Class 8: Protected categories

Question 1

What is the protection of protected categories,

Answer 1

• = gets an extra forum in which they can sue as opposed to the forum of the defendant, which would be the ordinary state of affairs.
• It is one of the rare occassion in the regulation where the claimant and the claimant’s position is considered relevant: art. 17 for consumers.

Question 2

What are the conditions for the protected categories?

Answer 2

• First condition: you need a contract = reciprocal contract, where both parties have duties and rights. In common law = there is no unilateral contract
• Contract has to be concluded by the consumer:
  
  • See case: Bonnie Lackey v Mallorca Mega Resorts before the High Court
  • Case about the privity of the consumer contract title = relativiteit van overeenkomsten.

Question 3

What is privity?

Answer 3

• Privity = idea that a contract binds you and not someone else. This brings with it the consequences of third party implications. The workings of the contract do not extend to other parties, because a contract is concluded between the parties that have actually concluded it.

Question 4

Case Bonnie Lackey v. Mallorca Mega Resorts

Answer 4

• High Court held that because of the effet utile of the consumer title: any exception of art. 4 has to be interpreted restrictively because it is an exception but you need to combine this with the effet utile.
• Ms. Lackey had been in Mallorca and she bumped her head in a wave pool and she became paralysed. Question was: for Ms. Lackey to sue in England = she would have to establish that the consumer title was triggered.
  
  • Otherwise: art. 4, potentially 7.1 → she would have to sue in Spain.
• She went with a bunch of friends and one of her friends had concluded the contract with Mallorca Mega Resorts, a Spanish cooperation. The friend had concluded a consumer contract, but did the maids in her party as well.

Question 5

What did the court decide in Bonnie Lackey?

Answer 5

• The hotel had to accept that all the people in the party could sue in the place of domicile because of the effet utile: the hotel had asked the maid to vouch for the good behavior of her party → this is an element which means that the hotel had intended for the contractual clauses to extend to anyone in the party. And also the jurisdictional consequences of that extension.
• Again we see the struggle of CJEU: again the struggle between the effet utile on the protected categories and art. 4 = exceptional application on the other hand.

Question 6

What is another condition for consumer section?

Answer 6

The purpose of the contract = outside his trade or profession → the consumer has to be a consumer contract.

Cases:

1. Gruber
2. Reliantco
3. Schrems

Question 7

What was case Benincasa?

Answer 7

• Foundation case where CJEU said: this needs to be a restrictive construction → we cannot expand the category too wide as a result of the general principe.

Question 8

Gruber Case

Answer 8

• Gruber is an Austrian farmer: he buys tiles of his farm: 40% professional and 60% private: does the consumer section kick in?
• So the CJEU answers: no, the professional aspect needs to be negligible = 40% is too much!
• What is relevant here?
  
  • Relevant distinction between partly professional use and partly private use and the relevant formula that the court uses.
  • Remember the general approach of the court -> apply this mutatis mutandis to other things
• Another important element: if the consumer gives an impression about his professional private identity.

Question 9

What does the court emphasize in Gruber?

Answer 9

• Consumer section is an exception to art. 4 so it has to be applied restrictively. And it needs to be applied even more restrictively because this is the only place in the regulation that is concerned with the position of the claimant!
• Court emphazises that there has to be an autonomous application = consumer should be read as a consumer for the EU as a whole, not just in view of a national interpretation.

Question 10

principles for the overall application of the protected categories:

Answer 10

1. It is the person invoking the exceptional regime who has the burden of proof of showing that the conditions for that title or for the section, apply in the case at issue → this is the consumer!
   
   • If the consumer wants to establish jurisdiction in their place of domicile, art. 19 specifies a specific judicial district of the domicile of the consumer, not just any part of Belgium, but that specific part in Belgium.
   • The opposing party will only mention that you are in the wrong court at the first appearance = danger for the statute of limitation.
2. It is relevant which impression the other party has given: if you turn up and give a card with BVBA on there = counterparty can assume you are a professional. → Factual burden of proof is relevant!

Question 11

Reliantco?

