European Court of Justice
All the material on this page is taken from press releases issued by the European Court of Justice. I have only chosen those matters which are likely to be of most use to me. Significant cases will be reviewed and discussed in regular postings.
26 August 2013
The European Court rules on the issue of contractual consequences of non-compliance with Article 19 of the Directive 2004/39/EC – Markets in financial instruments (MiFID)
The European Court rules as follows (Judgment of 30 May 2013, in Case C‑604/11, Genil 48 SL and Comercial Hostelera de Grandes Vinos SL v Bankinter SA and Banco Bilbao Vizcaya Argentaria SA):
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Article 19(9) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC must be interpreted as meaning, firstly, that an investment service is offered as part of a financial product only when it forms an integral part thereof at the time when that financial product is offered to the client and, secondly, that the provisions of European Union legislation and the common European standards referred to by that provision must enable there to be a risk assessment of clients and/or include information requirements, which also encompass the investment service which forms an integral part of the financial product in question, in order for that service no longer to be subject to the obligations laid down in Article 19.
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Article 4(1)(4) of Directive 2004/39 must be interpreted as meaning that the offering of a swap agreement to a client in order to cover the risk of variation of interest rates on a financial product for which that client has subscribed constitutes investment advice, as defined in that provision, provided that the recommendation to subscribe to such a swap agreement is made to that client in his capacity as an investor, it is presented as suitable for that person or based on a consideration of the circumstances of that person and it is not made solely through distribution channels or intended for the public.
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It is for the internal legal order of each Member State to determine the contractual consequences where an investment firm offering an investment service fails to comply with the assessment requirements laid down in Article 19(4) and (5) of Directive 2004/39, subject to observance of the principles of equivalence and effectiveness.
According to the Court, it should be noted that, although Article 51 of Directive 2004/39 provides for the imposition of administrative measures or sanctions against the parties responsible for non-compliance with the provisions adopted pursuant to that directive, it does not state either that the Member States must provide for contractual consequences in the event of contracts being concluded which do not comply with the obligations under national legal provisions transposing Article 19(4) and (5) of Directive 2004/39, or what those consequences might be.
As far as the Netherlands is concerned, it is left to the Dutch legislator to determine the contractual consequences where an investment firm fails to comply with the assessment requirements laid down in Article 19(4) and (5) of Directive 2004/39, subject to the principles of equivalence and effectiveness. According to Article 1:23 of the Dutch Financial Supervision Act (Wet financieel toezicht), the legal validity of a juridical act under private law performed in conflict with the rules laid down by or pursuant to this Act cannot be affected because of such conflict, unless provided otherwise in this Act.
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5 August 2013
The Court of Justice dismisses the appeal brought by FIFA and UEFA against the judgments of the General Court on television broadcasts of the World Cup and the EURO
Source: Press Release (for full text click here)
The Fédération internationale de football association (FIFA) organises the final stage of the football World Cup (‘the World Cup’) and the Union des associations européennes de football (UEFA) organises the final stage of the European football championship (‘the EURO’). Sales of television broadcasting rights for those competitions make up a significant part of their revenues.
Belgium and the United Kingdom each drew up a list of the events they regarded as being of major importance for society in their respective states. Those lists contained, inter alia, in the case of Belgium, all the matches in the final stage of the World Cup and, in the case of the United Kingdom, all the matches in the final stage of the World Cup and the EURO. Those lists were sent to the Commission, which decided that they were compatible with European Union law.
FIFA and UEFA challenged those decisions before the General Court, arguing that not all those matches could constitute events of major importance for the general public in those States. The General Court dismissed their actions, which led them to lodge appeals before the Court of Justice.
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The Court notes that not all the matches in the final stage of the World Cup and the EURO are of equal importance for the general public, which tends to attach particular importance to decisive matches between the best teams – such as the final and semi-finals – and those involving the national team. Consequently, those tournaments must be regarded as events which are, in principle, divisible into different matches or stages, not all of which are necessarily capable of being characterised as an event of major importance.
In that regard, the Court also states that, contrary to the grounds given in the judgments under appeal, the Member States are required to communicate to the Commission the reasons justifying why they consider that the final stage of the World Cup or the EURO constitutes, in its entirety, a single event of major importance for society in the States concerned.
