Category Archives: Consumer protection

Lack of jurisdiction of the court hearing the action by a consumer for a declaration of invalidity of a standard contract to hear the application for a declaration of unfairness of terms in the same contract

Judgment

C-567/13

12.02.2015

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Reference for a preliminary ruling

Nóra Baczó and János István Vizsnyiczaiv.Raiffeisen Bank Zrt

CJEU

3rd Ch.

C. Toader

J. Kokott

Consumer Protection —Directive 93/12/EEC

Keywords

Reference for a preliminary ruling — Consumer protection — Directive 93/13/EEC — Article 7 — Mortgage loan agreement — Arbitration clause — Unfairness — Action by consumer — National procedural rule — Lack of jurisdiction of the court hearing the action by a consumer for a declaration of invalidity of a standard contract to hear the application for a declaration of unfairness of terms in the same contract — Principles of equivalence and effectiveness

Significant points

  1. It must be held that the jurisdiction of the county courts to hear actions which are brought on grounds based on EU law does not necessarily constitute a procedural rule which may be classified as ‘unfavourable’. The designation of those courts, which are less numerous and hierarchically superior to the local courts, may facilitate a more homogeneous and specialised administration of justice in cases concerning the rules arising from Directive 93/13.
  2. As regards the higher costs of justice which the applicant might incur before the county courts, it cannot be inferred from the sole fact of examining a case such as that at issue in the main proceedings before such courts that that undermines the principle of equivalence. Such an interpretation would amount to measuring the equivalence between safeguarding the rights that individuals derive from EU law on one hand and safeguarding the rights they derive from national law on the other, solely from the point of view of costs, and by ignoring the advantages of the procedure which is provided for actions based on EU law, such as those mentioned in the preceding paragraph.
  3. Observance of the principle of effectiveness requires that the organisation of the internal remedies must not, however, make it impossible or excessively difficult to exercise the rights individuals enjoy under EU law.
  4. The answer to the questions referred is that Article 7(1) of Directive 93/13 must be interpreted as meaning that it does not preclude a national procedural rule pursuant to which a local court which has jurisdiction to rule on an action brought by a consumer seeking a declaration of invalidity of a standard contract does not have jurisdiction to hear an application by the consumer for a declaration of unfairness of contract terms in the same contract, unless declining jurisdiction by the local court gives rise to procedural difficulties that would make the exercise of the rights conferred on consumers by the EU legal order excessively difficult. It is for the national court to carry out the necessary verifications in that respect.

Noteworthy

This judgment deals with the question of whether the fact that consumers in Hungary had to bring an action for the unfairness of a contract under Directive 93/13/EEC in front of a higher court and at greater cost than would have been the case for an action dealing with domestic law constituted breach of the principle of equivalence between EU and national law or of the principle of effectiveness. In this regard, the Court of Justice reiterated the case law according to which each Member State is able to designate the courts having jurisdiction for governing actions which safeguard the rights of individuals conferred under EU law. It then clarified that the fact that actions in front of the courts designated may cost more than in other courts is not necessarily unfavourable to potential applicants if those courts possess advantages for applicants. Therefore the procedure for actions relating to EU law does not need to be exactly the same as those dealing with national law in the same area of law. As regards effectiveness, the Court outlined certain factors which the referring court should bear in mind when deciding whether the procedure in Hungary adequately protected consumer rights.

Regulation (EC) No 44/2001 – Consumer, domiciled in one Member State, having purchased securities issued by a bank in another Member State from an intermediary established in a third member State

Judgment

C-375/13

28.01.2015

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Request for a preliminary ruling

Harald Kolassa

v

Barclays Bank plc

CJEU

4th Chamber

M. Safjan

M. Szpunar

Brussels I Regulation – Financial law and consumer protection

Keywords

Regulation (EC) No 44/2001 – Jurisdiction in civil and commercial matters – Consumer, domiciled in one Member State, having purchased securities issued by a bank in another Member State from an intermediary established in a third member State – Jurisdiction for actions brought against the issuer of those securities

Significant points

1. Under which provision of Brussels I Regulation may an applicant who, as a consumer, has acquired a bearer bond from a third party professional invoke jurisdiction for the purposes of an action brought against the issuer of the bond on the basis of the bond conditions, breach of the information and control obligations and liability for the prospectus?

a.  Not under Article 15 (1) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters due to the lack of an agreement between the consumer and the issuer of the bond.

b. Not under Article 5 (1) (a) of Regulation No 44/2001 due to the lack of a legal obligation freely consented to by the issuer towards the applicant.

c. In so far as that liability is not based on a matter relating to a contract, within the meaning of Article 5 (1) of the Regulation, under Article 5 (3) of Regulation No 44/2001.

