Unfair Terms Issues
Consumer Rights Act
PART 6
Unfair terms in consumer contracts
Chapter 1
Interpretation and application (Part 6)
Interpretation (Part 6)
126. (1) In this Part—
“authorised body” means—
(a) the Competition and Consumer Protection Commission,
(b) the Central Bank of Ireland,
(c) the Commission for Communications Regulation,
(d) the Consumers’ Association of Ireland, being the association of that name whose purpose is to promote and protect the interests of consumers, or
(e) such other person as may be prescribed;
“consumer contract” means any contract between a consumer and a trader.
(2) Any reference in this Part to a term of a consumer contract includes a reference to a term, condition or specification (howsoever described) which governs, or purports to govern, the contractual relationship between the trader and consumer.
Application (Part 6)
127. (1) Subject to subsections (2) to (6) and section 140 (2)(b), this Part applies to a consumer contract that is concluded on or after the day on which this section comes into operation.
(2) A consumer contract is not excluded from the application of this Part by reason only that—
(a) the consumer contract or a term of the consumer contract has been individually negotiated between the trader and the consumer, or
(b) the consumer does not pay a price under the contract.
(3) This Part does not apply to a term of a consumer contract that reflects—
(a) mandatory statutory or regulatory provisions, including rules that, according to law, apply between the contracting parties on the basis that no other rules or arrangements have been established, or
(b) the provisions or principles of international conventions to which the State or the European Union is party.
(4) This Part does not apply to—
(a) a contract of employment,
(b) a contract relating to succession rights,
(c) a contract relating to rights under family law, or
(d) a contract relating to—
(i) the incorporation and organisation of a company, or
(ii) the creation and organisation of a partnership.
(5) If—
(a) the law of a country or territory other than an EEA State is chosen by the parties to be applicable to a consumer contract, and
(b) that contract has a close connection with the State,
this Part shall apply to the contract despite that choice.
(6) Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 200817 on the law applicable to contractual obligations (Rome I) applies where—
(a) the applicable law has not been chosen by the parties to the contract, or
(b) the law of an EEA State is chosen (other than an EEA State that has chosen not to be bound by that Regulation).
(7) In this section—
“EEA Agreement” means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by all subsequent amendments to that Agreement;
“EEA State” means a state which is a contracting party to the EEA Agreement.
Application of Part in relation to implied term of consumer contract
128. No term may be implied into a consumer contract that would be unfair in accordance with this Part if it were an express term of such a contract.
Chapter 2
Unfair terms in consumer contracts
Unfair term not binding
129. (1) An unfair term of a consumer contract is not binding on the consumer.
(2) Subsection (1) does not prevent the consumer from relying on the unfair term if the consumer chooses to do so.
(3) If a consumer contract is capable of continuing in existence without the unfair term, it shall continue to bind the parties.
Meaning of “unfair”
130. (1) A term of a consumer contract is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.
(2) In assessing whether a term of a consumer contract is unfair, the following matters shall in particular be taken into account—
(a) the nature of the subject matter of the consumer contract,
(b) whether the term of the consumer contract complies with the requirements referred to in section 134 (2),
(c) all of the circumstances relating to the conclusion of the consumer contract, and
(d) the other terms of the consumer contract or of any other contract (including a consumer contract) on which it is dependent.
(3) In assessing whether a term of a consumer contract complies with the requirement of good faith, regard shall be had in particular to—
(a) the strength of the bargaining positions of the parties,
(b) whether the consumer had an inducement to agree to the term,
(c) whether the goods were, or the digital content, digital service, service or other subject matter of the contract was, sold or supplied to the special order of the consumer, and
(d) the extent to which the trader has—
(i) dealt fairly and equitably with the consumer, and
(ii) taken the consumer’s legitimate interests into account.
(4) Nothing in this section affects the operation of the following provisions:
(a) section 39 (exclusion or limitation of liability of trader ( Part 2 ));
(b) section 71 (exclusion or limitation of liability of trader ( Part 3 ));
(c) section 94 (restriction on exclusion or limitation of liability of trader ( Part 4 ));
(d) section 132 (consumer contract terms that are always unfair).
Exclusion from assessment for unfairness
131. (1) Subject to subsections (2) to (4), a term of a consumer contract shall not be assessed for unfairness under section 130 to the extent that—
(a) it specifies the main subject matter of the contract and lays down the essential obligations under it, or
(b) it relates to the adequacy of the price or remuneration payable under the contract as against the goods, digital content, digital service, service or other subject matter of the contract supplied in exchange for such price or remuneration.
(2) A term of a consumer contract is excluded from assessment for unfairness under section 130 only if it is transparent in accordance with section 134 .
(3) The reference in subsection (1)(b) to the price or remuneration payable under the contract does not include—
(a) a payment that is incidental or ancillary to the price or remuneration payable under the contract for the goods, digital content, digital service, service or other subject matter of the contract supplied in exchange for such price or remuneration, or
(b) a payment that is contingent on whether a particular event occurs or not.
(4) Subsection (1) does not apply to a term of a consumer contract that is presumed to be unfair under section 133 (1).
Consumer contract terms that are always unfair
132. (1) Subject to subsections (2) and (3), a term of a consumer contract shall always be unfair if its object or effect is—
(a) to exclude or limit the liability of a trader for the death of or personal injury to a consumer arising from an act or omission of the trader,
(b) to require a consumer to pay for goods that have not been delivered or digital content, a digital service or a service that has not been supplied,
(c) to impose on a consumer a burden of proof that, according to the applicable law, would otherwise be on a trader,
(d) to exclude or hinder a consumer’s right to take legal action or exercise a legal remedy, including by requiring the consumer to take a dispute to an arbitration procedure that is not governed by law,
(e) to require a consumer to bear his or her own costs in respect of any arbitration,
(f) to give a trader the exclusive right to determine whether goods are, or digital content, a digital service or a service is, in conformity with the contract,
(g) to give a trader the exclusive right to interpret any term of the contract,
(h) to grant the trader a shorter notice period to terminate the contract than the notice period required of the consumer, or
(i) to confer exclusive jurisdiction for disputes arising under the contract on a court in the place where a trader is domiciled unless the consumer is also domiciled in that place.
(2) Subsection (1)(a) does not apply—
(a) to a consumer contract in so far as it is a contract of insurance, including a contract to pay an annuity on human life, or
(b) to a consumer contract so far as it relates to the creation or transfer of an interest in land.
(3) Subsection (1)(a) does not apply to the liability of an occupier of premises to a person who obtains access to the premises for recreational purposes if—
(a) the person suffers loss or damage because of the dangerous state of the premises, and
(b) allowing the person access for recreational purposes does not relate to the occupier’s trade, business, craft or profession.
(4) Subsection (1)(a) does not affect the validity of any discharge or indemnity given by a person in consideration of the receipt by that person of compensation in settlement of any claim that the person has.
(5) For the purposes of subsection (1)(a), a consumer shall not be deemed to have voluntarily accepted any risk merely because he or she agreed to or knew about a term of a consumer contract that purported to exclude the trader’s liability for death or personal injury.
(6) In this section, “personal injury” has the same meaning as it has in the Civil Liability Act 1961 .
Consumer contract terms presumed to be unfair
133. (1) Part 1 of Schedule 5 contains an indicative and non-exhaustive list of terms of consumer contracts that shall be presumed to be unfair for the purposes of this Part.
(2) Part 1 of Schedule 5 is subject to the provisions of Part 2 of that Schedule.
(3) Subject to section 131 , a term of a consumer contract referred to in Part 1 of Schedule 5 may be assessed for unfairness under section 130 .
(4) The Minister may by regulations specify further terms of consumer contracts that shall be presumed to be unfair for the purposes of this Part.
(5) The Minister may make regulations under subsection (4) only where the Minister is satisfied, after consultation with such persons as the Minister considers appropriate, that it is necessary in the interests of consumer protection and fair competition to do so.
Consumer contract terms to be transparent
134. (1) A trader shall ensure that the terms of a consumer contract are transparent.
(2) A term of a consumer contract is transparent if—
(a) the term is expressed in concise, plain and intelligible language,
(b) in the case of a term that is in writing, the term is legible and presented clearly,
(c) the term is made available to the consumer in a manner that gives the consumer a reasonable opportunity to become acquainted with it before the conclusion of the contract, irrespective of whether or not such an opportunity is availed of,
(d) in the case of a term that is novel or onerous, the term has specifically been brought to the consumer’s attention in such a way that the average consumer would be aware of the term,
(e) any costs or other financial consequences deriving from the term would be comprehensible to the average consumer, and
(f) the term complies with such other requirements as may be prescribed.
(3) In assessing the transparency of a term of a consumer contract, the following matters shall in particular be taken into account—
(a) the nature of the subject matter of the contract,
(b) the means by which the contract is communicated and presented to the consumer,
(c) the other terms of the contract or of any other contract on which it is dependent,
(d) compliance with any obligations relating to the provision of information to the consumer imposed by an enactment (including this Act) which require to be complied with before the conclusion of the consumer contract, and
(e) all the circumstances relating to the conclusion of the contract.
(4) In case of dispute, it shall be for the trader to show that a term of a consumer contract is transparent.
(5) If a consumer contract is directed at a particular group of consumers, any reference to the average consumer shall be read as a reference to the average member of that group.
(6) Before making regulations under subsection (2)(f) the Minister shall consult such persons as he or she considers appropriate.
(7) In this section—
“novel”, in relation to a term of a consumer contract, means a term which may be considered new or original by reference to existing or established market practice in the relevant sector or industry;
“the average consumer”, subject to subsection (5), means a consumer who is reasonably well-informed, reasonably observant and circumspect.
Interpretation of term of consumer contract
135. (1) Where there is doubt about the meaning of a term of a consumer contract, the interpretation that is most favourable to the consumer shall prevail.
(2) Subsection (1) shall apply to the interpretation of a term in proceedings on an application to a court for a declaration or injunction under section 137 .
Duty of court to consider whether term of consumer contract unfair
136. (1) In proceedings before a court relating to a term of a consumer contract, the court shall determine whether the term is unfair irrespective of whether a party to the proceedings has raised that question or indicated an intention to raise it.
(2) Subsection (1) shall not apply unless the court considers that it has before it sufficient legal and factual material to enable it to determine whether the term is unfair.
Application to court for declaration or injunction
137. (1) On an application by an authorised body for a declaration that a term of a consumer contract is unfair, the court may make an order—
(a) declaring that the term of the consumer contract is unfair,
(b) prohibiting the use or continued use in any consumer contract of such a term or similar terms of like object or effect, and
(c) imposing such other conditions as it considers appropriate, including in particular—
(i) a requirement that the trader publish a corrective statement, at the trader’s own expense and in any manner the court considers appropriate, in respect of the matter which is the subject of the order, or
(ii) a requirement that the trader provide to each consumer who is party to the contract to which the order relates an amended contract which does not contain the term which has been declared to be unfair.
(2) On an application by an authorised body for a declaration as to the proper interpretation of a term drawn up for general use as a term of a consumer contract, the court may make such a declaration.
(3) Before making an application under subsection (1) or (2), an authorised body shall cause to be published—
(a) in Iris Oifigiúil and at least two national newspapers, and
(b) in such other manner as the court may direct,
notice of intention to apply to the court for a declaration under the subsection concerned.
(4) An authorised body may apply for an injunction (including an interim injunction) against any trader using, or recommending the use of, a term which the authorised body considers to be an unfair term.
(5) Where an application is made under subsection (4), the court may grant an injunction on such terms, including conditions referred to in subsection (1)(c), as it considers appropriate.
(6) An injunction granted pursuant to subsection (4) may relate not only to the use of a particular contract term but to any similar term, or a term having like effect, used or recommended for use by any trader.
(7) In the exercise of its jurisdiction under subsection (1), (2) or (5) the court shall take account of all the interests involved and in particular the public interest in the protection of consumers.
(8) Every person claiming to have an interest in an application under subsection (1) or (2) shall be entitled to appear before and to be heard by the court on the hearing of the application.
(9) An application under subsection (1), (2) or (4) by an authorised body, other than the Competition and Consumer Protection Commission, shall be on notice to the Commission.
(10) On any application under subsection (1), (2) or (4) it shall not be necessary for an authorised body to prove—
(a) probable loss or damage,
(b) actual loss or damage, or
(c) recklessness or negligence on the part of the trader.
(11) Subsections (1), (2) and (4) are without prejudice to the right of a consumer to rely upon the provisions of this Part in any case before a court of competent jurisdiction.
(12) An application under this section to the Circuit Court shall be made to the judge of the Circuit Court for the circuit in which the trader is ordinarily resident or carries on any profession, trade or business.
(13) In this section, “court” means—
(a) the High Court, or
(b) the Circuit Court.
Transfer from Circuit Court to High Court
138. (1) If, in relation to an application under section 137 to the Circuit Court, that court becomes of the opinion, during the hearing of the application, that it is not appropriate for the Circuit Court to deal with the application, it may, if it so thinks fit, transfer the application to the High Court.
(2) Subsection (1) is without prejudice to the jurisdiction of the Circuit Court to determine an application under section 137 which, at the time of the making of the application, it was satisfied it had jurisdiction to deal with.
(3) Where an application is transferred to the High Court under subsection (1), the High Court shall be deemed to have made any order of a procedural nature that was made by the court from which it was transferred in the proceedings relating to the application.
Publication of order made by court under section 137(1)
139. (1) Subject to subsection (3), where a court makes an order under section 137 (1) declaring that a term of a consumer contract is unfair—
(a) the authorised body that made the application for the order, and
(b) where it did not make the application for the order, the Competition and Consumer Protection Commission,
shall publish, before the expiration of the period specified in subsection (2), a copy of the order on its website.
(2) The period referred to in subsection (1) is the period of 90 days beginning on—
(a) where no appeal is brought against the order made under section 137 (1), the day on which the period for bringing an appeal expires, or
(b) where such an appeal is brought, the day on which the appeal is finally determined or is withdrawn or abandoned.
(3) Subject to subsection (5), where the authorised body and, where it did not make the application for the order, the Competition and Consumer Protection Commission, consider that it would be—
(a) in the interests of consumer protection, or
(b) necessary in order to comply with a legal or regulatory requirement,
they may, instead of publishing a copy of the order as required by subsection (1), publish in such form and manner as they consider appropriate a notice that sets out the term of a consumer contract that the court has declared to be unfair, without disclosing information specified in subsection (4).
(4) The information referred to in subsection (3) is—
(a) information that would identify the parties, and
(b) where subsection (3)(b) applies, information that is not permitted to be disclosed under that legal or regulatory requirement.
(5) Where subsection (3) applies, both the authorised body and, where it did not make the application for the order, the Competition and Consumer Protection Commission shall publish the same notice.
Offence
140. (1) This section applies where an authorised body—
(a) publishes under section 139 (1) a copy of an order under section 137 (1) declaring that the term of a consumer contract to which the order relates is unfair, or
(b) publishes a notice under section 139 (3) setting out that term.
(2) Where, after the date on which the authorised body publishes an order or notice in respect of which this section applies, a trader—
(a) enters into a consumer contract containing the term to which the order or notice, as the case may be, relates, or
(b) seeks to rely on that term in a consumer contract (whenever concluded),
the trader commits an offence.
SCHEDULE 5
Part 1
Contract terms presumed unfair
1. A term which has the object or effect of inappropriately excluding or limiting the legal rights of the consumer in relation to the trader or another party in the event of total or partial non-performance or inadequate performance by the trader of any contractual obligations, including the option of offsetting a debt owed to the trader against any claim which the consumer may have against the trader.
2. A term which has the object or effect of making an agreement binding on the consumer whereas the supply of a service by the trader is subject to a condition whose realisation depends on the trader’s will alone.
3. A term which has the object or effect of permitting the trader to retain sums paid by the consumer where the consumer decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the trader where the trader is the party cancelling the contract.
4. A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation for goods, digital content, a digital service which have not been supplied.
5. A term which has the object or effect of requiring any consumer who fails to fulfil his or her obligations under the contract to pay a disproportionately high sum in compensation.
6. A term which has the object or effect of authorising the trader to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the trader to retain the sums paid for goods, digital content, a digital service or a service not yet delivered or supplied by the trader, where it is the trader who dissolves the contract.
7. A term which has the object or effect of enabling the trader to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so.
8. A term which has the object or effect of permitting a trader, where the consumer has cancelled the contract, to retain a payment which, had the contract been performed, would have been paid to a third party in accordance with a contractual obligation or a mandatory statutory or regulatory provision.
9. A term which has the object or effect of automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express a desire not to extend the contract is unreasonably early.
10. A term which has the object or effect of irrevocably binding the consumer to terms with which the consumer had no real opportunity of becoming acquainted before the conclusion of the contract.
