Cross-border civil litigation after Brexit: analysis of the UK government’s proposals

Professor Steve Peers

Imagine you’re a prominent UK politician. You spend most of your time ranting on a radio station in the UK or grovelling in the USA, occasionally showing up in France or Belgium to do your actual full-time job. You’re now getting a divorce from your German wife. Which court rules on matters concerning divorce and access to children – and which law applies?

This dispute would be part of the broader topic of cross-border civil litigation (or private international law), which is the subject of the UK government’s latest position paper on the Brexit talks. This paper gives some interesting hints about how the UK seeks a close relationship with the EU after Brexit, while also leaving some key issues rather vague.

First of all, it’s necessary to point out that the paper doesn’t concern the future of dispute settlement between the UK and the EU after Brexit. That’s the subject of another position paper coming very soon. Rather it concerns how cross-border disputes between private citizens or companies in the UK or EU will be dealt with after Brexit.

The paper usefully sets out which EU laws in this area the UK has currently opted into, in particular: the general rules on civil and commercial jurisdiction and conflict of laws; the special rules on insolvency disputes and divorce/child access, maintenance, and stalking orders; and related laws on simplified litigation, service of documents, legal aid, evidence, legal aid, mediation and the ‘European Judicial Network’ (a talking shop on the operation of these laws). (For an overview of these issues in the Brexit context see the recent House of Lords report).

Note that the UK has opted out of some other EU laws in this area, in particular those concerning marital property after divorce (and the property of civil partnerships which ended), inheritance and conflict of divorce law. (For an overview of EU law in this area as a whole, see the chapter in the second volume of my book on EU Justice and Home Affairs Law).

The paper is mainly about the future UK/EU relationship in this area, not withdrawal from the EU as such. But there's a bit on that issue at the end, in response to the EU’s position paper on the UK’s exit from the law in this area. Of course, the UK government is correct to say that there is no need for any such transition arrangements, to the extent that the UK still participates in the law in this field after Brexit. But then, the EU won't discuss any aspects of its future relationship with the UK until there is ‘sufficient progress’ on the key issues of the UK’s so-called ‘divorce bill’ and the status of UK and EU citizens. (If and when the EU and UK do agree on post-Brexit treaties in this area, note that the EU usually votes by a qualified majority, except as regards family law, where there is a veto. At least in key areas, the ECJ has ruled that Member State ratification of such treaties is not necessary, since the EU is exclusively competent).

There’s likely to be a need to bridge the gap between Brexit Day and any future agreement between the UK and the EU. This will probably take the form of some transitional extension of current EU law, as part of the Brexit withdrawal treaty. But the position paper doesn’t mention this issue at all – perhaps because the UK government has not fully agreed on the details, and perhaps because the EU side insists that the ECJ would still have jurisdiction during that period.

Future relationship

So what relationship does the UK government want with the EU in future? The papers calls for a ‘new partnership…reflecting our close existing relationship’, but does not detail which laws the UK wants to continue participating in.  One hopes that the government will at least tell the EU which laws it wants to continue applying. 

There’s one thing the UK government clearly doesn’t want though: the continued ‘direct’ jurisdiction of the ECJ. (The notion of ‘direct’ jurisdiction isn’t explained explicitly, but we can deduce what the government will accept – see further below).  The reader gets the distinct impression that the UK is happy to continue participating in all the EU laws it has signed up to already, except for removing the ECJ’s direct jurisdiction. It’s a bit like tearing down and rebuilding a house, in order to change one brick.

The paper doesn’t address an obvious question: what if an existing EU law is revised post Brexit? This point isn't hypothetical. There's a proposal to revise the current EU law on divorce and child access already. The UK has already opted in to negotiations. But negotiations are slow, and might not conclude before Brexit Day. Other laws in this field are negotiated over time. How to address this topic?

