European Parliament 2014-2019 Committee on Petitions 27.1.2016 NOTICE TO MEMBERS Subject: Petition No 0945/2014 by Eugenia Ion (Romanian) concerning alleged failure of the Romanian courts to enforce EU consumer protection legislation Petition No 1689/2014 by Irina Giurcău, (Romanian) on the alleged noncompliance of consumer protection legislation in Romania Petition No 1703/2014 by Rodica Huzum (Romanian) on alleged infringement of consumer protection legislation in Romania 1. Summary of petition Petition 0945/2014 In 2012, the petitioner initiated legal proceedings in Bucharest regarding a contract signed with a foreign company (containing a clause regarding the legislation applicable and jurisdiction). In this connection, he invoked both Romanian and EU law, including Council Directive 93/13/EC of 5 April 1993 on unfair terms in consumer contracts, as well as the body of case law established by the European Court of Justice (Cases C-240/98, C-618/10 and C- 137/08), under which national judges are empowered to rule on the possible inadmissibility of contractual terms, even if the parties have opted for the law of another Member State as being applicable. The petitioner is seeking the assistance of the European Parliament in ensuring compliance with consumer protection law. Petition 1689/2014 The petitioner relates that she filed a complaint with the National Authority for Consumer Protection in Bucharest in December 2012, requesting the authority to confirm that a company in Switzerland included unfair clauses in contracts with consumers. The petitioner CM\1084947.doc PE576.718v01-00 United in diversity
requested that the Authority compel the Swiss company to modify all the contracts in the process of being executed, to eliminate unfair clauses in the contracts and to provide compensation to the petitioner. The petitioner invoked national and European legislation on consumer protection, namely Law No 193/2000 on unfair terms in contracts between traders and consumers, Law No 296/2004 on the Consumer Code, Directive 93/13/EEC on unfair terms in consumer contracts and Directive 2005/29/EC on unfair business-to-consumer commercial practices in the internal market ( Unfair Commercial Practices Directive ). The Authority has not resolved the petitioner's complaint. Consequently, the petitioner applied to the Court of Justice in Bucharest - Contentious Administrative and Tax Department. The petitioner's request was rejected. The petitioner believes that the judges refused to apply European legislation on consumer protection and requests the European Parliament's support. Petition 1703/2014 The petitioner states that she submitted a complaint to the National Consumer Authority in Bucharest, requesting that the Authority check whether a Swiss-based company with a subsidiary in Romania had not included unfair terms in consumer contracts. The petitioner had asked the Authority to compel the Swiss company to modify all its open contracts by eliminating any unfair terms from its contracts and to offer to compensate the petitioner. The petitioner cited national and European legislation on consumer protection, and namely Act No 193/2000 on unfair terms in trader-consumer contracts, Act No 296/2004 on the Consumer Code, Directive 93/13/EEC on unfair terms in consumer contracts and Directive 2005/29/EC on unfair business-to-consumer commercial practices in the internal market (the Unfair Commercial Practices Directive ). The Authority has not resolved the petitioner s complaint, and she has therefore taken her case to the Administrative and tax litigation section of the Court of Bucharest. The Sector 1, Bucharest Court rejected her application on the grounds that the matter was not within the jurisdiction of the Romanian courts. The petitioner considers that the judges have refused to apply European consumer protection law and requests the European Parliament s support. 2. Admissibility Petition 0945/2014: Declared admissible on 18 March 2015 Petition 1689/2014: Declared admissible on 2 June 2015 Petition 1703/2014: Declared admissible on 3 June 2015. Information requested from Commission under Rule 216(6). 3. Commission reply, received on 27 January 2016 Petitions 0945/2014, 1689/2014 and 1703/2014 The petitioners entered into a collective purchase system operated by Lyoness Romania SPRL, a subsidiary of Lyoness Europe AG in Switzerland. It appears to be a commercial scheme where participants make group purchases, receive discounts and refunds from Lyoness partners. Benefits are available for attracting new participants to the scheme. The petitioners allege that the terms and conditions of Lyoness contain unfair terms and, PE576.718v01-00 2/5 CM\1084947.doc
additionally, they believe that Lyoness uses unfair commercial practices. The petitioners complained to the Romanian National Consumer Authority and, since they were not satisfied with the reply by the authority, the petitioners brought actions before courts. The Romanian court rejected the application on the grounds that the matter was not within the jurisdiction of the Romanian courts. Apparently, the court also discussed the issue of the applicable law and held that exclusively Swiss law applies, as per the agreement concluded by the parties. The Commission's observations Two EU consumer protection instruments could be relevant in the context of the petition. In both directives, the consumer is defined as a natural person who is acting for purposes which are outside his trade, business, (craft) or profession. Under Directive 93/13/EEC on unfair terms in consumer contracts, a contract term causing a significant imbalance between the parties' rights and obligations to the detriment of the consumer shall be regarded as unfair and as such shall not be binding. Member States must ensure adequate and effective means to prevent the continued use of unfair terms in contracts. Importantly, the Court of Justice of the European Union has established that the national court is required to examine, of its own motion, the unfairness of a contractual term where it has available to it the legal and factual elements necessary for that task. Where it considers such a term to be unfair, it must not apply it, except if the consumer opposes that non-application 1. In particular, the national court must investigate whether a term conferring exclusive territorial jurisdiction, which is the subject of a dispute before it, falls within the scope of Directive 93/13/EEC and, if it does, assess whether such a term is unfair 2. The Court further observed that the term whose purpose is to confer jurisdiction in respect of all disputes arising under the contract on the court where the trader has his principal place of business, obliges the consumer to submit to the