The law of member states in Amazon EU's case
‘Boilerplate clauses’ are standard clauses which are attached to many different types of contract. These cover an array of topics, and one of these clauses will usually constitute a governing law clause. This clause sets out which jurisdiction’s laws the contract will be read in accordance with.
The Court of Justice of the European Union (ECJ) recently considered the case of Verein für Konsumenteninformation v Amazon EU Sàrl (Case C-191/15). In the case the court decided:
- whether a boilerplate clause, stating the relevant law was that of the supplier's country of establishment, was unfair; and
- what Member State’s law governs the processing of personal data of consumers who are from other Member States to the data processor.
In this case Amazon EU (the defendant) was established in Luxembourg and made sales to consumers from Austria electronically, and had no office in Austria. The standard terms for these sales allowed Amazon to use the data supplied by the customers and stated that the governing law of the sale was the law of Luxembourg. A consumer protection body from Austria applied for an injunction to prohibit these terms.
The ECJ found that it was in the jurisdiction of a national court to decide whether a term, stating that the governing law is that of the member state in which the supplier is established, is an unfair term; taking into account whether that term is balanced, transparent and in good faith. However the ECJ did give guidance on the meaning of unfair, stating that it believed such a term would be unfair if:
- that term creates a material difference in the rights and obligations of the parties; and/or
- the term leads the consumer to believe that it is not also protected by mandatory provisions (the law of the Member State in which that consumer lives) if that term was absent.
The ECJ also found that personal data being processed in electronic commerce by a company should be governed by the law of a Member State in which that company is carrying out that commerce. The Court found that the defendant had an establishment in the member state where its website was located (Germany). In consideration of this, the court found that German data processing law should apply.
It is therefore important for any companies who are trading internationally to consider whether the standard conditions that are in their contracts are sufficiently clear and balanced or will likely be considered unfair. In particular these companies should make the consumer aware that they will be protected by the laws of the country in which they live. Companies who are processing personal data should be aware that if it is considered they are established in a member state other than their own that member states’ law shall be applicable.
For more information, contact our Dispute Resolution team on 0345 070 6000.