International treaties

The paper seems keen to reassure those who litigate in the UK (in particular, London) that the UK will still be ‘open for business’ in this field after Brexit. To that end, the government confirms that it will remain a party to a list of international treaties in the field (as distinct from EU law), drawn up in the auspices of an international body which focusses on cross-border civil litigation – the Hague Conference on Private International Law, including the important Hague Convention on child abduction. For most of these treaties, this will be simple, because the UK is a party to them in its own right, not as an EU Member State. For some others, the UK participates only as an EU Member State, although it ought to be an easy transition to participating in its own name: it can simply sign and ratify them on Brexit Day.

However, the UK also wants to stay part of the Lugano Convention - which extends an earlier version of the main EU law on civil and commercial jurisdiction to relations between the EU and EFTA states (Norway, Iceland, and Switzerland – along with EU Member State Denmark for convoluted reasons). This is another kettle of fish. According to that Convention, to sign up in its own name, the UK either has to become an EFTA state (which is a big issue in itself, since EFTA is a trade agreement) or wangle a special invitation to sign up. And as the government’s position paper acknowledges, it’s awkward that the Convention only relates to an earlier version of that EU law.

Signing up to the Lugano Convention also raises an issue about the ECJ. The Convention states that the courts of non-EU states must ‘pay due account’ to ECJ judgments. So we can deduce that the UK government does not believe that such an obligation violates its ‘red line’ against ‘direct jurisdiction’ of the ECJ. It might have been better to say this explicitly, and to propose it as a template for UK/EU relations in this field, given that the UK apparently wants to keep participation in other relevant EU laws as well. Indeed, it might also be a template for other areas where the UK seeks to continue participation in EU laws as a non-EU state. Perhaps the forthcoming paper on EU/UK dispute settlement will say more on this.

Furthermore, the ECJ clause in the Lugano Convention is similar (but not identical) to the ECJ clause in the EU Withdrawal Bill as proposed by the government – which says that pre-Brexit ECJ rulings stay binding (subject to the UK Supreme Court possibly overruling them, or the government or parliament overruling them), while post-Brexit ECJ may be taken into account by courts in the UK.

This may be enough of a compromise to satisfy hardline Brexiteers; we’ll see. It ought to be acceptable to the EU side, given that it’s been accepted in the context of relations with EFTA states for nearly thirty years (the first version of the Lugano Convention dates back to 1988). But then, the UK is asking for a closer relationship in this field of law than any other non-EU country. In any event, the areas of law where the EU insists on an ECJ role (citizens’ rights, the ‘divorce bill’, a transitional deal) will be more difficult to agree. Time will tell if talks eventually founder – either on those ECJ issues, or indeed on the bill itself.

Barnard & Peers: chapter 27

JHA4: chapter II:8

Photo credit: Metro

Brexit and business and human rights litigation in England

Anil Yilmaz Vastardis, Lecturer in Law, Human Rights Centre, University of Essex

In wake of the UK’s EU membership referendum result, people from all walks of life are wondering what will happen next. While a big uncertainty looms over the political questions surrounding the process of the UK’s exit from the EU, the repercussions go far beyond the UK – and  some of those wondering “what next” are likely overseas victims of human rights abuses by British corporations. The question remains as to what happens to all the EU law that either the UK has transposed into its legal order via acts of parliament, or that have direct application in the UK, such as EU Regulations.

Brussels I Regulation (Recast) is one of many such EU law instruments. It prescribes the rules on jurisdiction of member state courts, as well as the rules on the recognition and enforcement of judgments in civil and commercial matters within the EU. It has been predicted that the UK's adherence to the Brussels I regime “is likely to be significantly modified, if not entirely replaced, in the event of Brexit.” The authors of that piece outline the different scenarios on the fate of the English rules on civil jurisdiction post-Brexit. The course chosen may have an impact on the ability of human rights victims overseas to bring suit against multinational enterprises (MNEs) in UK courts.

