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Fifty Shades of (Facebook) Blue – ECJ Renders Decision on Consumer Jurisdiction and Assigned Claims in Case C-498/16 Schrems v Facebook
Written by Tobias Lutzi, DPhil Candidate and Stipendiary Lecturer at the University of Oxford.
Yesterday, the ECJ has rendered its decision in Case C-498/16 Maximilian Schrems v Facebook Ireland Limited. The case will be of interest to many readers of this blog as its facts are not only closely linked to the ECJ’s well-known decision in Case C-362/14 Schrems but also could have come straight out of a conflict-of-laws textbook.
Maximilian Schrems has been litigating against Facebook and the way in which the company uses the personal data of its users since 2011, when he first submitted a range of complaints to the Irish Data Protection Commissioner. In 2013, he submitted another complaint, which ultimately lead to the annulment of the ‘Safe Harbour’ framework between the EU and the US in the aforementioned decision; the proceedings continued with a reformulated version of this complaint and have recently been referred to the ECJ for a second time. Over the course of this litigation, Schrems built a reputation as a privacy activist, publishing two books, giving talks and lectures, and founding a non-profit organisation that uses ‘targeted and strategic litigation’ to enforce privacy and data protection laws across Europe.
The proceedings that gave raise to yesterday’s decision by the ECJ are formally unrelated to the aforementioned litigation. In 2014, Schrems set out to bring a ‘class action’ against Facebook for numerous violations of privacy and data protection laws. For this purpose, 25,000 Facebook users assigned their claims to him. Only eight of these claims, regarding Schrems’ own Facebook account and Facebook ‘page’ as well as the accounts of seven other users from Austria, Germany, and India, formed the object of the present proceedings. The claims were brought at Schrems’ domicile in Vienna, Austria, based on the special head of jurisdiction for consumer contracts in Art 16(1) Brussels I (= Art 18(1) of the recast Regulation).
The proceedings raised two separate questions, which the Austrian Oberster Gerichtshof ultimately referred to the ECJ:
- Can Schrems still be considered a consumer in the sense of Art 15(1) Brussels I, despite his continued activism and professional interest in the claims?
- If so, can he also rely on the privilege of Art 16(1) Brussels I regarding claims that have been assigned to him by other consumers who are domiciled in (a) the same EU Member State; (b) another Member State; (c) a non-member State?
Following the Advocate General’s opinion (reported here), the Court answered the first question in the positive (I.) and the second one in the negative (II.). Both answers are testimony to a nuanced interpretation of the special rules of jurisdiction for consumer contracts (III.)
I. The Consumer Exception
According to the ECJ’s well-known decisions in Case C-269/95 Benincasa and Case C-464/01 Gruber, the assessment of whether a party is a ‘consumer’ in the sense of Art 15(1) Brussels I does not depend on their subjective qualities but on the ‘the position of the person concerned in a particular contract’ (Benincasa, [16]), which must have been ‘concluded for the purpose of satisfying an individual’s own needs in terms of private consumption’ (ibid, [17]); where a contract has been concluded for a purpose that is partly private and partly professional, the professional aspect of it must be ‘so slight as to be marginal’ for the contract to still fall under the provision (Gruber, [39]).
In the present case, this definition raised two questions. The Court first had to decide whether the assessment was to be made only at the moment when the contract was originally concluded or whether subsequent changes of circumstances must also be taken into account. It held that
[38] … a user of [a digital social network] may, in bringing an action, rely on his status as a consumer only if the predominately non-professional use of those services, for which the applicant initially concluded a contract, has not subsequently become predominately professional.
Second, the Court had to decide whether this was the case for Schrems, who had originally entered into a contract with Facebook for private purposes but subsequently developed a professional activity involving litigation against Facebook. According to the Court,
[39] … neither the expertise which [a] person may acquire in the field covered by those services nor his assurances given for the purposes of representing the rights and interests of the users of those services can deprive him of the status of a ‘consumer’ within the meaning of Article 15 [Brussels I].
