Businesses that trade online should be aware of the implications of a recent judgment of Europe’s highest court, the Court of Justice of the European Union (CJEU). The upshot of the judgment is that, in the event of a dispute, a supplier may be sued by a consumer in the consumer’s home courts. This has a number of disadvantages for a supplier, not least the increased costs likely to result from managing a cross-border dispute involving unfamiliar laws, procedure and language.
The judgment concerned the interpretation of Article 15(1)(c) of the Brussels Regulation. This Regulation determines which European courts will have jurisdiction over a dispute where a supplier is based in one country and the consumer in another. Article 15 provides that a consumer may bring proceedings in his/her home courts where “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 that Member State, and the contract falls within the scope of such activities.”
In this case, Mr S ran a business selling second-hand cars. He advertised his cars on his website, which was accessible in France and Germany. The website displayed his contact details, including a French landline telephone number and a German mobile telephone number, together with the respective international codes. Mr E, a German consumer, travelled to France and bought a car from Mr S. He had not consulted Mr S’s website, but had heard about his business from acquaintances. A dispute arose over defects in the car and Mr E issued proceedings against Mr S in the German courts. He argued that the German courts had jurisdiction because the inclusion of the German mobile phone number on the website showed that Mr S was directing his commercial activities to Germany for the purposes of Article 15. The German court disagreed that Mr S’s activities were directed to Germany as Mr E had not used the website to find and contact Mr S or bought the car online. However, it asked the CJEU for a ruling on the scope of Article 15(1)(c) of the Brussels Regulation.
The CJEU held that it was clear from an earlier judgment that Article 15(1)(c) was relevant to determining which court had jurisdiction whether or not the contract in dispute was made at a distance (for example, online) or not. Therefore, it was relevant here.
Mr E could sue in the German courts if two conditions were met: (1) Mr S must “direct his commercial activities” to Germany and (2) the contract must fall within the scope of those activities. In relation to (1), assuming that one could consider, because of the German telephone number on Mr S’s website, that Mr S “directed” his commercial activities to Germany, there was no additional requirement that the website induced Mr E’s contract with Mr S or be the cause of Mr E’s purchase. A requirement for such a ‘causal link’ would be contrary to the objective in Article 15(1)(c) of protecting consumers. However, a causal link would be strong evidence to determine whether the activity of a supplier is in fact directed to a consumer’s home country.
The judgment helps to clarify the scope of Article 15 of the Brussels Regulation. It is consistent with the EU’s objective of protecting consumers and encouraging cross-border trade by giving consumers confidence to enter into transactions with traders in other Member States knowing that they can sue in their home courts should a dispute arise. However, the ruling makes uncomfortable reading for suppliers in the EU. Even if they only sell their products in their home Member State, they are at risk of being sued in the courts of a different Member State if they are directing commercial activities to that Member State. There is currently a lack of clarity around when a supplier will be ‘directing its commercial activities’ to a Member State. It has yet to be determined in this case if the fact that the website included (amongst other things) a German mobile telephone number is enough. The supplier’s marketing approach, and not the expectations of the consumer, will be key to answering this question.
For more information, please contact Stephanie Faber