Jurisdiction over Civil Liability Claims against Multinationals domiciled in England

Rights advocates are increasingly bringing lawsuits in the global north to hold MNEs accountable for human rights harm caused by their overseas subsidiaries. Among the reasons for pursuing the MNE in its “home” state (the state where they are domiciled – see Article 60 of Brussels I) are the existence of a dysfunctional legal system in the host state (place where the harm occurred) and/or a defunct or underfunded subsidiary. England is a popular jurisdiction for bringing such suits against UK domiciled MNEs. It is home to many multinationals and it offers advantages for creative litigation. Victims and their lawyers generally seek reparations from the parent entity on the basis of common law tort principles. While rights defenders are eager to hold parent companies accountable for harm inflicted by their subsidiaries, the legal landscape in the global north is fraught with obstacles to holding parent companies liable. Among them are the rules on civil jurisdiction.

In England, the forum non conveniens doctrine (FNC) used to be a major challenge to bringing suit against an MNE domiciled in England for harm caused overseas by its subsidiaries. The FNC allows English courts to refuse to exercise jurisdiction over a case if another forum is clearly better suited to adjudicate the case, due to for instance location of evidence and witnesses. A number of cases brought in England were protracted due to a battle over FNC. Claimants had to demonstrate substantial denial of justice in the host state legal system in order to convince English courts to exercise jurisdiction (see Connely v RTZ Corporation, Lubbe v Cape Plc).

Article 2 of Brussels I and its interpretation by the Court of Justice of the EU (CJEU) in Owusu v Jackson blocked the use of the FNC doctrine by English courts in civil liability suits filed against MNEs domiciled in England. According to Article 2 ‘persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.’ There is no indication here as to whether this rule would prevail if the lawsuit concerns events that occurred or harm suffered overseas (i.e. outside the European Union). In Owusu v Jackson, the CJEU held that Article 2 precludes a member state court from "declining  to exercise jurisdiction on the ground that a court in a non-EU would be a more appropriate forum" and thus jurisdiction shall be exercised over the UK domiciled MNE even if the dispute has certain connections with a state outside the EU.

Years need not be wasted fighting a jurisdiction battle

Article 2, read together with Owusu, brought an end to the protracted litigation over whether a lawsuit against an MNE domiciled in England should be adjudicated by English courts or the courts of the host state. Admittedly, adjudicating the dispute before English courts does not guarantee the liability of the parent company. That depends on whether the facts of the case warrant holding the parent liable under the law applicable to the substance of the case (which is likely to be the law of the country where the harm occurred – see Article 4 of the Rome II Regulation).

Nevertheless, the defeat of the FNC defence was not in vein. Even though we are yet to see a ruling that holds the parent company liable for harm caused by an overseas subsidiary, lawyers continue filing strategic cases with English courts with the confidence that they would not lose years battling an FNC challenge. MNEs are less able to protract litigation through jurisdictional questions, draining victims of the funds necessary to support the litigation. Brussels I gives victims a real chance to plead their case before home state courts, and thus attract more public attention to the alleged wrongdoings of MNEs that sometimes paint a ‘socially responsible’ picture to their consumer base in the global north. Finally, the concern of fighting such a claim on its substance pushes major MNEs like Royal Dutch Shell to offer out of court settlements to victims for amounts much greater than they would have offered in the absence of such concern. Although such settlements prevent the development of legal precedent in this area, they provide much needed relief to individual victims.

If the UK leaves the EU and no longer complies with Brussels I, without a post-exit deal between the two entities that incorporates equivalent provisions, the FNC defence is likely to be resurrected in business and human rights litigation against MNEs domiciled in England. This would be a big step back for access to justice in England for overseas victims of business abuse.

