On 25 January 2018, the European Court of Justice (“ECJ”) rendered a preliminary ruling in a case between Austrian citizen Maximilian Schrems and online social network Facebook. The ruling is important for two reasons. First, the ECJ approved a dynamic approach to the concept of ‘consumer’ under the Brussels I Regulation. Secondly, the ECJ clarified that the special consumer forum can only be invoked by the specific consumer who is party to the contractual relationship with the professional trader.
Mr Schrems is an Austrian citizen and a prominent privacy activist. In 2008, Schrems started using a Facebook account exclusively for private purposes (e.g. for posting personal photos and messages). In 2010, he also started using Facebook to promote public activities such as his participation in panel debates and media appearances. The primary aim of Schrems’ public activities was to apply pressure to force Facebook to improve its allegedly flawed data protection policies.
As part of his crusade against Facebook, Schrems initiated a civil action against Facebook before the court in his hometown of Vienna, Austria in 2015. The jurisdictional basis for this action was Article 16 of the Brussels I Regulation, which provides that ‘[a] consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled.’ Schrems started the civil action not only for himself but also on behalf of seven consumers domiciled in Austria, Germany and India who had assigned their claims to Schrems.
Before answering Schrems’ allegations on the merits, Facebook raised two jurisdictional challenges arguing that the Vienna court was not competent to hear the case. First, it argued that Schrems had lost his status as ‘consumer’ because he had used Facebook as a ‘professional’ (e.g. by posting posts about his lectures, books and fundraising efforts). Secondly, Facebook disputed that the special jurisdictional rule for consumer cases could not be invoked for claims which were assigned to Schrems by other consumers, as the mere act of assigning them to Schrems would in effect create a new head of jurisdiction for those claims.
On appeal, the case eventually reached the Supreme Court of Austria, which referred these jurisdictional questions to the ECJ.
Who is a consumer?
As to the first question, the ECJ reiterated that the special rule on jurisdiction for consumer cases is a derogation from the general rule that defendants should be sued before the courts of their domicile. Therefore, this exception should be interpreted strictly. The ECJ ruled that a strict interpretation of the concept of ‘consumer’ entails that it:
‘is necessary, in particular, to take into account, as far as concerns services of a digital social network which are intended to be used over a long period of time, subsequent changes in the use which is made of those services.’
Consequently, the ECJ approved of a ‘dynamic’ concept of the notion of consumer, which may entail that a person who initially concluded a contract in the capacity of a consumer may lose that status if:
‘the predominately non-professional use of those services’ subsequently becomes ‘predominately professional‘.
This dynamic view of the concept of ‘consumer’ appears on the face of it to be a victory for Facebook. However, the ECJ went on to explain that the expertise which a person may acquire in a certain field (such as privacy rules for Mr Schrems) cannot deprive that person of the status of ‘consumer’. If that were the case, consumers would not be able to efficiently organise themselves in order to safeguard their interests. Consequently, the ECJ ruled that in this case Schrems’ activities such as publishing books, lecturing or fundraising would not have the effect of him losing the status of a consumer.
Can Schrems invoke the special consumer forum for the assigned claims?
As for the second jurisdictional challenge from Facebook, the ECJ recalled that the special jurisdictional rule for consumer cases ‘is inspired 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‘. That rationale leads to the conclusion that only the consumer who is a party to the original contract can invoke this jurisdictional rule. To sum up: although Schrems can invoke the consumer forum for his personal claim, he cannot do so for the claims which were assigned to him by consumers who are not domiciled in Vienna. Indeed, as the ECJ succinctly ruled: ‘the assignment of claims cannot, in itself, have an impact on the determination of the court having jurisdiction‘.
The judgment clarifies that a person who was a consumer at the time of a contract’s conclusion may lose that status if the subsequent use of the contracted service becomes professional by nature. This dynamic concept of the notion of ‘consumer’ may potentially also be used as a defence by companies in consumer litigation relating to non-jurisdictional issues, such as disputes about unfair contract terms or unfair trading practices. Further, the ECJ – unsurprisingly – stated that the Brussels I Regulation is an insufficient basis for cross-border EU collective actions. However, this may change in the future as new models of collective redress in consumer matters are at the centre of heated debate at a European level. Readers interested in this debate are referred to A-G Bobek’s Opinion before the judgment.
What does this judgment mean for Maximillian Schrems? The case against Facebook in Vienna will continue on the merits – although it will not be a collective action as the court will only be competent to rule on his personal claim and not on the assigned claims.