[40] Indeed, an interpretation of the notion of ‘consumer’ which excluded such activities would have the effect of preventing an effective defence of the rights that consumers enjoy in relation to their contractual partners who are traders or professionals, including those rights which relate to the protection of their personal data. …
Interestingly, the Court put little emphasis on the possible distinction between Schrems’ private Facebook ‘profile’ and his arguably professional Facebook ‘page’ (see [34]–[36]). Instead, it seemed to generally exclude ‘representing the rights and interests of the users’ of a particular service from the range of professional activities that might prevent the contract for this service from being considered a consumer contract. The Court explicitly linked this interpretation to the objective of ensuring a high level of consumer protection in Art 169 TFEU. Thus, its decision might not even have been different had Schrems joined Facebook with the sole aim of enforcing his (and other users’) rights. This way, the Court effectively sidestepped the problems created by the increasingly wide range of uses to which social media and other online platform accounts can be put, which the Advocate General had so colourfully described as ‘fifty shades of (Facebook) blue’ (Opinion, [46]) – and which, for the time being, remain unaddressed.
II. Jurisdiction for Assigned Claims
With regard to using the second alternative of Art 16(1) Brussels I to bring claims that have been assigned to the claimant by other consumers at the claimant’s domicile, the Court held:
[45] The rules on jurisdiction laid down, as regards consumer contracts, in Article 16(1) of the regulation apply, in accordance with the wording of that provision, only to an action brought by a consumer against the other party to the contract, which necessarily implies that a contract has been concluded by the consumer with the trader or professional concerned ….
…
[48] … [T]he assignment of claims cannot, in itself, have an impact on the determination of the court having jurisdiction …. It follows that the jurisdiction of courts other than those expressly referred to by Regulation No 44/2001 cannot be established through the concentration of several claims in the person of a single applicant. … [A]n assignment of claims such as that at issue in the main proceedings cannot provide the basis for a new specific forum for a consumer to whom those claims have been assigned.
This interpretation seems to align well with earlier decisions by the Court, according to which the special head of jurisdiction in Art 16(1) Brussels I is only available personally to the consumer who is party to the consumer contract in question (Case C-89/91 Shearson Lehman Hutton, [23]; Case C-167/00 Henkel), [33]), and according to which the assignment of a claim does not affect international jurisdiction under the Brussels I Regulation (Case C-352/13 CDC Hydrogene Peroxide, [35]–[36]).
An interesting, and arguably unfortunate, side effect of this restrictive interpretation is that it may even exclude the consolidation of the claims of other Austrian consumers in the same forum, considering that the second alternative of Art 16(1) does not only contain a rule of international jurisdiction but also determines local (internal) jurisdiction. In this regard, the Advocate General argued that an additional forum in which such consumer claims could be brought could be created under national law (Opinion, [117]), a proposition that does not appear easily reconcilable with the clear wording of Art 16(1).
Contrary to the claimant’s press release, though, the fact that a consumer is not allowed to avail him- or herself of the privilege in Art 16(1) Brussels I in order to bring the claims 25,000 other consumers that have been assigned to him at his or her domicile does not mean that company’s can ‘divide and conquer’ and ‘block enforcement of consumer rights’. A claimant is free to rely on the first alternative of Art 16(1) Brussels I (which mirrors Art 2(1)) and bring all claims in the defendant’s Member State of domicile, the procedural law of which will then decide on whether the claims may be consolidated.
III. A Nuanced Approach to the Consumer Exception
What seems to emerge from the decision is a nuanced approach to the special provisions for consumer contracts. The Court applies a rather flexible interpretation to Art 15(1) Brussels I, allowing for changes of circumstances to be taken into account but also distinguishing the enforcement of (consumer) rights from other types of professional activities. At the same time, it interprets the special head of jurisdiction in Art 16(1) restrictively, limiting the privilege to each individual consumer and excluding the possibility of other consumers assigning their claims to one who is domiciled in what may appear as a more favourable forum.
Of course, there may well be strong arguments for the existence of such a possibility, especially in cases where each individual claim is too small to justify litigation but the sum of them is not. But it seems questionable whether Art 16(1) Brussels I would be the right instrument to create such a mechanism of collective redress – and, indeed, whether it should be the Court’s role to implement it.