However, those errors did not have any impact in the present cases. The General Court found, on the basis of the information provided by FIFA and UEFA and in the light of the actual perception of the public in the United Kingdom and Belgium, that all the matches in the final stages of those two tournaments actually attracted sufficient attention from the public to form part of an event of major importance. In particular, it is apparent from the file, first, that those tournaments, in their entirety, have always been very popular among the general public and not only viewers who generally follow football matches on television. Second, those competitions have traditionally been broadcast on free television channels in those Member States.
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3 June 2013
Decree of the Flemish Community requiring all cross-border employment contracts to be drafted in Dutch infringes freedom of movement for workers
Source: Press Release (for full text click here)
In Belgium, a decree of the Flemish Community requires the use of Dutch, inter alia, for the drafting of employment contracts concluded between employees and employers, where the employer’s established place of business is in the Dutch-language region. Non-compliance with that linguistic obligation results in the nullity of the employment contract, but without prejudice to the employee or to the rights of third parties.
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In its judgment delivered April 16, 2013, the Court points out, first, that the employment contract at issue falls within the scope of freedom of movement for workers, since it was concluded between a Netherlands national, resident in the Netherlands, and a company established in Belgian territory. In addition, the principle of freedom of movement may be relied on not only by workers, but also by employers. The Court points out that the provisions relating to freedom of movement for workers are intended to facilitate the pursuit of occupational activities of all kinds throughout the EU, and preclude measures which might place EU nationals at a disadvantage when they wish to pursue an economic activity in the territory of another Member State.
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The Court states that such a restriction is justified only if it pursues an objective in the public interest, is appropriate to ensuring the attainment of that objective, and is strictly proportionate. In response to the justifications advanced by the Belgian Government, the Court points out that EU law does not preclude the adoption of a policy for the protection and promotion of one or more official languages of a Member State. The EU must respect its rich cultural and linguistic diversity. It must also respect the national identity of its Member States, which includes protection of the official language or languages of those States.
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Yet parties to a cross-border employment contract do not necessarily have knowledge of Dutch. In such a situation, the establishment of free and informed consent between the parties requires those parties to be able to draft their contract in a language other than the official language of that Member State. Moreover, the Court continues, legislation which would also permit the drafting of an authentic version in a language known to all the parties concerned would be less prejudicial to freedom of movement for workers while being appropriate for securing the objectives pursued by that legislation. Therefore, according to the Court, the contested decree goes beyond what is strictly necessary to attain the objectives invoked and cannot be regarded as proportionate.
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26 February 2013
Passengers on connecting flights must be compensated when their flight arrives at the final destination at least three hours late
Source: Press Release (for full text click here)
Consequently, in the case of directly connecting flights, the fixed compensation must be determined according to the delay beyond the scheduled time of arrival at the final destination, understood as the destination of the last flight taken by the passenger concerned.
The opposite approach would constitute an unjustified difference in treatment, inasmuch as it would effectively treat passengers of flights arriving at their final destination three hours or more after the scheduled arrival time differently depending on whether their flights were delayed beyond the scheduled departure time by more than the limits set out in the regulation, even though their inconvenience linked to an irreversible loss of time is identical.
The Court makes clear in that regard that the fixed compensation to which a passenger is entitled under the regulation, when his flight reaches the final destination three hours or more after the scheduled arrival time, is not dependent on the conditions giving entitlement to the measures of assistance and care being met, those conditions being applicable where a flight is delayed at departure.
As regards the financial consequences for air carriers, the Court notes that such consequences may be mitigated, first of all, when an air carrier can prove that the long delay is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken, that is, circumstances which are beyond the air carrier’s actual control (Wallentin-Hermann; Case C-549/07). Next, the discharge of obligations pursuant to the regulation is without prejudice to air carriers’ rights to seek compensation from any person who caused the delay, including third parties (Nelson and Others). Lastly, the amount of compensation, fixed at €250, €400 and €600 depending on the distance of the flights concerned, may still be reduced by 50% in accordance with the regulation, where the delay is, in the case of a flight of more than 3,500 kilometres, less than four hours.
