The Brussels I Regulation (No 44/2001)

Section 4 Jurisdiction over consumer contracts

Also consumers are seen as a weaker party who, on the field of international jurisdiction, need protection against the stronger entrepreneur with whom they have concluded a contract. Section 4 of Title II BR I, therefore, encloses specific rules for jurisdiction in matters relating to consumer contracts (Article 15 BR I). While the consumer may sue the other party to the contract not just before the court of the State in which the other party is domiciled, but also before the court of the consumer’s own domicile, the other party may bring an action only in the courts of the State bound by the Regulation in whose territory the consumer is domiciled (Article 16 BR I). The Regulation permits an agreed choice of forum, but only after the dispute between the parties has arisen, or if it allows the consumer to bring proceedings additionally in other courts, or if the choice of forum agreement confers jurisdiction on the courts of a State in which the consumer and the other party both have their domicile or habitual residence at the time of the conclusion of the contract, provided that such an agreement is not contrary to the law of that State (Article 17 BR I). For these provisions, therefore, please refer to the reports of Jenard, pp. 33-34 and Schlosser, paragraphs 159-161.

One has to observe that the European Court has stressed several times that the special system established under Section 4 was inspired solely by the concern to protect the consumer, as the party deemed to be economically weaker and less experienced in legal matters than the other party to the contract, therefore as the party who is in need of protection, his economic position being one of weakness in comparison with professional entrepreneurs by reason of the fact that they are private final consumers and are not engaged, when buying the good or service, in trade or professional activities (ECJ 21 June 1978 'Bertrand v Paul Ott KG' (Case 150/77). So the idea of Section 4 is not to discourage consumers from suing by being compelled to bring their action before the courts in the Member State in which the other party to the contract is domiciled (ECJ 19 January 1993 ‘Shearson Lehmann Hutton Inc.’ Case C-89/91, ECJ 3 July 1997 ‘Benincasa v Dentalkit’, Case C-269/95, ECJ 27 April 1999 ‘Hans-Hermann Mietz v Intership Yachting Sneek BV’, Case C-99/96). This protection should not be extended to persons for whom that protection is not justified (ECJ 19 January 1993 ‘Shearson Lehmann Hutton Inc.’, Case C-89/91), 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 (ECJ 20 January 2005 ‘Johann Gruber v Bay Wa AG’, Case C-464/01).

The jurisdiction conferred by Section 4 is substituted for that conferred by Sections 1 and 2 (Proposal 2001 C 376E / 1-17). This, again, means that in matters relating to consumer contracts, as defined under the Brussels I Regulation, only the provisions of Section 4 are decisive to determine international jurisdiction, and not the general rules laid down in Sections 1 and 2 of the Brussels I Regulation. These last provisions have no meaning at all, with the exception of Article 4 and Article 5, point (5) BR I, because Article 15, paragraph 1, BR I explicitly states that these Articles remain fully applicable in matters relating to consumer contracts. All provisions of Section 4 of Chapter II of the Brussels I Regulation must be interpreted uniform and independent of the national laws of the Member States to ensure a correct and harmonious application (ECJ 21 June 1978 'Bertrand v Paul Ott KG' , Case 150/77, ECJ 19 January 1993 ‘Shearson Lehmann Hutton Inc.’ Case C-89/91, ECJ 3 July 1997 ‘Benincasa v Dentalkit’, Case C-269/95 and ECJ 27 April 1999 ‘Hans-Hermann Mietz v Intership Yachting Sneek BV’, Case C-99/96).

Where a contract qualifies as a consumer contract, questions concerning jurisdiction over disputes in regard thereof have to be answered on the basis of Section 4. The general rules of Section 1 and 2 remain inapplicable. If a consumer contract is not covered by Section 4, for instance because it is another contract than for the sale of goods on instalment credit terms or on any other form of credit and it does not comply with the requirements of Article 15, paragraph 1, under (c), BR I, then Section 1 and 2 stay applicable in full. Where a contract between a consumer and a commercial counterparty is to be seen as a more special contract that is more specifically regulated in the Brussels I Regulation, Section 4 doesn’t apply either. Insurance contracts (Section 3), individual employment contracts (Section 5) and disputes based on contracts falling within the scope of exclusive jurisdiction (Article 22 BR I) are consequently solely dealt with by the special provisions issued for these matters, and not by Section 4 of Chapter II of the Brussels I Regulation.

If the contract qualifies as a consumer contract within the meaning of Section 4, jurisdiction has to be determined exclusively on the basis of Article 15, Article 16 and Article 17 BR I. Nevertheless, Article 15 BR I points out that Article 4 and Article 5, point (5), BR I are still relevant in that event.

Article 4 BR I deals with the situation that the defendant is not domiciled in a Member State. In that case jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23 BR I, be determined by the law of that Member State. So, except for Articles 22 and 23 BR I (exclusive jurisdiction), the Brussels I Regulation plays no part in these circumstances. The question whether the seised court may assume jurisdiction then has to be answered by the national rules of private international law of the court seised.