Barnard & Peers: chapter 9, chapter 27

Photo credit: the times.com

JHA4: chapter II:8

Which data protection and consumer law applies to Amazon? Comments on the VKI v Amazon judgment

Lorna Woods, Professor of Internet Law, University of Essex

The recent CJEU judgment in VKI v Amazon concerns jurisdiction both in the context of conflict of laws (applicable consumer laws) and the Data Protection Directive.  Essentially, the Court of Justice had to decide which Member State’s data protection law should apply where goods are sold across national borders but within the EU. In this, it forms part of a stream of case law (both decided and pending), dealing with the powers of states (and their institutions) to protect those within their boundaries notwithstanding the digital internal market.

Facts

The case concerned Amazon, a well-known large company engaged in on-line selling. It has a branch established in Luxembourg.  It has a domain name ending ‘.de’ and there is a German language page.  It concludes sales with customers in Austria. The company has no registered address in Austria.  Whenever a customer buys goods via Amazon the transaction is governed by Amazon’s unilaterally imposed standard terms and conditions. One term in the agreement is that the law applicable to the contract is that of Luxembourg. 

A consumer protection body in Austria (VKI) sought to challenge this: Austrian law provides higher protection for the consumer than the equivalent Luxembourgish law and it sought to injunct Amazon on the basis of Directive 2009/22/EC on injunctions for the protection of consumers’ interests through an action brought before the Austrian courts. Amazon countered that it has no legal connection with Austria – it is not established there.  While there were questions regarding the applicable law and the fairness of the jurisdiction clause in the contract in the light of the Unfair Contract Terms Directive, there was another issue concerning data protection. There were clauses in Amazon’s standard terms and conditions which indicated that data might be exchanged with credit-risk assessment and financial services companies in Germany and Switzerland.  Again VKI argued that Austrian data protection rules should apply.

Questions Referred

While on the face of it, the matter might seem to be one of contract law therefore governed by the Rome I Regulation on the law applicable to contractual obligations, the form of relief sought – the injunction – might seem to bring the question within the Rome II Regulation, which regulates the law applicable to non-contractual obligations – a fact which might affect the outcome in the case.  The national court asked whether an action for an injunction fell within Rome II and if so, where the damage might said to have taken place so as determine jurisdiction.  Irrespective of the outcome to that question, the referring court also asked about the impact of the Unfair Contract Terms Directive on the jurisdiction clause. It likewise also wanted to know whether the processing of data should be regulated by Luxembourg alone, or must the processor ‘also comply with the data protection rules of those Member States to which its commercial activities are directed?’

Judgment

The ECJ dealt with the questions on Rome I and II together.  It noted that they should be interpreted consistently with one another, as well as the Brussels I Regulation (which concerns the separate question of which country’s court has jurisdiction in cross-border cases).  The Court referred to its previous case law in relation to the previous Brussels Convention, and the Brussels I Regulation replacing the Convention, to conclude that an action for injunction within the terms of Directive 2009/22/EC (on the protection of consumers’ interests) falls within the meaning of a non-contractual obligation for the purposes of Rome II.  Article 6 of the Rome II Regulation deals with unfair competition.  In that circumstance, the law applicable is that ‘of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected’.  The Court followed the Advocate General (Opinion, para 73) to hold that Article 6(1) covers the use of unfair terms inserted in standard terms and conditions, as ‘this is likely to affect the collective interests of consumers as a group and hence to influence the conditions of competition on the market’ (para 42). Here the relevant country is that where the consumers to whom the undertaking directs its activities reside and who are protected by the relevant consumer protection body (para 43).

Article 4(3) of the Rome II Regulation states that the law of another country applies if it is clear that the tort is manifestly more closely connected with it.  The ECJ approved the approach of the Advocate General (para 77) where he advised that Article 4(3) is not well suited to unfair competition. Article 6 is aimed at protecting collective interests and cannot be displaced by individual agreement (para 45).  Allowing the term of a contract to constitute ‘closer connection’ for the purposes of Article 4(3) would mean that such parties would be able to avoid the conditions for ‘freedom of choice’ set down in Article 14 Rome II.

The question of which law applies to the assessment of the unfairness of the contractual terms, however, falls under Rome I, whether or not it applies to a collective or individual action.

