. The action in the main proceedings was brought by the Bundesarbeitskammer (Federal Chamber of Labour), a body which is also responsible for consumer protection: it takes the view that the business practice of Content Services is unlawful and is in breach of various provisions of European Union and domestic law in regard to consumer protection.
13. Content Services, the unsuccessful party at first instance, appealed against that decision before the Oberlandesgericht. Considering it necessary, in order to resolve the dispute, to obtain a ruling from the Court of Justice on the scope of Article 5 of the Directive, the Oberlandesgericht stayed the proceedings and referred the following question for a preliminary ruling:
‘Is the requirement in Article 5(1) of the Distance Contracts Directive to the effect that a consumer must receive confirmation of the information specified there in a durable medium available and accessible to him, unless the information has already been given to him on conclusion of the contract in a durable medium available and accessible to him, satisfied where that information is made available to the consumer by means of a hyperlink on the trader’s website which is contained in a line of text that the consumer must mark as read by ticking a box in order to be able to enter into a contractual relationship?’
III – Preliminary observations
14. The circumstances giving rise to the main proceedings are in many ways curious, but are not an isolated case. In German-speaking countries in particular, there are frequent press reports of situations in which some internet users, who were looking for freely available software, downloaded it from sites like that run by Content Services, and signed up to subscription agreements without even realising it. In Austria and, above all, in Germany, the litigation linked to such cases has already resulted in a number of court judgments.
15. Overall, this case has raised many interesting legal issues. (9) However, the subject-matter of the reference for a preliminary ruling is very circumscribed, as it relates only to the methods of communicating information to the customer for the purposes of Article 5 of the Directive: I shall therefore confine my observations to that particular aspect.
16. Furthermore, I would point out that the question referred does not ask the Court to provide an exact definition of what, in general, constitutes a ‘durable medium’, but merely asks it to determine whether a business practice, such as that of Content Services, satisfies the requirements of the Directive regarding the obligation to give certain information in a durable medium. It other words, the Court is not asked to provide an exhaustive definition of the term, but merely to establish whether or not making the information available on a web page, which may be accessed via a hyperlink that the consumer is able to view before entering into the contract, constitutes the provision of information in a durable medium.
17. Even though the idea of providing an exhaustive definition of ‘durable medium’ may be attractive, I consider that the ‘minimalist’ approach implicitly suggested by the national court is the right one to adopt: rather than furnishing a general and detailed definition, it is appropriate simply to establish whether, in circumstances such as those of this case, the conditions constituting the provision of a durable medium have or have not been satisfied. To be more specific, a general definition can be provided, but it must be formulated in abstract terms, without entering into the detail of the technical methods by which a durable medium may be set in place. It must, in fact, be borne in mind that, in a sector like the new technologies sector, the imposition of excessively rigid constraints may produce negative results and, when all is said and done, be damaging to the consumer. What matters is that the technological methods of carrying out a specific activity (entering into a contract, for instance, or giving certain information to the consumer) should comply with the guidance set out in the Directive. It is not, however, appropriate to indicate in advance what those methods may be, because technological developments could, within a very short time, result in new methods, at present inconceivable but which might actually provide an even better way of satisfying the requirements laid down by the legislature.
IV – Analysis
A – General considerations
18. It is common ground that, after the contract had been concluded, Content Services did not provide its customers with specific confirmation of all of the information pursuant to Article 5 of the Directive. According to Content Services, however, confirmation of that nature was not required, since the methods by which the information was made available to customers in accordance with Article 4 also satisfied the criteria under Article 5, particularly the need for the information to be received by the customer in a ‘durable medium’: in such cases, as Article 5 itself provides, further confirmation of the information is not required.
19. As we saw when setting out the facts, in order to conclude the contract, potential customers had explicitly to declare, by ticking a box provided for the purpose, that they waived their right of withdrawal and accepted the general conditions of the contract. The general conditions of the contract, the rules governing the right of withdrawal and the information on personal data protection were not shown on the web page itself, but could be viewed by clicking on a hyperlink placed next to the acceptance box.
20. It is not disputed that the information contained on the web pages which the potential customer could access, before entering into the contract, by clicking on the hyperlinks on the sign-up page, included all the information required under Articles 4 and 5 of the Directive. The national court appears to take as a starting-point the assumption that such methods of presentation satisfy the requirements of Article 4, but questions whether they are also sufficient for the purpose of Article 5.
21. According to Content Services, naturally, the answer must be that they are. It considers that providing customers with information on a web page which they themselves can access is sufficient, in particular, to allow the information to be regarded as having been given in a durable medium in accordance with Article 5. However, according to the Bundesarbeitskammer, the Commission and most of the Governments that have submitted observations, simply making the information available to the customer by giving him the opportunity to click on a hyperlink when entering into a contract is not enough to satisfy the requirements of Article 5.
22. Let me say straightaway that, in my view, the position of Content Services cannot be accepted: the methods which it used to make the information available are not compatible with the requirements of Article 5 of the Directive. I shall set out the reasons for this below.
B – The two elements of the obligation laid down by Article 5
23. In general, the Directive requires the provision of the information to the customer, in accordance with Article 5, to involve two fundamental elements.
24. In the first place, the customer must ‘receive’ the information. This means, more specifically, that the information must be conveyed without the customer having to make any active effort to obtain it. In that connection, it must also be pointed out that, in most language versions of the Directive, that notion is reinforced by the distinction made between the information under Article 4 – with which the potential customer has simply to ‘be provided’ (10) – and the information under Article 5 which the customer must actually ‘receive’. (11) The Italian version of the Directive, which refers in both provisions to the information to be ‘received’, is out of step here, although it too confirms that the information under Article 5 must be given, and not merely made available, to the customer.
25. The purpose of the provision is clear: it is a requirement of the Directive that the consumer should obtain possession of certain information, essential to enable him to enforce his rights, without his having to be in any way proactive. Were that not the case, many consumers, and particularly the less careful, would enjoy a lower level of protection, not necessarily being able, in case of need, to recover the relevant information.
26. In the second place, the customer must be able to take control of the information he is given in accordance with Article 5. That, in my view, is the whole purpose of the obligation to provide the information in a ‘durable medium’. If, in fact, the information were to be conveyed to the customer fleetingly, it is clear that the level of protection accorded to the consumer under the Directive would be significantly reduced. Only if the information remains available to him in a reliable manner and for an adequate length of time can the customer use it, if necessary, to enforce his rights.
27. The definitions of the term ‘durable medium’ contained in the other directives that I cited above confirm that consumer protection is the purpose of the provision on durable media. In fact, as we have seen, in those directives the essential element is that it should be possible for the consumer to store, recover and reproduce the information over an adequate period of time.