11. A term which has the object or effect of enabling the trader to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.
12. A term which has the object or effect of enabling the trader to alter unilaterally without a valid reason any characteristics of the goods, digital content, digital service or service to be delivered or supplied.
13. A term which has the object or effect of giving the trader the discretion to decide the price payable under the contract after the consumer has become bound by the contract, where no price or method of determining the price has been agreed with the consumer before the consumer becomes bound.
14. A term which has the object or effect of providing for the price of goods, digital content, a digital service or a service to be determined at the time of delivery or supply, or permitting a trader to increase the price of goods, digital content, a digital service or a service without giving the consumer the right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded.
15. A term which has the object or effect of limiting the trader’s obligation to respect commitments undertaken by the trader’s agents or making the trader’s commitments subject to compliance with a particular formality.
16. A term which has the object or effect of obliging the consumer to fulfil all of his or her obligations where the trader does not perform the trader’s obligations.
17. A term which has the object or effect of giving the trader the possibility of transferring the trader’s rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the consumer’s agreement.
18. A term which has the object or effect of requiring a consumer to pay a fee in order to exercise a statutory right.
19. A term which has the object or effect of preventing, without a valid reason, the consumer from obtaining repairs or spare parts from another trader.
20. A term which has the object or effect of imposing disproportionate formal or other requirements where the consumer wishes to terminate the contract, whether for the purposes of switching to another trader or otherwise.
21. A term which has the object or effect of requiring from the consumer excessive advance payments or excessive guarantees of the performance of future obligations.
22. A term which has the object or effect of unduly restricting the evidence available to the consumer in respect of the performance of the contract.
23. A term which requires a consumer to restrict his or her rights as a data subject under the Data Protection Acts 1988 to 2018 or the General Data Protection Regulation (Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 201620 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)).
24. A term specified in any regulations made under section 133 (4).
Part 2
Restrictions on application of Part 1
1. Term 7 (cancellation of contract without reasonable notice) does not include a term of a consumer contract by which a supplier of financial services reserves the right to terminate unilaterally a consumer contract of indeterminate duration without notice where there is a valid reason, provided that the supplier of financial services is required to inform the consumer and any other contracting party of the cancellation immediately.
2. Terms 11 (alteration of contract terms without valid reason) and 13 (determination of price after consumer bound by contract) do not include a term of a consumer contract whereby a supplier of financial services reserves the right to alter the rate of interest payable by or due to the consumer, or the amount of other charges for financial services payable by the consumer where there is a valid reason for doing so, provided that the supplier is required to inform the consumer and any other contracting party or parties of the alteration at the earliest opportunity and the consumer is free to dissolve the contract immediately.
3. Terms 11 (alteration of contract terms without valid reason) and 13 (determination of price after consumer bound by contract) do not include a term under which a trader reserves the right to alter unilaterally the conditions of a contract of indeterminate duration provided that the trader is required to inform the consumer of the alteration with reasonable notice and the consumer is free to dissolve the contract.
4. Terms 7 (cancellation of contract without reasonable notice), 11 (alteration of contract terms without valid reason), 13 (determination of price after consumer bound by contract) and 14 (determination of price upon delivery or increase in price) do not apply to—
(a) transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the trader does not control, or
(b) contracts for the purchase or sale of foreign currency, traveller’s cheques or international money orders denominated in foreign currency,
provided that the consumer is made aware of the possibility of such cancellation, alteration or determination of price in the contract before the consumer is bound by the contract.
5. Term 14 (determination of price upon delivery or increase in price) does not apply to a price-indexation clause, where otherwise lawful, provided that the method by which prices may vary is explicitly described.
Cases
Banco Espanol de Credito
[2012] EUECJ C-618/10
The first question
28. The question is formulated in fairly broad terms (‘at any stage during the proceedings’), which might suggest that the referring court is seeking a general clarification of the powers of the national court in the prevention of unfair terms. However, such a reading of the question referred would disregard the fact that the Court has already addressed this subject extensively in its case-law on Article 6(1) of Directive 93/13. Rather, on a reasonable appraisal of the reference for a preliminary ruling having regard to the particular circumstances of the main proceedings, it must be assumed that the referring court wishes to know whether the principles developed by the Court in its case-law on consumer protection are also applicable to the national order for payment procedure. However, before examining this question, it would seem necessary briefly to recall these principles developed in case-law.
1. The role of the national court in the prevention of unfair terms according to the Court’s case-law
29. The Court has consistently held that the system of protection introduced by Directive 93/13 is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge. This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms. (23) In view of this weaker position, Article 6(1) of Directive 93/13 provides that unfair terms are not binding on the consumer. As is clear from the case-law, this is a mandatory provision which aims to replace the formal balance which the latter establishes between the rights and obligations of the parties with an effective balance which re-establishes equality between them. (24)
30. In order to guarantee the protection intended by Directive 93/13, the Court has held on several occasions that the imbalance which exists between the consumer and the seller or supplier may only be corrected by positive action unconnected with the actual parties to the contract. (25) It is in the light of those principles that the Court has therefore held that the national court is required to assess of its own motion whether a contractual term is unfair. (26) In the view of the Court, the national court’s power to determine of its own motion whether a term is unfair constitutes ‘a means both of achieving the result sought by Article 6 of Directive 93/13, namely preventing an individual consumer from being bound by an unfair term, and of contributing to achieving the aim of Article 7, since if the court undertakes such an examination, that may act as a deterrent and contribute to preventing unfair terms in contracts concluded between consumers and sellers or suppliers’. (27) That power of the national court has been regarded as necessary for ensuring that ‘the consumer enjoys effective protection, in view in particular of the real risk that he is unaware of his rights or encounters difficulties in enforcing them’. (28)
31. In Pannon (29) the Court strengthened the procedural position of consumers, pointing out that the national court is required to examine, of its own motion, the unfairness of a contractual term ‘where it has available to it the legal and factual elements necessary for that task’. It also made clear that that duty is also incumbent on the national court when it is ascertaining its own territorial jurisdiction. (30) This case-law was clarified by the judgment of 9 November 2010 in Pénzügyi (31) in so far as the Court took the view that the national court ‘must investigate of its own motion whether a term conferring exclusive territorial jurisdiction in a contract concluded between a seller or supplier and a consumer, which is the subject of a dispute before it, falls within the scope of Directive 93/13 and, if it does, assess of its own motion whether such a term is unfair’. (32) With particular regard to the examination of the applicability of Directive 93/13 to a specific contract, the Court found that ‘the national court must thus, in all cases and whatever the rules of its domestic law, determine whether or not the contested term was individually negotiated between a seller or supplier and a consumer’.
2. Applicability of the principles developed in case-law to the situation in the main proceedings
a) The approach taken by the Court in Pénzügyi
32. Of all the judgments cited above, Pénzügyi would appear to be the most instructive in finding an answer to the first question, especially since the Court was faced with a similar issue in that case. The Court was asked the question whether, if the national court itself observes, where the parties to the dispute have made no application to that effect, that a contractual term is potentially unfair, it may undertake, of its own motion, an examination with a view to establishing the factual and legal elements necessary to that examination where the national procedural rules permit that only if the parties so request. As is clear from the passages of the judgment cited above, the Court not only answered that question in the affirmative. In fact, it imposed on the national court an obligation under EU law to investigate in order to establish the necessary facts and law. It thereby answered a question which was left open in Pannon, namely how precisely this was to be done. In the absence of more precise indications from the Court, it could therefore be assumed that regard should be had to the procedural law of each individual Member State.
33. The passages of the judgments cited in point 31 of this Opinion suggest that the Court possibly intended to depart from the principle that the subject-matter of a case is delimited by the parties in civil proceedings in order to ensure the effectiveness of consumer protection desired by the EU legislature in a particular situation. This approach is in keeping with the Court’s previous consumer-friendly case-law. Because a duty to investigate thoroughly is imposed on the national civil court, it is given the opportunity to intervene in the proceedings in order to protect consumers, even if its national law would not, as a rule, permit it to take such action. The power to intervene could then be derived directly from EU law, with the result that conflicting national procedural rules would have to be replaced, as a result of the primacy of EU law, as regards their application.
b) Arguments against the applicability of this case-law to the main proceedings
34. As desirable as this approach may appear from the point of view of consumer protection, I do not consider that it is simply possible to apply this case-law dogmatically, without reservation, to a procedure like the order for payment procedure. In my view, consideration must be given to the particular circumstances of the Pénzügyi case on which the Court’s ruling was based. Furthermore, account must be taken of the consequences of applying that case-law to the order for payment procedure.
i) Comparison with Pénzügyi
– Different procedural situation
35. It should be pointed out, first, that the procedural situation of the consumer in that case was different to that in the main proceedings and it is not therefore possible, in my view, to draw parallels between the two cases. According to the statements contained in the Pénzügyi judgment regarding the procedural history, (33) an application was made for an order for payment against the consumer because of the outstanding payment of a loan. The order sought had been made in ‘ex parte’ proceedings, which under Hungarian law do not require the court to hold a hearing or hear the other party. When it made the order, the referring court had not raised any question concerning its jurisdiction or concerning the term conferring jurisdiction in the loan contract.
36. However, it is also clear from the judgment that the consumer had appealed against the order for payment, with the result that the order for payment procedure became inter partes proceedings, which were then governed by the provisions of the general national law on civil procedure. (34) It must therefore be assumed that proceedings for a declaratory judgment had been initiated. In the main proceedings, on the other hand, the order for payment procedure was initiated without the consumer having made a legal defence. Instead, the national court intervened of its own motion by declaring void the contractual term which was considered as unfair. Against this background, it must be assumed that the approach developed by the Court in Pénzügyi is actually tailored to civil proceedings for a declaratory judgment and not to the order for payment procedure.
– Different kind of contractual term
37. It should also be noted that the Pénzügyi case concerned a completely different kind of contractual term to the main proceedings. This aspect is particularly important and calls for a detailed examination. Consideration will have to be given to the different kinds of terms which are generally faced by the national court.
38. The Pénzügyi case related to a term conferring jurisdiction contained in a loan contract concluded between the seller or supplier and the consumer. A particular feature of that term was that it provided for the exclusive territorial jurisdiction of a court which was not the court in whose jurisdiction the consumer lived or the one with jurisdiction for the place where the seller or supplier had its registered office, but the one which was situated close to the registered office of the seller or supplier both geographically and in terms of transport links. (35) In this regard, as the Court also rightly stated in Pénzügyi, that term conferring jurisdiction was similar to the term which had already been the subject-matter of Océano Grupo Editorial and Salvat Editores. The Court observed that in paragraph 24 of that judgment it had ruled that a term which confers exclusive jurisdiction on a court in the territorial jurisdiction of which the seller or supplier has his principal place of business must be regarded as unfair within the meaning of Article 3 of the directive in so far as it causes, contrary to the requirement of good faith, a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. (36)
39. The Court regarded this as serious discrimination against the consumer, because such a term obliges the consumer to submit to the exclusive jurisdiction of a court which may be a long way from his domicile, which could make it difficult for him to exercise his rights on account of the costs relating to the consumer’s entering an appearance, particularly in the case of disputes concerning limited amounts of money. In the view of the Court, such a term thus fell within the category of terms which have the object or effect of excluding or hindering the consumer’s right to take legal action, a category referred to in paragraph 1(q) of the Annex to the directive. (37) The Court also regarded such a term as according undue preferential treatment to the seller or supplier, since such a term enables the seller or supplier to deal with all the litigation relating to his trade, business or profession in one court, which is not the one within whose jurisdiction the consumer lives, which makes it easier for the seller or supplier to arrange to enter an appearance and makes it less onerous for him to do so. (38)
40. Unlike Pénzügyi and Océano Grupo Editorial and Salvat Editores, however, the subject-matter of the present case is not an agreement conferring jurisdiction, but a contractual term concerning interest on late payments. This distinction is important because the approach adopted by a national court in civil proceedings will be different depending on the kind of term in the respective case.
41. As I explained in my Opinion in Pénzügyi, (39) jurisdiction agreements must in principle be distinguished from terms which lay down substantive contractual obligations. A distinguishing feature of the latter is that they often contain detailed terms which are binding on the contracting parties and whose incompatibility with the requirement of good faith cannot always be determined prima facie, not least because of their complexity. Rather, such a finding often requires a thorough assessment by the national court having regard to all the circumstances of the individual case. This is also pointed out by the Commission. (40) Directive 93/13 itself implicitly requires the national court to conduct such a thorough assessment since, first, according to the definition contained in Article 3 a term may be regarded as unfair only ‘if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’, which will have to be determined by means of careful investigation. Second, Article 4 of the directive provides that the unfairness of a contractual term under Directive 93/13 is to be assessed ‘taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent’. Taking these circumstances into account therefore requires an investigation of the term in question which goes far beyond a mere plausibility check.
42. The proposal for a regulation on a Common European Sales Law, which is mentioned in the introduction, (41) also takes account of the fact that certain terms often require careful assessment in order to be able to conclude that they are unfair. It includes provisions relating to ‘unfair contract terms’ in contracts between a trader and a consumer which are largely similar to those in Directive 93/13. (42) It should be mentioned in this connection that the proposal for a regulation also contains provisions relating to interest on late payments when the debtor is a consumer. (43) Of particular interest is a provision (44) under which, if a rate of interest higher than that provided in the proposal for a regulation is fixed, such a contractual term is to be regarded as not binding to the extent that such a term were assessed to be unfair according to the relevant provisions. The assessment itself is based on similarly strict criteria to those in Directive 93/13. (45) The question whether this provision will ever enter into force in this form certainly depends on the further course of the legislative process. In the case of contracts like those in the main proceedings, it would at least form a helpful basis for decision-making for a national court which is required to assess whether a term concerning interest on late payments is unfair, provided the contracting parties agree to the application of the Common European Sales Law.
43. If the term in question were, exceptionally, not legally standardised, for example by being mentioned in a list of terms which are to be regarded as unfair in any event, the national court will not be able to avoid having to give a positive assessment of the unfair character of a term. It should, however, be pointed out in this connection that this situation cannot be altered even by a standardisation like the definitions of terms in the annex to Directive 93/13. The Annex to which Article 3(3) of the directive refers contains only an indicative and non-exhaustive list of terms (46) which may be regarded as unfair. (47) A term appearing in the list need not necessarily be considered unfair and, conversely, a term that does not appear in the list may none the less be regarded as unfair. (48) It cannot therefore necessarily be inferred from the mere fact that a term appears in the list that it is also unfair. Despite the indicative character that such a factor has according to case-law, there must be a distinct, detailed assessment as to whether the contractual term in question might be unfair.
44. The situation is different, however, where the national court is confronted by a term conferring jurisdiction, as in Pénzügyi. As I stated in point 112 of my Opinion in Pénzügyi, a contractual term which, if reviewed, would have to be classified as unfair because it confers jurisdiction in respect of litigation arising from the contract on the court in the territorial jurisdiction of which the seller or supplier has his registered office could be examined by the national court as part of an examination, of its own motion, of its own jurisdiction, in which event the court would not be dependent on detailed submissions from the parties. It was not absolutely necessary to impose a comprehensive obligation to undertake an examination in order to achieve the aim of reviewing unfair terms pursued by Directive 93/13. Indeed, this assumption was confirmed by the procedural position in the main proceedings. As I explained in my Opinion, the documents before the Court showed that the referring court had noticed before setting the date for the oral hearing that the defendant’s place of residence was not situated within its territorial jurisdiction but that the claimant had made its application for the order for payment, on the basis of the standard contractual terms, to the court close to its registered office, which prompted doubts on the part of the referring court in relation to the contractual provision in question. In this way, the referring court had effectively indicated its suspicion as to the existence of an unfair jurisdiction clause.
45. In the light of the above considerations, I consider that classification of the term in question as unfair by the national court in Pénzügyi seemed obvious, for the following reasons: first of all, that court was dealing with a contractual term whose unfairness was beyond question in view of the assessment made by the Court of Justice itself in Océano Grupo. It can therefore rightly be claimed that the term was sufficiently standardised by EU law. Second, the referring court was able to obtain the ‘legal and factual elements necessary’ relatively easily, in examining its territorial jurisdiction, in order to comply with its duty to assess, of its own motion, whether the contractual term was unfair. In other words, the referring court was not dependent on a thorough assessment of unfairness having regard to all the circumstances of the individual case.