The application of Article 5, point (5), BR I has to be seen in conjunction with Article 15, paragraph 2, BR I. Both relate to situations in which a consumer has entered into a consumer contract with a party through the intervention of a branch, agency or other establishment of that party in one of the Member States. Where that opposite party itself is not domiciled within the European Union, jurisdiction would normally be dealt with by Article 4 BR I. Article 15, paragraph 2, BR I, however, makes clear that, where a consumer has entered into a contract with a party who is not domiciled in the Member State, but who has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of that branch, agency or establishment, be deemed to be domiciled in that Member State. Consequently, the rules of Section 4 may be applied to such party (entrepreneur) as if he was domiciled in the Member State where his branch, agency or other establishment is located from which the consumer contract with this particular consumer was concluded. When the consumer has entered into a consumer contract with a party who is domiciled in one of the Member States, but through intervention of one of the branches, agencies or other establishments of that party in another Member States, Article 5, point (5), BR I comes to surface. Next to the provisions of Section 4, that remain applicable as far as it concerns matters relating to consumer contracts, the consumer may in addition turn to Article 5, point (5), BR I as regards disputes arising out of the operations of a branch, agency or other establishment of the opposite party in another Member State than where that party himself has his domicile. It provides the consumer, in that case, an additional forum, namely the courts for the place in which the branch, agency or other establishment is situated from which the consumer contract with a party, domiciled in another Member State, was concluded.

See also:

• Section 4 Jurisdiction in matters relating to instalment sales and loans (Jenard 1968)
• Section 4 Jurisdiction over consumer contracts (principles) (Schlosser 1979)
• Consumer Contracts (Ervigenis 1986)
• Consumer Contracts (Pocar 2007)

Article 15 of the Brussels I Regulation

Index Article 15

• Jurisdiction in matters relating to consumer contracts [Article 15 BR I]
  • Consumers and non-consumers [Article 15(1) BR I]
  • Types of consumer contracts falling within the scope of Section 4 [Article 15(1)(a)(b)(c) BR I]
• A branch, agency or other establishment within the European Union [Article 15(2) BR I]
• Excluded contracts of transport [Article 15(3) BR I]

Jurisdiction in matters relating to consumer contracts [Article 15 BR I]

In order to qualify as consumer contract, the agreement must enclose three elements. First it must be entered into by a consumer. Secondly, the opposite party has to be an entrepreneur who takes part in the transaction in the conduct of his business or professional practice. And thirdly, where the contract does not relate to the sale of goods under a form of credit, the consumer has to enter into the contract in his own State or in a State where the entrepreneur directs his activities, provided that he is active in the same way as well in the State where the consumer is domiciled.

Consumers and non-consumers [Article 15(1) BR I]

A consumer is a natural person who concludes a contract ‘for a purpose which can be regarded as being outside his trade or profession’. This corresponds to the definition used in other Community legislation, in particular in the Regulation on the law applicable to contractual obligations (See Article 6 of the Rome I Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations). This consumer concept is drawn from a the judgment of the European Court of 21 June 1978 (ECJ 'Bertrand v Paul Ott KG' (Case 150/77) and from the Rome Convention on the law applicable to contractual obligations. For this last reason, the explanatory report of Guiliano/Lagarde is noteworthy as well for understanding the Brussels I Regulation. Other case law of the European Court makes clear that the term consumer has to be interpreted narrowly and that Section 4 does not provide any protection beyond what is necessary to look after natural persons who have concluded a contract to satisfy their own personal needs in terms of private consumption. This also means that a person, who enters into a contract in view of a business to be started in future, lacks the protection of Section 4, because the fact that the activity for which the contract is concluded is a future commercial activity does not deprive it in any way of its commercial or professional character (ECJ 3 July 1997 ‘Benincasa v Dentalkit’, Case C-269/95). Where a person concludes a contract partly for business or trade purposes and partly for other non-commercial purposes, he neither may rely on the protection of Section 4. This is only different when the connection between this person’s trade or profession and the contract is negligible in the context of the purpose for which the contract was concluded as a whole (ECJ 20 January 2005 ‘Johann Gruber v Bay Wa AG’, Case C-464/01).

In each individual case one has to answer the question whether a person may be regarded as a consumer within the meaning of Article 15, paragraph 1, BR I, thus as a person who has entered into the contract ‘outside his trade or profession’. A butcher, running a one-man business, who buys meat or a slice machine, whether or not on instalment credit terms, shall do so in the conduct of his butchery. Consequently he cannot be regarded as a consumer within the meaning of Section 4. If the same butcher buys a television or a couch for personal use, he doesn’t act in the conduct of his trade or profession, but as a consumer. With regard to this contract he may invoke, as any consumer may, the protection of Section 4. Often the object of the contract indicates whether a person acts as consumer or non-consumer. A medical doctor who buys medical equipment shall do so on behalf of his medical practice, and therefore act as a non-consumer. Where he buys food or a novel he will do so as a consumer. When he enters into an agreement for the delivery of a fitness device, a computer or a car, it’s not immediately clear if he acts in the conduct of his profession or as a consumer. In such cases usually the formal specifications on the selling order shall indicate whether he allocates the bought thing to his business or professional practice or not. When there is reasonable doubt whether a person acts as a consumer or a non-consumer, he has the burden of proof if he claims the protection which the Brussels I Regulation grants to consumers.

