Consumer contracts and Internet services

Council Regulation (EC) No 44/2001 lays down rules governing the jurisdiction of courts in civil and commercial matters. Which basically means; which legal rules apply when there is a cross-border dispute. The basic principle is that jurisdiction is to be exercised by the EU country in which the defendant is residing, but there are exceptions to this rules such as when there is a contract (the country where the performance of the contractual obligation has been conducted is then key).

However consumer contracts generally recieve more protection (for more information click here). If the trader ‘directs its activities’ to the country in which the consumer is domiciled, the consumer can bring proceedings before the courts of his own country and he can be sued only in that country as well. 

The European Court of Justice

Joined Cases C-585/08 and C-144/09 Peter Pammer v Reederei Karl Schlüter GmbH & Co. KG and Hotel Alpenhof GesmbH v Oliver Heller  involve actions that came before the Austrian courts involving defendants residing in Germany and faced the plea that they lacked the jurisdiction to pursue the issue in those courts. The Austrian Supreme Court (Oberster Gerichtshof) then asked European Court of Justice whether the fact that a company established in one EU country offers its services on the internet means that they ‘are directed’ at another country. 

If this was to be found to be the case then under the rules set out in Council Regulation (EC) No 44/2001, consumers would be able to pursue legal action through their own national courts against any companies based in another EU country.

The Ruling

In its judgment the European Court of Justice stated that mere use of a website by a trader in order to engage in trade does not in itself mean that its activity is ‘directed to another country’.  The Court went on to state that the trader must have manifested its intention to establish commercial relations with consumers from a particular country.

How could you show ‘intention’?

The Court does consider a couple examples:

• When it offers its services or its goods in several countries designated by name
• When it pays a search engine operator for an internet referencing service in order to facilitate access to its site by consumers domiciled in those various EU countries.

In addition any combination of the following could be capable of demonstrating the existence:

• The international nature of the activity at issue, such as certain tourist activities;
• The mention of telephone numbers with the international code;
• Use of a top-level domain name other than that of the country in which the trader is established, for example ‘.de’, or use of neutral top-level domain names such as ‘.com.’ or ‘.eu’;
• The description of itineraries from one or more other country to the place where the service is provided; 
• Mention of an international clientele composed of customers domiciled in various countries, in particular by presentation of accounts written by such customers.
• Also if the website permits consumers to use a language or a currency other than that generally used in the trader’s country, this can also constitute evidence demonstrating cross-border activity of the trader.

Who does it affect?

It could potentially affect anyone who offers services over the internet directly to consumers situated in another EU country.  Anyone who does offer services to other countries must be careful as to how their website is aimed at consumers in that particular market, as this could influence where any potential legal action could take place.