The Court also notes that the objective of consumer protection, and therefore the protection of air passengers, may justify even substantial negative economic consequences for certain economic operators.
Therefore, the Court answers that a passenger on directly connecting flights must be compensated when he has been delayed at departure for a period below the limits specified in the regulation, but has arrived at his final destination at least three hours later than the scheduled arrival time. That compensation is not conditional upon there having been a delay at departure.
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31 January 2013
An air carrier must provide care to passengers whose flight has been cancelled due to extraordinary circumstances
Source: Press Release (for full text click here)
In the event of cancellation of a flight, the air carrier is obliged, under EU law, to provide care to passengers as well as to provide compensation. As regards the obligation to provide care, the air carrier must provide free of charge, in light of the waiting time, refreshments, meals and, where appropriate, hotel accommodation and transport between the airport and place of accommodation, as well as means of communication with third parties. The air carrier is obliged to fulfill that obligation even when the cancellation of the flight is caused by extraordinary circumstances, that is to say circumstances which could not have been avoided even if all reasonable measures had been taken. The air carrier is, however, exempt from its obligation to provide compensation if it is able to prove that the cancellation of the flight was caused by such circumstances.
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The Court states that circumstances such as the closure of part of European airspace as a result of a volcanic eruption such as that of the Eyjafjallajökull volcano constitute ‘extraordinary circumstances’ which do not release air carriers from their obligation to provide care.
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Nonetheless, the Court states that when an air carrier has failed to comply with its obligation to provide care to an air passenger, that passenger may only obtain, by way of compensation, reimbursement of the amounts which proved necessary, appropriate and reasonable to make up for the shortcomings of the air carrier, a matter which is for the national court to assess.
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24 January 2013
EU law precludes OPAP from having an exclusive right to organize and operate games of chance in Greece
Source: Press Release (for full text click here)
In its judgment today, the Court notes, firstly, that national legislation which grants a monopoly to OPAP (Organismos prognostikon agonon podosfairou AE – organization for football betting) and prohibits providers established in another Member State from offering the same games of chance on Greek territory constitutes a restriction on the freedom to provide services or on the freedom of establishment. It then examines whether such a restriction may be allowed as a derogation on grounds of public policy, public security or public health or justified by overriding reasons in the public interest.
Next, the Court observes that the legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States and that, in the absence of Community harmonization in the field, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required in order to ensure that the interests in question are protected. Thus, as already recognized by its case-law, restricting the supply of games of chance and combating criminality linked to those games may justify restrictions on fundamental freedoms.
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The Court then answers that EU law precludes national legislation which grants the exclusive right for games of chance to a single entity, without genuinely reducing opportunities for gambling where it does not either limit activities in that domain in a consistent and systematic manner or ensure strict control of the expansion of the sector of games of chance solely in so far as is necessary to combat criminality.
The Court further states that, by reason of the primacy of directly-applicable EU law, national legislation which comprises restrictions that are incompatible with the freedom of establishment and the freedom to provide services cannot continue to apply during a transitional period. Consequently, during that period, national authorities may not refrain from considering applications.
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8 November 2012
The Greek scheme of prior authorization for the acquisition of voting rights in strategic public limited companies and of ex post control is contrary to the freedom of establishment
Source: Press Release (for full text click here)
Greek legislation requires prior authorization for the acquisition of voting rights representing 20% or more of the share capital in certain strategic public limited companies which operate national infrastructure networks within a monopoly context. There is provision for ex post control in regard to the adoption of certain decisions.
In its judgment delivered on 8 November 2012, the Court points out first of all that the Treaty allows the Member States to establish a privatization scheme in compliance with the fundamental freedoms guaranteed by the Treaty. In other words, if a State decides to transform public undertakings into public limited companies whose shares are quoted on the stock exchange and may be purchased freely on the market, it cannot subsequently invoke the rule on the protection of private property to remove such acquisitions from the ambit of the fundamental freedoms by making them subject to an authorization scheme.
Next, the Court examines the justification for the restrictions on the freedom of establishment in the light of the objective, invoked by Greece, of ensuring the continuity of basic services and the operation of networks necessary to economic and social life (that is to say, energy and water supply, telecommunications and the management of the country’s two largest ports).