There can be a consumer contract only if a consumer has entered into a contract with a party who pursues commercial or professional activities. The application of the special rules in Articles 15 to 17 BR I is justified solely where there is an imbalance between the positions of the parties such as to require that steps be taken to reduce or to eliminate it in order to protect the weaker party. This is the case only when the other party is engaged in a commercial or professional activity. Therefore, so as to avoid doubts of interpretation, Article 15, paragraph 1, under (c), BR I, which applies to most consumer contracts, expressly states that Section 4 is applicable only when the opposite party, with whom the consumer enters into the contract, is ‘a person who pursues commercial or professional activities’. This clarification was not considered necessary in the specific cases of contracts for the sale of goods on instalment credit terms or for loans repayable by instalments, as described under Article 15, paragraph 1, under (a) and (b), BR I, since it is difficult to imagine that the seller or lender is acting outside the scope of a trade or profession. (Procar)

So when a consumer enters into a contract with a natural person who, when entering into that agreement, as well pursues a purpose outside his trade or profession, their contract cannot be qualified as a consumer contract within the meaning of Article 15 BR I, so that neither of them is able to claim the protection of Section 4. Such a contract, which is concluded for a purpose outside the trade or profession of both contracting parties, falls under the general rules for jurisdiction (Sections 1 and 2 of Chapter II) of the Brussels I Regulation. The same applies when the parties to the contract both enter into it in the pursuance of their commercial or professional activities. Thus, the sale of a machine on instalment credit terms by one company to another is not a consumer contract (ECJ 21 June 1978 'Bertrand v Paul Ott KG', Case 150/77).

See also:

• Article 13 (Jenard 1968)
• Scope of the new section (Schosser 1979)
  • Persons covered (par. 1)
• Consumer contracts (Pocar 2007)

Types of consumer contracts falling within the scope of Section 4 [Article 15(1)(a)(b)(c) BR I]

Section 4 of Chapter II of the Brussels I Regulation only applies to consumer contracts. This means first of all that the dispute has to be based on or at least has to have a connection with a contract and not with another source of law. The notion of a ‘contract’ should be read here in the same way as under Article 5, point (1), BR I, since Article 15 BR I merely forms a special elaboration of that Article. As a result, Section 4 is applicable as well when the consumer contract is null and void from the start. Accordingly, Section 4 may be invoked even where the existence of the contract on which the claim is based is in dispute between the parties (ECJ 4 March 1982 ‘Effer v. Kanter’, Case 38/81). Where a claim itself does not result from a contract, but is closely connected with it, it may be regarded as being of a contractual nature. This was, for instance, the case when a person ordered goods solely because he thought that he would receive a prize when he did so. When he did not receive that prize, he claimed it under Article 15 BR I. The European Court thought that this particular claim was contractual in nature since it was essential for the consumer to conclude the contract of sale of goods (ECJ 11 July 2002 ‘Rudolf Gabriel’, Case C-96/00). In another, similar case, the European Court found that the claim to receive the promised prize was not contractual in nature, because the initiative of the company was not followed by the conclusion of any contract. The consumer merely claimed the prize on other grounds. As a result the dispute was not governed by Section 4, so that the general provisions of Section 1 an 2 were applicable. The European Court considered that the claim, dependent on certain conditions, fall within the scope of Article 5, point (1), BR I, since that provision did not require the conclusion of a contract (ECJ 20 January 2005 ‘Petra Engler v Janus Versand GmbH’, Case C-27/02). See also ECJ 14 May 2009 ‘Ilsinger v Dreschers’ (Case C-180/06).

Article 15 BR I, that indicates which contracts may qualify as consumer contracts, makes a distinction between three types of contracts. Nevertheless, all these types are consumer contracts, provided that they are concluded between a consumer and an entrepreneur, and they all are equally worthy of the protection provided under Section 4. Article 15, paragraph 1, BR I mentions the following three types of contracts:

1. contracts for the sale of goods on instalment credit terms;

   Instalment sales are subject to the special provisions of Section 4 without any further preconditions. The sole requirement is that that the special provisions apply only where the purchaser is a private consumer and the opposite party an entrepreneur. The rules governing instalment sales also apply automatically to the legal institution of hire purchase, which has developed into the commonest legal form for transacting instalment sales in the United Kingdom and Ireland. For reasons which are not material for jurisdiction purposes, instalment sales in those countries usually take the form in law of a contract of hire with an option to purchase for the hirer. In form the instalments represent the hire fee, whereas in substance they form the purchase price. At the end of the prescribed 'hire' period, once all the prescribed instalments of the 'hire fee' have been paid, the 'hirer' is entitled to purchase the article for a nominal price. As the term 'instalment sale' under the continental legal systems by no means implies that ownership of the article must necessarily pass to the purchaser at the same time as physical possession, hire purchase is in practice tantamount to an instalment sale. (Schlosser)