The Court then considered the Unfair Contract Terms Directive (Directive 93/13). That Directive contains the principle that a contractual term which has not been individually negotiated – that is, drafted in advance by the seller/supplier - must be regarded as unfair if it causes a significant imbalance to the detriment of the consumer. The Court agreed with the Advocate General (Opinion para 84) that the terms in issue here fell within that definition (para 63). The question of unfairness is to be determined on the facts by the national court within the scope of criteria determined by the Court of Justice. Since choice of law clauses are in principle permissible, such clauses are only unfair if its wording or context creates an imbalance – so if it is not drafted in intelligible language or if it seeks to deprive consumers of protections from which it would not be possible to derogate.  Here, this means that in relation to an Austrian consumer, the national court will ‘have to apply those Austrian statutory provisions which, under Austrian law, cannot be derogated from by agreement’ (para 70).

The Court then turned to Article 4 of the Data Protection Directive. Under Article 4, each Member State regulates processing carried out in the context of activities of an establishment in that Member State. Essentially the question is whether Amazon was established in Austria. The Court referred to its recent Weltimmo judgment, discussed here, which ruled that an undertaking does not need to have a branch or establishment.  Rather, it is a question of the stability of the arrangement and the effective exercise of activities (para 77) that is important.  Further, Article 4 does not require that the processing is carried out by the undertaking itself; the test is whether processing is carried out in the context of its activities (para 78).  This is a question of fact for the national court.

Comment

In terms of the importance of this judgment, we should note that the facts in issue are not uncommon – many on-line businesses have headquarters in one Member State but conclude contracts across multiple Member States. 

As regards the questions relating to applicable laws generally, we are now in a situation where national courts may have to assess questions pertaining to injunctions according to a different law from that relating to the contract itself.  This is not surprising, given case law in other fields, but it is the first confirmation of this point in the e-commerce context.  As an aside, it is also the first judgment on the Directive on injunctions for the protection of consumers’ interests.  It is worth noting that the Court seemed critical of attempts to bypass the protection in Article of 6 Rome II through the notion of ‘manifestly closer connection’ in Article 4(3).  It also specifically excluded the choice of law clause in the agreement as a determining factor in this regard too.

Perhaps the most interesting aspect is, however, the data protection aspect.  The Court did not go into much detail (perhaps signalling behind the scenes disagreement) and there are some curious silences as to some points touched upon by the Advocate General.  The Advocate General had in fact suggested that Article 4 had a ‘dual role’ (Opinion para 110).  So while Weltimmo might apply to determine applicable law, the broad approach to ‘establishment’ found in GoogleSpain to determine the outer territorial limit of the Data Protection Directive did not apply to the intra-EU setting.  The driver for the decision in GoogleSpain was a desire to ensure that the Data Protection Directive applied at all; it was therefore relevant to external processors (Opinion, para 124).  In this case, if the Austrian laws did not apply then the laws of one of the other Member States would and so the extensive approach would not be necessary.  This distinction was an innovation on the part of the Advocate General; it was certainly not visible in Weltimmo in which the Court relied on its reasoning in GoogleSpain, and nor was it apparent from GoogleSpain.  Further, the Advocate General seemed to be more stringent about finding ‘establishment’ than the Court in Weltimmo.  For example, the fact that Amazon may provide an aftersales service in Austria on its own was insufficient in his view (Opinion, paras 121 and 125); he also discounted the possibility that the accessibility of a website was likewise insufficient for this purpose (Opinion, paras 117 and 120). 

Against this background, the silence of the ECJ on the internal/external point is striking, especially given the repeated references to the Opinion through the rest of its judgment.  So is its silence on the subject of GoogleSpain. The Court’s reasoning is grounded only on Weltimmo.  On the one hand, we could argue that the Court has not agreed with the distinction put forward by the Advocate General, but by not applying GoogleSpain directly here, it has not ruled it out either. Note that the Article 29 Working Party (the advisory body set up by the data protection Directive) had applied the extensive interpretation from GoogleSpain in its updated Opinion 8/2010. The Court here also gave no further guidance on the topic of establishment, taking convenient refuge no doubt in the point that its role is to interpret EU law and not to assess facts.