46. It is necessary to bear in mind these circumstances in order to be able to place Pénzügyi in its correct context. In my view, this is because the obligation on the national court to investigate of its own motion, as proposed by the Court in paragraph 56 of that judgment, can only be understood against the background of the fact that the national civil court will, as a rule, examine its jurisdiction of its own motion and thereby be able to establish relatively easily whether a term is unfair, as in Océano Grupo and Pénzügyi. In the case of a substantive term, for the reasons I have already mentioned, this will not be simply possible, especially where the finding of unfairness requires a careful assessment. The Pénzügyi judgment therefore offers a reasonable solution for ensuring consumer protection only in the context of the particular circumstances of the main proceedings in that case.
– Conclusion
47. I therefore conclude that it is not possible to apply the Pénzügyi case-law to a situation like the present case if it is connected with the obligation on the national court to give a ruling, in the context of an order for payment procedure, of its own motion and in limine litis, on whether a term concerning interest on late payments in a consumer credit agreement is void.
ii) Consequences of application to the order for payment procedure
– Fundamental modification of the operation of the order for payment procedure
48. Should the Court take the opposite position and, contrary to my view, consider that there is nothing to prevent the application of the Pénzügyi case-law to the main proceedings in the abovementioned circumstances, regard should nevertheless be had to the consequences which would ensue if the approach developed by the Court were applied to the order for payment procedure.
49. All the parties agree, rightly in my view, that the imposition of a duty to conduct a thorough investigation in the context of a national order for payment procedure and to give a ruling in limine litis on whether a term concerning interest on late payments in a consumer credit agreement is void would lead to a fundamental, undesirable modification of the operation of that procedure. The doubts expressed are connected with the need both to safeguard the procedural guarantees for the parties and to maintain the efficiency of the national order for payment procedure in the long term.
50. In order to understand the scope of such an obligation imposed on the national court by EU law, it is necessary to bear in mind the importance of the order for payment procedure and the challenges posed in connection with its procedural form, in order to strike a reasonable balance between efficiency and the rule of law. As I have already explained in my introductory remarks, (49) whatever its specific organisation in the individual legal orders of the Member States, the order for payment procedure is intended to guarantee the simple, fast and efficient enforcement of uncontested pecuniary claims. (50) The restriction to uncontested pecuniary claims makes it possible to organise the order for payment procedure as a mass procedure. As the German Government rightly states, (51) the time benefit of the procedure plays an important role in avoiding or reducing the risk of late payment for small and medium-sized undertakings. The costs of legal proceedings can also be avoided.
51. A feature of such procedures is that an instrument is issued to the applicant without an oral procedure on the basis of an application submitted by form or by pleading. The respondent does not therefore participate in the procedure at the stage before the order for payment is made. In addition to examining its jurisdiction, the court reviews certain conditions governing applications, in particular whether the claim made is specified with sufficient precision. On the other hand, there is, as a rule, no substantive assessment of the claim made. The application for an order for payment may be refused only if the alleged claim is manifestly unfounded. (52) The substantive assessment of the claim made is reserved for the inter partes stage of the procedure, which may be initiated if the respondent appeals against the order for payment. In the subsequent inter partes procedure, a court then always also assesses of its own motion whether the conditions for the claim made are satisfied. If a contractual term is relevant to the existence or non-existence of a claim, the national court then also assesses whether or not it is unfair.
52. An obligation on the national court, of its own motion, to investigate and disapply any unfair terms would have to be regarded as legally objectionable in so far as the order for payment procedure is not an inter partes procedure, with the result that, if the national court were to determine, of its own motion, that the contractual term was unfair and refuse the application for an order for payment, the seller or supplier would not be given any opportunity to respond to the allegation of using unfair terms in commercial practices. The right to a hearing, which is regarded as corollary of the rule of law and is one of the general principles of EU law recognised in case-law, (53) would not be adequately safeguarded.
53. Such an obligation on the national court would also be subject to certain limits connected with the formalities entailed by the order for payment procedure. Although the unfair character of a contractual term will be evident in some cases, e.g. where the kind of term in question is standardised by law, this will not always be the case. As has already been explained, the assessment whether a term is unfair with reference to the legal requirements in Articles 3 and 4 of Directive 93/13 may be quite complex. (54) In addition, doubts might arise as to whether the term in question was individually negotiated in accordance with Article 3(1). As the Commission rightly states, (55) it cannot be ruled out that the national court will be confronted with the tricky task of having to give a definitive ruling on the unfair character of a term, even though it has doubts in this regard or does not have all the factual information. The Commission rightly considers that it would be legally objectionable if the only options available to the court having jurisdiction would be, despite any remaining doubts, either to refuse the application – to the detriment of the creditor – or to grant it – to the detriment of the debtor.
54. If, contrary to its original intention, the order for payment procedure had to be adapted so that it provided the possibility to make oral observations, for example by allowing a hearing, in order that doubts are dispelled or the parties are granted a right to be heard before a decision is taken, it would have to be feared that it would lose one of its main efficiency benefits if it merely reproduced the inter partes procedure.
55. It should also be borne in mind that in the order for payment procedure in some Member States competence does not rest with professional judges, but in the interest of easing the burden on the courts, has been delegated to judicial officers. (56) However, in view of the complexity of the assessment whether a contractual term is unfair and the consequences of a finding that a term is not binding on the contracting parties, this task should be reserved for a judge. If the Court were therefore to take the view that it is also possible to infer from Article 6 of Directive 93/13 a duty imposed on the national court by EU law to undertake a thorough investigation and to give a ruling in limine litis on whether a term in a consumer credit agreement is void in the context of the order for payment procedure, this would require organisational modification on the part of the national judicial systems. Sufficient precautions would have to be taken to ensure that only judges deal with applications for orders for payment in consumer rights cases. Separating these cases from the normal order for payment procedure would mean, however, that the procedure would possibly become more complex and the effect of easing the burden on the national courts would, to some extent, be lost.
56. I therefore conclude that the imposition of a duty to undertake a thorough investigation in the context of the order for payment procedure and to give a ruling in limine litis on whether a term concerning interest on late payments in a consumer credit agreement would result in a fundamental modification of the operation of that procedure, which would eliminate an important efficiency benefit of the order for payment procedure, namely the quick enforcement of uncontested pecuniary claims.
…..
60. These principles developed in case-law are also applicable to the system introduced by Directive 93/13 to protect consumers against unfair terms in commercial practices. Thus, most recently in Asturcom Telecomunicaciones the Court pointed to the importance of the principle of procedural autonomy in the context of the judicial review of contractual terms. That case concerned the question whether Directive 93/13 must be interpreted as meaning that a national court or tribunal hearing an action for enforcement of an arbitration award which has acquired the force of res judicata and was made in the absence of the consumer is required to determine of its own motion whether an arbitration clause in a contract concluded between a consumer and a seller or supplier is unfair and to annul the award. (61) The Court answered this question with reference to its case-law, according to which ‘Community law does not require a national court to disapply domestic rules of procedure conferring finality on a decision, even if to do so would make it possible to remedy an infringement of a provision of Community law, regardless of its nature, on the part of the decision at issue’. (62) After finding that there was an absence of EU legislation in this area, the Court held that ‘the rules implementing the principle of res judicata are a matter for the national legal order, in accordance with the principle of the procedural autonomy of the Member States’, recalling that ‘those rules must not be less favourable than those governing similar domestic actions; nor may they be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by Community law’. (63)
61. It can be inferred from this judgment that, in the view of the Court, the national law of civil procedure is subject only to the principles of equivalence and effectiveness, in the absence of more specific rules of EU law. (64) An infringement of EU law can thus be taken to exist only where it does not comply with those principles. Consequently, it is possible to answer the question whether a modification of the national order for payment procedure is necessary, in accordance with the first question, in order to enforce consumer protection only if that national procedure, the main features of which have already been described, does not comply with the principles of equivalence and effectiveness. This will be examined below.
No breach of the principle of equivalence
62. The principle of equivalence requires that a national rule be applied without distinction, whether the infringement alleged is of EU law or national law, where the purpose and cause of action are similar. (65) Applied to the specific context of consumer protection, which is relevant in this instance, this means that the question must be raised whether the protection of consumers against unfair terms in commercial practices, which the EU legislature seeks to achieve with Directive 93/13, has the same procedural guarantees at national level as the protection of consumers against infringements of similar legal positions protected under national law. A breach of the principle of equivalence could therefore be taken to exist only in the case of comparatively unfavourable procedural rules governing enforcement of claims stemming from Directive 93/13.
63. In its case-law the Court has developed a number of general criteria on the basis of which to assess the equivalence of national legal protection with regard to the safeguarding of legal positions established under EU law. The actual assessment essentially consists in an evaluative comparison of the relevant procedural rules. The Court takes the view that the purpose, the cause of action and the essential characteristics of the purportedly comparable actions concerning national law must be used as relevant criteria for assessing the similarity of those actions. (66) The Court has also found that in order to determine whether a national procedural provision is less favourable, the national court must take account of the role of that provision in the procedure, viewed as a whole, of the conduct of that procedure and of its special features. (67)
64. Although the Court has, in principle, delegated this task to the national courts, so as to utilise their direct knowledge of the national law of procedure, (68) it has insisted on making statements on the interpretation of EU law (69) and occasionally even making its own findings on compliance with the principle of equivalence in a specific case, (70) if it has had sufficient relevant information. However, the Court is attempting to do nothing more than provide the national courts with useful guidance to help them with their own decision. (71) Against this background, it would appear to be permissible to make a few general statements on certain features of the main proceedings.
65. With regard to the specific situation in the main proceedings, there is, in my view, nothing in the statements made by the referring court at least to suggest that, in the context of the national order for payment procedure, the Spanish law of civil procedure would lay down less favourable rules governing the review of unfairness of terms in consumer credit agreements, in accordance with Directive 93/13, than for the review of the compatibility of such consumer credit agreements with national law. Consequently, there is nothing to suggest a breach of the principle of equivalence in the context of the national order for payment procedure at issue in the present case.
66. For the purposes of the present preliminary ruling proceedings, the principle of equivalence must therefore be considered to have been complied with.
No breach of the principle of effectiveness
67. Lastly, it must be examined whether the main features of the national order for payment procedure are consistent with the principle of effectiveness. That principle requires that the application of EU law is not rendered impossible or excessively difficult. Reference should be made in this connection to the aim laid down by the EU legislature in Article 7(1) of Directive 93/13 ‘that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers’. From a legal point of view, that aim constitutes a criterion by which the national order for payment procedure must be assessed.
68. An obligation on the national court to conduct a thorough investigation and to give a ruling in limine litis on whether an unfair term in a consumer credit agreement is void would effectively protect the consumer even before a decision on a pecuniary claim having force of res judicata has been made. The national order for payment procedure would thus be supplemented by a preventive judicial protection mechanism. However, it is uncertain whether such a mechanism is absolutely necessary effectively to guarantee the protection of consumers against the use of unfair terms in commercial practices. As has already been mentioned, the order for payment procedure in the Member States is generally organised in such a way that the assessment whether a contractual term is unfair is transferred to an inter partes procedure which is initiated when an appeal is brought. (72) It is in the context of that inter partes procedure that the national court has the opportunity to perform its duty under EU law to assess whether a term is unfair. In other words, the consumer also is granted legal protection under this model. However, this will be made dependent on the consumer making known his intention to make a legal challenge in the context of the order for payment procedure.
69. I doubt that the effectiveness of EU law is affected because legal protection is made dependent on an expression of intent by the consumer. In case-law, the Court has considered it to be compatible with Articles 6 and 7 of Directive 93/13 for a positive intervention by the national court in order to compensate for the imbalance between the consumer and the trader to be made dependent on the consent of the consumer.
70. Reference should be made, first to Pannon GSM, in which the Court highlighted the obligation on the national court to disapply terms where it considers such terms to be unfair, ‘except if the consumer opposes that non-application’. (73) In its grounds, the Court stated that the requirement of an assessment of the court’s own motion is necessary to ensure the effectiveness of the protection intended to be given by the provisions of the directive. At the same time, it made clear that ‘the national court is not, however, required … to exclude the possibility that the term in question may be applicable, if the consumer, after having been informed of it by that court, does not intend to assert its unfair or non-binding status’.
71. Reference should also be made to Martín Martín, (74) in which the Court addressed the question whether a national court may raise, of its own motion, an infringement of Article 4 of Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises (75) and declare a contract falling within the scope of that directive void on the ground that the consumer was not informed of his right of cancellation, even though the consumer, at no stage, pleaded that the contract was void before the competent national courts. (76) In that judgment, the Court pointed out that ‘EU law does not, in principle, require national courts to raise of their own motion an issue concerning the breach of provisions of EU law, where examination of that issue would oblige them to go beyond the ambit of the dispute defined by the parties themselves and rely on facts and circumstances other than those on which the party with an interest in application of those provisions has based his claim’. (77) The Court further stated that ‘that limitation on the power of the national court is justified by the principle that, in a civil suit, it is for the parties to take the initiative, and that, as a result, the court is able to act of its own motion only in exceptional cases where the public interest requires its intervention’. (78) The Court nevertheless considered a positive intervention by the national court to be justified in a situation like the main proceedings on the ground that Article 4 of Directive 85/577 comes under the public interest. As the Court stated with reference to my Opinion in that case, (79) ‘the obligation to give notice of the right of cancellation laid down in Article 4 of Directive 85/577 plays a central role in the overall scheme of that directive, as an essential guarantee for the effective exercise of that right and, therefore, for the effectiveness of consumer protection sought by the Community legislature’. (80) It should be pointed out in this connection that the Court included the possibility of declaring the contract in dispute void among the ‘appropriate consumer protection measures’ within the meaning of the third paragraph of Article 4 of the directive in the case of failure to comply with the obligation to give notice. It should be mentioned, however, that the Court also made clear, with reference to the abovementioned passage of the judgment of Pannon GSM, (81) that ‘the national court seised may also have to take account, in certain circumstances, of the consumer’s wish not to have the contract at issue cancelled’. (82)
72. Lastly, reference should be made again to the judgment in Asturcom Telecomunicaciones, in which the Court was asked the question whether a national court or tribunal hearing an action for enforcement of an arbitration award which has acquired the force of res judicata and was made in the absence of the consumer is required to determine of its own motion whether an arbitration clause in a contract concluded between a consumer and a seller or supplier is unfair and to annul the award. (83) The Court drew a notable distinction with Mostaza Claro in that it pointed out that, unlike that case, the consumer did not in any way become involved in the various proceedings relating to the dispute between her and the company in question and, in particular, did not bring an action for annulment of the arbitration award in order to challenge the arbitration clause on the ground that it was unfair, so that that award now had the force of res judicata. (84) Contrary to my proposal, (85) the Court ruled that no such obligation should be imposed on the national court. Instead, it left it to the national legal orders to clarify the question referred and simply examined whether the relevant Spanish law of procedure was consistent with the principles of equivalence and effectiveness. The Court accepted an obligation on the national court to assess, of its own motion, whether an arbitration clause is unfair in connection with enforcement only in so far as, under the national law of procedure, such an assessment was actually possible in similar actions of a domestic nature. (86)
73. The cited case-law shows that the Court endeavours to interpret EU law in a manner which takes due account of the individual interests of consumers, by giving them the opportunity to decide independently whether they wish to avail themselves of the protection offered by consumer protection law in civil proceedings, which are governed by the principle of the active role of the parties. (87) This understanding of the procedural position of the consumer is consistent with the model of the consumer also developed in case-law (88) who is ‘reasonably well informed and reasonably observant and circumspect’. A particular feature of the approach taken in Pannon GSM is that it refrains from imposing protection on the consumer and is based on the idea of protecting consumers by providing them with information. The Court takes account of the fact that in a specific case the consumer may be keen to retain the term in question, for example in the case of an agreement conferring jurisdiction, where the consumer wishes to take legal action at the place provided for in the term. (89) Conversely, the Court also seems to tend to take account of a waiver by the consumer of his rights, as is shown by the judgment in Asturcom Telecomunicaciones. Accordingly, the obligation imposed on national courts by EU law to protect the consumer against unfair terms through positive intervention appears to extend only as far as is permitted by the national law of procedure.
74. In the light of the foregoing, I conclude that the effectiveness of the system introduced by Directive 93/13 is not affected if the national court is not required to give a ruling, in limine litis and of its own motion, on whether an unfair term in a consumer credit agreement is not binding. In this respect, it is possible to concur with the unanimously held view of all the parties, that it appears sufficient, in order to ensure that consumers are protected against claims based on unfair contractual terms, if, as is generally envisaged in a national order for payment procedure, the consumer in respect of whom an application for an order for payment has been made is given the opportunity to make a legal challenge by bringing an appeal. This cannot be regarded as a breach of the principle of effectiveness.
