The Court of Justice of the European Union (“CJEU”) has recently confirmed that “click-wrapping” can be relied upon for accepting jurisdiction in an online agreement. “Click-wrapping” occurs where a user clicks if he wishes to accept terms and conditions (such as for the sale of a product) but the webpage containing those terms does not open automatically. Instead, the contracting party must click on an additional link to view the terms and conditions. This form of agreement derives its name from “shrink-wrap” agreements, where a purchaser of software was considered to have agreed to the software licence agreement simply by opening the shrink wrap covering the product.

In this case, the CJEU was asked whether “click-wrapping” complied with the formalities for agreeing jurisdiction as set down by Article 23 of the Brussels I Regulation (now Article 25 of Brussels Recast). It held that an option to print or save the text of the agreement is sufficient if made available prior to the completion of the contract.

The law

The Brussels I Regulation (and its successor) deals with various issues relating to cross-border cases. In particular, it sets down the parameters within which parties may agree jurisdiction in a contract. Article 23(1) requires in general that any agreement as to jurisdiction must be “in writing” or “evidenced in writing”. Where the communication is by electronic means, Article 23(2) requires the agreement to be in a “durable record … equivalent to ‘writing’”.

What are the facts?

This case arose out of a dispute between two car dealers over an online contract for the sale of an electric car in a B2B sale. The seller, CarsOnTheWeb, a company with registered offices in Germany, cancelled the sale claiming the car had been damaged. Believing that the seller was cancelling due to the low price, the purchaser, Mr El Majdoub, sought an order for the transfer of the ownership of the car to him.

When the issue of jurisdiction arose, the purchaser argued that the German company was the contracting party and not its Belgian parent company. The seller, however, contended that the purchaser was bound by one of its general terms and conditions, accessible on its website, which stated that a Belgian Court in Leuven had jurisdiction.

The purchaser disagreed, arguing that Article 7 was not validly incorporated into the sales contract. He contended that it was not in writing in accordance with Article 23(1)(a) of the Brussels I Regulation.  He further claimed that the requirements of Article 23(2) are only met where the window containing the terms opens automatically. In this case, users were required to click on a box to open the terms and conditions.

Question referred

The German court referred the matter to the CJEU concerning the interpretation of Article 23(2). The question was whether the validity of a jurisdictional clause, contained in a contract concluded by electronic means, may be challenged if the click-wrapping technique is used.

What the CJEU said

The CJEU agreed that Article 23(2) does not require the agreement conferring jurisdiction (here, the terms and conditions of sale) to have been printed or saved. It added that it was irrelevant whether or not the window containing these conditions opened automatically.

The CJEU held that the only requirement is that it should be “possible” to provide a durable record of the agreement.  It is sufficient that there is the option to print or save the text of the agreement prior to the completion of the contract. Consequently, the CJEU found that “click-wrapping” complies with the formalities of Article 23.

Conclusion

This case provides welcome clarity for online businesses that use “click-wrapping” to incorporate their choice of jurisdiction clauses. The decision confirms that purchasers can agree to be bound by a choice of jurisdiction clause by clicking to accept the relevant terms, even where the content of those terms can only be accessed by clicking on an additional hyperlink.

It is important to highlight that this decision is primarily relevant to B2B transactions. In general, businesses cannot restrict a consumer’s choice of jurisdiction in a B2C contract.