Photo credit: www.creativeintent.co.uk 

Civil liability for Internet publishing: the CJEU clarifies the law

Professor Lorna Woods, co-author of Steiner & Woods, EU Law

Introduction

Yesterday’s CJEU judgment in Papasavvas is the most recent in a line of cases seeking to trace the edges of the concept of ‘intermediary’ for the purposes of EU information technology law, a question that has become rather more problematic than when the eCommerce Directive was first drafted in 2000. Then, the role of intermediaries was much more technical and related to transmission and technical access. Since then the market has moved on with the development of many services that are now viewed as important for the access and use of content on the Internet. Many of these services blur the boundaries between transmission services and content services. To what extent are those services neutral intermediaries? While in many respects this case could be seen as quite straightforward, it hints at still yet unresolved questions and highlights difficulties about reliance on EU law in national courts.

Facts

Mr Papasavvas (‘P’) brought an action for defamation in respect of articles published in the daily national newspaper O Fileleftheros, on 7 November 2010, which were published online on two websites. He sought damages and an injunction. The national court referred the following questions:

(1)      Bearing in mind that the laws of the Member States on defamation affect the capacity to provide information services by electronic means both at national level and within the European Union, might those laws be regarded as restrictions on the provision of information services for the purposes of applying Directive 2000/31 …?

(2)      If the answer to Question 1 is in the affirmative, do the provisions of Articles 12, 13 and 14 of Directive 2000/31 …, on the question of liability, apply to private civil matters, such as civil liability for defamation, or are they limited to civil liability in matters concerning business to consumer transactions?

(3)      Bearing in mind the purpose of Articles 12, 13 and 14 of Directive 2000/31 … relating to the liability of information society service providers and the fact that, in many Member States, an action must exist in order for a prohibitory injunction to be granted which will remain in force pending full completion of the proceedings, do those articles create individual rights which may be pleaded as defences in law in a civil action for defamation, or must they operate as an obstacle in law to the bringing of such actions?

(4)      Do the definitions of “information society service” and “service provider” in Article 2 of Directive 2000/31 … and Article 1(2) of Directive 98/34 … cover online information services the remuneration for which is provided not directly by the recipient, but indirectly by means of commercial advertisements posted on the website?

(5)      Bearing in mind the definition of “information service provider”, laid down in Article 2 of Directive 2000/31/EC and Article 1(2) of Directive 98/34 … could the following, or any of them, be regarded as a “mere conduit” or “caching” or “hosting” for the purposes of Articles 12, 13 and 14 of Directive 2000/31:

(a)      a newspaper that operates a free website on which the online version of the printed newspaper, with all its articles and advertisements, is posted in pdf format or another similar electronic format;

(b)      an online newspaper which is freely accessible but the provider obtains money from commercial advertisements posted on the website, where the information contained in the online newspaper comes from the newspaper’s staff and/or freelance journalists;

(c)      a website which provides (a) or (b) above for a subscription?’

Judgment

The Court dealt first with queries raised regarding admissibility.  P raised questions about timing: the proceedings at national level are at an early stage, to the point that the defendants in the national action have not yet filed a defence.  On this basis, P argued that the questions referred must be hypothetical as the nature of the dispute had not yet been defined. The Court did not address this argument directly but instead stated that ‘the description of the legal and factual framework of the proceedings in the order for reference seems to suffice so as to permit the Court to make a ruling’. 

P had also argued that the defendants did not fall within the scope of the e-Commerce directive and therefore questions relating to its interpretation were unnecessary. This is of course a little circular and the Court rejected the argument, pointing out that the scope of the Directive and the applicability to the defendants was one of the main issues that needed to be resolved. Having determined that, the Court re-ordered the questions referred and started with question 4 on the application of the Directive.