75. It is true that these considerations concern only the protection of consumers. However, it should not be forgotten that Article 7(1) of Directive 93/13 also expressly requires the introduction of adequate and effective means ‘in the interests of … competitors’. In other words, procedures must be established which take into account the interests of both contracting parties equally. By transferring the review of unfairness to an inter partes procedure initiated by means of an appeal, it is also possible to avoid a situation where a national court determines that a certain contractual term is not binding without the seller or supplier being given a prior opportunity to submit observations. This adequately ensures the effectiveness of the legal protection of the seller or supplier, as the Commission rightly argues. (90)
Interim conclusion
76. Consequently, it must be stated that the principles of equivalence and effectiveness do not require the obligation to be imposed on the national court to give a ruling, in limine litis and of its own motion, on whether an unfair term in a consumer credit agreement is not binding. I do not therefore see any need to restrict the procedural autonomy of the Member States in order to enforce consumer protection.
3. Conclusions
a) No obligation under EU law for the court to assess of its own motion and in limine litis in the order for payment procedure
77. I therefore conclude that it is not possible to apply the Pénzügyi case-law to the main proceedings. Such application is precluded, first, by the difference in the circumstances of the two cases, in particular the procedural situation (91) – an order for payment procedure in contrast with an inter partes procedure – and the kind of contractual term (92) – a substantive term in contrast with an agreement conferring jurisdiction – with which the national court is dealing. A further argument against applying that case-law to the main proceedings is that an obligation to give a ruling, in limine litis and of the court’s own motion, on whether an unfair term in a consumer credit agreement is not binding would result in a fundamental modification of the operation of the order for payment procedure (93) which would restrict the procedural autonomy of the Member States without this being absolutely necessary to ensure the effectiveness of Directive 93/13. (94) Accordingly, an obligation to that effect imposed on the national court by EU law must be rejected.
78. In view of the fact that EU law does not require such action on the part of the national court, it is also not contrary to EU law for a national court to avoid giving a ruling, of its own motion and in limine litis, on whether a term concerning interest on late payments in a consumer credit agreement is not binding.
b) Authorisation of the Member States to adopt more stringent rules
79. It should be remembered, however, that, as is clear from its 12th recital, Directive 93/13 undertakes no more than partial and minimum harmonisation of national legislation relating to unfair terms. (95) A fundamental normative expression of the minimum harmonisation approach on which that directive is based is the authorisation in Article 8, which expressly provides for the Member States to have the right to adopt more stringent provisions compatible with the Treaty in the area covered by the directive to ensure a greater degree of protection for the consumer. As I have already stated in my Opinion in Caja de Ahorros y Monte de Piedad de Madrid, that minimum harmonisation approach leaves the Member States considerable discretionary scope, (96) which is restricted only by the general limits to EU law, and above all by primary law. (97) Consequently, the Member States are free, in principle, to provide, in their national rules of civil procedure, for an obligation on their courts to assess, of their own motion and in limine litis in the order for payment procedure, whether a contractual term is unfair.
C – The second question
80. The second question needs to be reformulated in order to be able to give the national court a useful answer. In so far as, according to its wording, it asks the Court for a correct interpretation for the purposes of the directive of Article 83 of Royal Legislative Decree No 1/2007 in the light of Article 6(1) of Directive 93/13 and Article 2 of Directive 2009/22, it would have to be declared inadmissible in the absence of an admissible subject of interpretation. (98)
81. It must be recalled that it is not the task of the Court, in preliminary ruling proceedings under Article 267 TFEU, to rule upon the compatibility of national law with EU law or to interpret national law. The Court is, however, competent to give the national court full guidance on the interpretation of EU law in order to enable it to determine the issue of compatibility for the purposes of the case before it. (99) To that end, it is for the Court to extract from all the information provided by the national court, and in particular the grounds of the order for reference, the points of EU law which require interpretation, having regard to the subject-matter of the proceedings. (100)
82. Having regard both to the points raised in the main proceedings, as discussed in the order for reference, and to the first question (‘whether or not a term in a consumer credit agreement is void and whether or not that term should be modified’), the second question must be construed to the effect that the referring court is essentially seeking an interpretation of Article 6(1) of Directive 93/13. It would like to know whether, in the light of the legal consequence, provided for in that provision of the directive, of unfair contractual terms not being binding on consumers, it has the power to replace a contractual term which has been established to be unfair by another term which is not to be regarded as unfair.
83. In my view, the answer to this question follows both from the wording and from the regulatory purpose of Article 6(1) of Directive 93/13.
84. It should be stated, first, that Directive 93/13 does not expressly provide for the ‘replacement’ of unfair terms or for a judicial power to that effect. Instead, Article 6(1) of the directive merely prescribes the legal consequence of such terms not being binding on the consumer. (101) The same follows from the 21st recital in the preamble. This rule is mandatory for the Member States, in so far as it extends, with the result that no derogations are permitted. According to its purpose, Article 6(1) of the directive must also lead, in the context of implementation, to the compulsory and contractually mandatory legal consequence of not being bound.
85. It should also be stated that Article 6(1) of the directive provides that, after an unfair term has been found not to be binding, the contract continues ‘to bind the parties upon those terms’ if it is capable of continuing in existence without the unfair terms. The 21st recital in the preamble states that ‘if, nevertheless, such terms are so used, they will not bind the consumer, and the contract will continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair provisions’. Article 6(1) of the directive must therefore be understood to mean that, after the unfair terms have been removed, the contract must continue in existence in unmodified form as to the remaining terms, if that is legally possible, which notionally precludes any replacement of terms or modification of the contract.
86. If we take a closer look at the regulatory purpose of Article 6(1) of the directive, it is possible to see further arguments against a power held by the national court to modify a term. As has already been explained, a finding by the national court that unfair terms are not binding is intended to prevent the consumer remaining bound by such terms. However, this serves another long-term aim of Directive 93/13, to prevent the continued use of unfair terms in commercial practices, as is mentioned in Article 7(1) of the directive. For that purpose, as the Court has expressly recognised in its case-law, Directive 93/13 employs the deterrent effect which a judicial review of unfairness has on sellers or suppliers. (102)
87. In order to ascertain whether a modification of the agreement by replacing the unfair term in question with another term, as happened in the main proceedings, is contrary to Directive 93/13, it must therefore be examined whether such modification is likely to have a lasting adverse effect on the deterrent effect of an assessment of unfairness. This would mean that the effectiveness of the directive could no longer be ensured, which would run counter to the prohibition under EU law on national implementing measures frustrating the aims of a directive.
88. Such modification of the agreement means that the risks to a seller or supplier from the use of unfair terms in commercial practices are reduced considerably. Whilst the seller or supplier possibly has grounds to fear that, by virtue of a finding that a term is not binding, he will continue to be bound by an agreement which may be less favourable for him, a modification along the lines described above ultimately results in the terms of the agreement being modified in accordance with the law and thus to a state which is acceptable to the seller or supplier. (103) However, even in situations where the unfairness of one or more terms would lead to the overall invalidity of the agreement, the seller or supplier may rely on the fact that the agreement will nevertheless retain its validity, which may not be in the interest of the consumer. The prospect of curing the grounds for invalidity of an agreement and clarity over risks for the seller or supplier could have the reverse effect to that desired by the legislature. They could in fact give him an incentive simply to ‘try his luck’ and to include as many unfair terms as possible in the agreement in the hope that most of them will be overlooked by the national court. As the Commission rightly notes, (104) the seller or supplier may ultimately feel provoked by such a legal situation, especially since he would have nothing to lose by attempting to impose his terms on the consumer. These examples show that the possibility of a subsequent modification of the agreement by the court would not only neutralise the deterrent effect of Article 6 of the directive, but also have the reverse effect. The aims of Directive 93/13 would thus be frustrated.
89. In view of this finding, the effectiveness of Directive 93/13 must be considered to be affected. Consequently, the question must also be answered to the effect that Article 6(1) of the directive precludes a national provision like Article 83 of Royal Legislative Decree No 1/2007 which authorises the national court to replace an unfair contractual term by another term which is not to be regarded as such. (105) The national court must interpret and apply that national provision in accordance with the directive. When it applies domestic law, the national court is bound to interpret national law, so far as possible, in the light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive and consequently comply with the third paragraph of Article 288 TFEU. (106)
D – The third question
90. The referring court also wishes to ascertain whether it is possible to exclude judicial review of a court’s own motion and in limine litis where certain aspects of the loan agreement are clearly stated, as is the case with the European order for payment procedure. The referring court means Article 7 of Regulation No 1896/2006 creating a European order for payment procedure, under which an application for a European order for payment must state certain information which is set out in detail in paragraph 2. In this regard, the referring court raises the hypothesis that the specification of certain substantive requirements could possibly compensate for the absence of a possibility of review in limine litis. (107) The reason for these statements seems to be that, according to the referring court, such information is not required in Spanish law.
91. It remains unclear, however, what is the actually purpose of the question. On the one hand, the question could, as the Spanish Government and the Commission suggest, (108) be regarded as hypothetical and, in accordance with the Court’s case-law, inadmissible in so far as it seeks an interpretation of Regulation No 1896/2006, especially since the main proceedings concern exclusively a national order for payment procedure which is subject only the rules of the Spanish law of civil procedure. It should be borne in mind in this connection that where the questions submitted by the national courts concern the interpretation of EU law, the Court of Justice is bound, in principle, to give a ruling, (109) unless it is obvious that the request is in reality designed to induce the Court to give a ruling by means of a fictitious dispute, or to deliver advisory opinions on general or hypothetical questions, or that the interpretation of EU law requested bears no relation to the actual facts of the main action or its purpose, or that the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. (110)
92. However, the superficially hypothetical character of the question disappears if it is understood, in the light of the further statements made by the referring court, as seeking clarification as to what criteria can be inferred from Regulation No 1896/2006 as regards the substantive requirements for an application for a national order for payment. It is clear from the order for reference that the referring court is considering a ‘mutatis mutandis application’ of Regulation No 1896/2006. However, a mutatis mutandis application of Article 7 of Regulation No 1896/2006 would effectively harmonise the national law of civil procedure, which was not the intention of the EU legislature. As is evident from the 10th recital in the preamble to the regulation, ‘the procedure established by this regulation should serve as an additional and optional means for the claimant, who remains free to resort to a procedure provided for by national law’. The concept of a European order for payment procedure developed by the EU legislature as an additional and optional procedure for the cross-border recovery of uncontested pecuniary claims shows that the national and the European procedures were intended to exist alongside one another. (111). The relationship between the regulation and national law is further clarified by the second sentence, which expressly states that ‘this regulation neither replaces nor harmonises the existing mechanisms for the recovery of uncontested claims under national law’. Consequently, it is not possible to infer from Regulation No 1896/2006 any binding requirements (112) as to the substantive form of an application for a national order for payment.
93. This notwithstanding, the answer to the third question follows from my statements on the first and second questions. Accordingly, the Member States are not required by EU law to provide, in their national legal orders, for an assessment of the court’s own motion and in limine litis of whether contractual terms are unfair in the context of order for payment procedures. However, they may order this in the interest of consumer protection by virtue of the enabling provision in Article 8 of Directive 93/13.
E – The fourth and fifth questions
94. There are also doubts whether it is necessary to answer the fourth question. In so far as it seeks an interpretation of Directive 2008/48, it must be borne in mind that that directive is not applicable ratione temporis to the main proceedings. It was adopted on 23 April 2008 and entered into force on 11 June 2008, whilst the period for its transposition into national law expired on 12 May 2010. However, the contested loan agreement was concluded on 28 May 2007, i.e. before Directive 2008/48 entered into force.
95. Whilst Directive 2008/48 does provide for transitional measures, consideration must be given to Article 30 of the directive, under which the directive expressly does not apply to credit agreements existing on the date when the national implementing measures enter into force. The only exceptions to that provision are Articles 11, 12, 13 and 17, the second sentence of Article 18(1), and Article 18(2), which the Member States must ensure ‘are applied also to open-end credit agreements existing on the date when the national implementing measures enter into force’. However, these do not include Articles 5(1)(l) and (m) and 6(1)(i) and Article 10(2)(1), which impose on the creditor certain pre-contractual information requirements vis-à-vis the borrower and are the subject of the question. An attempt nevertheless to provide the national court with a useful answer, by having regard not to Directive 2008/48, but to the precursor Directive 87/102, which is applicable ratione temporis, also meets with insurmountable difficulties, as the latter directive does not contain any rules corresponding to the abovementioned provisions of Directive 2008/48. An interpretation of Directive 87/102 cannot therefore provide an answer to the questions asked by the referring court.
96. In view of the fact that the fourth question has no bearing on the main proceedings, there is no need to answer that question. The referring court should nevertheless note that Directive 2008/48 is not applicable ratione temporis.
97. As far as the fifth question is concerned, it would seem necessary, first, to point out the error which the referring court has clearly made in formulating that question. Since the cited provisions have no connection with the regulatory content reproduced, as the Commission rightly states, (113) it must be assumed that the national court is referring to Article 6(2) and Article 7 of Directive 87/102. The right to information and the principle of the prohibition on unjustified enrichment are laid down in Directive 87/102 and not in Directive 2008/48, which is cited by the referring court.
98. If this presumption is correct, it must then be examined whether the question can also be considered to be relevant to the decision in the light of the specific problems raised in the main proceedings.
99. There is nothing in the order for reference to suggest that in the main proceedings a problem would arise in connection with the duty imposed on the creditor by Article 6(2) of Directive 87/102 to inform the consumer ‘during the period of the agreement … of any change in the annual rate of interest or in the relevant charges at the time it occurs’. That aside, under Article 6(1) of Directive 87/102 this duty concerns only agreements between a credit institution or financial institution and a consumer for the granting of credit in the form of an advance on a current account. Because, according to the available factual information, the contested loan agreement does not appear to come under this category of credit agreement, there is also no need for an interpretation of Article 6(2) of Directive 87/102 in order to give a ruling in the main proceedings.
100. Nor does it appear necessary to interpret Article 7 of Directive 87/102 in order to give a ruling in the main proceedings. That provision of the directive stipulates that ‘in the case of credit granted for the acquisition of goods, Member States shall lay down the conditions under which goods may be repossessed, in particular if the consumer has not given his consent’. It also provides that the Member States must ‘further ensure that where the creditor recovers possession of the goods the account between the parties shall be made up so as to ensure that the repossession does not entail any unjustified enrichment’. There is, however, nothing in the order for reference to indicate that in the main proceedings a problem would arise in connection with the return of goods to the creditor. The referring court is possibly raising a conceivable scenario where, because the consumer has failed to fulfil his contractual obligations, the seller or supplier could demand repayment of the loan, in which case the question would arise whether he was also entitled to interest on late payments, which is regarded as unfair. Payment of such interest could otherwise be regarded as unjustified enrichment. However, there is no evidence in the order for reference to suggest that the reference seeks to clarify this question.
101. In the light of the foregoing, I conclude that there is no need to answer the fourth and fifth questions.
F – The sixth question
102. By its sixth question, the referring court is essentially seeking to ascertain whether Article 11(1) of Directive 2005/29 is to be interpreted as permitting a national court to assess, of its own motion, the unfair character of a commercial practice which consists in including in a contract a term concerning interest on late payments.
103. This provision of the directive, which the referring court mentions in its question, lays down a general aim which the Member States must achieve through legislative measures. They must ‘ensure that adequate and effective means exist to combat unfair commercial practices in order to enforce compliance with the provisions of this Directive in the interest of consumers’. Such means include legal provisions under which it is possible to take legal action against such unfair commercial practices and/or to bring such unfair commercial practices before an administrative authority competent either to decide on complaints or to initiate appropriate legal proceedings. It can therefore be stated that in order to combat unfair commercial practices Directive 2005/29 permits the establishment of both a judicial and an administrative procedure at national level.
104. For the purposes of the preliminary ruling proceedings, however, only the first variant is of relevance, since the points of law raised relate to the national order for payment procedure before a national court. It must be stated in this connection that Article 11(2) of Directive 2005/29 confers extensive powers on the courts of the Member States, which are outlined. Those powers include adopting court prohibitions of unfair commercial practices, granting interim relief and ordering measures to eliminate the consequences of these kinds of commercial practices.