Sharia law in Greece: Blending European values with Islamic tradition
The Hellenic Republic is the sole EU Member State which provides for the application of Sharia law in its territory for more than a century. A recent amendment is granting Greek Moslems the right to opt-out, and resort to domestic civil law. At the same time, the new law respects the right to opt-in for the application of Sharia law, upon the condition of mutual agreement between the parties.
Law 4511/2018 was enacted on January 15. It contains only one article (the second simply declares that the law will be in force upon publication in the State Gazette), which amends the previous status of Sharia courts in Greece. A new Paragraph (4) is added to Art. 5 Law 1920/1991. By virtue of the new provision, the jurisdiction of the Mufti becomes the exception, whereas (until today) it was the rule for Greek Moslems living in the region of (Western) Thrace. The Mufti has jurisdiction for a vast number of family and succession matters, which are listed under Article 5.2 Law 1920/1991. A prerequisite is that the parties have submitted the above matters to Sharia law.
The new law grants the right to each party to seek Justice before domestic courts, and in accordance with Greek substantive and procedural law. The Mufti may exercise jurisdiction only if both parties file an application for this cause. Once the case is submitted to the Mufti, the jurisdiction of national courts is irrevocably excluded.
In addition, the new law paves the path for a more structured procedure before the Mufti: A drafting Committee will be authorized to prepare a decree, which will shape (for the first time) the Rules and Regulations of the Mufti ‘courts’. Signs of a formalized process are already clearly visible in the new law (Article 4.b).
Inheritance matters are also regulated by the new legislation: In principle they are subjected to Greek law, unless the testator solemnly states before a notary public his wish to submit succession matters to Sharia law. A parallel application of Greek and Sharia law is not permitted. However, revocation of the testator’s declaration is allowed, pursuant to Greek succession law provisions embedded in the Civil Code.
The new law has certainly conflict of laws ramifications too, most notably in light of the recent Sahyouni case of the CJEU. In this respect it is important to underline that all decisions rendered by the Mufti are passing through a hybrid process of domestic exequatur, which is rudimentarily regulated under Article 5.3 Law 1920/1991. Failure to submit the Mufti decisions to domestic courts’ scrutiny, deprives them of res iudicata and enforceability. Hence, EU Member States courts, whenever confronted with a request to recognize or enforce Mufti decisions within their jurisdiction, will always have to examine whether a Greek court has granted full faith and credit to the Mufti’s ruling.
Japanese Supreme Court Renders Decision on Hague Abduction Convention
On December 21, 2017, the Japanese Supreme Court rendered a decision on the Hague Abduction Convention. The Court upheld a lower court decision in favor of the Japanese mother, even though she had turned back on her promise to return the kids from a visit to Japan, and even though that same court had earlier issued a return order in favor of the American father. The matter had received international press attention, and even a Congressional subcommittee hearing.
Japan had long refused to join the Hague Convention, and when it did, in 2014, critical observers already expected that courts would find ways to undermine it. Those observers see themselves vindicated.
Colin Jones reports critically on the decision; he has previously written on Japan’s joining the Convention and on reluctance to enforce it. Useful background from the Law Library of Congress is here.
Japanese accession to the Convention has been a frequent scholarly topic, both in Japan and elsewhere. Yuko Nishitani, who had already written about “International Child Abduction in Japan” in (2006) 8 Yearbook of Private International Law 125-143, and who wrote a long report (in Japanese) for the Japanese Ministry in 2010, provided a brief analysis in 2011. Dai Yokomizo discussed the accession in (2012) Revue critique 799; Jun Yokohama did so in the Mélanges van Loon (2013, pp 661-72). Vol. 57 (2014) of the Japanese Yearbook of International Law contains articles by Tatsuki Nishioka and Takako Tsujisaka, Masayuki Tanamura, Masako Murakami, Martina Erb-Klünemann, and Nigel Vaughan Lowe. Takeshi Hamano helpfully explains the Japanese reluctance with regard to the Japanese ideology of the family. Outside of Japanese authors, Barbara Stark and Paul Hanley wrote most recently in the United States; the topic is also addressed in several student notes. The accession was also discussed by Bengt Schwemann (in German) and Francisco Barberán Pelegrín (in Spanish).