The Court reformulated the question, asking whether ‘information society services’ (ISS) as defined in the directive ‘covers the provision of online information services for which the service provider is remunerated not by the recipient, but by income generated by advertisements posted on a website (para 26).’ The Court re-iterated that the definition of ISS has four elements:

·         ‘normally provided for remuneration’;

·         at a distance;

·         by electronic means; and

·         at the individual request of a recipient of services.

The final three seemed non-contentious, but what concerned the national court was the issue of remuneration, as the user did not pay to access the website.  The Court then referred to recital 18 of the Directive, which expressly excludes the possibility that a service will fall outside the directive merely because payment is indirect.  In this there is a similarity to the CJEU’s reasoning in Bond van Adverteerders and Others (paragraph 16).

Having determined that the directive could apply to information services such as those in issue here, the Court then considered question 1 in which the referring court is effectively asking whether the directive precludes the application of rules of civil liability for defamation to ISS providers.  The directive applies the principle of home country rule to service providers, with the corollary that Member States should not impose additional rules on services coming from other Member States.  Given that the defendants in the domestic proceedings were based in the same Member State as P, the issue of whether the civil defamation rules constituted a restriction did not apply, though the Court noted that such rules fall within the scope of the directive (at Article 2(h)).

The Court then went on to consider whether the defendants could benefit from the intermediary immunity provisions in Articles 12-14 of the Directive. The Court considered the role of these provisions, and relying on its reasoning in Google France and Google  (paragraph 113) and L’Oréal and Others (paragraph 113) stated that they applied to intermediaries and activities which are of ‘a merely technical, automatic and passive nature’, that the ISS provider has neither knowledge of nor control over the information which is transmitted or stored and takes a neutral approach to content. The Court highlighted factors such as assisting clients in drafting commercial messages, or in optimising presentation of content.  It concluded:

Consequently, since a newspaper publishing company which posts an online version of a newspaper on its website has, in principle, knowledge about the information which it posts and exercises control over that information, it cannot be considered to be an ‘intermediary service provider’ within the meaning of Articles 12 to 14 of Directive 2000/31, whether or not access to that website is free of charge. [45]

So, in such a circumstance, a newspaper cannot claim exemption from civil liability.  Given this answer, it was not apparent that the Court needed to address question (2). Nonetheless, it confirmed that it made no difference whether the case involved business to consumer or consumer to consumer cases. [50]

The final issues dealt with were those raised by question (3), though again the Court noted that answers to this question might not be necessary given that Articles 12-14 did not apply.  The Court summarised this question as asking whether Articles 12-14 preclude the adoption of interim measures (such as the injunction prohibiting publication) or whether those articles create individual rights which the ISS provider may plead as defences in law in the context of legal proceedings such as those in the main proceedings. As regards the first element, the Court noted that – subject to the principles of equivalence and effectiveness, matters as to conditions under which remedies might be available were matters for national law. [53]

The second element effectively concerns the direct effect of the immunity provisions: can they be relied on in the context of a dispute between private parties. The Court returned to the general case law on horizontal direct effect of directives, arguing that ‘with regard to proceedings between individuals, such as those at issue in the main proceedings, the Court has consistently held that a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against an individual’ [54] but that indirect effect/doctrine of consistent interpretation from Von Colson would apply. [56]

Comment

While this case at the headline level came to the right answer - people who write or (first) publish content on the Internet are not intermediaries - the case raises a couple of issues worth pondering further.

First off, there was no Advocate-General’s opinion.  Querying this might seem churlish, given that I’ve just said the Court got to the right answer, and on the facts the judgment is a straightforward application of the Court’s existing law on Articles 12-14 in Google and L’Oreal.  It is, however, a sensitive area: currently a case, Delphi, concerning a news site and the self-same provisions is awaiting a judgment from the Grand Chamber of the European Court of Human Rights on whether there was a breach of freedom of expression in finding the journalists liable for defamation (see the Chamber judgment here).  While there is a crucial factual difference between the two cases (Delphi concerns liability for user generated content, not journalism), it is noteworthy that although Recital 9 recognises the significance of ISS for freedom of expression, Papsavvas did not even consider whether there was a freedom of expression argument in issue.