105. In accordance with the clear wording of that provision of the directive, however, those powers must be granted by the Member States in the course of the transposition of the directive, having regard to certain minimum requirements under EU law. (114) The Member States also enjoy a broad margin of discretion in connection with transposition. (115) Directive 2005/29 carries out a complete harmonisation of the material rules concerning unfair commercial practices of undertakings vis-à-vis consumers, (116) but not of the procedural instruments for combating these kinds of commercial practices. As regards the question of the direct applicability of Directive 2005/29, to which the national court alludes by referring to the evident failure to transpose Directive 2005/29 in Spain, my view follows from the statements made above to the effect that neither is this expressly provided for, nor does such a possibility appear to have been intended in accordance with the regulatory purpose of Directive 2005/29. An argument against the indiscriminate direct applicability of the provisions of Directive 2005/29 for the national courts might be that it is clear from Article 11(1) that the procedures which must be established by the Member States will first ensure the implementation of the directive. The establishment of adequate means to combat unfair commercial practices thus appears to be an essential condition for the implementation of the aims of the directive at national level. (117)
106. Notwithstanding this interpretation, it must be stated with regard to the relevance of the question to the decision that there is nothing in the order for reference to indicate that the court of first instance had also regarded the inclusion of the contractual term concerning interest on late payments, which it considered to be unfair, as an unfair commercial practice within the meaning of Directive 2005/29. The referring court, which first raised the question of the applicability of Directive 2005/29 in the main proceedings, merely mentions a ‘possible unfair commercial practice’, (118) without any evidence in support of such an assumption. It can merely be presumed, having regard to the overall context, that in the view of the referring court the unfairness of the commercial practice resides in the fixing of an excessively high rate of interest on late payments. However, it is not possible to establish precisely, from the scant statements made in the order for reference, whether the referring court has actually subsumed the situation under the provisions of the directive. It follows that the request for an interpretation of Directive 2005/29 has no connection with the main proceedings. Against this background, the question must be regarded as purely hypothetical, as is argued by the parties. Accordingly, the sixth question must also be declared inadmissible.
VII – Conclusion
107. In the light of the foregoing, I propose that the Court answer the questions asked by the Audiencia Provincial de Barcelona as follows:
(1) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts is to be interpreted to the effect that it does not require a national court, in the context of a national order for payment procedure, to give a ruling of its own motion and in limine litis on whether a term concerning interest on late payments in a consumer credit agreement is not binding, provided the assessment of whether that term is unfair can be transferred, in accordance with the national procedural rules, to an inter partes procedure to be initiated through an appeal brought by the debtor, in which the national court is given the opportunity to obtain the legal and factual elements necessary to conduct such an assessment.
(2) Article 6(1) of Directive 93/13 precludes a national provision which authorises the national court to modify a consumer agreement so as to replace an unfair contractual term by another term which is not to be regarded as unfair.
(3) The provisions of Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure are not applicable to a national order for payment procedure.
Costea
[2015] EUECJ C-110/14_O, ECLI:EU:C:2015:271, EU:C:2015:271
1. The present request for a preliminary ruling from the Judecatoria Oradea (Romania) provides the Court with the opportunity to rule on the definition of consumer within the meaning of Article 2(b) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (‘the Directive’), (2) pursuant to which a ‘consumer’ is any natural person who, in contracts covered by the Directive, is acting for purposes which are outside his trade, business or profession.
2. Although judicial interpretations of the term ‘consumer’ have been provided in a number of areas of EU law, the concept has so far not been developed exhaustively in the case-law relating to the specific area of the Directive, (3) the interpretation of which is sought in the present case. In particular, the unusual feature of this case is that it questions whether a legal professional may be regarded as a consumer when he concludes a credit agreement secured on immovable property owned by his law firm. The question thus arises, on the one hand, of the effect of the particular skills and knowledge of a person on his status as a consumer and, on the other hand, of the effect of that person’s role in an ancillary security agreement on his status as a consumer in a principal credit agreement.
……
IV – Analysis
17. Bearing in mind the relevant factors which will enable a useful answer to be provided to the question referred for a preliminary ruling by the national court, on which the observations of the participants have also focused, my analysis will entail an examination of the concept of consumer in the Directive and also of the effect of other factors on that concept, such as the reference to dual purpose contracts in Directive 2011/83 and the relationship between the principal agreement (the credit agreement) and the security agreement.
A – The concept of consumer in Directive 93/13
18. The concept of consumer appears across many fields of EU law, beyond the specific instruments on the approximation of laws on consumer protection; examples are the fields of competition law, (9) judicial cooperation in civil matters, (10) the common agricultural and fisheries policies, (11) and other fields where measures to approximate laws exist. (12) In that regard, the many instruments of secondary law aimed at consumer protection do not provide an unambiguous conception of the term ‘consumer’ either. (13) It is, therefore, a notion which is present in many areas of the European Union’s legislative activity but one which has not been specifically defined in primary law, (14) and its application as a category for identifying certain persons is not monolithic but is altered by each of the relevant instruments of secondary law. Thus, the notion of consumer is not defined uniformly in all instruments, which belong to different spheres and have different objectives: it is a working, dynamic notion, which is defined by reference to the subject-matter of the legislative act concerned. (15)
19. In the present case, the Court is required to interpret the term ‘consumer’ in the context of Directive 93/13. It is clear that the starting point for carrying out that task must be the wording of Article 2(b) of the Directive, which sets out the definition of consumer.
20. It is apparent from that provision that, for the purposes of the definition of consumer and the definition of seller or supplier, the sphere in which the individual concerned acts is relevant. Thus, Article 2(b) of the Directive provides that a consumer is ‘any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business or profession’. By contrast, according to Article 2(c), a seller or supplier is ‘any natural or legal person who, in contracts covered by this Directive, is acting for purposes relating to his trade, business or profession …’
21. In that connection, the case-law of the Court has made clear that the contrast between the concepts of seller or supplier and consumer does not operate in completely symmetrical terms (not everyone who cannot be regarded as a seller or supplier is a consumer), since, in particular, a legal person cannot be regarded as a consumer within the meaning of Article 2 of the Directive. (16) In the present case, there is no doubt that Mr Costea concluded the credit agreement in his capacity as a natural person and not as the representative of his law firm.
22. The uncertainty surrounding Mr Costea’s status as a consumer, which is the reason for the question referred for a preliminary ruling, stems from the fact that Mr Costea is a lawyer by profession. All the participants who submitted written observations and presented oral argument, with the exception of Volksbank, take the view that the profession practised by a natural person has no bearing when it comes to assessing whether a person may be regarded as a consumer within the meaning of Article 2(b) of the Directive. However, Volksbank states that, in order to be able to regard a person as a consumer, in addition to finding that an objective criterion is satisfied — resulting from the wording of Article 2(b) of the Directive — a subjective criterion must also be satisfied, relating to the spirit of the Directive, which is to protect the consumer as the weaker party who is generally not aware of the statutory provisions. Thus, according to Volksbank, the presumption that a consumer is in a position of inequality may be rebutted if that consumer is found to have the experience and information necessary to protect himself on his own.
23. Taking into account the wording of the definition in Article 2(b) of the Directive, interpreted systematically in conjunction with the other provisions of the Directive, and in the light of the judicial interpretation of the concept of consumer in other instruments of EU law, I believe that Volksbank’s reasoning cannot be accepted.
24. The central element of the notion of consumer, as defined in the Directive, is an element which can be clearly circumscribed: the position held by the contracting party in the legal transaction in question. In that connection, as pointed out in Asbeek Brusse and de Man Garabito, it is necessary to take into consideration the fact that ‘[i]t is … by reference to the capacity of the contracting parties, according to whether or not they are acting for purposes relating to their trade, business or profession, that the directive defines the contracts to which it applies.’ (17)
25. The emphasis on the sphere of activity in which the transaction concerned takes place as a factor determining the status of consumer is also confirmed by the case-law of the Court on other instruments relating to consumer protection, which contain definitions of the term ‘consumer’ similar to that in Article 2(b) of the Directive. Thus, in Di Pinto, (18) with regard to the interpretation of the concept of consumer in the context of Directive 85/577/EEC, (19) the Court pointed out that the criterion for the application of protection lay in the connection between the transactions which were the subject of the canvassing of traders — aimed at inducing the conclusion of an advertising contract concerning the sale of a business — and the professional activity of the trader concerned, so that the latter could claim that the directive was applicable only if the transaction in respect of which he was canvassed lay outside his trade or profession. (20)
26. Thus, the wording of the Directive and the case-law interpreting that instrument and Directive 85/577 appear to opt for a concept of consumer which is both objective and functional; therefore, as regards a specific person, it is not an inherent, unalterable category, (21) but is, on the contrary, a quality which may be assessed by reference to a person’s status in relation to a particular legal transaction or operation, among the many which he may carry out in his daily life. As Advocate General Mischo observed in Di Pinto, as regards the concept of consumer in the context of Article 2 of Directive 85/577, the persons referred to in that provision ‘are not defined in abstracto, but rather according to what they do in concreto’, so that the same person, in different circumstances may be sometimes a consumer and sometimes a seller or supplier. (22)
27. That conception of a consumer as an actor in a specific legal transaction, which entails both objective and functional elements as the case may be, is also confirmed in the context of the Brussels Convention, a context in which the Court has also interpreted the term ‘consumer’; however, as I shall point out below, the analogy must be qualified when interpreting the Directive, taking account of the different objectives of the two measures. Thus, in Benincasa, (23) the Court held that, in order to determine whether a person has the capacity of a consumer, ‘reference must be made to the position of the person concerned in a particular contract, having regard to the nature and aim of that contract, and not to the subjective situation of the person concerned. … [T]he self-same person may be regarded as a consumer in relation to certain transactions and as an economic operator in relation to others.’ (24)
28. In short, this is an objective and functional definition which is satisfied on the basis of a single criterion: the legal transaction in particular must form part of activities which are outside a person’s trade, business or profession. As the Romanian Government has observed, the Directive does not lay down any additional criteria for establishing the status of consumer. It is, moreover, a concept which is defined from a situational perspective, in other words, in relation to a specific legal transaction. (25) Accordingly, no one can be deprived of the possibility of being treated as a consumer in relation to a contract which is outside his trade, business or profession by reason of his general knowledge or his occupation, and instead regard must be had exclusively to his position vis-à-vis a specific legal transaction.
29. That conclusion is not called into question by Volksbank’s submissions based on the spirit of the Directive, referring, in particular, to a number of recitals in the preamble to the Directive. (26) Taking a systematic approach to the Directive, the idea that the consumer is vulnerable and in a weak position as regards both his bargaining power and his level of knowledge is the rationale for the Directive, since it is based on a situation in which a consumer agrees to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms. (27) However, those notions of vulnerability and weakness, which generally underlie EU consumer protection law as a whole, (28) were not given concrete form in the legislative expression of the concept of consumer as necessary conditions through its definition in positive law. Thus, neither the definition of consumer nor any other provisions of the Directive make the existence of the status of consumer in a particular situation subject to a lack of knowledge, a lack of information or a genuine position of weakness.
30. It would undermine the practical effect of the Directive if it were possible to call into question the status of consumer in each individual case, based on factors related to the experience, education, occupation and even the intelligence of the consumer. In particular, lawyers (or those with a law degree, and other professionals) would be deprived of protection in many aspects of their private affairs. As the Romanian Government points out, even where the level of knowledge of the person in question may be comparable to that of the lender, that does not alter the fact that his bargaining power is the same as that of any other natural person vis-à-vis a seller or supplier.
31. The Court held in Šiba (29) that ‘[l]awyers display a high level of technical knowledge which consumers may not have’. (30) However, those considerations referred to a situation in which the lawyer in question ‘provides a legal service for a fee, in the course of his professional activities, to a natural person acting for private purposes’ and is, therefore, a seller or supplier within the meaning of Article 2(c) of the Directive. (31)
32. Further, an interpretation of the kind proposed by Volksbank would result in all persons who had legal advice or professional advice of another kind when the contract was concluded being denied the status of consumer. (32)
33. In addition, the effect of the knowledge or specific situation of the person concerned has been rejected by the Court in areas distinct from that of the Directive, when the objective requirement that the activity must be outside the trade, business or profession of the person concerned was not satisfied. That occurred in relation to Directive 85/577, with regard to which the judgment in Di Pinto shows that where a person acts in the context of his trade, business or profession a genuine lack of knowledge in the particular case does not detract from his status as a seller or supplier. (33)
34. In conclusion, I believe that the concept of consumer, within the meaning of Article 2(b) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, must be interpreted as including a natural person who practises as a lawyer and concludes a credit agreement with a bank, where a building owned by his law firm is also covered by that agreement as mortgage security, when, in the light of the evidence available to the national court, it emerges that that person acted for purposes outside his trade, business or profession.
B – The concept of consumer in relation to dual purpose contracts
35. In addition to the foregoing considerations, I believe that, in order to reply to the question referred for a preliminary ruling, it is helpful to discuss so-called ‘dual purpose contracts’, in particular in so far as that question refers expressly to a contract in which the purpose of the credit is not specified.
36. In that connection, the Romanian Government and the Netherlands Government have pointed to the usefulness of the judgment in Gruber when it comes to determining whether Mr Costea is a consumer in the present case. (34) For its part, the European Commission drew attention in its written observations and at the hearing to the relevance of recital 17 in the preamble to Directive 2011/83. That recital and the Gruber judgment both refer to dual purpose contracts in different contexts.
37. The criteria for determining whether a contract comes within the private sphere or the trade or professional sphere are different in Gruber and Directive 2011/83. As I shall point out below, I believe that the criterion in Directive 2011/83 is the relevant criterion in the circumstances of the present case.
38. In Gruber, (35) the Court opted for a strict interpretation of the term ‘consumer’ in situations relating to dual purpose contracts. That interpretation makes paramount the criterion of marginality: a person may not rely on the special rules of jurisdiction relating to consumers laid down in the Brussels Convention ‘unless the trade or professional purpose is so limited as to be negligible in the overall context of the supply, the fact that the private element is predominant being irrelevant in that respect’. (36) The Court also held in that context that the burden of proof rests with the person wishing to rely on Articles 13 to 15 of the Convention. (37)
39. Recital 17 in the preamble to Directive 2011/83, which is worded quite differently, opts for a criterion based on the predominant purpose: ‘in the case of dual purpose contracts, where the contract is concluded for purposes partly within and partly outside the person’s trade and the trade purpose is so limited as not to be predominant in the overall context of the contract, that person should also be considered as a consumer’.
40. Thus, whereas, according to the criterion of marginality laid down in Gruber, use for a trade or professional purpose must be so limited that it may be regarded as negligible in order for a contract to fall within the private sphere, Directive 2011/83 opts for a more balanced solution, using the criterion of the predominant purpose in the overall context of the contract.
41. As the European Commission stated at the hearing, the application of the Gruber case-law in connection with the interpretation of the Directive should be treated with caution. The case-law of the Court interpreting the concept of consumer in the context of Article 13 of the Brussels Convention and Article 15 of Regulation No 44/2001 emphasises a restrictive approach, which undoubtedly takes into consideration the fact that those provisions involve exceptions to the general criterion of jurisdiction based on the defendant’s domicile and, therefore, must be interpreted strictly. (38) Thus, it does not appear that it is possible to transfer by analogy the restrictive application of the concept of consumer in dual purpose contracts to the context of special provisions aimed at the protection of consumers, such as the Directive. (39)
42. In addition, the difference between the approach in recital 17 in the preamble to Directive 2011/83 and that taken in Gruber is no coincidence. During the negotiations on that directive, the European Parliament introduced an amendment which expressly proposed the alteration of the definition of consumer so as to widen it to ‘any natural person who … is acting for purposes which are primarily outside his trade, business, craft or profession. (40) During the subsequent negotiations, the European Parliament agreed to retain the definition of consumer, removing the adverb primarily, on condition that in the recital clarifying the definition of consumer, which was originally based on the Gruber judgment, (41) the word ‘limited’ was replaced by the word ‘predominant’. (42)
43. In short, in the light of the different functions of the concept of consumer in the different legislative acts and of the finding which is clear from the preparatory documents, I believe that recital 17 in the preamble to Directive 2011/83 enshrines the criterion of the predominant purpose in the overall context of the contract.
44. As far as the present case is concerned, I, like the Romanian Government and the Commission, incline to the view that recourse to the explanation provided in recital 17 in the preamble to Directive 2011/83 for the purpose of interpreting the concept of consumer is also required in the context of the Directive. That conclusion is justified in the light of the shared objective and the clear link between the two instruments. In that connection, Directive 2011/83 is a measure amending the Directive. (43) Moreover, the wording of the definition of consumer in those two provisions is almost identical, the sole difference being that, whereas the Directive refers only to ‘trade, business or profession’, Directive 2011/83 refers to ‘trade, business, craft or profession’.
45. Accordingly, in order to ascertain whether a person may be regarded as a consumer for the purposes of the Directive in circumstances in which there is evidence that the contract at issue pursues a dual purpose, so that it is not clear that that contract was concluded exclusively for either a private purpose or a trade or professional purpose, the criterion of the predominant purpose provides a tool for establishing, through an examination of the totality of the circumstances surrounding the contract at issue — beyond a purely quantitative criterion — (44) and an assessment of the objective evidence available to the national court, the extent to which the trade or professional purpose or the private purpose is predominant in relation to a particular contract.