2. contracts for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods;

   Contracts to finance instalment sales to private consumers are also subject to the special provisions of Section 4 without any further preconditions. Actions arising out of a loan contract to finance the purchase of movable property are subject to the special provision even if the loan itself is not repayable by instalments or if the article is purchased with a single payment (normally with the funds lent). Credit contracts in itself do not fall under the provision of Article 15, paragraph 1, under (b), BR I. They only do so when they are entered into to finance the sale of goods. If such direct link is absent, the contract may still fall within the range of Article 15, paragraph 1, under (c), BR I, provided that the other requirements of that provision are met.

3. all other contracts concluded between a person for a purpose which can be regarded as being outside his trade or profession and a person who pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.

   Initially, the 1968 Brussels Convention only paid attention to consumer protection as far as it concerned instalment sales and loans. It merely related to the sale of goods where the price was payable in a series of instalments, and to the sale of goods where the sale was contractually linked to a loan (Abzahlungsgeschafte). Afterwards, its relevance was extended to other contracts for the supply of goods or services. This application has been broadened again under the Brussels I Regulation. Now, the use of general terms in Article 15, paragraph 1, under (c), BR I (‘.. in all other cases ..’) makes clear that all the contracts between a consumer and entrepreneur, whether they relate to goods, services or other subjects and whether they are paid on instalment or other forms of credit or not, fall within the scope of Section 4, unless the Brussels I Regulation provides more specific provisions for such a particular contract. This broad concept of consumer contracts extends the scope of the protection offered and simplifies the determination of the contracts covered, in line with the protection provided by Community Directives on consumer protection. It encompasses all the contracts regulated as consumer contracts by Community Directives, including contracts whereby a creditor grants or promises to grant to a consumer credit in the form of a deferred payment, loan or other similar financial accommodation, in so far as they are regulated by Directive 87/102/EEC of 22 December 1986 on consumer credit for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ L 42, 12.2.1987), subsequently replaced by Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers (Procar). Yet, a contract of insurance is not a consumer contract within the meaning of the Brussels I Regulation. The same has to be said about individual employment contracts. Such contracts are governed solely by Section 3 and Section 5, respectively. Time-share contracts, on the other hand, do fall under the scope of Article 15 BR I, and not under that of Article 22, paragraph 1, under (a), BR I. The European Court has held that timeshare contracts that are subject to Directive 94/47/EC are also covered by Directive 85/577/EC if the conditions for the application of that directive are otherwise fulfilled (ECJ Case C-423/97 Travel Vac [1999] ECR I-2195) and that that interpretation must be taken into account for the purposes of the interpretation of the Lugano Convention too, given the link between that Convention and the Community legal order (ECJ Case C-73/04 Klein [2005] ECR I-8667). Contracts for the sale of real property, however, are excluded from the application of Section 4. This means that contracts relating to real property rights (rights in rem) in immovable property or to leases or tenancies of such immovable property, are not covered by Section 4, but exclusively by Article 22 BR I. The same applies to other legal actions, whether or not based on a contract, mentioned in that Article, for which the Brussels I Regulation after all provides special rules of exclusive jurisdiction.

Contrary to the consumer contracts meant in Article 15, paragraph 1, under (a) and (b), BR I, the contracts referred to in Article 15, paragraph 1, under (c), BR I still have to comply with an additional requirement in order to qualify as a consumer contract for the purpose of Section 4. The person, with whom the consumer has entered into the contract, has to pursue commercial or professional activities in the Member State of the consumer's domicile or, by any means, has to direct such activities to that Member State or to several States including that Member State, and the contract itself has to fall within the scope of such activities. This requirement demands a specific connection with the State in which the consumer is domiciled. Such requirement is not called for with regard to the sale of goods on instalment credit terms or loans repayable by instalments, given that there is no need for proximity between the contract and the State in which the consumer is domiciled. For other contracts, however, the extension of protection to all consumer contracts, and the extension of the forum actoris that that brings with it, would not be justified without a factor connecting the other contracting party and the State of domicile of the consumer. For this reason, the Lugano Convention 1988 and the 1968 Brussels Convention imposed the requirement that in the State of the consumer’s domicile the conclusion of the contract was preceded by a specific invitation addressed to the consumer or by advertising, and the requirement that the consumer took in that State the steps necessary for the conclusion of the contract. But the place where the consumer takes these steps was sometimes difficult or impossible to determine, especially if the contract was concluded on the Internet by means of an interactive website, and they may in any event be irrelevant to create a link between the contract and the consumer's State. Furthermore, this requirement brought along that the consumer could not rely on the protective jurisdiction of Section 4 when he had been induced, at the co-contractor’s instigation, to leave his home State to conclude the contract. To counterattack these shortcomings the text of Article 15, paragraph 1, under (c), BR I, has been changed. The philosophy of the adjusted Article 15 BR I is that the co-contractor creates the necessary link when directing his activities towards the consumer's home State.