Answer 11

• Question: does it matter that the person involved who claims to be a consumer de facto has a lot of knowledge of the specific markets or services have been bought?
• Court states: It is the specific purpose for which those goods and services are put that are relevant for the trigger of the consumer title have been bought:
  
  • How did you present yourself when buying the goods and services, did you give indications that this was going to be used for professional purposes?
• CJEU specifically holds that the qualification of a consumer under secondary EU consumer law is not relevant for the qualification as a consumer in Brussels IA or indeed in any other European PIL instrument.
  
  • Secondary consumer law: lot of harmonization but the CJEU says: for the purposes of interpreting the notion of ‘consumer’ in Brussels Ia, the qualification in secondary consumer law or indeed such as in Reliantco the impact of secondary law directives in the banking and finance sector, the CJEU says that none of that matters.

Question 12

Can you still be a consumer under Brussels Ia if it is a lot of money that is being exchanged?

Answer 12

• Secondary consumer law: lot of harmonization but the CJEU says: for the purposes of interpreting the notion of ‘consumer’ in Brussels Ia, the qualification in secondary consumer law or indeed such as in Reliantco the impact of secondary law directives in the banking and finance sector, the CJEU says that none of that matters.
  
  • A lot of banks suggested that there should be a link → eg. we’ve sold her services for 500.000 = she can’t be a consumer but the CJEU = not relevant!
  • What matters is: the specific purpose for which she puts those goods and services.

Question 13

What is relevant for the qualification as a consumer?

Answer 13

1. Knowledge that coincidentally present in the consumer of the market in which they buy goods and services is irrelevant to the qualification as a consumer.
2. CJEU makes a clear distinction between secondary law outside of PIL and PIL itself. You need strong arguments, eg. art. 24(4) = a lot of IP secondary law which talks about applicable law = meant to be some kind of link (not always straightforward). But that is not the case → There is a Chinese Wall between secondary EU law and Brussels Ia and other jurisdictional rules.
   
   • Case example: cosmetic surgery of a porn star → what is the use that she has made of these cosmetic services: is she a consumer within the context of Brussels Ia. If the professional use is negligible (see case Gruber): then you’ll be able to trigger the consumer title.

Question 14

Case Schrems? First issue?

Answer 14

• Schrems: fights Facebook on privacy issues.
• Court: dynamic interpretation: Mr. Schrems could have lost his qualification as a consumer because he’s putting the service of Facebook to professional use: move dynamically from a B2C to a B2B contract.
  
  • Schrems could have lost his rights as a consumer: if you are no longer the weaker party = you do not longer have the right to be protected by this.

Question 15

What if you start off as a professional user and after while your professional profile page turns into a private FB page?

Answer 15

• There is not CJEU authority on this issue yet = can you gain consumer quality?
  
  • View prof: not possible, but it depends on which principle they will put their emphasis: predictability = guiding principles of the regulation → CJEU will say no because when you enter into a relationship under Brussels Ia → you need to be able to know from the beginning in which court you might be able to sue!
    
    • For a business to be confronted with consumers who, en parcours de route, change → too unpredictable for the corporation at issue.
  • On the other hand: it is about the protection of consumers → if the corporation would have an issues with that = they should have warned you.

Question 16

Second level of analysis in Schrems?

Answer 16

• Class actions have been assigned to him: The Court of Justice there said those claims assigned to Schrems, the jurisdictional implication of those claims has been assigned with the claims itself.
  
  • Which means that you not just had to sue in the 28, or at the time even 29 different member states, but that he would had to sue in the individual domiciles of each individual consumers, right? Because, as you know, the consumer title assigns jurisdiction to your domicile not to your member state.
• So, this is not good for class action purposes. But in the current state of the law, there is no class action purpose in EU law and the CJEU cannot just invent this
  
  • Difficult relationship between assignment subrogation and EU PIl Law (see Rome II and insurance contracts)

Question 17

Case Pillar Securitisation

Answer 17

Case where you had a consumer dabbling in large amounts of money → CJEU: qualification as a small or large investment on the banking and finance directives has no relevance on your qualification in Brussels IA.

Question 18

What is the third condition for the protected category?

Answer 18

• You need fit within one of the following: 2 categories: Art. 17(1) a and b identify a specific default contract:
  
  1. Either a contract for the sale of goods on installment credit terms = seller tells you, you can buy this bike and pay in 6 payments of 500 euro.
  2. Or, contract for a loan repayable by instalments or any other form of credit made to finance the sale of goods = sale, not a lease.