46. Although the European Commission and Mr Costea stated at the hearing that the account of the facts provided by the national court does not reveal any evidence suggesting that the agreement at issue is a dual purpose contract, it is for the referring court to clarify the factual situation in relation to the purpose of the loan by means of the evidence available to it, which undoubtedly includes the terms contained in the agreement itself, the subject-matter of which may well underpin the presumption that the loan in question is intended for private purposes.
47. In conclusion, I believe that if the national court takes the view that it is not clear that a contract was concluded exclusively with either a private purpose or a trade or professional purpose, the contracting party in question must be regarded as a consumer if the trade or professional purpose is not predominant in the overall context of the contract, having regard to the totality of the circumstances and an assessment of the objective evidence available to the national court, which it is for that court to evaluate.
C – The relationship between the principal agreement and the ancillary agreement
48. Finally, it remains to be established whether the classification of Mr Costea’s status as that of consumer may be affected by the fact that the principal credit agreement was secured on a building which is used for the borrower’s professional activity.
49. In that connection, the observations submitted by both the Romanian Government and the Commission contend that the security agreement does not affect the credit agreement. Those observations, and Mr Costea’s observations at the hearing, pointed out that the law firm ‘Costea Ovidiu’ has the status of third party in relation to the credit agreement, observing that the mere fact that a building owned by the firm constitutes security for the credit agreement does not mean that that firm becomes a party to the credit agreement.
50. Taking the same view as that put forward in the observations submitted to the Court, I believe that there are two distinct legal relationships: on the one hand, the relationship between Mr Costea, as a natural person — in his capacity as borrower — and the bank, and, on the other hand, the relationship between the law firm ‘Costea Ovidiu’ — as mortgage guarantor — and the bank. The two legal relationships must be considered separately, so that the latter — which, moreover, is ancillary in nature — does not affect the nature of the former.
51. In that regard, the case-law of the Court offers some guidance on the relationship between contracts which may be regarded as ancillary and the respective principal contracts, in the context of both Directive 85/577 and Regulation No 44/2001. Thus, as regards Directive 85/577, the Court held in Dietzinger (45) that, in view of the ancillary nature of contracts of guarantee, ‘on a proper construction of the first indent of Article 2 of Directive 85/577 [which contains the definition of consumer], a contract of guarantee concluded by a natural person who is not acting in the course of his trade or profession does not come within the scope of the directive where it guarantees repayment of a debt contracted by another person who, for his part, is acting within the course of his trade or profession’. (46) The Court took the same view when interpreting Article 15(1) of Regulation No 44/2001, holding in Ceská sporitelna (47) that that provision ‘must be interpreted as meaning that a natural person with close professional links to a company, such as its managing director or majority shareholder, cannot be considered to be a consumer within the meaning of that provision when he gives an aval on a promissory note issued in order to guarantee the obligations of that company under a contract for the grant of credit.’ (48)
52. However, the case before the Court involves the opposite situation. Any professional aspect applies only to the ancillary agreement, in so far as Mr Costea signed the security agreement as the legal representative of his law firm. Accordingly, unlike in Dietzinger and Ceská sporitelna, this case does not involve the application of the maxim accessorium sequitur principale, in the sense that the effects of the ancillary agreement must suffer the same fate as those of the principal agreement, but rather it is necessary to take into account the individual nature of each of these legal relationships in order to be able to identify the different functions which the same person performs in them. The decisive point for the purposes of the present case is not to establish Mr Costea’s status as legal representative in the security agreement, which is the ancillary agreement, but rather to ascertain what his position is in the credit agreement, which is the principal agreement.
53. Thus, the fact that Mr Costea signed the security agreement as the representative of the law firm does not adversely affect Mr Costea’s status as a consumer in relation to the principal credit agreement. On the contrary, based on the case-law cited, it could even be argued that the ancillary security agreement comes under the influence of the principal agreement. (49)
54. For the reasons set out above, I believe that the role of a natural person, in his capacity as the legal representative of his law firm, in the conclusion of an ancillary security agreement does not affect his status as a consumer in relation to a principal credit agreement.
V – Conclusion
55. In the light of the foregoing considerations, I propose that the Court reply as follows to the question referred for a preliminary ruling by the Judecatoria Oradea:
‘The concept of consumer, within the meaning of Article 2(b) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, must be interpreted as including a natural person who practises as a lawyer and concludes a credit agreement with a bank, where a building owned by his own law firm is also covered by that agreement as mortgage security, when, in the light of the evidence available to the national court, it emerges that that person acted for purposes outside his trade, business or profession.
If the national court takes the view that it is not clear that a contract was concluded exclusively with either a private purpose or a trade or professional purpose, the contracting party in question must be regarded as a consumer if the trade or professional purpose is not predominant in the overall context of the contract, having regard to the totality of the circumstances and an assessment of the objective evidence available to the national court, which it is for that court to evaluate.
The role of a natural person, in his capacity as the legal representative of his own law firm, in the conclusion of an ancillary security agreement does not affect his status as a consumer in relation to a principal credit agreement.’
1 – Original language: Spanish.
2 – OJ 1993 L 95, p. 29.
3 – The Court interpreted that concept in relation to Directive 93/13/EEC in Cape and Idealservice MN RE (C-541/99 and C-542/99, EU:C:2001:625).
4 – It is apparent from the documents in the case-file that the term in question is included in the ‘special conditions’ section of the agreement and is headed ‘risk charge’; that charge amounts to 0.22% of the balance of the loan and must be paid monthly on the instalment dates throughout the term of the agreement.
5 – Volksbank’s practice of including ‘risk charge’ terms in credit agreements has led to a number of cases before the Court of Justice. In SC Volksbank România (C-602/10, EU:C:2012:443), the Court held that Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/12/EEC (OJ 2008 L 133, p. 66) must be interpreted as not precluding a national measure (in that case, Government Emergency Order 50/2010, Monitorul Oficial al României, Part I, No 389, of 11 June 2010) designed to transpose that directive into domestic law from including in its material scope credit agreements concerning the grant of credit secured by immovable property, even though such agreements are expressly excluded from the material scope of the directive. The Romanian courts have sought preliminary rulings in five other cases which were, however, subsequently removed from the register after the withdrawal of the requests for a preliminary ruling (orders in SC Volksbank România (C-47/11, EU:C:2012:572); in SC Volksbank România (C-571/11, EU:C:2012:726); in SC Volksbank România (C-108/12, EU:C:2013:658); in SC Volksbank România (C-123/12, EU:C:2013:460); and in SC Volksbank România (C-236/12, EU:C:2014:241). In Matei (C-143/13, EU:C:2015:127), the Court had the opportunity to interpret Article 4(2) of Directive 93/13 in relation to certain terms included in credit agreements concluded between a seller or supplier and consumers, which provide for a ‘risk charge’.
6 – Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/CE of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council (OJ 2011 L 304, p. 64).
7 – See, inter alia, Melki and Abdeli (C-188/10 and C-189/10, EU:C:2010:363, paragraph 27 and the case-law cited).
8 – See, for example, Traum (C-492/13, EU:C:2014:2267, paragraph 19), and PreussenElektra (C-379/98, EU:C:2001:160, paragraph 40).
Invitel
[2011] EUECJ C-472/10
III – Facts, main proceedings and questions referred for a preliminary ruling
17. According to the case-file, in 2008 the defendant in the main proceedings, a telecommunications undertaking providing fixed network services, inserted provisions into its GBC relating to the cost of payment by money order. These provide that if payment is made by money order the service provider is entitled to charge the associated additional costs to the subscriber. The GBC do not, however, state the way in which the costs of the money order are to be charged.
18. The applicant in the main proceedings subsequently received numerous complaints from consumers, which in its opinion indicate that the abovementioned provisions are unfair. It therefore asked the defendant in writing to amend its GBC accordingly, but the defendant flatly refused to do so.
19. In the action in the public interest brought before the referring court under Article 39(1) of the Hungarian Law on consumer protection, the applicant applies first for a finding that the term in question is unfair pursuant to Article 209/B(1) of the Civil Code and secondly for the immediate and retroactive refund of the amounts that the defendant received as a result of the unlawful charging of the cost of money orders.
20. The referring court has doubts about the interpretation of some provisions of Directive 93/13. It considers that an interpretation of those provisions by the Court of Justice is necessary in order to be able to resolve the dispute in the main proceedings. On that ground, it stayed proceedings and referred the following questions to the Court for a preliminary ruling:
‘(1) May Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts be interpreted as meaning that an unfair contract term is not binding on any consumer where a body appointed by law and competent for that purpose seeks a declaration of the invalidity of that unfair term which has become part of a consumer contract on behalf of consumers in an action in the public interest (actio popularis)?
May Article 6(1) of Directive 93/13 be interpreted, where an order which benefits consumers who are not party to the proceedings is made, or the application of an unfair standard contract term is prohibited, in an action in the public interest, as meaning that an unfair term which has become part of a consumer contract is not binding on all consumers also as regards the future, so that the court has to apply the consequences in law thereof of its own motion?
(2) May Article 3(1) of Directive 93/13, in conjunction with points 1(j) and 2(d) of the annex applicable by virtue of Article 3(3) of that directive, be interpreted as meaning that, where a seller or supplier provides for a unilateral amendment of a contract term without explicitly describing the method by which prices vary or giving valid reasons in the contract, that contract term is unfair ipso jure?’
……
V – Main arguments of the parties
A – The first question
24. The Hungarian Government, citing the case-law of the Court, points out that the collective measures laid down in Article 7 of Directive 93/13 are preventive in nature, in that their purpose is to prevent the use of unfair terms to the detriment of consumers. It asserts that actions in the public interest, to which Directive 2009/22 is also applicable, are intended to protect the common interests of consumers, regardless of whether they are party to the proceedings or not. Consequently, according to the Hungarian Government, Article 6(1) and Article 7(2) of Directive 93/13 must be interpreted jointly as meaning that terms classified as unfair by the referring court are not binding on consumers and cannot be used in future.
25. On the one hand, according to the Hungarian Government, under Directive 93/13 the national court must rule a contract term to be unfair, if necessary of its own motion, and where appropriate order that it not be used, unless the consumer objects. On the other hand, it is for the national court to determine the consequences in law of a finding that a contract term is unfair in the context of an action for an injunction.
26. In the opinion of the Spanish Government, an unfair term is not binding on any consumer, nor will it be binding in the future, if an organisation competent in this regard brings an action for a finding that a contract term is void and the court seised accedes to that request. Moreover, it maintains that the national court is obliged of its own motion to apply the consequences in law arising from such a finding of unfairness and from a prohibition on use of the term in consumer contracts.
27. The Commission points out that the statement in Article 6(1) of Directive 93/13 that unfair terms are not binding on the consumer places an obligation on the Member States to achieve a particular result. The method of implementation must conform with the principles of equivalence and efficiency, as defined in the case-law of the Court.
28. As Article 7(1) of Directive 93/13 lays down no precise rules on the way in which the continued use of unfair terms should be prevented, in the view of the Commission the directive does not preclude the possibility that the consequences in law of a declaration that an unfair term is invalid in the context of an action for an injunction is not restricted to the parties to the action. The Commission maintains that the Hungarian legislation, which provides that such a declaration of invalidity applies to any person concluding a contract containing the term in question, contributes towards achieving the objective of the directive. It also states that Directive 93/13 does not preclude a national provision under which the national court is obliged to apply of its own motion the consequences in law stemming from a judgment, including one in favour of consumers who are not parties to the proceedings.
B – The second question
29. Both the Hungarian Government and the Commission state that Article 3 of Directive 93/13 lists in abstract terms all the characteristics that make a contract term unfair. Moreover, the annex to the directive contains a list of terms that may be deemed unfair. The mere fact that a particular term appears on that list does not necessarily mean that that term must also be classified as unfair. Rather, it is for the national court itself to make that judgment, taking into account the general criteria in that regard, which in turn are subject to the interpretative jurisdiction of the Court of Justice.
30. Citing the facts of the dispute in the main proceedings, the Hungarian Government points out that a unilateral amendment of the GBC, without indicating the method by which prices vary or the reason for the amendment, does not accord with Directive 93/13, as it leads to a substantial imbalance in the parties’ contractual rights and obligations. Nevertheless, according to that government, the national court has a duty to assess the contract term in the light of the circumstances of the individual case, taking account of the criteria listed in Directive 93/13.
31. The Spanish Government states that if the seller or supplier reserves the right in a contract term to amend the GBC unilaterally without describing the method by which prices vary or giving the reason for the price change that term must be deemed unfair.
VI – Legal assessment
A – The first question
32. The first question, which is in two parts, is designed essentially to determine whether the Hungarian system for the collective protection of rights in the form of an action in the public interest (actio popularis), available to consumer protection associations under national law, is compatible with Directive 93/13. The raising of these questions provides an opportunity to clarify the principles of the system for protecting consumers from unfair terms that was created by Directive 93/13. The information gleaned should help provide an answer to the individual questions from the referring court.
33. I shall first describe this protection system in general terms and then examine the instrument of the collective action as conceived by the authors of the directive, focusing on the central question of the legal effects that the judgment of the national court seised with an action in the public interest should have in order to comply with the objective of consumer protection of Directive 93/13.
1. Consumer protection as an objective of the directive
34. According to settled case-law of the Court of Justice, the system of protection introduced by Directive 93/13 is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge. This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence their content. (4) In view of that weaker position, Article 6(1) of Directive 93/13 provides that unfair terms are not binding on the consumer. As is apparent from the case-law, this is a mandatory provision which aims to replace the formal balance between the rights and obligations of the parties with an effective balance which re-establishes equality between them. (5)
35. In order to guarantee the protection intended by Directive 93/13, the Court has stated on a number of occasions that the imbalance which exists between the consumer and the seller or supplier may be corrected only by positive action unconnected with the actual parties to the contract. (6) It is in the light of those principles that the Court has therefore held that the national court is required to assess of its own motion whether a contractual term is unfair. (7) The court’s power to determine of its own motion whether a term is unfair constitutes, in the opinion of the Court of Justice, ‘a means both of achieving the result sought by Article 6 of [Directive 93/13], namely preventing an individual consumer from being bound by an unfair term, and of contributing to achieving the aim of Article 7, since if the court undertakes such an examination, that may act as a deterrent and contribute to preventing unfair terms in contracts concluded between consumers and sellers or suppliers’. (8) Moreover, that power of the national court has been regarded by the Court as necessary ‘for ensuring that the consumer enjoys effective protection, in view in particular of the real risk that he is unaware of his rights or encounters difficulties in enforcing them’. (9)
2. The collective action as an appropriate and effective instrument within the meaning of Articles 6 and 7 of Directive 93/13
36. References for preliminary rulings have hitherto related primarily to the protection of individual rights, and hence to cases in which the consumer himself has taken action against the use of unfair terms, for example by challenging the contract in question or resisting its enforced execution. It would, however, be wrong to conclude from this that the provision set out in Article 7(2) of Directive 93/13 permitting individuals and organisations to bring legal proceedings in the interest of consumers against the use of unfair terms in contracts is of limited practical importance.
37. In fact, this provision, the purpose of which is to introduce mechanisms for verification in abstracto, complements the system of protection created by Directive 93/13 by permitting an effective defence against unfair terms even where in exceptional cases consumers do not take steps to protect their rights, for reasons of cost, for example. This also accords with the objective of Directive 93/13, which not only provides consumers with appropriate protection in their individual disputes with sellers or suppliers but also, as is clear from Article 7(1), aims in general to ‘prevent the continued use’ of unfair terms by sellers or suppliers.
38. In order to achieve that objective, Article 7(1) of Directive 93/13 places an obligation on the Member States to take ‘adequate and effective means’ to eliminate unfair terms. This obligation signifies, in particular, that there must be a means of prohibiting the use of an unfair term more widely than for an individual case. Measures under civil, administrative and criminal law can be envisaged in this respect. (10) It is ultimately left to the Member States to decide which means are most appropriate and effective in the circumstances of their respective legal systems. To that extent they are free to opt for various verification mechanisms, depending on their legal tradition. As can be seen from a systematic interpretation of Article 7(1) and (2), what is required is an adequate level of effectiveness. (11) Autonomous powers of decision on the part of the competent court or authority on the unfairness of terms and the existence of appropriate and effective means to prevent the continued use of the terms in question are contributory factors in this regard.
39. The collective action, which was already available in the legal systems of some Member States before Directive 93/13 came into effect, is the most important instrument of effective verification required by the directive. (12) Under Article 7(2) of the directive, the Member States must make provision whereby ‘persons or organisations, having a legitimate interest under national law in protecting consumers, may take action … before the courts or before competent administrative bodies’ for a decision on the unfairness of terms and, where necessary, ‘can apply appropriate and effective means to prevent the continued use of such terms’. The fact that the legislature made express provision for collective actions shows that it regards them as an essentially appropriate and effective instrument within the meaning of Article 7(1) in order permanently to prevent the use of unfair terms in contracts.