28. Moreover, as emphasised in the Court’s case-law, consumer protection is one of the pillars of the Directive. More specifically, the right of withdrawal is one of the essential instruments by which that protection is given effect, and it is the purpose of the Directive to ensure that it is effective for consumers. (12)
29. It is therefore necessary to establish whether, in this case, the information required under Article 5 of the Directive has been given to the customer in accordance with the two conditions which I have set out above. I shall now look separately at whether each has been complied with.
C – The need for the customer to ‘receive’ the information
30. As I have pointed out above, for Article 5 of the Directive to be complied with it, it is essential that the customer should ‘receive’ the information, and thus that he should obtain possession of it without having to take any kind of action himself to that end.
31. In that connection, it is my view that even requiring the customer to click on a hyperlink on the contract sign-up page, in order to view the necessary information, does not fully satisfy the requirements of Article 5. Although, in fact, the action involved in clicking on a hyperlink is not, in principle, particularly difficult, the fact remains that it requires a deliberate act on the part of the consumer, and therefore requires him to take an ‘active’ role. On the contrary, as we have seen, the meaning of Article 5 is precisely that certain information must be provided to the user, without any specific action on his part (except, obviously, the action resulting in the conclusion of the contract).
32. It must also be borne in mind that, in the context of electronic commerce, giving the customer the information required under Article 5 without the latter needing to take any particular form of action does not, as a rule, present any problem. Moreover, it seems to me to be particularly significant that, after they have signed up to the contract, Content Services itself sends its customers an email message containing, in particular, confirmation of the contract and the information needed (user name and password) to connect to the site. And so it is perfectly clear that, for instance, there would be no technical difficulty in including in that message the information required under Article 5.
33. Allowing operators in the field of electronic commerce to require their customers to carry out certain actions before they could access the information required under Article 5 of the Directive, even if all they had to do was to use a link shown when the contract was concluded, would risk opening the gates to possible abuses. It is in fact clear that, even though clicking on a hyperlink is an entirely commonplace action, within the capability of any internet user, not all users are in a position to understand, when the contract is concluded, that they need to click on the link in order to be able, should the need arise, to protect their own rights better in the future.
34. In this case, therefore, the first of the two conditions needed to secure compliance with Article 5 of the Directive remains unfulfilled: the consumer has not ‘received’ the requisite information. That in itself would be sufficient to provide the national court with a useful answer. However, for the sake of completeness, I shall also consider the second of the two conditions laid down by Article 5.
D – The information conveyed must be placed under the customer’s control
35. As we have seen, the second requirement laid down by Article 5 is linked to the concept of ‘durable medium’: the obligation to give the customer the information in a durable medium meets the need to provide him with the information in a way that will enable him to use it, where necessary, to enforce his rights.
36. As we have seen, in other legislation, the legislature has provided a number of definitions of the concept of ‘durable medium’ which, although not automatically applicable here, may certainly prove helpful. There is in fact nothing to indicate that they refer to a concept different from that used in Directive 97/7/EC. (13)
37. More particularly, those definitions reveal a number of key principles, specifically, that the customer should be able: (a) to record or, in any event, store the information; (b) to access the information, unchanged, for an ‘adequate’ period of time; and (c) to reproduce the information unchanged.
38. We are therefore faced with the problem of determining whether a website can constitute a ‘durable medium’ within the meaning of the Directive – and, if so, under what conditions. As we have, in fact, seen, Content Services makes the information available to its customers only on a page of the opendownload.de site.
39. The Court of Justice has not yet had occasion to give a ruling on the concept of durable medium. Recently, however, the issue was considered by the EFTA Court which set out its view on the matter in a judgment of January 2010. (14) In that judgment, the EFTA Court found that, in principle, a website too can constitute a durable medium, provided that three cumulative conditions are met. Firstly, the site must allow the consumer to store the information received. Secondly, that storage must be guaranteed for a sufficiently long period: the period of time for which it must be able to be stored cannot be specified generally, but must be determined case by case. Finally, for the user’s protection, it must not be possible for the person who provided the information to change it.
40. For my part, I am of the view that the considerations set out by the EFTA Court in its judgment are largely sound.
41. It is clear that it is not, in principle, inconceivable that a web page too may satisfy the conditions necessary in order to be regarded as a durable medium within the meaning of the Directive. As we saw above, the definition of durable medium contained in Directive 2002/92/EC specifically provides, for example, that, if it meets the conditions laid down by the definition itself, a website may be classified as a durable medium; and this is so even though there is no presumption that a website complies with the requirements of the provision, in contrast to the situation in regard, for instance, to CD-ROMs and email messages. It is therefore necessary to determine, in every specific case, whether or not the website possesses the requisite features.
42. The features in question are those that, as I mentioned above, make it possible to establish that the information has been placed under the customer’s control and is no longer under the control of the person giving it. As the EFTA Court correctly pointed out, this means that the user must be able to store the information for a sufficiently long period to enable him to enforce his rights, and that the supplier must be unable to alter the information.
43. The technical methods of achieving this must be assessed in each individual case, and it is certainly not for the Court to define them here. However, the fact remains that a general web page, such as the page on which Content Services gives its customers the information, does not satisfy the conditions described. By its very nature, in fact, a normal web page is not placed under the control of the person who consults it, but under the control of the person who publishes it, who may at any time modify or delete it at will. The fact that the user may possibly act to print or store the page before it can be changed does not alter the situation: in those circumstances, in fact, the durable medium (the printed or stored version of the page) would be generated by the user and not the vendor, as required by the Directive.
44. It follows that the Content Services site does not satisfy the requirements of Article 5 of the Directive in regard to the nature of the medium in which the information is supplied to the consumer either.
45. Moreover, before reaching a conclusion, I must point out that although it is, in general, possible that a web page may constitute a ‘durable medium’ within the meaning of the Directive, it might be difficult to identify ways in which the information contained on a web page may be ‘received’ by the consumer, as required by Article 5. As we saw earlier, in fact, Article 5 requires the customer to be given the information without any effort on his part. It would be necessary to consider closely whether the practice of a vendor who was to send to the customer, after the contract had been entered into, an email message including a link to a web page containing the information, was compatible with the Directive: in such a case, in fact, even if the web page were held to be a ‘durable medium’, access to the information would be subject to action on the part of the user (having to click on a link sent to him). Setting aside the legal assessment of a situation of that nature, the fact remains that it is much simpler, and certainly in keeping with the spirit of the Directive, to include the information directly in the text of the email message. (15) That is the position even though, and let me reiterate this, it cannot be excluded a priori that there may be specific procedures whereby the information provided on a website may satisfy both the conditions laid down by Article 5 of the Directive.
E – Summary
46. To summarise the considerations set out above, the methods for presenting the information to the customer in the circumstances giving rise to the main proceedings do not satisfy the requirements of Article 5 of the Directive. In particular, the fact that the customer is given the information on a web page only, which he can access by clicking on a link shown when the contract is concluded, means both that the customer has not ‘received’ the information and that the latter has not been given in a ‘durable medium’.