In this respect, the courts where the applicant is domiciled have jurisdiction, on the basis of the place where the loss occurred, to hear and determine such an action, particularly when the damage alleged occurred directly in the applicant`s bank account held with a bank established within the area of jurisdiction of those courts.

2. In the context of the determination of international jurisdiction under Regulation No 44/2001, it is not necessary to conduct a comprehensive analysis of the evidence in relation to the disputed facts that are relevant both to the question of jurisdiction and to the existence of the claim. It is, however, permissible for the court hearing the case to examine its international jurisdiction in the light of all the information available to it, including, where appropriate, the allegations made by the defendant.

Noteworthy

  1. Articles 15(1), 5(1) and 5(3) of the Regulation No 44/2001 must be interpreted strictly since they constitute respectively a derogation from the general rule of jurisdiction laid down in Article 2 (1) of the regulation/rules of special jurisdictions for contracts, tort, delict or quasi-delict.
  2. This being said, the Kolossa judgment brings valuable clarifications to the Kronhofer judgment (C-168/02) regarding the jurisdiction of the courts where the applicant is domiciled under Article 5(3) of Regulation No 44/2001. Provided that the bank account in which the loss occurred is held within the Member State of residence of the plaintiff (by contrast to the situation in the Kronhofer case), they are competent.

Consumer protection – Consumer credit – Pre-contractual information duties

Judgment

C-449/13

18.12.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Reference for a preliminary ruling

CA Consumer Finance SA

V

Ingrid Bakkaus,

Charlien Bonato,

Florian Bonato

CJEU

4th Ch.

A. Prechal

/

EU Banking and Financial law – Consumer credit – Consumer protection

Keywords

 Consumer protection – Consumer credit – Directive 2008/48/EC – Pre-contractual information duties – Obligation to check the borrower`s creditworthiness – Burden of proof – Methods of proof

Significant points

Pursuant to Directive 2008/48/EC lenders, when contracting with consumers, bear responsibility for the pre-contractual information requirements laid down in the Directive. They must provide consumers with a “Standard European Consumer Credit Information” form, check individually the creditworthiness of the consumer and have a duty to assist the consumer by giving a personalised explanation if need be. The purpose of this Directive is to enable the consumer to make an informed choice as to the commitment to subscribe to a loan. But there are no provision rules relating to the burden of, or the detailed rules for, providing that the lenders` obligations have been fulfilled.

  1. In this respect, the principle of effectiveness (which limits the procedural autonomy of the Member States) would be undermined if the burden of proving the non-performance of the lender`s obligations lay with the consumer. A diligent lender must be aware of the need to gather and retain evidence that its obligations to provide information and explanations have been fulfilled. A standard term according to which the borrower acknowledges that he has received and taken note of the “Standard European Information form” constitutes an indication which the lender is required to substantiate with one or more relevant items of evidence.
  2. The consumer’s creditworthiness assessment (article 8 of the Directive 2008/48) may be carried out solely on the basis of information supplied by the consumer, provided that that information is sufficient and that mere declarations by the consumer are also accompanied by supporting evidence. Secondly, it does not require the lender to carry out systematic checks of the veracity of the information supplied by the consumer. The Directive 2008/48/EC affords the lender a margin of discretion for the purpose of determining whether or not the information at its disposal is sufficient. However, mere unsupported declarations made by the consumer may not, in themselves, be sufficient if they are not accompanied by supporting evidence. This requirement aims to making creditors accountable and to preventing them from granting loans to consumers who are not creditworthy.
  3. Pursuant to article 5(6) of the Directive 2008/48, further to the provision of the “Standard European Consumer Credit Information” form (article 5(1), the lender must provide adequate and personalized explanations to the consumer in order to place him in a position where he is enabled to assess whether the proposed credit agreement is adapted to his needs and to his financial situation. Therefore, notwithstanding the pre-contractual information which must be provided under Article 5(1) of that Directive, the consumer may, pursuant to Article 5(6), before entering into the credit agreement, still need additional assistance. The Directive does not specify in what form this additional adequate explanations must be given to the borrower. Therefore, those explanations may be given orally by the lender to the consumer in the course of an interview. Those explanations must be communicated to the consumer in good time before the credit is signed. This requirement aims to enabling the consumer to make a fully informed decision with regard to a type of loan agreement.
  4. Both articles 5 and 8 of the Directive 2008/48 are pre-contractual in nature. There is no link between the two obligations stemming from these two articles. As such, the assessment of the financial situations and the needs of the consumer may not be necessarily carried out before the provision of adequate explanations. The lender is in a position to give the consumer explanations based solely on information which the consumer supplies to him, so that the consumer may make a decision with regard to a type of loan agreement, without the lender being required to assess the consumer’s creditworthiness beforehand. However, the lender must take account of the assessment of the consumer’s creditworthiness in so far as that assessment means that the explanations provided need to be adapted.

Noteworthy