40. It is useful to point out in this connection that actions brought by persons or organisations representing consumer interests for a finding that individual contract terms are invalid or to prohibit their use in contracts are equal in value to actions brought by individual consumers. As a matter of principle, the considerations that justify strict consumer protection and on which the Court of Justice has based its case-law with respect to Article 6 of Directive 93/13 in proceedings by individuals also apply to such persons or organisations. It is a question of intervening to protect the consumer, who as a rule is in a weaker position, and in a way that deters the seller or supplier using unfair terms. As the Court stated in Commission v Italy, (13) judicial means of deterrence include not only actions seeking a finding that the terms in question are invalid but also preventive measures, such as actions for injunctions against their continued use. (14)
41. The collective action as a means of enforcing collective rights not only provides access to this legal remedy but also has characteristics that make it an effective deterrent. (15) As can be seen from the abovementioned judgment, this assessment is shared by the Court. (16) Collective actions offer many advantages over individual actions. By bundling consumers’ common interests together, they make it possible to enforce them judicially. By means of collective actions, consumer protection associations give consumers a voice and a weight that they would often not have in this form in isolated proceedings because of their generally weaker position. Lastly, a collective action helps to enhance the status of the consumer at the procedural level and relieves him of the risk of costs in civil proceedings if he is unsuccessful, which may deter a consumer from individually asserting his rights just as much as a low value in an individual case, for which it would not be worthwhile for an individual to incur the expense. (17) The successful enforcement of rights by way of a collective action creates a just balancing of the interests of consumers and undertakings, ensures fair competition and shows that collective actions are just as necessary as individual actions in order to protect the consumer.
42. If no special provisions for this kind of action exist – such as the rule of interpretation set out in Article 5 of the directive (18) – such persons or organisations authorised to bring proceedings should, for the reasons stated above, rely on the case-law of the Court on Article 6(1) in order to prevent the use of unfair terms.
43. It follows from the above that a system for the legal protection of collective rights, as provided for in the Hungarian legal order, which makes use of collective actions, essentially accords with the requirements of Directive 93/13. However, this says nothing about whether that system as it is actually configured meets those requirements. This must be examined below.
3. The configuration of the collective action in detail
44. As is apparent from the 12th recital in its preamble, Directive 93/13 carries out only a partial and minimum harmonisation of national legislation concerning unfair terms. (19) Against that background, it cannot be assumed that the aim of the directive is to standardise collective actions in consumer protection cases. This does not, however, prevent it being held that Article 7(2) of the directive contains a partial harmonisation of the law on collective actions. (20)
45. The specific requirements for the organisation of the procedure point towards partial harmonisation. Apart from that, the possibility provided for in Article 7(2) of the directive for the Member States to permit collective actions in the public interest in their legal systems also furnishes indirect information on the way in which such a procedure should be structured, and especially on the legal effects that judgments by national courts must have, because only if certain requirements are met can such a system of protection achieve the objective of consumer protection effectively and adequately.
46. From the procedural point of view, the existence of such a collective system of protection means first that persons or organisations representing consumer interests should be entitled to apply for a judicial finding that the contested unfair terms are invalid and for their continued use in contracts to be prohibited. Article 7(2) therefore provides that national provisions should be enacted to permit them to apply to courts or administrative authorities. This provision means that they should have the power to bring judicial proceedings or apply to the competent authority. (21) In this way, they are granted a procedural status that enables them to defend the interests of third parties effectively and in an appropriate manner.
a) Legal effects of judgments against third parties
i) Principles of the in abstracto verification procedure under Article 7(2) of Directive 93/13
47. On the question of the legal effects that national judgments must have in order to take adequate account of the objective of consumer protection, the first point to note is that the key provision of Article 6(1) of Directive 93/13 stipulates that the term in question shall ‘not be binding on the consumer’. The directive therefore makes the legal consequence of a finding of the unfairness of the term binding on the Member States. The fact that a term is not binding on the consumer means, within the meaning of the directive, that the consumer cannot be bound legally by the unfair term. The obligations imposed on the consumer by such a term therefore have no binding legal effect from the outset. The non-binding nature of the term therefore exists ipso jure, and is not dependent on any judicial decision. Hence, the court simply finds that the provisions in question could not bind the consumer. (22)
48. The concept of ‘not binding’ itself has a variety of meanings and takes account of the fact that the further consequences of finding a term unfair are ultimately determined by national law. They may differ from one legal system to another. For that reason, in particular, Article 6(1) of Directive 93/13 uses a neutral concept. (23) This provision of the directive merely prescribes an outcome that the Member States must attain by implementing the directive, but without determining in detail whether the term in question is to be declared invalid or void. Instead, this is left to national law, which lays down the precise legal consequence. (24) The use of neutral terms by the EU legislature reflects the recognition of the diversity of systems and traditions of civil law within the European Union. (25)
49. It is debatable, however, to what extent the non-binding nature of unfair terms laid down in this provision of the directive can apply to the consumers affected in the event of a collective action. Here the fundamental problem arises that judicial decisions in a contract dispute under the procedural law of the Member States in principle have legal effects only in the relationship between the parties. (26) To interpret Article 6(1) of Directive 93/13 in the manner envisaged by the referring court in the first part of the question – namely as meaning that an unfair contract term cannot be binding on a consumer if a national court declares, in response to an action brought on behalf of consumers by a legally designated and duly authorised body, that an unfair term contained in a consumer contract is invalid – would be tantamount to extending the effect of a judicial decision to third parties. The question of the legal effects of such a finding on the legal relationship between the defendant seller or supplier and a third party not involved in the proceedings must be addressed, since Hungarian legislation provides for this possibility in Article 209/B(1) of the Civil Code.
50. Hitherto the Court of Justice has adopted a position solely on the meaning of Article 6(1) of Directive 93/13 in the context of individual actions, but it cannot be deduced from this that a judicial finding of unfairness cannot have legal effects for persons other than the parties to the proceedings. As I have already stated, (27) this central provision is not applicable only to individual cases but is a general provision with equal validity for the mechanisms for the collective protection of rights laid down in Article 7(2) of the directive.
51. However, in order effectively to achieve the objective of consumer protection in proceedings for collective judicial protection, the legal consequence of the non-binding nature of the term laid down in Article 6(1) of Directive 93/13 must also apply if the persons or organisations named in Article 7(2) of Directive 93/13 have brought proceedings in the interest of the consumers concerned, because otherwise a collective action would be of little benefit to consumers. It must not be forgotten that in abstracto verification, as an instrument of collective judicial protection, was designed to eliminate unfair terms ‘drawn up for general use’. These terms are therefore intended for use in a large number of consumer contracts. They can therefore be combated effectively only if the decision of the national court finding a particular term to be unfair is accorded fairly wide applicability. (28)
52. Moreover, the directive is silent as to the way in which a judicial finding of the unfairness of a contract term should have legal effects extending beyond the individual case. In the absence of more precise provisions at the level of EU law, it must be assumed that the Member States retain legislative powers in this field. That conclusion is also logical, if one considers that the requirements laid down in Article 7 of Directive 93/13 apply equally to judicial and administrative procedures, the form of which can differ markedly from one Member State to another. Moreover, such an approach accords with the principle of the organisational and procedural autonomy of the Member States recognised in the case-law of the Court, under which, in the indirect implementation of EU law, the Member States remain responsible for the creation and institutional form of the competent authorities and as a matter of principle apply their own national procedural and constitutional law. (29)
53. Given that the present case relates only to collective actions, I shall confine my remarks to possible approaches under civil law. A conceivable effective means, to mention but one example, would be to extend the legal effect of a court finding of unfairness delivered in an individual case, which would be compatible with Directive 93/13. (30) First, as the Court last ruled in Asturcom Telecomunicaciones, (31)in the absence of EU legislation in this area, the rules implementing the principle of res judicata are a matter for the national legal order, in accordance with the principle of the procedural autonomy of the Member States. (32) Secondly, extending the legal effect to third parties would be an appropriate way of rendering the terms non-binding for the contractual relationship in question. It is ultimately for the Member States to determine which method is most appropriate and effective in the conditions of their national legal system. To that extent, the Member States have a prerogative to assess the effectiveness of the method to be chosen.
54. Nevertheless, the Member States remain under an obligation to take other measures if under national law an instrument is definitively proven to be ineffective. (33) Moreover, it must be emphasised that the Member States’ scope for framing measures is by no means unlimited: in fact, the Member State may exercise its discretion only within the general limits of EU law, which ultimately means that excessive measures conflict not only with the protection of fundamental rights but also with the principle of proportionality under EU law. (34) The explicit reference to the criterion of ‘appropriateness’ in Article 7 of the directive with regard to the means chosen indicates that the principle of proportionality is a further important legal yardstick for assessing the compatibility of each means with EU law.
ii) Compatibility of an erga omnes effect of national judgments finding a term to be unfair
55. Having described the essential characteristics of an in abstracto verification procedure set out in Article 7(2), I shall now examine whether Directive 93/13 precludes a national provision such as that in question, which confers legal effect on findings of unfairness delivered by national courts not only for the parties to the judicial proceedings but also for every person (erga omnes) who concludes a contract with the seller or supplier.
56. To that effect, the question of the compatibility of that national provision with the criterion of ‘effectiveness’ must first be examined, while according the national legislature sufficiently wide discretion to determine its national law on civil procedure, as stated in the above considerations.
57. The judicial finding that a term classified as unfair is invalid for all consumer contracts concluded with the defendant seller or supplier contributes objectively to the prevention of the continued use of this term in contracts. The erga omnes effect of such a judgment eliminates the disputed term at a stroke from all contracts in which it was used, without individual consumers having to contest it before the courts. The finding that the term is invalid imposes one of the most profound legal consequences available under civil law. This ensures that the requirement of Article 6(1) of Directive 93/13 – a declaration that the disputed term is not binding on the consumer – is implemented. It can be assumed, not least in view of the considerable implications of such a judgment, that it will also have a deterrent effect on other sellers or suppliers wishing to use similar terms in contracts. The national provision at issue is therefore likely to contribute to consumer protection in the long term as well.
58. Consequently, the national provision in question meets the requirement of ‘effectiveness’ set out in Article 7(2) of Directive 93/13.
59. The national provision also constitutes an adequate means of preventing the continued use of unfair terms ‘in contracts concluded with consumers by [a seller or supplier]’ (Article 7(1) of the directive). In any event, there is nothing to indicate that this national provision interferes disproportionately with fundamental rights protected under EU law and could therefore be an inappropriate means of protecting consumers. In particular, sellers and suppliers who are not party to the proceedings leading to a judicial finding are not disproportionately subject to the effects of that judgment without the right to be heard, since under the national provisions reproduced in point 11 et seq. of this Opinion, in particular Article 209/B(2) of the Civil Code, it is to be assumed that the finding that the term is not binding affects only the defendant seller or supplier. The erga omnes effect of the judgment against him therefore does not apply indiscriminately to every other seller or supplier using a similar term but not involved in the proceedings that led to the finding that the term in question was not binding.
60. If that were the case, serious doubts would arise from the point of view of procedural law and fundamental rights: an erga omnes effect adversely affecting persons not party to the proceedings would be difficult to reconcile with the principles of a fair trial, particularly as such persons would be denied an opportunity to express their views on the accusation of using unfair terms in contracts before a judgment affecting them was delivered. The right to be heard, which is considered to derive from the principle of the rule of law and is one of the general principles of EU law recognised in case-law, (35) would not be adequately safeguarded if an erga omnes effect applied indiscriminately to persons not party to the proceedings and the national provisions in question would thus not be appropriate within the meaning of Article 7 of the directive. On the one hand, it must be emphasised in this connection, however, that the question of compatibility with fundamental rights enshrined in EU law arises only to the extent that an erga omnes effect of national judgments is one of the means that fall within the scope of Directive 93/13. On the other hand, there appears to be no objection to an erga omnes effect in favour of persons who are not party to the proceedings. Since there is no suggestion that fundamental procedural rights have been infringed, at least so far as can be judged from the information provided to the Court, for the purposes of the remainder of this Opinion it must be assumed that the criterion of ‘appropriateness’ is also fulfilled.
61. It follows from all the above considerations that Article 6(1) in conjunction with Article 7(1) and (2) of Directive 93/13 does not preclude a national provision under which an unfair contract term used by a particular seller or supplier is not binding on the consumer if, in an action brought by a body appointed by law and competent for that purpose, a national court declares an unfair term which has become part of a consumer contract to be invalid.
iii) Compatibility of actions for injunctions
62. In the second part of the question, the referring court essentially seeks to know whether Directive 93/13 precludes a national provision granting a body appointed by law and competent for that purpose the right to bring an action to prohibit the use of terms which a court has previously found to be unfair.
63. It must first be noted that Directive 93/13 – leaving aside the possibility of prior verification of the general conditions obtaining in individual economic sectors mentioned in the 24th recital in the preamble thereto – does not prevent the Member States from organising their procedural law in such a way that preventive measures to prohibit the use of unfair terms in contracts can be ordered. Indeed, the opposite is the case, as can be seen from the interpretation of Article 7(2) of the directive.
64. First, this provision of the directive lays down that persons or organisations must have the right to take action before the courts not only for a decision as to whether contractual terms are unfair but also so that the courts ‘can apply appropriate and effective means to prevent the continued use of such terms’. In view of the specific legislative context of this provision, the indeterminate legal concept of ‘means’ must be understood to include any judicial or administrative decision for which the national legal system in question provides in its procedural law and which can be adopted on application or of the court’s own motion to protect consumers. It is clear from the very wording of this provision of the directive that the legislature distinguishes between two mutually complementary categories of collective actions. The first category includes the procedure for a finding that a term is unfair, while the second encompasses all other ‘appropriate and effective means’ to be determined by the Member States.
65. Secondly, it is clear from this provision of the directive that the measures to be taken are to be aimed at unfair terms ‘drawn up for general use’. Hence, it is solely a question of whether the author drafted the term with a view to its possible use. It is therefore not necessary for general use to be actually or certainly planned. (36) The purpose of this provision of the directive is to give persons who might be affected the possibility of legal protection against future infringement of their rights. This interpretation is confirmed by the way in which the provision in question is worded in several language versions, (37) as it indicates that preventive measures should be taken to prevent the seller or supplier from using a particular unfair term in future contracts.
66. In the light of these facts, the introduction of actions for injunctions appears not only permissible under EU law but in fact a procedural necessity in order to achieve the objective of the directive. (38) The collective legal remedy which Article 7 of Directive 93/13 requires of the Member States would be incomplete in the light of the meaning and purpose of this provision if it merely permitted the elimination of an unfair term existing at a given point in time without providing for the possibility of prohibiting the general use of this term and ordering measures to enforce such a prohibition in the event of contravention.
67. Aware of this need, the EU legislature adopted Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests. (39) The purpose of this directive, which repealed its much amended predecessor Directive 98/27/EC (40) with effect from 29 December 2009, is to approximate the laws, regulations and administrative provisions of the Member States relating to actions for injunctions aimed at the protection of the collective interests of consumers included in the directives listed in Annex I, with a view to ensuring the smooth functioning of the internal market. It should be emphasised in this connection that the directives listed in Annex I to this directive include Directive 93/13, which is of relevance for the purposes of the present proceedings. Directive 2009/22 complements the procedural legal protection provided by Article 7(2) of Directive 93/13. (41)
68. Under Article 3 of Directive 2009/22, ‘any body or organisation which, being properly constituted according to the law of a Member State, has a legitimate interest in ensuring that the [consumer protection] provisions … are complied with’ is qualified to bring an action. Since this provision corresponds to a large extent to Article 7(2) of Directive 93/13, it is to be interpreted as meaning that consumer protection organisations such as the applicant in the main proceedings are in principle entitled to bring an action for an injunction, provided that they meet the national requirements in this regard.
69. If the national legislation in question, as set out in the second part of the question, is examined in the light of the above remarks, it does in any event objectively meet the requirement of ‘effectiveness’ in that it permits persons or organisations with a legitimate interest in protecting the consumer to apply for a court finding that a term is invalid and to obtain an injunction against the particular seller or supplier even before it uses the term classified as unfair in contracts. The early intervention of the national court responsible for in abstracto verification ensures that the term in question is not incorporated into contracts with consumers. Moreover, the possibility of establishing the invalidity of a term and applying this legal consequence for the future and for all contracts concluded by the seller or supplier also offers the advantage that it prevents the repeated use of a term that has already been classified as unfair. In particular, if, as is often the case under procedural law, contraventions against an injunction issued by the court were subject to a substantial penalty, the action for an injunction would be all the more incisive as a weapon against unfair terms.