V – Conclusion
47. In the light of the foregoing considerations, I suggest that the Court answer the question referred to it by the Oberlandesgericht as follows:
The requirements of Article 5(1) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts are not satisfied where the information required by Article 5(1) is made available on a web page which the customer can access by clicking on a hyperlink shown when the contract is concluded.
Content Services Ltd v Bundesarbeitskammer
[2012] EUECJ C-49 [2012] WLR(D) 195, ECLI:EU:C:2012:419
The question referred for a preliminary ruling
26 By its question, the referring court asks, in essence, whether Article 5(1) of Directive 97/7 must be interpreted as meaning that a business practice consisting of making the information referred to in that provision accessible to the consumer only via a hyperlink on a website of the undertaking concerned meets the requirements of that provision.
27 It is clear from the order for reference that, before the conclusion of a distance contract, consumers can access information relating, inter alia, to the right of withdrawal only by clicking on a link which refers the consumer to a section of Content Services’ website. It is also clear from that order for reference that, after placing their order, those consumers receive an email from Content Services which does not contain any information on that right, but in which there is a link to Content Services’ website from which certain information on the right of withdrawal can be obtained.
28 Pursuant to Article 5(1) of Directive 97/7, the consumer must receive written confirmation or confirmation on another durable medium available and accessible to him of the relevant information, in good time unless the information has already been given to him prior to conclusion of the contract in writing or on any other such medium.
29 It follows from that provision that, where a business makes certain information available to the consumer prior to conclusion of the contract, other than in writing or on a durable medium available and accessible to that consumer, the business is obliged to confirm the relevant information in writing or on any other such medium.
30 In the case in the main proceedings, the question is whether, as part of the business practice adopted by Content Services, the relevant information is given to the consumer on a durable medium prior to the conclusion of the contract or the confirmation of that information is later received by the consumer via such a medium.
31 First, it should be examined whether, in the context of that business practice, the relevant information is ‘given’ to the consumer or ‘received’ by him, within the meaning of Article 5(1) of Directive 97/7.
32 In that regard, it must be stated that neither Directive 97/7 nor the documents relevant for its interpretation, such as the travaux préparatoires, provide clarification of the exact scope of the concept of ‘receive’ and ‘given’ in Article 5(1) of the directive. Therefore, the meaning of those terms must be determined by considering their usual meaning in everyday language, while also taking into account the context in which they occur and the purposes of the rules of which they are part (see, to that effect, Case C-336/03 easyCar [2005] ECR I-1947, paragraphs 20 and 21).
33 As regards the usual meaning in everyday language, it should be noted, as the Commission did, that the terms ‘receive’ and ‘given’, used in that provision, refer to a process of transmission, the first from the point of view of the consumer and the second from that of the supplier. In a process of transmission of information, it is not necessary for the recipient of the information to take any particular action. By contrast, where a link is sent to a consumer, he must act in order to acquaint himself with the information in question and he must, in any event, click on that link.
34 As regards the context in which the terms in question are used, it should be recalled that Article 5(1) of Directive 97/7 seeks to ensure the communication to the consumer of the information necessary to the proper performance of the contract and, above all, to the exercise of his consumer rights, in particular his right of withdrawal. As the Italian Government states, that provision contains a series of requirements intended to protect consumers, who are the weak parties in contractual relations concluded at a distance.
35 It should also be noted in that regard that, whereas the European Union legislature opted, in Article 4(1) of Directive 97/7, in the vast majority of the linguistic versions, for a neutral formulation, according to which the consumer is to be ‘provided’ with the relevant information, it chose, by contrast, a term with greater implications for the business in Article 5(1) of that directive, according to which the consumer must ‘receive’ confirmation of that information. That term expresses the idea that, regarding the confirmation of information to consumers, passive conduct by those consumers is enough.
36 The purpose of Directive 97/7 is to afford consumers extensive protection, by giving them a number of rights in relation to distance contracts. The objective of the European Union legislature is, as is apparent from recital 11 in the preamble to the directive, to avoid a situation where the use of means of distance communication leads to a reduction in the information provided to the consumer.
37 In those circumstances, it must be held that, where information found on the seller’s website is made accessible only via a link sent to the consumer, that information is neither ‘given’ to that consumer, nor ‘received’ by him, within the meaning of Article 5(1) of Directive 97/7.
38 Secondly, it must be examined whether a website the information of which is accessible to consumers via a link provided by the seller must be regarded as a ‘durable medium’, within the meaning of Article 5(1) of Directive 97/7.
39 In that regard, it should be stated that that provision gives an alternative, namely that the relevant information must be received by the consumer ‘in writing’ or ‘on another durable medium’.
40 It can be inferred that the European Union legislature provided for two functionally equivalent approaches and, therefore, required that such media be equivalent.
41 In those circumstances, as is clear from the observations submitted to the Court by the Austrian, Belgian and Greek Governments, in the context of new technologies, a substitute for paper form may be regarded as capable of meeting the requirements of the protection of the consumer so long as it fulfils the same functions as paper form.
42 It follows that a durable medium, within the meaning of Article 5(1) of Directive 97/7, must ensure that the consumer, in a similar way to paper form, is in possession of the information referred to in that provision to enable him to exercise his rights where necessary.
43 Where a medium allows the consumer to store the information which has been addressed to him personally, ensures that its content is not altered and that the information is accessible for an adequate period, and gives consumers the possibility to reproduce it unchanged, that medium must be regarded as ‘durable’ within the meaning of that provision.
44 Such an approach is confirmed by the definition of ‘durable medium’ given by the European Union legislature in other legislative texts, in particular in Article 2(f) of Directive 2002/65, Article 2(12) of Directive 2002/92 and Article 3(m) of Directive 2008/48. Although those directives do not apply in the present case, there is nothing to indicate, as the Advocate General noted in point 36 of his Opinion, that they refer to a concept different from that used in Directive 97/7. That finding is all the more applicable to Directive 2011/83 which replaces Directive 97/7 as of 13 June 2014, and Article 2(10) thereof, which defines ‘durable medium’ according to the criteria noted in the previous paragraph.
45 The same approach was followed by the Court of the European Free Trade Association (EFTA) in Case E-4/09 Inconsult Anstalt v Finanzmarktaufsicht [2010] EFTA Court Report, p. 86, to interpret the concept of ‘durable medium’ under Directive 2002/92.
46 There is nothing in the file to indicate that the seller’s website, to which the link sent to the consumer connects, allows that consumer to store information which is personally addressed to him in such a way that he can access it and reproduce it unchanged during an adequate period without the seller being able to amend the content unilaterally.
47 Content Services refers to a 2007 report of the European Securities Markets Expert Group (ESME) which distinguishes between ‘ordinary websites’ and ‘sophisticated websites’ and which considers that some sophisticated websites can constitute a durable medium.