To some extent most of the questions referred by the national court seem to reflect a lack of familiarity with the internal market system generally. So, the application of the rules in this case might seem straightforward, but they might not always be so.  While it should come as no surprise that national rules imposing civil liability on a service ‘import’ could be a restriction, nor that ‘home’ regulation should not be circumvented by reliance on provisions aimed at cross-border services, the determination of the place of establishment may in itself be problematic, as cases on cross-border television services have shown.  The eCommerce Directive seems to refer to the Court’s general case law on this point (Article 2(c), Recital 19): the Court accept the establishment point as proven here in Papasavvas. 

There is a risk of forum shopping and, by contrast to the Audiovisual Media Services Directive (which deals with television), the eCommerce Directive has no ‘anti-abuse’ clause, although Member States may derogate on limited grounds (article 3(4), Recital 24). In this case, the Court did not address the question of whether rules relating to defamation could be seen as being justified under the protection of human dignity in Article 3(4)(a)(i).  Of course, a system which allows or even encourages delocalisation to another Member State has the consequence of adversely affecting would be plaintiffs under the national rules, especially private persons and small businesses. Even in rules of conflicts allow action in the injured party’s home state, there may be questions as to applicable law in the light of the home country regulatory principle (see eDate and Martinez). So, while the eCommerce Directive claimed not to affect rules on conflicts of law (Article 1(4)), there is an interrelationship there and one which may affect the effectiveness of remedies for users. 

Similarly, and as the Court itself noted, remuneration has typically been widely interpreted.  The Court referred to Bond van Adverteerders, a case concerning free-to-air commercial television – a set-up which has clear parallels with free to user internet services.  In its case law on Article 56 TFEU (freedom to provide services), the Court has gone further, even suggesting (in Deliege) that an amateur judoka was remunerated because she took part in competitions which carried advertising and which were televised.  Essentially the Court seemed to be saying, ‘there’s money there somewhere….’. Of course, there will be hard questions in some cases- ‘amateur’ content available freely: is that an ISS, and does the answer to the question change if the platform carries advertising entirely separately? In Delphi, it was the user generated content that was problematic. This question did not arise, however, as it was the underlying website that was sued, and it clearly was a commercial entity for the same reason that the newspaper in Papasavvas was.

Perhaps the interesting questions are those which deal with the interface between the immunity provisions and national law.  The purpose of these provisions is to encourage the development of the digital environment, particularly cross border services (recital 40). It should therefore make no difference if the service the intermediary carries is between businesses, or business to consumer, as indeed the Court ruled. The national court also questioned whether injunctions were permissible. The Court handed this one off to national procedural autonomy, but it is arguable that the terms of the directive suggest that injunctions are in principle permissible: each of the intermediary exceptions state that the exemption from liability does not affect the possibility of the Member State’s legal system requiring the intermediary to terminate the offending activity.

Finally, we come to the question of whether intermediaries can rely on the exemption directly before national courts: in effect, do these provisions have horizontal direct effect? The Court dealt with this by returning to basic principles precluding such an effect, but in doing so it argued that Union law precludes the imposition of an obligation on an individual. Of course, in this case the directive is not imposing an obligation on an individual but rather removing it. In this sense, although for different reasons, the position is closer to that in cases such as CIA Security International or even Wells, where a national obligation is disapplied. This area of law is problematic generally. Suffice it to note here that this approach knocks a potentially large hole in the protection of intermediaries if the Member State has not implemented, or not implemented correctly, indirect effect notwithstanding.

Barnard & Peers: chapter 6, chapter 14