70. For the sake of completeness, it must be pointed out that the national legislation in question makes no provision for a procedure comparable to a procedure for prior authorisation within the meaning of the 24th recital in the preamble to Directive 93/13, since the use of a particular term is not dependent on judicial or administrative approval, for example. Rather, the decision to institute proceedings for in abstracto verification lies solely with the persons or organisations entitled to bring proceedings listed in Article 7(2) of Directive 93/13.
71. Nor is there evidence that this national legislation interferes disproportionately with fundamental rights protected under EU law and hence could ultimately contravene the ‘appropriateness’ requirement. The concerns expressed in points 59 and 60 of this Opinion about an erga omnes effect for sellers or suppliers not involved in the proceedings none the less apply equally here. Since this criterion is also satisfied, it can be assumed that the national legislation is compatible with Directive 93/13.
72. The answer to the second part of the question must therefore be that Article 6(1) in conjunction with Article 7(1) and (2) of Directive 93/13 does not preclude national legislation under which, where an order which benefits consumers who are not party to the proceedings is made, or the application of an unfair standard contract term is prohibited, in an action in the public interest, an unfair term which has become part of a consumer contract is not binding as regards the future for the consumers concerned in relation to the seller or supplier against whom the action was brought.
iv) Refund of costs and expenses charged
73. A further issue, which admittedly is not included in the questions referred for a preliminary ruling but to which it is clear from the statements in the order for reference that the referring court seeks an answer, concerns the compatibility with Directive 93/13 of national legislation under which consumers who are not party to proceedings may claim a refund of the costs and expenses charged by the supplier of services under unfair terms. The referring court formulated this question to the effect that it wishes to know whether consumers who are not party to proceedings can rely on the provisions of Directive 93/13 in order to claim such a refund.
74. In my opinion, this question, stated in this way, is to be answered in the negative, because Article 6(1) of Directive 93/13 merely lays down that an unfair term must ‘not be binding’ on the consumer, as provided for under national law. This means that it is left to the Member States to implement the provisions regarding the non-binding nature of terms in their territory. However, the directive does not cover consumers’ possible claims for refund of payments improperly charged by the seller or supplier because of the partial invalidity of the contract with the consumer. The object of refund claims is to reverse financial transfers that had legal effect but were unjustified. In this way, financial relationships are brought into line with the legal situation consistent with the law. Claims for refunds therefore grant much more than Article 6(1) of Directive 93/13 actually intends, since the legislative purpose of this provision is merely to ensure that unfair contract terms do not impose any obligations on the consumer.
75. The answer to this question is no different from the viewpoint of the requirements of collective legal protection, to which this provision of the directive is also applicable because of its general validity. It is true that Article 7(1) of the directive requires adequate and effective means to be provided in order to prevent the use of unfair terms, but it does not require any adjustment of financial relationships to the legal situation consistent with the law. Instead, this is left to national legislation.
76. Given that national legislation grants the consumer more rights than are provided for in Directive 93/13, it remains for me to examine the applicability of Article 8 of the directive. This provision permits Member States to adopt or retain the most stringent provisions compatible with the Treaty in the area covered by the directive, to ensure a maximum degree of protection for the consumer. The legal recognition of a right to refund of costs and expenses charged by the service provider on the basis of unfair terms undoubtedly serves to protect consumers. It is also a national provision affecting the field of unfair terms in consumer contracts covered by Directive 93/13. Since there is no doubt as to its compatibility with primary law, this national provision meets the requirements for the authorisation granted under Article 8 of the directive to be exercised in accordance with EU law. Consequently, Directive 93/13 does not preclude such a national provision.
B – The second question referred
77. The second question referred, when interpreted as to its meaning, can be divided into two thematic parts. First, the referring court seeks to establish whether a contract term in which the seller or supplier provides for unilateral amendment of the contract terms without explicitly describing the method by which prices vary or giving valid reasons in the contract is to be regarded as unfair within the meaning of Directive 93/13. If the answer to this is in the affirmative, the referring court then wishes to know whether national law may provide for this contract term to be invalid ipso jure. In the interests of clarity, I shall separate these two topics and deal with them in turn.
1. Assessment of the unfair nature of the contested term
a) Content of the substantive assessment
78. Before assessing whether the term is unfair, the national court must ascertain whether it is even open to substantive assessment, given Article 4(2) of Directive 93/13. Reference must be made in this regard to Caja de Ahorros y Monte de Piedad de Madrid, (42) in which the Court made clear that this article does not define the scope of Directive 93/13 but rather is concerned with ‘establishing the detailed rules and the scope of the substantive assessment of contract terms which have not been individually negotiated and which describe the essential obligations of contracts concluded between a seller or supplier and a consumer’. (43) Under Article 4(2), assessment of the unfair nature of the terms ‘shall relate neither to the definition of the main subject-matter of the contract nor to the adequacy of the price and remuneration, on the one hand, as against the services or goods [to be supplied] in exchange, on the other, in so far as these terms are in plain intelligible language’.
79. The fact that the defendant in the main proceedings charged its customers for the cost of money orders could, at first sight, lead one to assume that the practice in question affects only the price, one of the essential obligations of the contract, which under Article 4(2) of Directive 93/13 can be subject to substantive assessment only if the term in question is not expressed in plain intelligible language. However, this would be to overlook the fact that the dispute hinges less on the amount of the cost itself than on the entitlement of the defendant in the main proceedings unilaterally to amend the contract terms for particular services. The question raised is thus more complex than it initially appears. In reality, it is necessary to assess, on the basis of Directive 93/13, a particular method of contract amendment which may significantly prejudice the consumer. The fact that Article 3(1) in conjunction with point 1(j) of the annex lists a similar situation should be seen as an indication that the intention of the legislature was to subject the method of unilaterally amending contracts to closer scrutiny on the basis of Directive 93/13. The scope of the provision and its consequences for the consumer militate in favour of recognising the need for substantive assessment. Against this background, the requirements for the term to be clear and intelligible, which determine whether a substantive assessment may be carried out and compliance with which must be ascertained according to the case-law of the competent national court, (44) should not be set too low.
b) Indicative nature of the list and division of powers
80. As regards the central question of the classification of the contested term itself as unfair, it should be noted that in referring to concepts of good faith and significant imbalance between the rights and obligations of the parties Article 3 of Directive 93/13 merely defines in a general way the factors that render unfair a contractual term that has not been individually negotiated. (45) In that context, the annex to which Article 3(3) of the directive refers contains only an indicative and non-exhaustive list of terms (46) that may be regarded as unfair. (47) A term appearing on the list need not necessarily be considered unfair and, conversely, a term that does not appear on the list may none the less be regarded as unfair. (48) Hence, the mere fact that a term appears on the list does not necessarily mean that it is also unfair.
81. Despite the fact that according to the case-law such a circumstance is indicative, an independent and detailed assessment is necessary to determine whether the contract term in question is unfair. That assessment is made under Article 4(1) of Directive 93/13, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which the term is dependent.
82. In this connection, it should be noted that the Court of Justice has consistently ruled that it is for the national court to decide whether a contractual term satisfies the requirements for it to be regarded as unfair under Article 3(1) of Directive 93/13. (49) For the purposes of the present reference for a preliminary ruling, this means – as all the parties to the proceedings have pointed out in their written observations – that it is for the national court and not for the Court of Justice to assess the unfairness of the term at issue.
83. However, it is also clear from the case-law that, in the context of its jurisdiction under Article 267 TFEU to interpret EU law, the Court may interpret general criteria used by the EU legislature in order to define the concept of unfair terms. As stated most recently in Pénzügyi Lízing, (50) this interpretative jurisdiction also extends to the terms contained in the annex to Directive 93/13. The Court cannot, however, rule on the application of those general criteria to a particular term, which must be considered in the light of the particular circumstances of the case in question. (51)
84. It may be deduced from the question referred that the referring court clearly assumes that the contested term broadly corresponds to the situation referred to in point 1(j) of the annex. There can be no objection to this classification on the basis of the factual information available to the Court. As is apparent from the case-file, (52) the defendant in the main proceedings introduced the contested business practice of charging for the cost of money orders by amending its GBC in stages between June and October 2008. All that remains unclear is whether the new GBC applied only to new contracts or to all customers. In the absence of more information, it must be assumed in the remarks that follow that the latter obtained. A realistic consideration of the facts also points in this direction, particularly as it can be assumed that a seller or supplier is more likely to prefer his GBC to apply across the board to all contracts with his customers. Seen in this light, the main proceedings do indeed relate to a subsequent amendment of contract terms of the kind described in point 1(j) of the annex.
85. In accordance with the division of powers in preliminary ruling proceedings, the Court of Justice will only interpret the cited provisions of the directive on the basis of the classification made by the referring court, although in the interest of providing a useful answer to the question referred it will also be necessary to take account of the circumstances in the main proceedings.
c) Interpretation of the pertinent term
86. The point of departure for the interpretation is the central provision of Article 3(1) of Directive 93/13, under which a contractual term which has not been individually negotiated is to be regarded as unfair if, ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’. If, as in the main proceedings, the seller or supplier reserves the right to amend important aspects of the contract unilaterally, including the price and costs of performing the contract, in certain circumstances this can lead to a situation in which the consumer is at the mercy of the seller or supplier unless he is granted the exceptional right to object to the amendment in certain cases. The more unspecific the term in question with regard to the aspects of the contract that may be amended unilaterally by the seller or supplier, the greater the risk that the consumer will be placed at a disadvantage. Such a provision may result in a substantial shift in the rights and obligations arising under the contract, to the detriment of the consumer, contravening the requirement of good faith. This is particularly true where, as in the present case, the seller’s or supplier’s power to amend terms relates to the main subject of the contract and not solely to other aspects of it. It was, in particular, on account of the risks that such a situation harbours for the consumer that the authors of the directive provided for it in general terms in point 1(j) of the annex.
87. However, terms that create a right to amend contracts unilaterally are not automatically unfair, but only those that permit amendments without a valid reason or which do not state the reason for the amendment in the term itself. The type of term described in point 1(j) of the annex is based on the assumption that the consumer is sufficiently protected if from the outset he is informed of the possibility of and the conditions for amendment of the contract. It does not have to be completely impossible to comply with every facet of the contractual description of the services for there to be a valid reason, as can be deduced a contrario from the criterion of serious grounds stated in point 1(g), in particular. Any sufficiently important legal reason for possible amendment of the description of the services pursuant to the term is sufficient. Hence the deciding factor is the existence of a legally overriding reason after assessment of the interests involved. The reason for the amendment must be explicitly stated in the term. If the reason is not stated, the term is typically deemed unfair on that ground alone. The description of the reason must be plain and intelligible to the consumer. This obligation stems from Article 5 of Directive 93/13, under which all terms in writing must always be drafted in plain, intelligible language. According to the wording and meaning of the type of term described in point 1(j) of the annex, for that purpose it is not sufficient that the term merely repeats the general concept of a valid reason. Rather, the possible reason must be stated with sufficient clarity. (53) As is directly apparent from the question referred, this requirement is not met in the case to which the main proceedings relate, so that there is certainly evidence for classifying the term as unfair. However, the final assessment lies with the competent national court.
2. Invalidity ipso jure
a) Consequences of a declaration of invalidity under national law
88. With regard to the final question whether national law may provide for an unfair contract term to be invalid ipso jure, I wish to refer first to my remarks in point 47 et seq. of this Opinion.
89. As I have pointed out in that section, Article 6(1) of Directive 93/13 provides merely that the term in question shall ‘not be binding on the consumer’, while the consequences of a finding that it is unfair are determined by national law. This provision of the directive only prescribes a particular outcome, the achievement of which the Member States must ensure by implementing the directive, but it does not lay down in detail whether the term in question is to be declared invalid or void. That is left to national law. Such a provision also corresponds to the legal nature of the directive as an instrument for the harmonisation of legislation, which under Article 288 TFEU is binding as to the objective to be attained, while it is left largely to national bodies to choose the form and means of doing so.
90. Against this background, the concept of invalidity is fundamentally compatible with Directive 93/13, as in accordance with the purpose of Article 6(1) it prevents an unfair contract term from producing legal effects to the detriment of the consumer. (54)
b) The ipso jure effect of invalidity
91. On the question whether national law can provide for such a term to be invalid ipso jure it is necessary to refer to the case-law of the Court of Justice on Article 6(1) of Directive 93/13, which lays down important requirements for national law on transposition in order to ensure that it satisfies the objective of consumer protection.
92. I wish to draw attention first to Océano Grupo Editorial and Salvat Editores, (55) in which the Court held that ‘the aim of Article 6 of the directive … would not be achieved if the consumer were himself obliged to raise the unfair nature of such terms[, and that] effective protection of the consumer may be attained only if the national court acknowledges that it has power to evaluate terms of this kind of its own motion’. (56) Secondly, I wish to point to Pannon GSM, (57) in which the Court clarified this case-law by stating that ‘Article 6(1) of the directive cannot be interpreted as meaning that it is only in the event that the consumer has brought a specific application in relation to it, that an unfair contract term is not binding on that consumer.’ The Court justified this on the ground that ‘such an interpretation would rule out the possibility of the national court assessing, of its own motion, in the context of examining the admissibility of the action which is before it, and without a specific application from the consumer to that effect, the unfairness of a contractual term’. (58)
93. As I have already stated in my Opinion in Pénzügyi Lízing, (59) this case-law is to be interpreted as meaning that first there is an obligation under EU law for the national court to undertake an examination of unfair terms of its own motion and secondly that a contractual term must become ineffective ipso jure. (60) Only if these requirements are met can it be ensured that the consumer need take no action for the term not to be binding on him.
94. The Member States are thus free to implement in their legal system the requirement that a term classified as unfair is not binding on the consumer in such a way that it is regarded as invalid ipso jure.
C – Summary of conclusions
95. The essential conclusions from the above examination of the questions referred for a preliminary ruling can be summarised briefly as follows.
96. Examination has shown that Directive 93/13 not only permits the adoption of collective actions in national legal systems but regards it as an ‘effective’ and ‘appropriate’ means of collective legal protection under Article 7(2) ‘to prevent the continued use’ of unfair terms in contracts. (61)
97. Although the general prescriptions set out in Article 7 of Directive 93/13 and the minimum harmonisation approach adopted by the EU legislature allow the Member States wide discretion in the organisation of their procedural law, certain requirements must be met in order to ensure that the legislative objective of consumer protection is achieved. This includes the requirement that once a contract term has been classified as unfair it continues to be ‘not binding’ on the consumers concerned under Article 6(1). (62) A provision that gives legal effect to national courts’ findings of unfairness of a term not only for the parties to the proceedings but to all persons (erga omnes) who concluded contracts with the seller or supplier using the term meets this objective in any event. (63) Actions for injunctions, the essential characteristics of which are governed by Directive 2009/22, are a procedural necessity for achieving the objective of Directive 93/13. (64)
98. Furthermore, I have established that although claims by consumers for the refund of costs and expenses charged as a result of the use of an unfair contract term are not governed by Directive 93/13, that directive does not in principle preclude a national provision in that regard. (65) Lastly, the examination I have conducted has shown that although there are compelling indications for assuming that the contested term corresponds to the type of term described in point 1(j) of the annex and meets the criteria for being classified as unfair within the meaning of Article 3(1) of Directive 93/13, it remains for the national court to rule definitively on the unfair nature of the term. (66) If the term is ruled to be unfair, Directive 93/13 does not prevent its being declared invalid ipso jure under national law. (67)
VII – Conclusion
99. In the light of the foregoing considerations, I propose that the Court’s answer to the questions referred by the Pest Megyei Bíróság should be as follows:
(1) Article 6(1) and Article 7(1) and (2) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts are to be interpreted as meaning that they do not preclude a national provision under which an unfair contract term used in contracts by a particular seller or supplier and which a national court has ruled, in an action brought in the public interest by a body appointed by law and competent for that purpose, to be invalid or not binding has no legal effect in any consumer contract concluded by that seller or supplier.
(2) Article 6(1) and Article 7(1) and (2) of the directive grant consumers who are not party to proceedings no right to the refund of costs resulting from the unfairness of a term if the unfairness of a term has been determined in other proceedings not affecting them. However, Article 8 of the directive does not preclude a national provision granting consumers a right to refund in such a case.
(3) A contract term in which a seller or supplier provides for a unilateral amendment of the general business conditions without explicitly describing the method by which prices vary or giving valid reasons in the contract falls within the category described in point 1(j) of the annex referred to in Article 3(3) of the directive. However, it remains for the national court to assess on a case-by-case basis whether the term in question is unfair. The directive does not preclude a national provision under which such a term is invalid ipso jure.