exclusive jurisdiction of a court which may be a long way from his domicile. Directive 2005/29/EC on unfair commercial practices requires that traders act in accordance with professional diligence and that they provide material information, which the consumer needs to take an informed decision. This directive also contains a list of practices which are prohibited in all circumstances without any need of a case-by-case assessment. Notably, point 14 of the black-list prohibits establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products. However in this case, the Romanian court declined jurisdiction and, furthermore, stated that Swiss law applies based on the clauses contained in the contracts. As regards the applicable law, Regulation (EC) No 593/2008 on the law applicable to contractual obligations (known as "Rome I") will apply in the present proceedings, in so far as 1 C-243/08, Pannon GSM point 2 of the operative part 2 C-137/08, Pénzügyi Lízing, point 3 of the operative part CM\1084947.doc 3/5 PE576.718v01-00
the situation described by the petitioner involves a conflict of law question. Accordingly, the parties to a contract can choose the applicable law. However, in consumer contracts, such a choice cannot have the result of depriving the consumer of the protection afforded to him by the provision of the law of the country of his habitual residence, in this case Romania, from which the parties cannot derogate from by agreement. This means that in the present case Swiss law, as chosen by the parties, could apply, subject to the application of such mandatory protection rules as set out in the Romanian legislation. However, this outcome is subject to the conditions listed in Article 6(1) of the Rome I Regulation, namely that the defendant in this case either pursues commercial or professional activities in Romania or, by any means, directs such activities to Romania and the contract falls within the scope of such activities, provided that the applicant in his case can be qualified as a consumer, as defined above. As far as the jurisdiction is concerned, the 2007 Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies rationae temporis in the present case. This convention essentially extends the rules of Council Regulation No 44/2001 on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (known as "Brussels I") to Iceland, Norway and Switzerland. Accordingly, if the applicant in this case can be regarded as a consumer and the contract has been concluded with a person who pursues commercial or professional activities in Romania or, by any means, directs such activities to Romania and the contract falls within the scope of such activities, then a clause attributing exclusive jurisdiction to the courts of Switzerland cannot be valid under that Lugano Convention/Brussels I Regulation. Furthermore, as clarified by the Court of Justice in Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial and Salvat Editores, at paragraph 24, such a clause can be regarded as unfair within the meaning of Article 3 of Council Directive 93/13/EEC. Indeed, such a term also falls within the category of terms which have the object or effect of excluding or hindering the consumer s right to take legal action, a category referred to in subparagraph (q) of paragraph 1 of the Annex to the Directive 1. Conclusion From the outset, it must be emphasised that it is the role of the national courts to assess and rule in individual cases, based on all available legal and factual circumstances. In this context, national courts must apply EU law. Nevertheless, the information provided by the petitioners allows drawing some conclusions from the perspective of EU civil and consumer law. While the Commission cannot assess whether the petitioners acted as consumers, as this requires the appreciation of facts, prima facie, nothing in the description provided by the petitioners would point out to the fact they might have been acting in a commercial sphere. On the contrary, it appears they have entered into a group purchasing scheme as consumers and EU consumer law applies. It should also be assessed whether the commercial practices used by Lyoness could constitute a pyramid scheme prohibited by the Unfair Commercial Practices Directive. Information provided by the petitioners does not allow drawing conclusions in this respect. 1 C-137/08, Pénzügyi Lízing, paragraph 53 PE576.718v01-00 4/5 CM\1084947.doc
Furthermore, for the purpose of answering the question of applicable law and jurisdiction it is also of crucial importance to assess the factual elements of the present case in order to establish whether (i) the applicant acted as a consumer and (ii) whether the defendant pursues commercial or professional activities in Romania or, by any means, directs such activities to Romania and the contract falls within the scope of such activities. In this context, as stated above, it is for the national courts to assess these factual elements. The Commission cannot substitute its factual analysis to that of the national courts. Nevertheless, if the contract in question would benefit from consumer protection, then the clause attributing exclusive jurisdiction to the courts of Switzerland cannot be valid under the Lugano Convention/Brussels I Regulation. Finally, Swiss law, as chosen by the parties, could apply, subject to the application of equivalent mandatory protection rules as set out in the Romanian legislation. In addition, it is also likely that, based on the existing guidance of the Court of Justice, the term in the contract of Lyoness whose purpose is to confer jurisdiction in respect of all disputes arising under the contract on the court where the trader has his principal place of business (i.e. Switzerland) would fall within the category of terms which have the object or effect of excluding or hindering the consumer s right to take legal action. It could therefore be unfair and not binding. Based on the above remarks, if the petitioners consider that the court did not properly apply EU law, they should use remedies available to them in the national legal system against the judgement of the court of first instance. While the effectiveness of consumer protection and the compliance with EU law depends on its application by the national courts, the Commission has to take into account the practice of the national courts at a larger scale 1 and, in assessing whether an infringement of EU law by a Member State took place, may not rely on isolated decisions, or on interpretations that are disowned by the national supreme court 2. 1 See, for instance: 27 April 2006, Case C-441/02, Commission./. Germany, point 50 2 Case C-129/00 Commission. /. Italy, ruling of 9 December 2003, paragraph 32 CM\1084947.doc 5/5 PE576.718v01-00