Consumer contracts: A tangled web


By Michael McParland

20 January 2014 at 13:02 BST


Businesses need to be aware that a domestic contract can become international with just a few clicks of a mouse as a result of a recent case, says barrister Michael McParland.

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In an important decision in November last, the Court of Justice of the European Union (CJEU) has ruled on the ‘international character’ of the consumer contract jurisdiction provisions of the Brussels I Regulation. Although the case involved modest sums under a package travel contract, given the potentially broad scope of consumer contracts under the Regulation the Court’s decision may well have wider implications. In Case C 478/12, Maletic –v- lastminute.com GmbH, TUI Österreich GmbH, a couple, Mr & Mrs Maletic, domiciled in Austria, booked and paid for a package holiday to Egypt on 30 December 2011for EUR 1, 858 through the website of lastminute.com GmbH, a German company.

On its website, lastminute.com stated it acted as the travel agent and the travel operator for the trip would be TUI Österreich GmbH, an Austrian company. The holiday was to be at the Jaz Makadi Golf & Spa hotel in Hurghada, Egypt. That booking was confirmed by lastminute.com, which passed it on to TUI.

Subsequently, the Maletics received a ‘confirmation/invoice’ on  5 January 2012 from TUI that confirmed the information concerning the trip booked with lastminute.com, but mentioned the name of another hotel, the Jaz Makadi Star Resort Spa. It was only on their arrival in Egypt that the Maletics discovered this was a different hotel and they had to pay a surcharge of EUR 1, 036 to stay in the hotel they had originally booked. Returning to Austria, they issued proceedings against lastminute.com and TUI in their local court in Bludenz to recover EUR 1,201.38 together with interest and costs. Little did they know that two years later they’d be in the CJEU.

Difficulties over jurisdiction

The Austrian court upheld jurisdiction over the German based lastminute.com on the basis of the consumer contract provisions of Articles 15 and 16 of the Brussels I Regulation, but declined jurisdiction over the Austrian domiciled TUI on the basis that the international consumer contract provisions of the Brussels I Regulation were not applicable: the dispute between the Maletics and TUI was a purely domestic one.

Therefore, in accordance with the applicable provisions of Austrian law, the court with jurisdiction over TUI was in Vienna and was not the court in Bludenz. This ruling would have required the Maletics to bring two proceedings arising out of the same claim for EUR 1,201.38: one in their local court against lastminute.com, the other in Vienna against TUI. On a reference from the Regional Court, Feldkirch, the CJEU was asked whether Article 16 (1) of the Brussels I Regulation which confers jurisdiction on the courts for the place where the consumer is domiciled, applied to the circumstances of this case.

International element

The CJEU decided that it did.  There was ‘an international element’ justifying the application of the Brussels I Regulation to the dispute between the Austrian Maletics and the Austrian travel operators TUI. The international character of the legal relationship was satisfied by the involvement of both the German domiciled lastminute.com and the Austrian domiciled TUI.

 Importantly, the Court held that even assuming that a single transaction in which the Maletics booked and paid for their package holiday on lastminute.com’s website could  be divided into two separate contractual relationships,  that is, with (i) the German online travel agency, lastminute.com and (ii) the Austrian travel operator TUI, then ‘… the second contractual relationship cannot be classified as ‘purely’ domestic since it was inseparably linked to the first contractual relationship which was made through the travel agency situated in another Member State’ (para. 29).

Consumer protection objectives

The Court emphasised the consumer protection objectives of the Brussels I Regulation and the need to minimise the possibility of concurrent proceedings, precluded a solution that required the Maletics to pursue parallel proceedings in two courts against two operators involved in the booking and the arrangements for the package holiday.

Consequently, the CJEU held that the concept of the ‘other party to the contract’ in Article 16(1) of the Brussels I Regulation must be interpreted as covering the contracting partner of the travel operator with which the consumer concluded that contract. Therefore, although the contract was concluded with the German lastminute.com, the Austrian TUI were also caught within the concept of the ‘other party to the contract’, and thus subject to the special jurisdictional provisions for international consumer contracts despite being domiciled in the same Member State as the consumer.

This judgment has a number of potential implications for businesses which conduct their dealings with essentially domestic consumers through intermediaries (on-line or not) who are domiciled outside the jurisdiction of both the consumer and the business.  An otherwise domestic contract could become an ‘international’ one with only a few clicks of a computer mouse.

Michael McParland is a Barrister (England & Wales,and the British Virgin Islands & California Attorney)  at Quadrant Chambers
 

 
   
 
 
 

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