With the help of Brian Hayes, MEP, and his team we had a very interesting and helpful meeting with Veronica Manfredi, Head of Consumer Law Unit at the European Commission on Thurs 23rd Feb 2017.
Ms Manfredi outlined 2 EU Directives that apply in protecting consumers, such as purchasers of French leaseback properties who were subjected to mis-selling and unfair contractual terms.
Key take-aways were:
- as consumers who are resident in a member state (MS) of the EU and mis-sold something in another member state, we can take a court case here in Ireland, there is no need to take one in France
- if someone was approached and sold to in English and then subjected to documents and contracts in another language, this goes against their rights and is contrary to the directive
- if a legal case is pending against someone, but that someone was mis-sold to and their rights violated under any or both of these EU Directives, then that court case cannot proceed until it is proved that their rights were not violated
1. The mis-selling of the properties: UCPD
Directive 2005/29/EC on unfair business-to-consumer commercial practices (the UCPD) prohibits commercial practices that can deceive consumers, if such practices are likely to cause consumers to take transactional decisions they would not have taken otherwise. Article 6 of the Directive prohibits misleading actions and Article 7 prohibits misleading omissions. Whether a commercial practice, such as the advertising and the promises made by the sellers for the properties in this case, qualify as misleading must be assessed on a case-by-case basis by the competent national authorities and courts. In addition, Annex I to the UCPD lists 31 commercial practices that shall be considered unfair in all circumstances (meaning without a case-by-case assessment of whether the consumer’s transactional decision has been affected). The commercial practice in No 8 of Annex I UCPD could possibly be relevant to this case, as it prohibits undertaking to provide after-sales services prior to a transaction in a language which is not the official language of the MS where the trader is located and then making such a service available only in another language without clearly disclosing this to the consumer before the consumer is committed to the transaction.
The functioning of the UCPD is explained in an updated Guidance document published by DG Justice and Consumers in May 2016:
The UCPD has been implemented in Ireland by the Consumer Protection Act 2007. Consumers have no right to individual redress under this Directive, but MS must ensure that effective, proportionate and dissuasive penalties are in place for businesses that infringe the provisions.
The relevant authority in Ireland for assessing whether a commercial practice infringes the UCPD, as implemented in Irish law, is the Competition and Consumer Protection Commission (CCPC) (http://ccpc.ie/).
2. Unfair contract terms: UCTD
Directive 93/13/EEC on Unfair Terms in Consumer Contracts (the UCTD) protects consumers against unfair contract terms. Under Article 6 of this Directive, MS shall lay down that unfair terms in a consumer contract shall not be binding on the consumer.
If a consumer tells a court that he believes that his European rights have been violated, the court must stay the proceedings and assess whether this is the case. There is ample case-law from the Court of Justice of the European Union (CJEU) on this, notably concerning mortgage enforcement proceedings. In recent years the CJEU has further developed its case law on the effectiveness of the protection of consumers against unfair contract terms under the UCTD. Although the CJEU does not directly rule on the fairness of individual clauses used by banks, its pronouncements imply rather strict standards for the assessment of contract terms used inter alia by banks, including transparency requirements ensuring that consumers are properly informed. In these cases the Court of Justice of the European Union has established that national courts and authorities are required to examine, of their own motion, the unfairness of a contractual term against the background of the UCTD as transposed in national law.
Some key rulings on this by the CJEU:
· C-618/10 Banco Español de Crédito of June 2012: ES rules on payment order proceedings are incompatible with Directive 93/13/EEC, not guaranteeing an effective right for consumers to object to a payment order on the basis of unfair contract terms and not allowing an ex officio control of unfair contract terms by ES courts. Furthermore the Court ruled that national courts have to set aside unfair contract terms (e.g. excessive late payment interests) as if they had never existed and may not adapt the relevant contract terms. The ES provisions on payment orders have been changed in the meantime
· C-415/11 Aziz of March 2013: ES rules on the enforcement of mortgages are incompatible with Directive 93/13 since they did not give consumers the possibility to object to the enforcement on the basis of unfair contract terms with the possibility to suspend enforcement proceedings so as to ensure that no irreversible facts are created for consumers (who are at the risk of losing their home).
The assessment of whether contractual terms are unfair under the UCTD is to be carried out by the competent national authorities and courts. However, in most MS only courts have the power under national law to grant consumers individual remedies. Therefore, consumers most often go to court in order to achieve such individual remedies.
Cross-border enforcement and cooperation (the CPC Network)
Regulation (EC) No 2006/2004 on consumer protection cooperation (the CPC Regulation) lays down a cooperation framework to allow national authorities from all countries in the European Economic Area to jointly address breaches of consumer rules when the trader and the consumer are established in different countries. The CPC Regulation links national Competent Authorities to form a European enforcement network, the “CPC Network“. This means that in this case, the Irish Competition and Consumer Authority has an efficient way to contact its French counterpart, the DGCCRF (la Direction générale de la concurrence, de la consommation et de la répression des fraudes) to discuss the matter.
The applicable law and the relevant court
According to Article 6 of Regulation (EC) No 593/2008 (Rome I), a contract concluded by a consumer with a trader shall be governed by the law of the country where the consumer has his habitual residence, provided that the trader, by any means, directs his activities to that country or to several countries including that country. Thus, if a trader based in France directs his activities at people in Ireland, consumers affected by his practices in Ireland can invoke the protection of Irish law. The concept of ‘directing’ one’s commercial or professional activities to the country of the consumer was addressed by the Court of Justice in joined cases C‑585/08 and C‑144/09 Peter Pammer and Hotel Alpenhof GesmbH. This judgment sets out a number of criteria for establishing whether a website is ‘directed’ at a specific Member State, such as the use of different languages or currencies on the website (see paragraphs 92 and 93 in particular).
Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial Matters (the Brussels I Regulation) sets out the rules for which courts consumers can go to in proceedings against traders. Under Article 16(1) of this Regulation, the consumer may bring proceedings against the trader either in the courts of the Member State in which the trader is domiciled or in the courts for the place where the consumer is domiciled.
We have engaged with the Competition and Consumer Protection Commission here in Ireland, which is the relevant statutary body and will post updates when we receive them.