Feb 10, 2015

Consumer Contracts - Jurisdiction - Where can Businesses Sue and be Sued?

Where a business has directed its activities to an EU member state in which a consumer is domiciled it can generally only sue the consumer in that member state and the consumer can choose to sue the business in that state. Since 10 January 2015, that applies regardless of whether the business is itself EU domiciled or has any presence in the EU.

The Court of Appeal recently considered the test of when a business 'directs its activities' to a member state.In Wood v Hewitsons LLP an English firm of solicitors were directing their activities to Scotland and therefore could only sue their Scottish domiciled client in Scotland.

Hewitsons advised Mrs Wood, who lived and was domiciled in Scotland, on the validity of an English will. When she failed to pay their fees, Hewitsons instituted court proceedings in England to recover the fees owed to it.  Mrs Wood argued that the Scottish courts had jurisdiction as she was a consumer and Hewitsons had directed their activities to Scotland.

The county court refused Mrs Wood's jurisdiction challenge. She applied for permission to appeal.  Permission was refused by the Court of Appeal which commented (Lord Justice Lewison) that, "the mere accessibility of the trader's or the intermediary's website in the Member State in which the consumer is domiciled is insufficient. The same is true of mention of an email address and of other contact details, or of use of a language or a currency which are the language and/or currency generally used in the Member State in which the trader is established."

Lord Justice Lewison gave some guidance on what would be taken into account in assessing whether a traders business was directed towards a Member State as follows, "The following matters, the list of which is not exhaustive, are capable of constituting evidence from which it may be concluded that the trader's activity is directed to the Member State of the consumer's domicile, namely the international nature of the activity, mention of itineraries from other Member States for going to the place where the trader is established, use of a language or a currency other than the language or currency generally used in the Member State in which the trader is established with the possibility of making and confirming the reservation in that other language, mention of telephone numbers with an international code, outlay of expenditure on an internet referencing service in order to facilitate access to the trader's site or that of its intermediary by consumers domiciled in other Member States, use of a top-level domain name other than that of the Member State in which the trader is established and mention of an international clientele composed of customers domiciled in various Member States. It is for the national courts to ascertain whether such evidence exists."

Whether activities are directed to a member state will depend on the facts of each case. The Court of Appeal in this case appears to have taken quite a strict approach in the context of professional services. This was not a case in which it could be shown that services were marketed specifically to consumers in Scotland, even though the work would take place in England.

in: Civil Procedure, Companies, Consumer Law, Contract

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