Preparing for Brussels I recast—consumer contracts

With Brussels I (recast) set to apply from 10 January 2015, we continue our series considering what lawyers need to be aware of and prepare for when dealing with matters under the new regulation.

In our sixth installment, Anna Medvinskaia, a barrister at Gough Square Chambers, considers the likely impact of the changes on consumer contracts.

What is the effect of the additional wording in art 16 in relation to consumer contracts?

Regulation (EU) 1215/2012 (Brussels I (recast)), which amends Regulation (EC) 44/2001 (Brussels I ) contains general provisions that govern jurisdiction within the European Union. The general rule is contained in art 4(1)—jurisdiction lies with the courts of the member state of the defendant’s domicile. However, art 5 states that a defendant may be sued in the courts of another member state if the specific exceptions contained in ss 2–7 of Chapter II apply.

Article 18 (previously art 16) sets out the exception governing consumer contracts. A trader wishing to bring proceedings against a consumer can only do so in the consumer’s domicile. It is not possible to contract out of this rule. A consumer, however, may bring proceedings against a trader either in the member state in which the trader is domiciled or in the consumer’s own domicile.

The right of a consumer to bring proceedings against a trader in the consumer’s home court has now been extended to traders domiciled outside the EU. Article 18(1) expressly states that the domicile of the ‘other party’ is immaterial.

How will these changes play out in practice?

The new rules will apply from January 2015. It is difficult to assess the practical implications of the changes at this stage and their impact will largely depend on the extent to which consumers take advantage of the increased protection granted to them by Brussels I (recast).

However, it must be remembered that even before these changes, consumers were able to bring proceedings against traders domiciled outside the EU. While this could not be done under Brussels I, consumers were able to proceed under the rules of private international law. Accordingly, Brussels I (recast) does not introduce access to justice in consumer disputes. It does however facilitate it and brings with it a degree of predictability and consistency.

What are the wider changes to consumer protection which have/will be coming into force this year?

The Consumer Rights Bill is currently in the process of passing through Parliament. It aims to simplify and modernise consumer law in the United Kingdom.

In addition, the Consumer Protection (Amendment) Regulations 2014, SI 2014/870, came into force in October 2014. These regulations will provide consumers with a private right of redress if they fall victim to misleading or aggressive commercial practices (as defined in the Unfair Commercial Practices Directive 2005/29/EC). The Department for Business, Innovation and Skills has recently published guidance on the new regulations.

Finally, the Consumer Rights Directive 2011/83/EU has now been implemented in the UK, primarily through the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, SI 2013/3134.

What is the effect of the provisions in art 26 dealing with a defendant entering an appearance which is also amended to seek to protect the weaker party?

Brussels I (recast) provides protection for so-called ‘weaker parties’, which include beneficiaries of insurance contracts, consumers and employees. Weaker parties may only be sued at their domicile.

Article 26(2) provides additional protection to weaker parties. Where the weaker party is a defendant in proceedings, the court must ensure that the defendant is informed of:

  • his right to contest the jurisdiction of the court, and
  • the consequences of entering or not entering an appearance

This is important, as many consumers may be unrepresented in proceedings brought against them by traders.

Anna Medvinskaia has experience across the full breadth of chambers’ core practice areas, including financial services, regulatory crime and commercial law. She has a particular interest in EU consumer law and has been involved in a number of regulatory cases. Anna has experience in a range of commercial matters, including the sale and supply of goods and services. She has also been involved in advisory work on the application of the Distance Selling Regulations 2000 and the Unfair Terms in Consumer Contracts Regulations 1999.

Interviewed by Kate Beaumont.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

Don't miss the rest of the series:

Preparing for Brussels I recast—employment

Preparing for Brussels I recast—reversing Gasser

Preparing for Brussels I recast—declining jurisdiction in favour of the first court seised

Preparing for Brussels I recast—choice of court agreements

Preparing for Brussels I recast—arbitration

Filed Under: Brussels I Reform

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