Question 19

What is the general fall back provision in consumer section?

Answer 19

• If you do not fall under one of those default contracts, then you might still be a consumer contract if the contract has been concluded with a person who pursues commercial or professional activities in the member state of the consumer’s domicile or by any means directs such activities to that member state, or to several states including the member state, and the contract falls within the scope of such activities.
• Now a more modern version of what was in the convention before:
  
  • Gruber: reciprocal obligations Ilisinger.
  • Default category in the convention, was the scenario where the seller turns to direct marketing like in Gruber’s case, sends you a proposal and then you have to actively respond to that proposal.

Question 20

What is the idea behind the modern version of the general fall back provision?

Answer 20

• But when the regulation was negotiated in 2000, it is a thing of the past = we need to have proper consumer protection, that is adapted to the modern era → came up with the formula in the third part of art. 17 = directing your activities:
  
  • Either you are present in the MS: sales people = if you go to a trade fair where there’s a representative of a German corporation, even if they do not have a website → physical presence in your MS.
  • Most likely event: website that directs their activities to your MS.

Question 21

What does it mean “directing your activities at a Ms”?

Answer 21

• Question from Pammer Alpenhof:
  
  • What does it take for them to be found to have directed their activities toward my member state?
  • Eg. When is it the case that amazon.de directs their activities towards me? What were the criteria which the CJEU applied in Pammer Alpenhof?
• Court says: there is not a magic bullet → not from the moment that you advertise your activities in a different language that you direct your activities to any other state than your own municipality → there is a basket of criteria which are relevant.
  
  • Declaration by the Commission and Council: the use of the language on a website would not be relevant for the determination of the consumer title.
    
    • Position of recitals if quite iffy in European PIL → the position in EU law is not very strong, it can be used to support an interpretation, but it cannot singlehandely carry an interpretation.

Question 22

What are elements that are relevant for checking if activities are aimed at an MS?

Answer 22

• Language: used as an element
• Currency
• Targeting international clients
• International packaching
• Switching to a different site: targeting a specific consumer
• Discounts for Flemisch national holiday = targeting
• Example of the lady of the cosmetic surgery: establish that the activities of the service was targeted to her MS where she was domiciled.
  
  • If it is a local cosmetic surgeon = no issue with section 4 of title II → you have to be careful if you have an English version, a Russian version → a lot of e-tailors have been caught off guard because they were directing consumers outside their jurisdiction.
• “Directing your activity at” = targeting would be the language of the convention because there you have the active consumer where you send out a specific proposal = targeting.

Question 23

What for e-traders outside the EU?

Answer 23

• For e-tailors outside the EU: still need to meet with requirements of art. 17:
  
  1. Default contract or
  2. Website (most cases) which directs their activities at the MS, including the MS of the consumer in question.
• “Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled”
  
  • = the business is limited to suing you in the place of your domicile.

Question 24

What is the possibility of choice of court wrt protected categories?

Answer 24

• Possibility of choice of court which differs from the rule of art. 18
• The conditions are not cumulative = the assumption of the first element, once the dispute has arisen, you can still have arguments about when a dispute has arisen, the assumption is that you have then consulted with a lawyer.
• There is also a possibility of article 26 of voluntary appearance: But then the judge needs to point out that you do not need to be there! There is a distinction between art. 19(1) and 26:
  
  • Art. 19: you agree on paper, after the dispute has arisen = jurisdiction clause on paper with the other party after the dispute.
  • Art. 26 just assumes that you arrive in a court that is not the court indicated in art. 18.

Question 25

What is art. 19?

Answer 25

• Art. 19: “which allows the consumer to bring proceedings in courts other than those indicated in this Section”
• = even broader possibility for suing, other than your own domicile of the domicile of other party.
• If opposing party is a non-EU business: you only have your domicile to sue → they are not bound by Brussels Ia Regulation. Assumption is that this is what most consumers want.

Question 26

What is the protection for employees?

