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Web-based traders- 07/04/2011
The Brussels Regulation offers increased protection to consumers, however, where a trader "directs its activities" to consumers domiciled within the EU. If a trader targets a specific country for business, a consumer domiciled in that country can choose to bring proceedings against the trader either in that country or in the member state where the trader is based. However, acknowledging the perceived inequality of bargaining power, the consumer can only be sued in the country in which he is domiciled.
When will a trader be "directing its activities" at another member state?
The Austrian Supreme Court had two cases before it asking that very question. In the first case an Austrian resident, Mr Pammer, booked a voyage by freighter, from Italy (Trieste) to the Far East, with a German company through a German travel agency. Mr Pammer subsequently refused to travel, objecting to the standards aboard the freighter, and brought proceedings in the Austrian courts for full reimbursement. The German company disputed the Austrian court's jurisdiction to hear the case on the ground that it did not pursue any professional or commercial activity in Austria.
In the second case, a German resident, Mr Heller, made reservations in an Austrian hotel using an email address provided on the hotel's website for this purpose. When Mr Heller left without paying the bill, the hotel went to the Austrian courts to seek payment of the bill. However, Mr Heller argued that, as a German consumer, he could only be sued in the German courts.
The Austrian Supreme Court asked the European Court of Justice (ECJ) whether the fact that a website could be consulted in another member state was sufficient to justify a finding that activities were being "directed" to that state.
The ECJ held that the mere use of an internationally accessible website by a trader, or the mention of an email address or local contact details, did not constitute "directed activity", as it did not evidence any intention to solicit consumers in other member states.
Importantly, it must be apparent from the website and the trader's overall activity that the trader envisaged doing business with consumers domiciled in one or more member states, in the sense that it was minded to contract with them.
The ECJ's Guidance
The ECJ provided the following guidance as to what might constitute "directed activity" on a trader's website:
- activity of an international nature;
- telephone numbers with international dialling codes;
- referring to clients based outside the country in which the trader is established, especially where reviews/feedback are given by such clients;
- paying a search engine operator to market the site to foreign consumers;
- the description of itineraries from countries other than that in which the trader is established;
- use of different languages and currencies on the website, particularly where it is possible to make a reservation in the consumer's native language;
- the use of top-level domain names other than that of the country where the service is provided, e.g. ".de", or use of neutral top-level domain names such as ".com" or ".eu"; and
- the trader's service by its very nature seeks foreign consumers' business (e.g. tourism).
With internet transactions increasingly becoming the preferred method of offering and procuring services, traders must be aware of the jurisdictional risks presented by inadvertently "directing" certain information on their websites to consumers based in EU markets other than their own.
Traders that wish to avoid being caught by the enhanced consumer protection offered by the Brussels Regulation, and avoid defending costly legal action abroad, should carefully consider the practical implications of this ECJ guidance.
Case: Pammer v Reederei Karl Schulter GmbH & Co KG; Hotel Alpenhof GesmbH v Heller (C-585/08 and C-144/09)