48 Content Services states that technical progress and rapid change to new technologies makes it possible to develop websites which can ensure that information, without coming under the control of the consumer, can be stored, accessed and reproduced by the consumer during an adequate period.
49 Leaving aside the question whether the use of such an advanced website can meet the requirements of Directive 97/7, it is not disputed, and Content Service itself recognises, that it does not use such a site for the activity in question in the main proceedings.
50 It should be held, therefore, that a website such as that in question in the main proceedings, the information on which is accessible to consumers via a link provided by the seller, cannot be regarded as a ‘durable medium’ within the meaning of Article 5(1) of Directive 97/7.
51 Having regard to all of the foregoing considerations, the answer to the question referred is that Article 5(1) of Directive 97/7 must be interpreted as meaning that a business practice consisting of making the information referred to in that provision accessible to the consumer only via a hyperlink on a website of the undertaking concerned does not meet the requirements of that provision, since that information is neither ‘given’ by that undertaking nor ‘received’ by the consumer, within the meaning of that provision, and a website such as that at issue in the main proceedings cannot be regarded as a ‘durable medium’ within the meaning of Article 5(1).
Costs
52 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
Article 5(1) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts must be interpreted as meaning that a business practice consisting of making the information referred to in that provision accessible to the consumer only via a hyperlink on a website of the undertaking concerned does not meet the requirements of that provision, since that information is neither ‘given’ by that undertaking nor ‘received’ by the consumer, within the meaning of that provision, and a website such as that at issue in the main proceedings cannot be regarded as a ‘durable medium’ within the meaning of Article 5(1).
OFT v Easycar
[2005] ECR I-1947, [2005] EUECJ C-336/03, [2005] All ER (EC) 834, [2005] 2 CMLR 2, [2005] CEC 577
The reference for a preliminary ruling concerns the interpretation of Article 3(2) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ 1997 L 144, p. 19, hereinafter the directive).
The reference was made in the context of a dispute between the company easyCar (UK) Ltd (hereinafter -easyCar-) and the Office of Fair Trading (hereinafter -the OFT-) concerning the terms and conditions of the car hire contracts offered and concluded by easyCar.
Law
Community legislation
The object of the directive, as stated in Article 1, is to harmonise the provisions applicable in the Member States to distance contracts between consumers and suppliers.
Under Article 3(2) of the directive, Articles 4, 5, 6 and 7(1) of the directive do not apply -?-? to contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period -?-?.
Article 6(1) of the directive provides, in respect of distance contracts, for a right of withdrawal for the consumer. Under Article 6(2), where the right of withdrawal has been exercised, the supplier must reimburse the sums paid by the consumer free of charge, except for the cost of returning the goods.
National legislation
The directive was transposed into United Kingdom law by the Consumer Protection (Distance Selling) Regulations 2000 (-?the national regulations-?).
The exemption referred to in Article 3(2) of the directive was transposed into national law by Regulation 6(2).
The right of withdrawal provided for in Article 6(1) of the directive was transposed into national law by Regulation 10, and the obligation under Article 6(2) to reimburse by Regulation 14.
Regulation 27 of the national regulations authorises the OFT to apply for an injunction against any person who appears to it to be responsible for a breach.
The main proceedings and the question referred for a preliminary ruling
easyCar is a self-‘drive car hire undertaking. It operates in the United Kingdom and in several other Member States. The company-”s customers can book cars offered for hire only via the internet. Under the terms and conditions of the car hire contract offered and concluded by easyCar, a customer cannot obtain a refund of sums paid if that contract is cancelled, except in -”unusual and unforeseeable events beyond [his] control including -”: serious illness of the driver which results in the driver being unfit to drive; natural disaster -”; acts or restraints of governments or public authorities; war, riot, civil commotion or acts of terrorism-” or -”at the discretion of our Customer Service Manager in other extreme circumstances-”.
In the view of the OFT, which received a number of complaints from consumers relating to hire contracts which they had concluded with easyCar, the terms and conditions of those contracts infringe Regulations 10 and 14, which provide, for the purpose of implementing the directive, for a right of withdrawal, together with full reimbursement of sums paid by the consumer, within a specific period after the conclusion of the contract.
easyCar submits that the hire contracts which it offers are covered by the exemption laid down for -”contracts for the provision of -” transport -” services-” within the meaning of Regulation 6(2) of the national regulations and Article 3(2) of the directive, and that it is therefore not subject to the requirements of Regulations 10 and 14. The OFT, on the other hand, contends that car hire cannot be characterised as a -”transport service-”.
Both easyCar and the OFT brought proceedings before the High Court of Justice of England and Wales, Chancery Division. easyCar sought a declaration that its rental agreements are exempted from the right of withdrawal provided for by the national regulations, whereas the OFT sought an injunction to restrain easyCar from infringing the national regulations by refusing to offer its customers the right to withdraw and to receive a refund of sums paid.
It was in those circumstances that the High Court of Justice of England and Wales, Chancery Division, decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
-”Does the term -?contracts for the provision of … transport … services-?, in Article 3(2) of [the directive], include contracts for the provision of car hire services”-”
The application for reopening of the oral procedure
By application lodged at the Registry of the Court of Justice on 13 December 2004, easyCar sought the reopening of the oral procedure.
In that regard, it should be recalled that the Court may order that the oral procedure be reopened, in accordance with Article 61 of its Rules of Procedure, if it considers that it lacks sufficient information, or that the case must be dealt with on the basis of an argument which has not been debated between the parties (see Joined Cases C-270/97 and C-‘271/97 Deutsche Post [2000] ECR I-929, paragraph 30, and Case C-‘299/99 Philips [2002] ECR I-5475, paragraph 20).
The Court considers that there is no need in this case to order the reopening of the oral procedure. Consequently, the application for a reopening must be rejected.
The question referred for a preliminary ruling
The order for reference indicates that it is common ground between the parties that the contracts concluded between easyCar and its customers are distance contracts within the meaning of the national regulations and of the directive, and that they constitute contracts for the provision of services. By its question, the national court seeks, in essence, to ascertain whether car hire services are transport services for the purposes of Article 3(2) of the directive.
easyCar submits that this question should be answered in the affirmative. The Spanish, French and United Kingdom Governments and the Commission of the European Communities maintain the opposite view.
In that regard, it must be stated from the outset that neither the directive nor the documents relevant for its interpretation, such as the travaux préparatoires, provide clarification of the exact scope of the concept of -”transport services-” mentioned in Article 3(2) of the directive. Similarly, the general scheme of the directive shows only that its objective is to entitle consumers to extensive protection by conferring on them certain rights, including the right of withdrawal, and that Article 3(2) provides for an exemption from those rights in four closely-‘related sectors of economic activity, including that of transport services.