News
Venezuela: Negative choice and UNIDROIT Principles in determining Law applicable to bill of exchange
by Claudia Madrid Martínez
On 17 March 2023, the Civil Chamber of the Supreme Court of Justice issued a decision whereby it annulled a judgment on appeal and decided the merits of the case, which concerned a bill of exchange issued in Curaçao, binding Venezuelan citizens domiciled in Venezuela.
The interesting thing about this judgment is that the Civil Chamber set aside the reasoning of the court of appeals according to which, since there are no international treaties in force between Venezuela and Curaçao, and there are no rules on bills of exchange in the Venezuelan Act on Private International Law, the Inter-American Convention on Conflicts of Laws concerning Bills of Exchange, Promissory Notes and Invoices should be applied by analogy and, consequently, “the Law of the place where the obligation was contracted” (art. 1), i.e., the Law of Curaçao, should be applied to the bill of exchange.
It should be noted that, on the one hand, the only Conventions in force for Venezuela regarding bills of exchange are the Inter-American Convention on Conflicts of Laws regarding Bills of Exchange, Promissory Notes and Invoices, and the Bustamante Code. On the other hand, the Act on Private International Law does not establish rules on International Commercial Law, since —as stated in the Explanatory Memorandum— this matter must be developed within the Commercial Law itself in accordance with the general principles set forth in the Act on Private International Law.
In addition, Article 1 of the Act on Private International Law provides two tools to integrate the gaps in the Act and, in general, the gaps in the Venezuelan Private International Law system. This rule refers to analogy and to the generally accepted principles of Private International Law.
In the past, case law has admitted the application of treaties in force for Venezuela, but not for the other States involved in a specific case, either by analogy (Supreme Court of Justice, Political Administrative Chamber, judgment of 23 February 1981), or on the understanding that their solutions can be characterized as generally accepted principles of Private International Law (Second Court of First Instance in Commercial Matters of the Federal District and Miranda State, judgments of 29 February 1968 and 12 March 1970). Therefore, in this case, the arguments used by the court of appeal in analogically applying the Inter-American Convention were not erroneous.
The Civil Cassation Chamber, however, had another idea when it understood that the judge of appeal erred in the application of the Law of Curaçao to settle the case. Thus, the Chamber began by reaffirming the existence of “relevant foreign elements, such as the place of issuance of the bill of exchange, i.e., Curaçao, and the domicile of the parties involved in Venezuela”. The latter criterion, in fact, is not a foreign element, since it is located in the forum.
The Chamber then cites Article 1 of the Act on Private International Law, and concludes that there are no treaties in force, applicable to the case since Curaçao has not ratified any of the aforementioned treaties, and proceeds to the application of the domestic rules of Private International Law.
In particular, the Civil Chamber intends to determine, in the first place, the Law applicable to the form of the bill of exchange, which is why it resorts, rightly, to Article 37 of the Act on Private International Law, a rule that governs the form of all kinds of legal acts, which is perfectly applicable to bills of exchange, and also, as is well known, it establishes the locus regit actum principle in an alternative manner. Indeed, the rule allows the judge to choose between the Law of the place of conclusion of the act, which governs the substance of the act, and the Law of the domicile of the person doing the act, or of the common domicile of the persons doing the act.
Under Article 37, the choice of the connecting factor applicable to the specific case will depend on the favor validitatisprinciple, i.e., the judge must determine the Law applicable in order to favor the formal validity of the act. In this case, the Civil Chamber decided to apply the domicile criterion, without explaining why, although, basically, the reason can be intuited from the fact that the judge ended up applying Venezuelan law.
The Civil Chamber then begins its examination of the Law applicable to the merits and, in this regard, “finds it pertinent to bring up the provisions of Article 30 of the Act on Private International Law”, a rule that establishes the Law applicable to international contracts in cases where the parties have not chosen it. The nature of a bill of exchange can certainly be discussed, but it is not a contract.
In any case, the Civil Chamber does not justify its action, that is to say, it does not indicate the reason why a rule governing contracts should be applied to a bill of exchange. However, I do not know if this was consciously done, but it did leave out a series of points that are of great interest in the field of international contracts. Let us see.