The Court points out that the security of energy supply can only be relied on as a justification if there is a genuine and sufficiently serious threat to a fundamental interest of society. The Court then examines whether the Greek legislation is appropriate and proportionate for the purpose of attaining the objectives invoked.
In conclusion, the Court finds that both the prior authorization and the ex post control leave the national authorities with a measure of discretion which is too extensive and not easily amendable to judicial review. Consequently, the restrictions on the freedom of establishment inherent in the Greek scheme of prior authorization and ex post control are contrary to the freedom of establishment and cannot be justified.
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8 September 2010
The public monopoly of the organisation of sporting bets and lotteries in Germany does not pursue the objective of combating the dangers of gambling in a consistent and systematic manner
Source: Press Release (for full text click here)
The Court of Justice finds, first, that the German rules on sporting bets constitute a restriction on the freedom to provide services and the freedom of establishment. Nevertheless, the Court recalls that such a restriction may be justified by imperative reasons in the public interest, such as preventing incitement to squander on gambling and combating gambling addiction. However, the national measures for attaining those objectives must be suitable for attaining them and must be limited to the restrictions necessary for that purpose.
In that regard, the Court considers that, with a view to channelling the desire to gamble and the operation of games into a controlled circuit, Member States are free to establish public monopolies. In particular, such a monopoly is likely to overcome the risks connected with the gaming industry more effectively than a system under which private operators are authorised to organise bets subject to compliance with the relevant legislation.
Next, the Court observes that the fact that some games of chance are subject to a public monopoly whilst others are subject to a system of authorisations issued to private operators cannot, in itself, call into question the consistency of the German system as those games have different characteristics.
However, the Court of Justice finds that, having regard to the findings which they made in those cases, the German courts are right to take the view that the German rules do not limit games of chance in a consistent and systematic manner. First, the holders of public monopolies carry out intensive advertising campaigns with a view to maximising profits from lotteries, thereby departing from the objectives justifying the existence of those monopolies. Secondly, with regard to games of chance such as casino games and automated games, which do not fall within the public monopoly but carry a greater risk of addiction than games which are subject to that monopoly, the German authorities carry out or tolerate policies designed to encourage participation in those games. In such circumstances, the preventive objective of that monopoly can no longer be pursued, so that the monopoly ceases to be justifiable.
The Court of Justice further notes that national rules concerning that monopoly, held to be contrary to the fundamental freedoms of the Union, cannot continue to apply during the time necessary to bring it into conformity with Union law.
Finally, the Court of Justice recalls that Member States have a broad discretion in determining the level of protection against the dangers emanating from games of chance. Thus, and in the absence of any Community harmonisation in the matter, Member States are not required to recognise authorisations issued by other Member States in that area. For the same reasons, and having regard to the risks posed by games of chance on the internet in comparison with traditional games of chance, Member States may also prohibit the offering of games of chance on the internet.
22 September 2009
ADVOCATE GENERAL POIARES MADURO CONSIDERS THAT GOOGLE HAS NOT INFRINGED TRADE MARK RIGHTS BY ALLOWING ADVERTISERS TO BUY KEYWORDS CORRESPONDING TO REGISTERED TRADE MARKS
Advocate General’s Opinion in Joined Cases C-236/08, C-237/08 and C-238/08 re Google France & Google Inc. v Louis Vuitton Malletier, Google France v Viaticum & Luteciel and Google France v CNRRH, Pierre-Alexis Thonet, Bruno Raboin & Tiger, franchisée Unicis
“Google’s liability may be engaged for featuring content in AdWords that involves trade mark infringement.
Under Community trade mark rules (First Council Directive 89/104/EEC and Council Regulation (EC) No 40/94), the owner of a trade mark can prohibit others from using the sign in advertising.
The E-Commerce Directive (2000/31/EC) exempts, under certain conditions, information society service providers from liability for the information stored at the request of a recipient of the service. The exemption applies where: (i) there is an information society service; (ii) that service consists in the storage of information, provided by the recipient of the service, at the request of that recipient; and (iii) the provider of the service has no actual knowledge of the illegal nature of the information, or of facts which would make such illegality apparent, and duly acts to remove it upon becoming aware of its illegality.