The new connection with the State of domicile of the consumer can be applied to a contract of any kind, and is intended in particular to meet the need for protection arising out of electronic commerce as defined in Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) (OJ L 178, 7.7.2000), Article 1(4) of that Directive expressly provides that it does not ‘deal with the jurisdiction of Courts’, which is consequently left to the Brussels I Regulation and, in parallel, to the Lugano Convention 2007. After its adjustment, Article 15, paragraph 1, under (c), BR I no longer depends on the place where the consumer acts, nor on the place where the contract is concluded, which may be in a country other than that of the consumer’s domicile. It attaches importance only to the activities of the other party, which must be pursued in the State of the consumer’s domicile, or directed to that State, perhaps by electronic means. In the case of an Internet transaction, for example, the fact that the consumer has ordered the goods from a State other than the State of his own domicile does not deprive him of the protection offered by Section 4 if the seller’s activities are directed to the State of his domicile, or to that State among others. In that case too the consumer may bring proceedings in the courts of his own domicile, under Article 16 BR I, regardless of the place where the contract was concluded and regardless of the place where a service supplied electronically was enjoyed. The connection exists only if the commercial or professional activities are indisputably directed towards the State where the consumer is domiciled. Whether a website is considered active or passive is irrelevant here. As the EU Council and the EU Commission have stated on Article 15 of the Brussels I Regulation, for Article 15, paragraph 1, under (c), BR I to be applicable it is not sufficient for an undertaking to target its activities at the Member State of the consumer’s residence, or at a number of Member States including that Member State. A contract must also be concluded within the framework of its activities. This provision relates to a number of marketing methods, including contracts concluded at a distance through the Internet. In this context, the Council and the Commission stress that the mere fact that a consumer simply had knowledge of a service or possibility of buying goods via a passive website accessible in his country of domicile will not trigger the protective jurisdiction. The contract is thereby treated in the same way as a contract concluded by telephone, fax and the like, and activates the grounds of jurisdiction provided for by Article 16 BR I. This means that the setup of the sellers’ e-business can be regarded as either a specific invitation addressed to the consumer in his State or as advertising in the consumer’s State, and provided that the consumer took the steps necessary for the conclusion of the contract (the click) in is own State or in any other State, provided that the entrepreneur directs this kind of activities also to the home State of the consumer. The mere fact that an Internet site is accessible is, therefore, not sufficient for Article 15 BR I to be applicable, although a factor will be that this Internet site solicits the conclusion of distance contracts and that a contract has actually been concluded at a distance, by whatever means. In this respect, the language or currency which a website uses does not constitute a relevant factor (Proposal 2001 C 376E / 1-17).

The European Court has stated that, for the question whether an entrepreneur (trader) whose activity is presented on his website or on that of an intermediary can be considered to be ‘directing’ his activity to the Member State of the consumer’s domicile, within the meaning of Article 15, paragraph 1, under (c), BR I. (1)(c) of Regulation No 44/2001, it should be ascertained whether, before the conclusion of any contract with the consumer, it is apparent from those websites and the entrepreneur’s overall activity that the entrepreneur was envisaging doing business with consumers domiciled in one or more Member States, including the Member State of that consumer’s domicile, in the sense that he was minded to conclude a contract with them. The Court then has named some items that could produce evidence that the entrepreneur’s activity is directed to the Member State of the consumer’s domicile. Yet, the European Court emphasizes that the mere accessibility of the entrepreneur’s or the intermediary’s website in the Member State in which the consumer is domiciled is insufficient and that the same is true of the (mere) mention of an email address and of other contact details, or of use of a language or a currency which are the language and/or currency generally used in the Member State in which the entrepreneur is established (ECJ 7 December 2010 (joint cases) 'Peter Pammer v Reederei Karl Schlüter GmbH & Co.' (C-585/08) and 'Hotel Alpenhof GesmbH v Oliver Heller' (C-144/09).

Nevertheless, Section 4 does not apply where the defendant is not domiciled in the European Union. So if a consumer, making use of the Internet in his house located in a EU Member State, orders a product from a seller established in the United States who sends that product by mail, but who has no office or agent within the European Union itself, and the consumer afterwards wants to sue that seller on account of this transaction, he cannot rely on the protection offered by Section 4 of Chapter II of the Brussels I Regulation. Article 15 BR I explicitly makes clear that this Section is without prejudice to Article 4 BR I, in the sense that if the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23 BR I, be determined by the law of the Member State whose courts are seised by the consumer on this matter. Article 5, point (5) nor Article 15, paragraph 2, BR I lead to another result, since the American seller does not have a branch, agency or other establishment within the European Union. Even when he directs his activities frequently to the home State of the consumer or to other EU Member States, this itself does not create a branch, agency or other establishment in a Member State. A consumer who orders a product from a company outside the European Union, whether this is done by internet, e-mail or by other means, faces the risk that he has to start legal proceedings in a country far away.

