European Union: ECJ Clarifies Rules On Jurisdiction In Relation To Consumer Contracts

On 6 September 2012, the Court of Justice of the European Union ("ECJ") gave judgment on a preliminary reference from the Austrian Supreme Court concerning the interpretation of Article 15(1)(c) of Council Regulation 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the "Brussels I Regulation") (ECJ, case C-190/11, Daniela Mühlleitner v. Ahmad Yusufi and Wadat Yusufi).

As a general rule, the Brussels I Regulation requires actions against a person domiciled in an EU Member State to be brought in the courts of that State. Further, in contractual matters, the Brussels I Regulation allows the courts of the place of performance of the contractual obligation to decide on the dispute.

With a view to protecting consumers, section 4 of the Brussels I Regulation derogates from the above general rules for contractual disputes between a consumer and a trader. In such disputes, the consumer is entitled to bring proceedings before the courts of the EU Member State where he is domiciled when specific conditions are satisfied. In this regard, Article 15(1)(c) of the Brussels I Regulation provides that a consumer may sue in his national courts a trader with whom he has concluded a contract, even if the trader is domiciled in another EU Member State on the double condition that (i) the trader pursues commercial or professional activities in the EU Member State of the consumer's domicile or, by any means (e.g., via the Internet), directs such activities to that State or to several States including that State; and (ii) the contract at issue falls within the scope of such activities.

The Austrian Supreme Court asked the ECJ whether Article 15(1)(c) of the Brussels I Regulation must be interpreted as requiring the contract between the consumer and the trader to be concluded at a distance. This question arose in proceedings between Ms. Mühlleitner, who resides in Austria, and the Germany-based company Autohaus Yusufi GbR ("Autohaus Yusufi") which sells cars.

After coming across an offer of Autohaus Yusufi on the Internet, Ms. Mühlleitnerwent to Germany to sign the contract of sale and to take delivery of the vehicle. However, on her return to Austria, Ms. Mühlleitnerdiscovered that the vehicle was defective. Since Autohaus Yusufi refused to repair the vehicle, Ms. Mühlleitnerbrought proceedings in the Austrian courts for rescission of the sale contract. Autohaus Yusufi contested the international jurisdiction of the Austrian courts, arguing that the dispute had to be brought before the competent German courts.

In its judgment, the ECJ answered that the possibility for a consumer to bring proceedings before the courts of his EU Member State against a trader domiciled in another EU Member State is not subject to the condition that the contract was concluded at a distance. The considerations of the ECJ were as follows.

First, the ECJ noted that Article 15(1)(c) of the Brussels I Regulation does not expressly make its application conditional on the fact that the contracts falling within its scope have been concluded at a distance. In this regard, the ECJ referred to the explanatory memorandum accompanying the proposal for the Brussels I Regulation, which indicates that Article 15(1)(c) applies to contracts concluded in a State other than the consumer's domicile. The ECJ added that, in order to ensure better protection for consumers, Article 15 of the Brussels I Regulation is worded more generally than the old Article 13 of the Brussels Convention.

Second, the ECJ noted that the addition of a condition concerning the conclusion of consumer contracts at a distance would run counter to the objective of Article 15 of the Brussels I Regulation.

Finally, in response to the question whether it could be deduced from the ECJ's judgment in Pammer/Alpenhof (ECJ, joined cases C-585/08 and C-144/09, Peter Pammer v. Reederei Karl Schlüter GmbH & Co KGand Hotel Alpenhof v. Oliver Heller - see, VBB on Belgian Business Law, Vol. 2010, No. 12, p. 5, available at www.vbb.com) that the ECJ introduced a requirement that the contract must be concluded at a distance, the ECJ answered in the negative. The ECJ continued that the essential condition for the application of Article 15(1)(c) of the Brussels I Regulation is the one relating to a commercial or professional activity directed towards the State of the consumer's domicile. In this respect, the establishment of a contract at a distance, as in the case at hand, and the reservation of goods or services at a distance (or, a fortiori, the conclusion of a consumer contract at a distance) are indications that the contract is connected with such an activity.

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