The mere fact that a company offers their service via the Internet does not mean that they are being directed to consumers in other member states, according to a recent ruling from the European Court of Justice (ECJ). The ruling highlighted the importance of protective jurisdiction for the consumer in cases of cross-border commercial disputes.
The ruling follows two distinct cases of cross border commercial disputes that the Austrian Supreme Court had sent the ECJ for referral. In one case an Austrian resident is claiming compensation for misleading information on a holiday he booked through a German on-line company. In the other, a German resident is being sued by an Austrian hotel for failing to pay bills that were reserved using the Internet.
The Austrian Supreme Court was unable to determine the legitimacy of either case because on the one hand it involved two member states in civil commercial matters, and on the other both cases share the ambiguity of jurisdiction when dealing with Internet related affairs. The ECJ took the view that if the Austrian Court could find evidence of intent to engage in business outside of the Member State it is registered in, such as international codes for telephone numbers and accepting foreign currency, then grounds for protective jurisdiction would no longer apply.
The ECJ concluded that, having regard to such evidence, the Austrian court must determine whether it is apparent from the traders websites and overall activity that they were envisaging doing business with Austrian consumers (Case C-585/08) or German consumers (Case C-144/09) in the sense that they were minded to conclude contracts with them.
The European Union regulation on jurisdiction in civil and commercial matters provides that actions against a person domiciled in a Member State must, as a general rule, be brought in the courts of that State. It also provides that cases resulting from a contractual relationship may be decided by the courts for the place of performance of the contractual obligation.
In the case of consumer contracts, however, rules protecting the consumer apply. If the trader directs its activities to the Member State in which the consumer is domiciled, the consumer can bring proceedings before the courts of the Member State of his domicile and he can be sued only in that Member State. Both of the present cases concern whether a trader directs its activities within the meaning of the regulation when it uses a website to communicate with consumers.
In either case it is apparent that as a growing number of transactions are executed on the Internet, e-commerce could become a large source of legal tension between parties of two or more Member States. It is plausible to imagine that in 5 years from now new regulations will be implemented at the supranational level to harmonize interests. In turn, this endeavour leaves us with an unanswered question: will the Internet be the next motor of integration for the European project.?
Background
Case C-585/08
Peter Pammer, who resides in Austria, wished to travel by freighter from Trieste (Italy) to the Far East. He therefore booked a voyage with the German company Reederei Karl Schlüter, through a German travel agency specialising in the sale on the Internet of voyages by freighter. Mr Pammer refused to embark on the ground that the conditions on the vessel did not, in his view, correspond to the description which he had received from the agency and he sought reimbursement of the sum that he had paid for the voyage. Since Reederei Karl Schlüter reimbursed only a part of that sum, Mr Pammer brought proceedings in the Austrian courts, before which that German company raised a plea that they lacked jurisdiction on the ground that it did not pursue any professional or commercial activity in Austria.
Case C-144/09
Oliver Heller, a German resident, reserved a number of rooms, for a period of a week, in Hotel Alpenhof, which is in Austria. The reservation was made by email, the hotels website which Mr Heller had consulted indicating an address for that purpose. Mr Heller found fault with the hotels services and left without paying his bill. The hotel then brought an action before the Austrian courts for payment of the bill. Mr Heller raised a plea of lack of jurisdiction, submitting that, as a consumer resident in Germany, he could be sued only in the German courts.
The Oberster Gerichtshof (Supreme Court, Austria), before which these two cases are pending, has asked the Court of Justice whether the fact that a company established in a Member State offers its services on the internet means that they are directed to other Member States too. If that were so, consumers domiciled in those other States who have recourse to the services could also benefit, in the event of a dispute with the trader, from the more favourable rules of jurisdiction laid down by the regulation.
European Court of Justice – Justice and Application – Full Text