The first thing the Chamber does is to identify, in accordance with Article 30 of the Law, the objective and subjective elements of the relationship, in order to determine with which Law the bill of exchange is more closely related and assumes for this purpose —although it does not quote it— the opinion expressed by Professor Fabiola Romero in her work “Derecho aplicable al contrato internacional” (in: Liber Amicorum, Homenaje a la Obra Científica y Académica de la profesora Tatiana B. de Maekelt, Caracas, Facultad de Ciencias Jurídicas y Políticas, UCV, Fundación Roberto Goldschmidt, 2001, Volume I, pp. 203 ss.), understanding that the subjective elements refer to the parties and the objective ones to the relationship itself.
Thus, the Civil Chamber includes in the subjective elements the nationality and domicile of the parties —all located in Venezuela—; and, within the objective elements, the place of subscription of the bill of exchange —Curaçao—, the place of payment —understanding as such the place indicated next to the name of the drawee and located in Curaçao—, and the fact that the bill is intended to be enforced and performed in Venezuela.
Then, in accordance with the last part of Article 30 of the Act on Private International Law, according to which the judge “shall also take into account the general principles of International Commercial Law recognized by international organizations”, the Civil Chamber analyzes such principles. And it does so considering their so-called conflictual function, since in this case they will be used, not to settle the merits, but to search for the Law applicable.
However, the principles sought by the Civil Chamber are contained in international treaties. Firstly, the 1980 Rome Convention on the Law Applicable to International Contracts —now absorbed by the 2008 Rome I Regulation—, which refers to the closest links, but based rather on the questioned criterion of the characteristic performance. Secondly, Article 9 of the Inter-American Convention on the Law Applicable to International Contracts, rule that inspired the solution of Article 30 of the Act on Private International Law.
After reaffirming the application of the Law with which the bill of exchange is most closely connected, the Civil Chamber refers Article 31 of the Act on Private International Law, and understands that “in the event of a dispute regarding the Law to be applied, in the case of a contract or obligation of international origin, in the absence of a choice of Law by the parties or when it is ineffective, the judge shall apply ‘…when appropriate…’, that is, according to the specific case, the Lex mercatoria, which includes the usages, customs and commercial practices of general international acceptance”.
This rule leads the Chamber to consider the UNIDROIT Principles and it decides to apply them on the basis of the so-called negative choice —a discussed solution in the world of arbitration—, admitted by the Preamble of the Principles. Indeed, the Principles may be applied “when the parties have not chosen any law to govern their contract”.
Thus, the Civil Chamber ends up understanding that, in the absence of indication by the parties, in case of a monetary obligation, the place of performance will be “at the obligee’s place of business” (art. 6.1.6[1][a]).
“Now, considering the objective and subjective elements that are directly linked to the referred bill of exchange, as well as the general principles of International Commercial Law accepted by international organizations, the customs and manners of international trade, known as Lex mercatoria, according to Articles 30 and 31 of the Act on Private International Law, it is concluded that the Law applicable to the performance of the bill of exchange shall be the Law of the place of performance, it is concluded that the Law applicable to resolve the merits of the case is Venezuelan Law, given that the parties are Venezuelans, their domicile is in the Bolivarian Republic of Venezuela and the commercial instrument, although signed in Curaçao, is intended to be enforceable in the Bolivarian Republic of Venezuela. It is hereby declared”.
The Civil Chamber applied Venezuelan Law to both the form and the substance of the bill of exchange. But there is more, when deciding on the merits, instead of following the solution of the UNIDROIT Principles and calculating interest according to the Law of the State of the currency of payment (art. 7.4.9), it did so instead “at the rate of five percent (5%) per annum, according to Article 456, ordinal 2° of the Venezuelan Commercial Code… for which the conversion into bolivars must be made at the rate established by the Central Bank of Venezuela for the day of payment, all this through a complementary expert opinion, in accordance with Article 249 of the Code of Civil Procedure and not as erroneously requested by the plaintiff, that is to say, calculated at the legal interest rates that have been fixed for each semester by the Central Bank for Curaçao and St. Martin (Centrale Bank Curaçao en Sint Maarten)” (bold in the original).
There are undoubtedly some noteworthy aspects of this decision that hopefully will be taken into account in the future in cases related to international contracting. Others, such as the characterization of a bill of exchange as a contract, the disregard of the possibility of applying international treaties by analogy or as general principles, and the calculation of interest on an international obligation, denominated in foreign currency, in accordance with Venezuelan Law, could rather be forgotten.