It is settled case-‘law that the meaning and scope of terms for which Community law provides no definition must be determined by considering their usual meaning in everyday language, while also taking into account the context in which they occur and the purposes of the rules of which they are part (Case C-128/94 Hönig [1995] ECR I-3389, paragraph 9, and Case C-164/98 P DIR International Filmand Others v Commission [2000] ECR I-447, paragraph 26). When those terms appear, as in the main proceedings, in a provision which constitutes a derogation from a principle or, more specifically, from Community rules for the protection of consumers, they must, in addition, be interpreted strictly (Case C-’83/99 Commission v Spain [2001] ECR I-445, paragraph 19, and Case C-‘481/99 Heininger [2001] ECR I-9945, paragraph 31).
So far as the term -”transport services-” is concerned, it must be held that it represents, like each of the other categories of services listed, a sectoral exemption and that it therefore relates generally to services in the transport sector.
When the provisions on the exemption at issue in the main proceedings were drafted the legislature did not opt for the term -”contracts of carriage-” commonly used in the legal systems of the Member States, which relates only to carriage of passengers and goods performed by the carrier, but for the distinctly broader term -”contracts for the provision of -” transport-” services-”, which can cover all contracts governing services in the field of transport, including those involving an activity which does not include, as such, the carriage of the customer or his goods, but which is aimed at enabling the customer to perform that carriage.
The wording of Article 3(2) of the directive thus demonstrates that the legislature intended to define the exemption laid down in that provision, not according to the type of contract, but in such a way that all contracts for the provision of services in the accommodation, transport, catering and leisure sectors come within the scope of that exemption, with the exception of those the performance of which is not due on a specific date or within a specific period
That interpretation is expressly supported by several language versions of Article 3(2) of the directive, namely the German, Italian and Swedish versions, which mention, respectively, -”Dienstleistungen in den Bereichen -” Beförderung-” (-”services in the transport sector-”), -”servizi relativi -” ai trasporti-” (-”services relating to transport-”) and -”tjänster som avser -” transport-” (-”services which concern transport-”).
In everyday language, -”transport-” refers not only to the action of moving persons or goods from one place to another, but also to the mode of transport and to the means used to move those persons and goods. Making a means of transport available to the consumer is thus one of the services involved in the transport sector.
Consequently, without exceeding the strict scope of the sectoral exemption relating to -”transport services-”, provided for in Article 3(2) of the directive, it must be held that that exemption covers car hire services, the essential nature of which is precisely the making available to the consumer of a means of transport.
In addition, so far as concerns the context in which the concept of -”transport services-” is used and the objectives pursued by the directive, it is established, as the Advocate General noted in points 39 to 41 of her Opinion, that the intention of the legislature was to institute protection for the interests of consumers who use means of distance communication, but also protection for the interests of suppliers of certain services, in order that the latter should not suffer the disproportionate consequences arising from the cancellation at no expense and with no explanation of services which have given rise to a booking. In that regard, easyCar rightly maintains, without, moreover, being contradicted on this point either by the governments which submitted observations to the Court or by the Commission, that Article 3(2) of the directive is aimed at exempting suppliers of services in certain sectors on the ground that the requirements of the directive could affect those suppliers disproportionately, in particular where a service has given rise to a booking and that booking is cancelled by the consumer at short notice before the date specified for the provision of that service.
Clearly, car hire undertakings carry on an activity which the legislature intended to protect against such consequences by means of the exemption laid down in Article 3(2) of the directive. Those undertakings must make arrangements for the performance, on the date fixed at the time of booking, of the agreed service and therefore, for that reason, suffer the same consequences in the event of cancellation as other undertakings operating in the transport sector or in the other sectors listed in Article 3(2).
It follows from the foregoing considerations that the interpretation to the effect that car hire services are transport services for the purposes of Article 3(2) of the directive is the only one which ensures that the exemption laid down in that provision has the character of a sectoral exemption and which enables the objective pursued by that provision to be achieved.
The answer to the question referred must therefore be that Article 3(2) of the directive is to be interpreted as meaning that -”contracts for the provision of transport services-” includes contracts for the provision of car hire services.
Messner
[2009] EUECJ C-489/07, [2010] Bus LR D78
The present reference for a preliminary ruling concerns the interpretation of Article 6 of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ 1997 L 144, p. 19).
The reference has been made in the course of proceedings between Ms Messner, a consumer, and Firma Stefan Krüger (‘Stefan Krüger’), a company which operates an internet-based mail-order business, concerning reimbursement of the sum of EUR 278 following the rescission of a distance contract.
Legal context
Community legislation
Recital 14 in the preamble to Directive 97/7 provides:
‘Whereas the consumer is not able actually to see the product or ascertain the nature of the service provided before concluding the contract; whereas provision should be made, unless otherwise specified in this Directive, for a right of withdrawal from the contract; whereas, if this right is to be more than formal, the costs, if any, borne by the consumer when exercising the right of withdrawal must be limited to the direct costs for returning the goods; whereas this right of withdrawal shall be without prejudice to the consumer’s rights under national laws, with particular regard to the receipt of damaged products and services or of products and services not corresponding to the description given in the offer of such products or services; whereas it is for the Member States to determine the other conditions and arrangements following exercise of the right of withdrawal’.
Article 6(1) and (2) of Directive 97/7 provides:
‘Right of withdrawal
1. For any distance contract the consumer shall have a period of at least seven working days in which to withdraw from the contract without penalty and without giving any reason. The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods.
…
2. Where the right of withdrawal has been exercised by the consumer pursuant to this Article, the supplier shall be obliged to reimburse the sums paid by the consumer free of charge. The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods. Such reimbursement must be carried out as soon as possible and in any case within 30 days.’
Article 14 of Directive 97/7 states:
‘Minimal clause
Member States may introduce or maintain, in the area covered by this Directive, more stringent provisions compatible with the Treaty, to ensure a higher level of consumer protection. … ‘
National legislation
Paragraph 312d of the German Civil Code (Bürgerliches Gesetzbuch) (‘the BGB’), which is headed ‘Right of withdrawal and return in respect of distance contracts’, states:
‘1. In respect of a distance contract a consumer has a right of withdrawal under Paragraph 355. In the case of contracts for the supply of goods, the consumer may be granted a right of return under Paragraph 356 instead of the right of withdrawal.
2. In derogation from the first sentence of Paragraph 355(2), the withdrawal period shall not commence before the duties to provide information in accordance with Paragraph 312c(2) have been fulfilled; in the case of the supply of goods not before the date on which they are received by the recipient; in the case of recurrent supplies of goods of the same kind not before the date on which the first instalment is received by the recipient; and in the case of services not before the date on which the contract is concluded.’