Answer 26

• Employment contracts are regulated by art. 20
  
  • = you have more wiggle room as you descend into the matrix → so they will try to become a consumer: eg. Pammer Alpenhove
• Employees were not included from the beginning, a little bit of crumbs across the whole convention, but no organized section → there is now!
• When you read art. 20: “In matters relating to individual contracts of employment, jurisdiction shall be determined by this Section, without prejudice to Article 6 (basically that is again the relevance of the employer not having to be domiciled in the EU), point 5 of Article 7 (which is branch jurisdiction) and, in the case of proceedings brought against an employer, point 1 of Article 8 (which again refers to issues outside of the EU)”

Question 27

What are the conditions for protection of employment?

Answer 27

• There needs to be an employment contract → But, there is no definition of what employment might mean! CJEU has made it up across a number of cases
  
  • = some kind of ius commune because not always easy to distinguish an employment contract.
• Difficult in the gig economy.

Question 28

What is the case on Uber?

Answer 28

• Case Supreme Court on the qualification of Uber drivers: the service contract with Uber is a contract with Uber BV, specifically said that it is service providing and that the choice of court would be Amsterdam. So for an Uber employee to be able to sue Uber in England → argue that they are an employee, under the protective title of the Brussels Ia regulation.

Question 29

What is CMC?

Answer 29

• In English procedure: council often agree among themselves what the issues as = case management in procedure law: CMC = case management conferences → discuss with the judge what the issues really are → done in English CPR rules because it dramatically reduces the workload of the courts.
  
  • Often, you might wonder why they did not mention certain points → often in CMC.
  • Drawbacks and advantages: judgements will be more to the point.

Question 30

Case Holterman?

Answer 30

• CJEU held that if a person qualifies as an employee, for parts of their relationship with the employer, then they would enjoy the protection of the protective title for their entire relationship.
• Holterman = dual capacity (manager). And the court of justice in Holterman said “look, at least for the purposes of PIL, you will enjoy the whole privilege of protection for your whole relationship, even if you just qualify only for part of it in your relationship.”
• Another case: Boswoith → protected English litigation concerning the Lugano convention, where the issue was the same: qualification of employment contracts.
• CJEU: effectual criteria which helps the courts decide = reconfirmation of the same kind of criteria → should not necessarily have gone up to the CJEU.

Question 31

Case BY v Markt24 GmbH

Answer 31

• Employee who had signed a contract for employment, but it hasn’t started yet: she wanted to sue in Salzburg (where she would have habitually carried out the employment), whilst the employer was domiciled at Munich = 2 different MS.)
• So the CJEU emphasized the existence of a contract = not the actual exercise of that contract, at least if the lack of exercise of the contract is due to the employers’ fault = question is now: “what lawyer is going to determine whose fault it is?” = might depend on national applicable law.
  
  • Here: discussion on whether it was her fault = she could actually not perform it.
• Depending on the law: the fault might be imputable to the employer or not → only then the claimant can sue in Salzburg. If it is not imputable to the employer, then our claimant should sue in Munich = big difference in terms of costs of proceedings and applicable law.

Question 32

Case Jamieson v. Wurtemburgische

Answer 32

• Case about determining the place of habitual employment → has important jurisdictional consequences. The employer can sue you in your place of domicile (not dramatically different than art. 4) and you can sue the employer either in their domicile or where you are habitually employed!
• Case about determining the place of habitual employment → has important jurisdictional consequences. The employer can sue you in your place of domicile (not dramatically different than art. 4) and you can sue the employer either in their domicile or where you are habitually employed!
• Question: does the protective quality of the protected category titles, does it go as far as to rule out such proactive action by the non-protected party = is the protected position of the weaker party (consumer, employee or small insured) to rule out that the opposing party can take a proactive action asking a court to declare that there is no liability (= dni)

Question 33

What did the CJEU say about case Jamieson?

Answer 33

• Problem of:
  
  • Effet utile of protected categories
  • Safeguarding restrictive application.
• Judge has sympathy for claimant but there is no indication that the other party is not allowed to do this.
• Is there a principle of EU law = fraus omnia corrumpit → which would sustain the conclusion that the insurance company should not be allowed to do this. And the problem with that statement is that once the court of justice were to say “we will allow such a general principle like abuse of EU law, to penetrate the enforcement of Brussels 1A,” than I think you can forget about predictability, cause then everyone will be trying abuse of EU law, for every single article in the regulation.