Google allows internet users free access to the Google search engine. On entering keywords into that search engine, users are presented with a list of natural results selected and ranked according to their relevance to the keywords, determined by objective criteria.
Google also operates an advertising system called ‘AdWords’, which enables ads to be displayed, alongside natural results, in response to keywords. These ads typically consist of a short commercial message and a link to the advertiser’s site; they are differentiated from natural results by their placement and design. Through AdWords, Google allows advertisers, in return for payment, to select keywords so that their ads are displayed to internet users in response to the entry of those keywords in Google’s search engine. Google supports its search engine with its income from AdWords.
In France, legal proceedings have been initiated by trade mark owners against Google as to the legality of the use, in the Adwords advertising system, of keywords corresponding to trade marks. It has been established in those proceedings that entering certain trade marks into Google’s search engine triggered the display of ads for sites offering counterfeit versions of the products covered by the trade mark or identical or similar products of competitors.
The Cour de cassation, called upon to settle the issue at last instance, has asked the Court of Justice whether Google has committed a trade mark infringement by making available such keywords to advertisers and if the company can be held liable for the content featured in AdWords.
In his Opinion delivered today, Advocate General Poiares Maduro suggests that Google has not committed a trade mark infringement by allowing advertisers to select, in AdWords, keywords corresponding to trade marks. He highlights that the use of the trade marks is limited to the selection of keywords which is internal to AdWords and concerns only Google and the advertisers. When selecting keywords, there is thus no product or service sold to the general public. Such a use cannot therefore be considered as being a use made in relation to goods or services identical or similar to those covered by the trade marks. Similarly, advertisers themselves do not commit a trade mark infringement by selecting in Adwords keywords corresponding to trade marks.
By contrast, the Advocate General finds that Google, by displaying ads in response to keywords corresponding to trade marks, establishes a link between those keywords and the sites advertised which sell products identical or similar to those covered by the trade marks. The very same link is established between keywords which correspond to trade marks, and the sites displayed as natural results.
However, in the view of the Advocate General, such a link also does not constitute a trade mark infringement. In effect, the mere display of relevant sites in response to keywords is not enough to establish a risk of confusion on the part of consumers as to the origin of goods or services. Internet users are aware that not only the site of the trade mark owner will appear as a result of a search in Google’s search engine and sometimes they may not even be looking for that site. These users will only make an assessment as to the origin of the goods or services advertised on the basis of the content of the ad and by visiting the advertised sites; no assessment will be based solely on the fact that the ads are displayed following the entry of keywords corresponding to trade marks.
The Advocate General then recalls that trade mark rights cannot be construed as classical property rights enabling the trade mark owner to exclude any other use. Accordingly, internet users’ access to information concerning the trade mark should not be limited to or by the trade mark owner even if it involves a trade mark which has a reputation. He notes that many of the sites reached by internet users by entering keywords are perfectly legitimate and lawful even if they are not the sites of the trade mark owner.
Mr. Poiares Maduro also rejects the notion that Google’s actual or potential contribution to a trade mark infringement by a third party should constitute an infringement in itself. He opines that instead of being able to prevent, through trade mark protection, any possible use – including many lawful and even desirable uses –, trade mark owners would have to point to specific instances giving rise to Google’s liability in the context of illegal damage to their trade marks.
In this context, the Advocate General finds that both Google’s search engine and AdWords constitute information society services. He adds that service providers seeking to benefit from a liability exemption under the E-Commerce Directive should remain neutral as regards the information they carry or host.
However, whilst the search engine is a neutral information vehicle applying objective criteria in order to generate the most relevant sites to the keywords entered, that is not the case with Adwords where Google has a direct pecuniary interest in internet users clicking on the ads’ links.
Accordingly, the liability exemption for hosts provided for in the E-Commerce Directive should not apply to the content featured in AdWords.
Please note: The Advocate General’s Opinion is not binding on the Court.”
