The Unfairness of Choice-of-Law Clauses, Or: The (Unclear) Relationship of Art. 6 Rome I Regulation and the Unfair Terms in Consumer Contracts Directive
Common Market Law Review 55  pp. 201-224
21 Pages Posted: 2 Jul 2018
Date Written: January 15, 2018
Online-shopping is an integral part of modern life. More than ever before consumers buy goods over the internet rather than going to their local retail store. The by far most popular and most successful online-shop is Amazon, an American company that sells basically everything from books and DVDs to baby and beauty products to musical in-struments and gourmet food. Both in terms of total sales and market capitalization Amazon is the largest internet-based retailer in the world. In Europe, Amazon operates its online-shop through a subsidiary incorporated in Luxembourg which targets consumers from all over Europa via various websites in various languages under various top-level domains (e.g. amazon.de, amazon.fr, amazon.it, amazon.es). It naturally follows that the vast majority of contracts concluded by Amazon in Europe are international, cross-border consumer contracts which, in turn, give rise to a myriad of choice-of-law questions. In the above mentioned judgment the ECJ had the chance to answer three of them, including one that has troubled courts and academics for a long time: May choice-of-law clauses be unfair in the meaning of the Unfair Terms Directive?
The ECJ answered this question in the affirmative and held that choice-of-law clauses in general conditions of contract are unfair if they call for application of the trader’s law and the trader does not inform the consumer about the limited effects of choice of law under Article 6(2) Rome I Regulation. In my article I show that the judgment - even though appealing at first sight (Who would not like to be fully informed?) - triggers a number of follow-up questions and practical problems: First, the ECJ fails to explain how the Unfair Terms Directive relates to the Rome I Regulation on the law applicable to contractual obligations and whether the national provisions implementing the Directive apply by virtue of Article 6(2), Article 9 or Article 23 Rome I Regulation. As a result, it remains unclear under what conditions choice-of-law clauses will be subject to the Directive. Second, the Court does not detail to what extent choice-of-law clauses will be controlled for fairness under the Directive. In Amazon it „only“ applied the transparency provisions of the Unfair Terms Directive. However, the judgment seems to suggest that the Court is also prepared to apply the Directive’s provision on substantive fairness to choice-of-law clauses. Should the Court actually do so this would constitute a major break with fundamental principles of European Private International Law as enshrined in Articles 3 and 6 Rome I Regulation. Third, the Court fails to explain where the trader’s newly created information obligation comes from and how it can be aligned with the European legislature’s general decision against any such obligation. In addition, it fails to detail the exact scope and reach of the traders’ obligation, thus making it difficult for traders to inform consumers correctly.
What is the most troubling about the judgment, however, is that it shows a fundamental lack of familiarity with pervasive problems of choice of law. In fact, much of the judgment resembles the tip of an iceberg: It looks nice and pretty from a distance. But all kinds of dangers are lurking below the surface – dangers that the ECJ does not seem to be aware of. As far as the Court deals with the unfairness of choice-of-law clauses, the judgment, thus, proves – once more – that European Private International Law has apparently reached a degree of sophistication that does not make it easily accessible for lawyers not well-versed in the field. I have argued elsewhere, together with Jan von Hein, that the quality of ECJ judgments would benefit if the Court’s structure allowed for specialization. In the light of the Amazon judgment this proposal seems more justified than ever before.
Keywords: Choice of Law, Rome I Regulation, Unfair Terms Directive, Unfairness of Choice of Law Clauses, Amazon, Consumer Contracts, Overriding Mandatory Provisions
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