See also:

• Article 13 (Jenard 1968)
• Scope of the new section (Schosser 1979)
  • Subject matters covered (par. 1 (a)(b)(c)
• Consumer contracts (Pocar 2007)

A branch, agency or other establishment within the European Union [Article 15(2) BR I]

Article 15, paragraph 2, BR I has to be read in conjunction with Article 5, point (5), BR I. It specifies that, where a consumer enters into a consumer contract with a party who is not domiciled in the Member State but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State. Article 15, paragraph 2, BR I has been incorporated because the exclusion from the scope of Section 4 of contracts between consumers and firms domiciled outside the European Union would not be reasonable where such firms have a branch, agency or other establishment within the European Union. Under the national laws upon which jurisdiction is to be founded in such cases pursuant to Article 4 BR I, it would often be impossible for the consumer to sue in the courts which would be guaranteed to have jurisdiction for his purposes in the case of contracts with parties domiciled within the European Union. Insurers with branches agencies or other establishments in the European Union are treated as regards jurisdiction in like manner to those domiciled within the European Union (Article 8 BR I) and for the same reasons the other parties to contracts with consumers must also be deemed to be domiciled within the European Union if they have a branch, agency of other establishment in the European Union. It is, however, only logical that it should not be possible to invoke exorbitant jurisdictions against such parties simply because their head office lies outside the European Union. (Schlosser). For the meaning of Article 15, paragraph 2, BR I in connection with Article 4 and 5, point (5), BR I, we refer to what has been mentioned with regard to the applicability of Section 4.

See also:

• Article 13 (Jenard 1968)
• Only a branch agency or other establishment within the Community (Schlosser 1979)
• Consumer contracts (Pocar 2007)

Excluded contracts of transport [Article 15(3) BR I]

Initially, the 1968 Brussels Convention left all contracts of transport out of the scope of the special consumer protection provisions because such contracts were subject under International Conventions to special rules with very considerable ramifications. The inclusion of those contracts in the 1968 Brussels Convention purely for jurisdictional purposes was felt to merely complicate the legal position. Moreover, the total exclusion of contracts of transport from the scope of Section 4 meant that Sections 1 and 2 of the 1968 Brussels Convention (and the Lugano Convention 1988) and hence in particular Article 5, point (1), thereof, remained applicable.

Later, the sphere of application of the rules of jurisdiction protecting consumers has been expanded to include also particular contracts of transport. The exclusion of all contracts of transport appeared unjustified given the practice of concluding contracts for a combination of travel and accommodation for an inclusive price. To continue to exclude contracts of transport here would also have meant that different rules of jurisdiction would have to be applied to the different services combined in a single contract which in economic terms represents a single commercial transaction. Article 15, paragraph 3, BR I therefore now limits the exclusion from the rules in Section 4 of Title II of the Brussels I Regulation to contracts of transport that do not provide for a combination of travel and accommodation for an inclusive price. This provision is thereby aligned on the provision for consumer contracts in the Rome I Regulation on the law applicable to contractual obligations (Procar). For the excluded contracts of transport the general provisions of Sections 1 and 2 of the Brussels I Regulation remain applicable. For the not-excluded contracts of transport Section 4 has relevance and offers consumers jurisdictional protection.

For the meaning of Article 15, paragraph 3, BR I, the European Court has referred to Article 6(4)(b) of the Rome I Regulation. Since the purpose of that latter provision is that consumer contracts should not include contracts of carriage, with the exception of those which correspond to the concept of ‘package travel’ for the purposes of Directive 90/314, this applies in the same way for the purpuse and meaning of Article 15, paragaph 3, BR I (ECJ 7 December 2010 (joint cases) 'Peter Pammer v Reederei Karl Schlüter GmbH & Co.' (C-585/08) and 'Hotel Alpenhof GesmbH v Oliver Heller' (C-144/09).

See also:

• Article 13 (Jenard 1968)
• Scope of the new section (Schosser 1979)
  • Subject matters covered (par. 1 (a)(b)(c)
• Consumer contracts (Pocar 2007)

Article 16 of the Brussels I Regulation

Jurisdiction in case of consumer contracts [Article 16 BR I]

Article 16 BR I determines the rules of jurisdiction. In actions against an entrepreneur, proceedings may be instituted by the consumer, at his own choice, either in the courts of the State in which the defendant (entrepreneur) is domiciled or in the courts of the State for the place where the consumer is domiciled himself. In order to increase consumer protection, the option available to the consumer in case of dispute is either the Member State where the other party is domiciled or the courts of the place where he is domiciled (and not the Member State where he is domiciled). This departure from the rule that the Regulation applies only to international jurisdiction and not to jurisdiction within a Member State, is warranted by the concern to enable the consumer to sue the other party as close as possible to his home (Proposal 2001 C 376E / 1-17).