Paragraph 355 of the BGB, which is headed ‘Right of withdrawal in respect of consumer contracts’, provides:
‘1. If a consumer is granted a statutory right of withdrawal under this provision, he shall no longer be bound by his declaration of intention to conclude the contract if he has withdrawn from it in good time. The withdrawal does not have to be reasoned and must be declared to the seller in writing or by returning the item within two weeks; the withdrawal period shall be deemed to be observed in the case of dispatch in good time.
2. The period shall commence when the consumer has been informed in writing by a clearly formulated notice of his right of withdrawal which makes clear to him his rights in accordance with the requirements of the means of communication used and which also states the name and address of the person to whom withdrawal is to be declared and refers to the beginning of the period and the rules in the second sentence of paragraph 1. If notice is given after the contract has been concluded, the period shall be one month, in derogation from the second sentence of paragraph 1. If the contract is to be concluded in writing, the period shall not begin to run until the consumer has also been provided with a contract document, his written application or a copy of the contract document or of the application. If the time at which the period commences is disputed, the seller shall bear the burden of proof.
3. The right of withdrawal shall expire at the latest six months after the conclusion of the contract. In the case of the supply of goods the period shall not commence before the date on which they are received by the recipient. In derogation from the first sentence, the right of withdrawal shall not expire if the consumer is not given due notice of his right of withdrawal, and in the case of distance contracts concerning the provision of financial services it shall also not expire if the seller has not duly complied with his duties to provide information in accordance with Paragraph 312c(2)(1).’
Paragraph 357 of the BGB, which is headed ‘Legal consequences of withdrawal and return’, states:
‘1. Unless otherwise provided, the provisions on statutory termination shall apply mutatis mutandis to the right of withdrawal and return. Paragraph 286(3) shall apply mutatis mutandis to the obligation to reimburse payments under that provision; the period laid down therein shall commence with the declaration of withdrawal or return by the consumer. In this connection the period shall commence, with regard to an obligation to reimburse on the part of the consumer, when that declaration is made and, with regard to an obligation to reimburse on the part of the seller, when that declaration is received.
…
3. In derogation from point 3 of the first sentence of Paragraph 346(2), the consumer shall pay compensation in respect of deterioration in the goods as a result of their proper use if he has been informed in writing of this legal consequence and of a means of avoiding it at the latest when the contract is concluded. This shall not apply if the deterioration is due solely to testing of the item. Point 3 of the first sentence of Paragraph 346(3) shall not apply if the consumer has been given due notice of his right of withdrawal or if he has become aware of it in some other way.
4. The above provisions shall be exhaustive as regards the rights of the parties.’
Paragraph 346(1) to (3) of the BGB, entitled ‘Effects of termination of the contract’, states as follows:
‘1. If one party to a contract has reserved the right to terminate the contract or if he has a statutory right of termination, then, if termination occurs, any services received shall be returned, and the benefits derived from such services surrendered.
2. The debtor shall pay compensation for value, in lieu of restitution or surrender, where:
(1) restitution or surrender is excluded by virtue of the nature of what has been obtained;
(2) he has used up, transferred, encumbered, processed or transformed the object received;
(3) the object received has deteriorated or has been destroyed, any deterioration resulting from the proper use of the object for its intended purposes being disregarded.
If the contract specifies consideration, such consideration shall be taken as a basis for calculation of the compensation for value; if compensation is to be provided for the benefit deriving from use of a loan, evidence may be adduced to show that the value of such benefit was lower.
3. No obligation to pay compensation for value shall arise:
(1) if the defect which gives the right to termination became apparent only during the processing or transformation of the object;
(2) in so far as the creditor is responsible for the deterioration or destruction, or in so far as the damage would also have occurred in his hands;
(3) if, in the case of a statutory right of termination, the deterioration or destruction has occurred in the hands of the person entitled, even though he has taken the care that he customarily exercises in relation to his own affairs.
Any remaining enrichment must be surrendered.’
The dispute in the main proceedings and the question referred for a preliminary ruling
On 2 December 2005, Ms Messner bought from Stefan Krüger a second-hand laptop computer on the internet at a price of EUR 278.
At the time of that sale, Stefan Krüger placed general terms of contract on the internet, in which it was stated, inter alia, that the purchaser would be liable to pay compensation for value in respect of deterioration in goods through use for their intended purpose.
In August 2006 the computer display became defective. Ms Messner informed Stefan Krüger of that screen defect on 4 August 2006. The defendant refused to repair the defect free of charge.
On 7 November 2006, Ms Messner informed Stefan Krüger that she was revoking the contract of sale and offered to return the laptop computer in return for refund of the purchase price. That revocation was carried out within the period provided for in the BGB in so far as Ms Messner had not received effective notice, provided for in the provisions of that Code, such as to commence the period for withdrawal.
Ms Messner sought reimbursement from Stefan Krüger of EUR 278 before the Amtsgericht (Local Court) Lahr.
In opposition to that claim, Stefan Krüger submitted that Ms Messner was, in any event, obliged to pay it compensation for value inasmuch as she had been using the laptop computer for approximately eight months. For a comparable laptop computer, it argued, the average market rental price for three months would be EUR 118.80, with the result that the compensation for the period during which Ms Messner had been using the computer at issue came to EUR 316.80.
In those circumstances, the Amtsgericht Lahr decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:
‘Is Article 6(2) in conjunction with the second sentence of Article 6(1) of Directive 97/7 … to be interpreted as precluding a provision of national law which provides that, in the case of a revocation by a consumer within the revocation period, a seller may claim compensation for the value of the use of the consumer goods delivered”’
The question referred for a preliminary ruling
By its question, the referring court asks, in essence, whether the provisions of the second sentence of Article 6(1) and Article 6(2) of Directive 97/7 should be interpreted as precluding a provision of national law which provides that, in the case of withdrawal by a consumer within the withdrawal period, a seller may claim compensation for the value of the use of consumer goods acquired under a distance contract.
Under the second sentence of Article 6(1) and Article 6(2) of Directive 97/7, the only charge that may be imposed on the consumer by reason of the exercise of his right of withdrawal is the direct cost of returning the goods.
In that regard, it follows from recital 14 in the preamble to Directive 97/7 that that prohibition of imposing on consumers charges other than those resulting directly from the return of the goods serves to ensure that the right of withdrawal guaranteed by that directive ‘is to be more than formal’. Thus, the consumer could be dissuaded from exercising that right if it involved adverse financial consequences.
Furthermore, it also follows from recital 14 that the right of withdrawal is designed to protect the consumer in the particular situation of mail-order sales, in which he ‘is not able actually to see the product or ascertain the nature of the service provided before concluding the contract’. The right of withdrawal is therefore intended to offset the disadvantage for the consumer resulting from a distance contract by granting him an appropriate period for reflection during which he can examine and test the goods acquired.
The prohibition laid down in the second sentence of Article 6(1) and Article 6(2) of Directive 97/7 must be interpreted in the light of those objectives.