Translated by the author from her original post in Spanish.
Second Issue of ICLQ for 2023
Further to my post on first view articles for the second issue of ICLQ 2023, the second issue for ICLQ for 2023 was just published. It contains the following conflict of laws article that was not included in the first view articles:
S Camilleri, “Sense and Separability”:
This article explores the doctrine of separability, as understood in particular in the English legal tradition. It does so by reference to the decisions in Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others and ENKA ?n?aat ve Sanayi A.?. v OOO ‘Insurance Company Chubb’ & Ors that explore the relevance of the concept when determining the law applicable to the arbitration agreement. These decisions largely treat the doctrine as irrelevant to the determination of the law governing the arbitration agreement. They do so because of the way in which English law views separability as tied inimically to the concept of enforcement of the arbitration agreement. This is unsurprising given the content of section 7 of the Arbitration Act 1996 and the position of the doctrine of separability as a legal fiction that must be restricted to its defined purpose. Viewed against the potential reform of the Arbitration Act 1996, the author asks whether a broader view of separability can be adopted. The author’s view is that there are cogent and compelling reasons for adopting a broader view, that would promote certainty and consistency in a way that is not best served by the current approach.
Conference & call for papers Sustaining Access to Justice
Save the date
On 19-20 October 2023 a conference on ‘Sustaining Access to Justice: Developments and Views on Costs and Funding’ will be held at Erasmus University Rotterdam. The conference is organised by the project team Affordable Access to Justice, financed by the Dutch Research Council. Confirmed keynote speakers include Rachael Mulheron (Queen Mary University London) and Andreas Stein (European Commission, DG Justice and Consumers, head of unit). More information on the program and registration will follow soon.
Call for papers
For this conference we invite submissions of abstracts from early career researchers and young practitioners.
The conference’s theme: Access to civil justice is of paramount importance for enforcing citizens’ rights. At the heart access to civil justice lies litigation funding and cost management. Yet, over the past decades, access to justice has been increasingly put under pressure due to retrenching governments, high costs of procedure, and inefficiency of courts and justice systems. Within this context, the funding of litigation in Europe seems to be shifting from public to private. Private actors and innovative business models emerged to provide new solutions to the old problem of financial barriers of access to justice. With the participation of policymakers, practitioners, academics and civil society representatives from all over Europe, the conference seeks to delve deeper into the financial implications of access to justice and the different ways to achieve sustainable civil justice systems in Europe. The topics addressed will include the different methods of financing dispute adjudication, particularly in the context of group litigation (third-party funding, crowdfunding, blockchain technologies), public interest litigation, developments in ADR/ODR, and the new business models of legal professionals.
Call for Papers: During the second day of the Conference (20 October) a panel will be organised which is intended to function as a forum for young scholars and young practitioners to present their work in front of a distinguished and broad audience. We particularly invite Early Career Researchers, PhD candidates (at an advanced stage of their PhD), and young practitioners to participate and present their research on the conference’s topics and beyond. While the contributions should fall within the Conference broader topic (costs and funding of civil justice), authors are free to include matters they deem interesting to explore within this context. Proposals can be theoretical, empirical as well as policy oriented. Interdisciplinary approaches and/or a Law & Economics approach are especially encouraged.
Submissions and deadline: Please submit an extended abstract (max 1000 words) in English to dori@law.eur.nl and cordina@law.eur.nl on 7 July 2023 at the latest. Please include your name, affiliation, and a link to your research profile. Submissions will be selected based on quality, originality, interdisciplinarity and the capacity to incite fruitful debates. Accepted submissions will be notified on 30 July 2023 at the latest. The selected participants will be asked to submit their final manuscript in early 2024.
The organisers aim to include the best papers in the conference proceedings, to be published as an edited volume with a reputable publisher. Further details in this regard will be communicated in due time.
Funding for travel and accommodation is available for the selected authors.
The conference venue will be @ Erasmus University Rotterdam – Woudestein Campus. The conference is organised by Erasmus School of Law in the context of the VICI Project ‘Affordable Access to Justice’. More information at: http://www.euciviljustice.eu/.