Where the transaction results from a contract that has been concluded through the intervention of a branch, agency or other establishment of the entrepreneur within a Member State, he is deemed to be domiciled also in that Member State, irrespective whether the entrepreneur himself is domiciled within the European Union (see Article 5, point (5) and Article 15, paragraph 2, BR I). This means that the consumer is allowed to start legal proceedings at the courts of that specific Member State as well.

Actions by an entrepreneur against a consumer may in general be brought only in the courts of the Member State in which the consumer is domiciled when the proceedings are instituted. (Article 16, paragraph 2, BR I). Contrary to Article 16, paragraph 1, BR I, the provision of paragraph 2, indicating where the entrepreneur may file a legal claim against the consumer, does not interfere with the internal rules of national jurisdiction of the Member State where the consumer lives. It specifically does not refer to the courts for the place where the consumer is domiciled, like paragraph 1 does. Decisive is the Member State where the consumer is domiciled when the legal claim is filed, and this irrespective of whether the consumer, after the conclusion of the contract, has moved to another Member State.

The question where the consumer or entrepreneur is domiciled, has to be answered on the basis of Articles 59 and 60 BR I (see domicile natural persons and domicile legal persons). Decisive is only the domicile of the consumer or entrepreneur at the moment on which the legal action is brought in court, and therefore not the domicile when the consumer contract was concluded. A consumer who, after the conclusion of the contract of which an action subsequently arises, moves to another Member State may thus sue the entrepreneur in the courts of his new State of domicile. This is always the case in respect of instalment sales and credit contracts referred to in Article 15, paragraph 1, under (a) and (b) BR I. For actions arising out of other consumer contracts, this might be complicated. Article 15, paragraph 1, under (c), BR I implicates that Section 4 shall only apply when the entrepreneur pursues commercial or professional activities in the Member State of the consumer's domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities. This has to be established at the moment on which the contract is concluded. When the consumer afterwards moves to another Member State, he still may invoke the protection of Section 4. But the question is now if he has to do so before the courts of the Member State where he was domiciled previously, when the contract was concluded, or if he is allowed to do so before the courts of his new home State, since he is domiciled there at the moment when he started his legal action. One could argue that he is not allowed to bring his lawsuit to the courts of his new home State. This is in line with the remarks Schlosser made about the effects of a migration of a consumer to another Member State, yet at a time when the requirement still applied that Section 4 was only relevant to consumer contracts if the consumer had taken the necessary steps in his home State for the conclusion of that contract. According to Schlosser, Section 4 would, because of that, in virtually all cases cease to be applicable if the consumer transfers his domicile to another State after conclusion of the contract. This for the reason that the steps necessary for the conclusion of the contract would almost always not have been taken in the new State of domicile. Nowadays this requirement no longer applies and is replaced by the condition that the entrepreneur must pursue his activities in the Member State of the consumer's domicile or, by any means, direct such activities to that Member State or to several States including that Member State. If the consumer moves to a Member State where the entrepreneur does not pursue any commercial activities of this kind, then it would be in conflict with legal certainty if he could be sued anyhow before the courts of that new State simply because the consumer has decided to establish his new domicile there. The consumer, on the other hand, still shall have some connection with the Member State where he had lived before, so it want be a heavy burden for him to start proceedings there. One could argue also that the consumer is only allowed to start proceedings before the courts of his new home State when the entrepreneur, at the moment of conclusion of the contract, already directed the same activities to that new State also. According to the text of Article 16 BR I, however, only the Member State where the consumer is domiciled at the moment that the legal claim is brought in court has relevance.

Article 16, paragraph 3, BR I stipulates that Article 16 BR does not affect the right to bring a counterclaim in the court in which, in accordance with Section 4, the original claim is pending. It corresponds to Article 6, point (3), BR I. So when the consumer has taken legal actions in the courts of the State where the entrepreneur is domiciled, the entrepreneur is allowed to file a counterclaim there against that consumer, even though the consumer does not live in that Member State. In practice, however, the consumer who wants to initiate legal proceedings shall usually do so before the courts of his home State. Article 16, paragraph 3, BR I had to be incorporated separately because Article 6, point (3), BR I does not apply to consumer contracts governed by Section 4 of the Brussels I Regulation.

See also:

• Article 14 (Jenard 1968)
• The substance of the provisions of Section 4 (Schlosser 1979)
  • Subsequent change of domicile by the consumer

Article 17 of the Brussels I Regulation

Derogation from Section 4 by agreement [Article 17 BR I]

Article 17 BR I limits the scale for prorogation. Although Section 4 does not impose any formal requirements for agreements conferring jurisdiction in deviation from the provisions of this Section, it should be noted that the requirements of Article 23 BR I have te be met as well in order for such an agreement to be valid.