9 July 2009
PASSENGERS ON AN INTRA-COMMUNITY FLIGHT MAY BRING THEIR CLAIMS FOR FLAT-RATE COMPENSATION IN THE EVENT OF CANCELLATION BEFORE THE COURT OF THE PLACE OF DEPARTURE OR ARRIVAL OF THE AIRCRAFT
Judgment of the Court of Justice in Case C-204/08 – Rehder v. Air Baltic
“Neither the location of the head office of the company operating the flight nor the place where the air transport contract was entered into is conclusive with regard to the choice of the court having jurisdiction.
A claim for compensation following the cancellation of a flight provides the Court of Justice with an opportunity to define the rules governing jurisdiction in the field of air transport.
The regulation on compensation and assistance to air passengers [Regulation (EC) No 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights (OJ 2004 L 46, p. 1] provides, in the event of cancellation of a flight, that passengers may receive flat-rate compensation of between EUR 250 and EUR 600. Where an airline refuses to pay the flat-rate compensation, the question then arises whether, in the case of a flight within the Community, the passenger concerned, under the Community regulation on jurisdiction, may bring the matter before a court in another Member State in addition to the court within the territorial jurisdiction of which that airline has its head office [Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1].
Peter Rehder, who resides in Munich, booked a flight from Munich to Vilnius with Air Baltic, the head office of which is in Riga (Latvia). About 30 minutes before the scheduled time of departure from Munich, passengers were informed that their flight had been cancelled. After his booking had been changed by Air Baltic, Mr Rehder took a flight to Vilnius via Copenhagen.
By an application lodged with the Amtsgericht Erding, the court having territorial jurisdiction over Munich airport, Mr Rehder requested that Air Baltic be ordered to pay him compensation in the amount of EUR 250 in accordance with the regulation on compensation and assistance to air passengers.
Taking the view that air transport services are provided at the aircraft’s place of departure, which implies that the place of performance of the contractual obligation, within the terms of the regulation on jurisdiction, is that of the airport of departure, the Amtsgericht Erding held that it had jurisdiction to deal with Mr Rehder’s claim for compensation.
Following a successful appeal by Air Baltic to have that decision set aside, on the ground that jurisdiction lies with the court within the territorial jurisdiction of which the head office of the airline company is situated, Mr Rehder subsequently brought the matter before the Bundesgerichtshof. The latter court has expressed uncertainty as to whether, in legal disputes arising from international air transport contracts, the special jurisdiction in respect of contractual obligations should not generally be concentrated in a single place of performance.
In its judgment delivered today, the Court of Justice finds that, where there are several places at which services are provided in different Member States, it is necessary to identify the place which provides the closest connecting factor between the contract in question and the court having jurisdiction, in particular the place where, pursuant to that contract, the main provision of services is to be carried out.
The place of the head office or the principal place of establishment of the airline concerned does not have the necessary close link to the contract. The operations and activities undertaken from that place, such as, in particular, the provision of an adequate aircraft and crew, are logistical and preparatory measures for the purpose of performing the contract relating to air transport and are not services the provision of which is linked to the actual content of the contract. The same is true with regard to the place where the contract for air transport is concluded and the place where the ticket is issued.
The services the provision of which corresponds to the performance of the obligations arising from a contract to transport passengers by air are the checking-in and boarding of passengers, the on-board reception of those passengers at the place of take-off agreed in the transport contract in question, the departure of the aircraft at the scheduled time, the transport of the passengers and their luggage from the place of departure to the place of arrival, the in-flight care of the passengers and, finally, the disembarkation of the passengers in safe conditions at the place of landing and at the time scheduled in that contract.
The only places which have a direct link to those services, provided in performance of obligations linked to the subject-matter of the contract, are those of the departure and arrival of the aircraft, the ‘places of departure and arrival’ having to be understood as those agreed in the contract of carriage in question, made with one sole airline which is the operating carrier.
Each of those two places has a sufficiently close link of proximity to the material elements of the dispute and, accordingly, ensures the close connection between the contract and the court having jurisdiction. Consequently, a claim for compensation following the cancellation of a flight may be brought, as a matter of choice on the part of the passenger concerned, before the court having territorial jurisdiction over the place of departure or of arrival.”
Click here for the full text of the judgment.
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