In that regard, it should be noted that a general requirement to pay compensation for the value of the use of consumer goods acquired under a distance contract is incompatible with those objectives.
As was stated by the Advocate General in point 74 of her Opinion, if the consumer were required to pay such compensation merely because he had the possibility of using the goods acquired under a distance contract whilst they were in his possession, he would be able to exercise his right of withdrawal only against payment of that compensation. Such an outcome would be clearly at variance with the wording and purpose of the second sentence of Article 6(1) and Article 6(2) of Directive 97/7 and would, in particular, deprive the consumer of the possibility of making completely free and independent use of the period for reflection granted to him by that directive.
Likewise, the functionality and efficacy of the right of withdrawal would be impaired if the consumer were obliged to pay compensation simply as a result of having examined and tested the goods acquired under a distance contract. To the extent to which the right of withdrawal is intended precisely to give the consumer that possibility, the fact of having made use thereof cannot have the consequence that the consumer is able to exercise that right only if he pays compensation.
However, although Directive 97/7 is designed to protect the consumer in the particular situation of a distance contract, it is not intended to grant him rights going beyond what is necessary to allow him effectively to exercise his right of withdrawal.
Consequently, the purpose of Directive 97/7 and, in particular, the prohibition laid down in the second sentence of Article 6(1) and Article 6(2) thereof do not preclude, in principle, a legal provision of a Member State which requires a consumer to pay fair compensation in the case where he has made use of the goods acquired under a distance contract in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment.
In that regard, it follows from the last part of recital 14 in the preamble to Directive 97/7 that it is for the Member States to determine the other conditions and arrangements following exercise of the right of withdrawal. That power must, however, be exercised in accordance with the purpose of that directive and, in particular, may not adversely affect the functionality and efficacy of the right of withdrawal. Such would, for example, be the case if the amount of compensation, such as that referred to in the previous paragraph, were to appear disproportionate in relation to the purchase price of the goods at issue or also if the provision of national law were to place on the consumer the onus of proving that he did not use those goods during the period for withdrawal in a manner which went beyond what was necessary to permit him to make effective use of his right of withdrawal.
It is in the light of those principles that the national court must resolve the actual case before it, taking due account of all the elements of that case and, in particular, of the nature of the goods at issue and the length of the period at the end of which, as a result of the seller’s failure to meet his obligation to provide information, the consumer exercised his right of withdrawal.
Regard being had to all of the foregoing, the answer to the question referred is that the provisions of the second sentence of Article 6(1) and Article 6(2) of Directive 97/7 must be interpreted as precluding a provision of national law which provides in general that, in the case of withdrawal by a consumer within the withdrawal period, a seller may claim compensation for the value of the use of the consumer goods acquired under a distance contract. However, those provisions do not prevent the consumer from being required to pay compensation for the use of the goods in the case where he has made use of those goods in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment, on condition that the purpose of that directive and, in particular, the functionality and efficacy of the right of withdrawal are not adversely affected, this being a matter for the national court to determine.
Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (First Chamber) hereby rules:
The provisions of the second sentence of Article 6(1) and Article 6(2) of Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts must be interpreted as precluding a provision of national law which provides in general that, in the case of withdrawal by a consumer within the withdrawal period, a seller may claim compensation for the value of the use of the consumer goods acquired under a distance contract.
However, those provisions do not prevent the consumer from being required to pay compensation for the use of the goods in the case where he has made use of those goods in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment, on condition that the purpose of that directive and, in particular, the functionality and efficacy of the right of withdrawal are not adversely affected, this being a matter for the national court to determine.
L’Oreal SA & Ors v EBay International AG & Ors
[2009] RPC 21, [2009] EWHC 1094 (Ch), [2009] ETMR 53 Arnold J
Are the Distance Selling Regulations relevant to any of the foregoing issues, and if so how?
The Distance Selling Directive has been implemented in domestic law by the Consumer Protection (Distance Selling) Regulations 2000, SI 2000 No. 2334 (“the Distance Selling Regulations”).
In paragraph 40(16) of the Re-Amended Particulars of Claim, L’Oréal plead:
“The Distance Selling Regulations provide protection to consumers in relation to any consumer distance contract. ‘Buy It Now’ sales advertised on the Site are covered by the scope of the Distance Selling Regulations. Accordingly, under the Distance Selling Regulations, ‘Buy It Now’ offers on the Site should provide the consumer with information in respect of the identity of the supplier and the supplier’s address where the contract requires payment in advance. Relevant sellers on the Site do not provide such information, including the Fourth, Fifth, Sixth, Seventh and Eighth Defendants.”
L’Oréal rely upon this allegation in support of (i) their allegation of joint torfeasorship and (ii) their case that eBay Europe are not protected by the E-Commerce Directive. It is far from clear on the face of the pleading, however, what relevance this allegation has to either of those issues.
Selected provisions of the Distance Selling Regulations
The Distance Selling Regulations include the following provisions:
“Interpretation
3. (1) In these Regulations –
“breach” means contravention by a supplier of a prohibition in, or failure to comply with a requirement of, these Regulations;
“business” includes a trade or profession;
“consumer” means any natural person who, in contracts to which these Regulations apply, is acting for purposes which are outside his business;
…
“distance contract” means any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sales or service provision scheme run by the supplier who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded;
…
“excepted contract” means a contract such as is mentioned in regulation 5(1);
“means of distance communication” means any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the conclusion of a contract between those parties; and an indicative list of such means is contained in Schedule 1;
…
“operator of a means of communication” means any public or private person whose business involves making one or more means of distance communication available to suppliers;
“period for performance” has the meaning given by regulation 19(2);
…
“supplier” means any person who, in contracts to which these Regulations apply, is acting in his commercial or professional capacity; and
…
Contracts to which these Regulations apply
4. These Regulations apply, subject to regulation 6, to distance contracts other than excepted contracts.
Excepted contracts
5.(1) The following are excepted contracts, namely any contract –
…
(f) concluded at an auction.
…
Information required prior to the conclusion of the contract
7.(1) Subject to paragraph (4), in good time prior to the conclusion of the contract the supplier shall –
(a) provide to the consumer the following information –
(i) the identity of the supplier and, where the contract requires payment in advance, the supplier’s address;
(ii) a description of the main characteristics of the goods or services;
(iii) the price of the goods or services including all taxes;
(iv) delivery costs where appropriate;
(v) the arrangements for payment, delivery or performance;
(vi) the existence of a right of cancellation except in the cases referred to in regulation 13;
(vii) the cost of using the means of distance communication where it is calculated other than at the basic rate;
(viii) the period for which the offer or the price remains valid; and
(ix) where appropriate, the minimum duration of the contract, in the case of contracts for the supply of goods or services to be performed permanently or recurrently;
(b) inform the consumer if he proposes, in the event of the goods or services ordered by the consumer being unavailable, to provide substitute goods or services (as the case may be) of equivalent quality and price; and
(c) inform the consumer that the cost of returning any such substitute goods to the supplier in the event of cancellation by the consumer would be met by the supplier.”