Agreements between the consumer and entrepreneur with regard to courts having jurisdiction over matters relating to consumer contracts are permitted only if they are entered into after the dispute has arisen (Article 17, point (1) BR I) or if they are to the advantage of the consumer (Article 17, point (2) BR I). We refer in this respect to our comment on Article 13 BR I on agreements conferring jurisdiction in matters of insurance. Where the entrepreneur has sued a consumer before a court that would not have jurisdiction according to Section 4 of the Brussels I Regulation, but the consumer nevertheless appears in court to contest the legal claim to its substance, and not merely to point out that the court has no jurisdiction, then this may be regarded as a tacit prorogation of jurisdiction after the dispute has arisen (ECJ 20 May 2010 ‘Ceská -Vienna Insurance Group v Michal Bilas’, Case C-111/09).

Article 17, point (3), BR I contains a provision analogous to that of Article 13, point (3), BR I, but for different reasons. In actions brought by an entrepreneur, it is rather difficult to determine jurisdiction where the consumer establishes himself abroad after the contract has been concluded. To protect consumers, they should ideally be sued only in the courts of the State where they have established their new domicile. For reasons of equity it is however provided that where an entrepreneur and consumer are both domiciled or at least habitually resident in the same State when the contract is concluded, they may confer on the courts of that State jurisdiction over all disputes arising out of the consumer contract on the condition that such agreements are not contrary to the law of that State. The criterion of habitual residence allows agreements conferring jurisdiction to be concluded even where a consumer remains domiciled in a Member State other than that in which he is resident. It follows, for example, that an entrepreneur need not sue the defendant abroad in the courts of the State in which the defendant is domiciled if, when the proceedings are instituted, the defendant is still resident in the State in which the contract was concluded (Jenard). One should notice that it is at the time of conclusion of the contract, and not when proceedings are subsequently instituted, that the parties must be domiciled in the same State. Although the agreements conferring jurisdiction as referred to in Article 17 BR I are not expressed to be subject to Article 23 BR I, such agreements must, in so far as they are permitted at all, comply with the formal requirements of Article 23 BR I. Since the form of such agreements is not governed by Section 4, it must be governed by Article 23 BR I (Schlosser).

See also

• Article 15 (Jenard 1968)
• Agreements on jurisdiction (Schlosser 1979)

Special attention has to be paid to the Unfair Contract Terms Directive, protecting consumers against unreasonable and excessive contractual stipulations. This Directive has priority over the Brussels I Regulation, and therefore also over Article 17 BR I. Where an agreement between a consumer and entrepreneur is in conflict with the Unfair Terms Directive, it shall be null and void, even when it is in line with and permissible under Article 17 BR I. The European Court has ruled that, where a jurisdiction clause is included, without being individually negotiated, in a contract between a consumer and a seller or supplier and where it confers exclusive jurisdiction on a court in the territorial jurisdiction of which the seller or supplier has his principal place of business, it must be regarded as unfair within the meaning of Article 3 of Directive 93/13 on unfair terms in consumer contracts, insofar 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 (ECJ 27 June 2000 ‘Océano Grupo Editorial SA v Roció Murciano Quintero’ (C-240/98). This last condition leaves a certain discretion to the seised court of the Member State, yet that court has to examine of its own motion, thus even without any appeal thereto of the consumer, if the jurisdiction clause which establishes the court’s jurisdiction is acceptable in view of the foregoing opinion of the European Court. Especially where the consumer has no other option than the court appointed under the jurisdiction clause and this court is not the court for the place of the consumer’s domicile of habitual residence, it shall usually be declared invalid as being unfair within the meaning of the before meant Directive, unless there are other circumstances taking away or compensating the burdensome procedural position of the consumer. One has to be aware that the before meant opinion of the European Court also applies in legal cases without any international element, for instance between an entrepreneur and a consumer who both are domiciled in the same Member State, whereas the consumer contract commits both parties to carry out a performance to be implemented entirely within the territory of that same State.

Such jurisdiction clauses, conferring jurisdiction to one specific court to the detriment of the consumer, usually take the form of a not negotiated stipulation in the consumer contract itself or in the general terms and conditions governing that contract. They won’t collide with Article 17, point (1), BR I, since that provision concerns jurisdictional clauses that have been entered into after a dispute had arisen between the entrepreneur and consumer. It’s hard to imagine that the consumer then accepts a not negotiated jurisdiction agreement as weaker party. The before mentioned opinion of the European Court doesn’t either affect the jurisdiction agreements meant in Article 17, point (2), BR I, given that these only enlarge the rights and possibilities of the consumer.

For jurisdiction agreements referred to in Article 17, point (3), BR I, this may be different. As the judgment of the European Court shows, the opinion of the European Court makes clear that it applies also to jurisdiction agreements between an entrepreneur and a consumer who are both domiciled in the same Member State and who point out a court within a specific region of that State as the court with exclusive jurisdiction. As far as such choice of forum is detrimental to the consumer, it may be invalid, despite that it meets the requirements of Article 17, point (3), BR I, if it is a not negotiated jurisdiction clause in a consumer contract that grants exclusive jurisdiction to the court for the place where the entrepreneur is domiciled 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.