Promoting cross-border trade

One of the major setbacks experienced by consumers when purchasing a product from another member state relates to the fact that it might not be easy for them to exercise their legal rights against the foreign trader should things go wrong.

While e-commerce continues to grow, it remains largely domestic- Mariosa Vella Cardona

Over the years, the European Commission has set up and launched two networks with the objective of ensuring that consumers can avail themselves of the necessary assistance in asserting their legal rights. The European Consumer Centres Network, known as ECC-Net, gives information and advice on problems encountered by consumers when shopping across borders and intervenes when issues arise.

A more specialised network, FIN-NET, is focused on cross-border financial disputes. It seeks to facilitate out of court resolution of disputes when the consumer and the financial services provider, be it a bank, an insurance company or other entity, hail from different EU countries. It offers the consumer an alternative way to solve disputes quickly, cheaply and easily, and serves to reduce the need of filing action in court.

Another way whereby the EU has sought to boost consumer confidence in the single market is by ensuring that the consumer has easy access to the courts of law should she/he decide to file court proceedings. EU law takes into consideration the geographical proximity of courts to the consumer when making provision for jurisdiction. A consumer may therefore sue a trader with whom he/she has concluded a deal, in the consumer’s national courts, even if the said trader is domiciled in another member state. This right is subject to two conditions.

The trader must, primarily, pursue commercial or professional activities in the member state in which the consumer resides or, by any means such as, via the internet, direct such activities to that member state and, secondly, the contract at issue must fall within the scope of such activities.

A court’s jurisdiction in a cross-border trade dispute was the subject of a recent ruling given by the Court of Justice of the European Union. An Austrian resident filed an action against a German company before the Austrian courts, seeking the rescission of a contract of sale for a vehicle purchased from the German company. The Austrian consumer had come across the offer for the vehicle by searching on the internet but went to Germany in order to sign the contract of purchase and to take delivery of the vehicle.

On her return to Austria, she discovered that the vehicle was defective and since the German company refused to repair the vehicle, she decided to file legal proceedings in the Austrian courts. The German company refused to accept the jurisdiction of the Austrian courts. The question arose as to whether, in terms of EU law, it was necessary for the contract to be concluded at a distance for the consumer to able to sue a foreign trader in the courts of the consumer’s own member state. A preliminary reference was therefore made by the Austrian courts to the CJEU requesting guidance on the matter.

The CJEU observed that the consumer’s right of bringing proceedings before the courts of his/her own member state against a trader domiciled in another member state, is not subject to the condition that the contract must have been concluded at a distance. The court continued to explain that, in such cases, there are only two conditions which need to be satisfied for a consumer to be able to assert such a right. The trader in question must pursue commercial or professional activities in the member state of the consumer’s domicile or, by any means, directs such activities to that member state and the contract at issue must fall within the scope of such activities.

If these conditions are satisfied, then the consumer is free to file legal proceedings in his/her own country even if the actual contract itself was not concluded at a distance but signed in the member state of the trader. Indeed, the court continued to explain that the establishment of contact at a distance, the reservation of goods or services at a distance and the actual conclusion of a contract at a distance, are all indications that the contract in question is connected with the trader’s activity as directed to the consumer’s country of domicile. The fact that the consumer travelled to the trader’s member state to sign the contract does not therefore prevent the courts of the consumer’s member state from having jurisdiction.

Despite the numerous efforts on the part of the European Commission to promote cross-border trade, the majority of EU consumers are still reluctant to partake of the advantages offered by the single market and remain diffident in effecting cross border purchases. Indeed, recent statistics show that while e-commerce continues to grow, it remains largely domestic despite the clear potential in terms of choice and savings when purchasing across borders.

Such interpretations of EU law by the ECJ certainly serve to strengthen the concerted efforts being made by the European Commission to promote cross-border trade by equipping the consumer with more and more tools to be able to participate more confidently and actively in the EU’s single market.

mariosa@vellacardona.com

Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is the deputy chairman of the Malta Competition and Consumer Affairs Authority as well as a member of the National Commission for the Promotion of Equality.