On 20 December 2017, in a keenly awaited ruling, the Court of Justice of the European Union ("CJEU") held that, where Uber Systems Spain SL ("Uber") offers a smartphone application – through which customers wishing to make urban journeys can connect with non-professional drivers using their own vehicles – such services must be regarded as being inherently linked to a transport service (Case No. C-434/15). Accordingly, these services must be classified as ‘…a service in the field of transport…’ within the meaning of Article 58(1) of the Treaty for the functioning of the European Union ("TFEU"). The services provided by Uber were not to be regarded as information society services for the purposes of Directive 2000/31/EC ("E-Commerce Directive") and consequently, Uber could not avail itself of the free movement principles laid down in Article 56 of the TFEU.

The CJEU's ruling arose from a referral by the Spanish courts relating to an action brought by a professional drivers association, Asociación Profesional Élite Taxi ("Elite") against Uber.

Through a platform run out of the Netherlands, Uber provided a software interface usually by way of a smartphone application whereby customers, who wish to make an urban journey, could connect with available non-professional drivers who are located nearby. Within the metropolitan area of Barcelona, taxi services are governed by various local rules and laws under which the provision of such services requires the prior grant of a licence to be issued by the town halls or the competent local authorities in the territory where the activity shall be carried out. Neither Uber nor its drivers were so licensed or authorised.

The CJEU noted that Uber exercises decisive influence over the conditions under which the services by their drivers are provided to the extent that Uber determines through its application the maximum fare that will be charged. Uber is paid the fare by the passenger and then it remits a portion of this sum to its non-professional driver. The CJEU also noted that Uber exercises a certain control over the quality of the vehicles, the drivers and their conduct, which can, in some circumstances, result in them being excluded.

Elite sought a declaration that Uber's activities amounted to misleading practices and acts of unfair competition in that it was operating a taxi service without complying with the local licensing and authorisation requirements. The association further argued that Uber should be ordered to cease its unfair conduct of supporting other companies in its group by providing on-demand booking services by means of mobile devices and the internet. Finally, Elite requested that Uber be prohibited from engaging in such activities in future.

Uber argued that it was only providing information society services and that it relied upon Article 56 TFEU which prohibits restrictions on the freedom to provide services within the Union. However, Article 56 TFEU is qualified in some respects, most notably by Article 58 TFEU that seeks a common policy with regard to transport services across the Union. The Commercial Court of Barcelona, which referred the case to the CJEU, had taken the view that if it was held that the services being provided by Uber were only information society services then, even if Uber did not hold a licence or authorisation, its practices could not be regarded as unlawful in accordance with the local law.

Uber selects the non-professional drivers to use their own vehicles and, without the UBER branded application: (i) those drivers would not be led to provide transport services to the fares, and (ii) those customers would not use the services provided by those drivers. Accordingly, looking at the nature and effect of the services provided by Uber and the control exercised by Uber, the CJEU ruled that it was providing transport services – not information society services. As such, it ruled that Article 56 TFEU and the laws under the E-Commerce Directive, and related legislation, did not apply to these circumstances. Moreover, the CJEU noted that as these taxi services amounted to non-public urban transport services and such had not yet become the subject of an EU wide common transport policy, it remained open for individual Member States to regulate the conditions under which these services were provided.

Although this case concerns a particular sector and set of circumstances, the ruling will naturally feed into the broader current debate about what immunity should be given to internet service providers for what content is published and/or business is transacted through their platforms.

Moreover, by way of a tangent, it is notable that in applying to register its trade marks before the UKIPO and EUIPO, Uber has expressly included transportation services.

In the UK, Uber has confirmed that it is already subject to local laws and is regulated as a taxi firm, and as such the ruling won't have much impact. However, in other EU countries where Uber is not currently regulated as a transport service, the business is likely to come under further scrutiny as Member States seek to tighten control of Uber's operations.

This decision could also have wider ramifications on the so-called 'gig-economy'. Similar services that operate through an app, such as Airbnb, Deliveroo and Fiverr, may also become subject to more stringent regulation in future.