Jurisdiction for internet consumer contracts

According to the European Union Regulation on jurisdiction in civil and commercial matters, actions against persons domiciled in a Member State must normally be brought before the courts of that State. Furthermore, according to this Regulation, in disputes concerning a contract, the action may be brought before the court of the place where the obligation under the contract has been or would have to be performed.

If, on the other hand, there is a consumer contract, special rules apply to protect the consumer. Where the trader dealing with the consumer has 'directed' his activity towards the Member State in which the consumer resides, the consumer may bring any action in the court of the Member State in which he himself resides and, conversely, may be sued only in that State. The two disputes on which today's judgment of the Court of Justice is based concern the question whether a trader 'directs' his activity, within the meaning of the regulation, to the Member State of residence of the consumer when he uses a website to communicate with consumers.

Case C-585/08
Mr. Pammer, who lives in Austria, wanted to take a cargo ship trip from Trieste (Italy) to the Far East. He booked such a voyage with the shipping company Karl Schlüter, established in Germany, through the intermediary of a German travel agency specializing in the sale of cargo ship voyages on the Internet. However, Mr. Pammer refused to embark on the voyage because, in his opinion, the conditions on board did not correspond to the description the travel agency had given of the voyage. He therefore demanded a refund of the travel price he had already paid.

As the Karl Schlüter shipping company only refunded him part of this price, Mr Pammer brought an action before an Austrian court. The Karl Schlüter shipping company raised the objection that the Austrian courts did not have jurisdiction. It justified this on the grounds that it did not carry out any professional or commercial activity in Austria.

Case C-144/09
Mr Heller, who lives in Germany, booked several rooms for a one-week stay at a hotel located in Austria, the Hotel Alpenhof. He made this booking by e-mail using an e-mail address provided on the hotel's website, which he visited. Mr. Heller found fault with the hotel's services and left without paying the hotel bill. The hotel then sued him in an Austrian court for payment of the invoice price. Mr. Heller raised a plea of lack of jurisdiction against this on the grounds that, as a consumer resident in Germany, he could only be sued before the German courts.

The Austrian Supreme Court, before which these two disputes were brought, asked the Court of Justice of the European Union for a preliminary ruling on the question whether the fact that an undertaking established in one Member State offers its services via the internet also constitutes a 'direction' of its activities towards other Member States. If this question is answered in the affirmative, consumers residing in those States who use the services of the undertaking would benefit from the more favourable jurisdiction rules of the Regulation in the event of a dispute with the undertaking.

In today's judgment, the Court holds that the mere use of a website by a trader for the purpose of transacting business does not in itself mean that the trader is 'directing' his activity towards other Member States, which would lead to the application of the consumer-protection jurisdiction rules of the regulation. Rather, the application of these rules in relation to consumers of other Member States requires that the trader has expressed his intention to establish business relations with consumers of other Member States.

In this context, the Court cites various indications that the trader intended to do business with consumers residing in other Member States. Such indications include all manifest expressions of the trader's intention to attract consumers from other Member States, such as the offering of its services or goods in several named Member States or the expenditure by the trader on internet referencing services provided by search engine operators in order to facilitate access to its website by consumers residing in other Member States.

However, evidence which is not so obvious, combined where appropriate, may also demonstrate the existence of an activity 'targeted' at the consumer's Member State of residence. Such evidence may include the international nature of the activity in question, such as certain tourist activities, the indication of telephone numbers with international dialling codes, the use of a top level domain name other than that of the Member State in which the trader is established, e.g. ".de", or the use of neutral top level domain names such as ".com" or ".eu", the reproduction of directions from one or more other Member States to the place where the service is provided, or the mention of an international clientele composed of customers residing in different Member States, in particular through the reproduction of customer reviews.

Also, if the website in question allows consumers to use a language or currency other than the one commonly used in the trader's Member State, this may be an indication of cross-border activity by the trader.

However, such indications do not include the mere indication of the trader's electronic or geographical address on the website or of his telephone number without an international dialling code, since such indications do not reveal whether the trader directs his activity towards one or more Member States.

The Court thus concludes that it will be for the Austrian court to determine whether it can be inferred from the website and the overall activity of the traders in question that they intended to do business with Austrian consumers (in the case of Case C-585/08) or with German consumers (in the case of Case C-144/09) in the sense that they were prepared to conclude a contract with those consumers.

Judgment in joined cases C-585/08 and C-144/09
Peter Pammer v Reederei Karl Schlüter GmbH & Co. KG and Hotel Alpenhof GesmbH v Oliver Heller

Source: ECJ press release

Goldberg Attorneys at Law 2010
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist attorney for information technology law (IT law)
E-mail: info@goldberg.de