Under regulations 26-29, enforcement of the Distance Selling Regulations is a matter for enforcement authorities such as the Director General of Fair Trading, who can apply for an injunction. It is common ground that the Regulations do not create or confer any private right of action.
Application of the Distance Selling Regulations to eBay Europe
It is common ground that a Buy It Now transaction is a distance contract if the supplier (the seller) is acting in a commercial capacity. L’Oréal suggest that anyone other than a private seller on an occasional basis (e.g. selling an unwanted present) is acting in a commercial capacity. More particularly, L’Oréal contend that PowerSellers such as the Fourth-Eighth Defendants and operators of eBay Shops such as the Fourth-Sixth Defendants are acting in a commercial capacity. Counsel for eBay Europe did not concede this, but nor did he directly dispute it.
The help page on the Site entitled Legal Guidance for Business Sellers states that users should register as a business if they (i) sell items that they have bought to resell, (ii) make items themselves and sell them, intending to make a profit, (iii) are a Trading Assistant or (iv) buy items for their business. (The page entitled Registering as a Business suggests that users should also register as a business if they sell a large amount of goods on a regular basis or sell new items that they have not acquired for their own personal use.) It advises that the Distance Selling Regulations apply to Buy It Now listings, but not to auction-style listings. It advises that where the Distance Selling Regulations apply a seller has to refund an item if the buyer changes his or her mind within 7 days of the day on which the item was delivered (this requirement is imposed by regulation 10). So far I can see, it does not advise users about the requirements of regulation 7. This and other help pages do, however, advise business sellers of the need to comply with the Electronic Commerce (EC Directive) Regulations 2002 by providing full contact details.
The basis upon which eBay Europe advise users that the Distance Selling Regulations do not only apply to auction-style listings is regulation 5(1)(f) and advice published by the Office of Fair Trading that the Regulations “do not apply to … auctions, including internet auctions”. It appears, however, that the position may be different in Germany.
L’Oréal contend that many sellers on the Site act in a commercial capacity, but do not register as business sellers, and that many such sellers (and some sellers who do register as business sellers) do not comply with regulation 7 of the Distance Selling Regulations. L’Oréal also contend that eBay Europe participate in such breaches because it has sufficient information available to it, in particular from account histories and feedback records, to know that this is so.
Relevance?
Even if L’Oréal were right about this, I am not persuaded that it would be relevant to the issues arising in this case which are discussed above. In this regard, it is instructive that there was no mention of the Distance Selling Regulations in L’Oréal’s detailed skeleton argument for trial. Accordingly, I decline to make any findings as to whether sellers are contravening the Regulations or whether, if so, eBay Europe bear any legal liability for such breaches.
A reference to the ECJ?
In eBay Europe’s skeleton argument for trial counsel for eBay Europe pointed out that the issues in the present case touched upon matters that were already the subject of pending references before the ECJ. He identified eight references that were then thought to be pending, although it was later discovered that the ECJ had already dealt with one of these by reasoned order (Case C-62/08 UDV North America Inc v Brandtraders NV, 19 February 2009). Since the hearing, the ECJ has given judgment on a second reference (Copad). The other six references are all references concerning Google Adwords, or similar services, and at present they remain pending. Those six references are considered in some detail in my judgment in Interflora v M & S.
When I enquired whether eBay Europe was contending that this court should refer questions to the ECJ for a preliminary ruling, counsel replied that eBay Europe considered that a reference on the issues arising in these cases was long overdue. He adhered to that position in his closing submissions. Counsel for L’Oréal accepted in his closing submissions that the present case raised one issue of law which was not acte clair and upon which it would be appropriate for this court to seek guidance from the ECJ, namely the issue in relation to testers and dramming bottles; but he submitted that, apart from that issue, the legal issues in the present case were either issues of English law or were acte clair.
For the reasons given above I have concluded that this case raises a number of issues of Community law upon which the guidance of the ECJ is required. Since this court is not a court of last resort, I have a discretion as to whether to make a reference or to attempt to decide the issues myself. In my judgment, in the circumstances of the present case it is clearly better to make a reference myself, for the following reasons.
First, I consider that there are clearly some issues of law which are difficult and important even though others appear more straightforward. If I did not refer, I consider that it is highly likely that the Court of Appeal would do so on any appeal. Thus refusing to refer now would simply entail further delay and costs for the parties.
Secondly, as I have observed, this is one of a number of cases around Europe both between the same parties and between other parties raising the same or similar issues. Interflora v M & S is another one. The sooner the courts of Europe are able to arrive at common answers to these issues, the better. Accordingly, the ECJ should be asked to rule on these issues as soon as possible.
Conclusions
For the reasons given above, I conclude as follows:
i) The Fourth to Tenth Defendants have infringed the Trade Marks. In the case of the Fourth to Eighth Defendants the goods they sold were put on the market outside the EEA and L’Oréal did not consent to those goods being put on the market within the EEA. In the case of the Ninth and Tenth Defendants the goods they sold were counterfeits.
ii) Whether the sale by sellers on the Site of testers and dramming products and of unboxed products amounts to an infringement of the Trade Marks depends upon questions of interpretation of the Trade Marks Directive as to which the law is unclear (see paragraphs 319-326 and 331-342 above). Although these questions are academic so far as the acts committed by the Fourth to Tenth Defendants are concerned, they are potentially relevant to the question of what relief, if any, L’Oréal are entitled to. Accordingly, guidance from the ECJ is required on these points.
iii) eBay Europe are not jointly liable for the infringements committed by the Fourth to Tenth Defendants.
iv) Whether eBay Europe have infringed the Link Marks by use in sponsored links and on the Site in relation to infringing goods again depends upon a number of questions of interpretation of the Trade Marks Directive upon which guidance from the ECJ is required (see paragraphs 388-392, 393-398 and 413-418 above).
v) Whether eBay Europe have a defence under Article 14 of the E-Commerce Directive is another matter upon which guidance from the ECJ is needed (see paragraphs 436-443 above).
vi) As a matter of domestic law the court has power to grant an injunction against eBay Europe by virtue of the infringements committed by the Fourth to Tenth Defendants, but the scope of the relief which Article 11 requires national courts to grant in such circumstances is another matter upon which guidance from the ECJ is required (see paragraphs 455-465 above).
I shall hear further argument on the precise formulation of the questions to be referred to the ECJ. The parties should exchange proposed drafts of the questions in advance of that hearing. The parties should also consider the guidance given by Arden LJ in Horvath v Secretary of State for Environment [2007] EWCA Civ 620 at [80].