Click-wrapping exclusive jurisdiction

July 22, 2015

This article first appeared in e-commerce law reports [2015] ECLR 1-32.

In Jaouad El Majdoub v. CarsOnTheWeb.Deutschland GmbH, the Court of Justice of the European Union (CJEU) ruled that an agreement formed by “click-wrapping” can be regarded as a “communication by electronic means which provides a durable record of the agreement” and thus as being in writing under the Brussels I Regulation.

Background

Mr Jaouad El Majdoub is a car dealer based in Cologne, Germany. He purchased an electric car from carsontheweb.com (COTW), an online B2B car auction site.

Mr El Majdoub bought the car for a very good price. However, the sale was cancelled by COTW on account of damage allegedly sustained by the car which was noted while it was being prepared to be shipped to the purchaser.

However, Mr El Majdoub took the view that the reason given for the cancellation was a pretext and that the real reason was because COTW discovered that the sale price was too low. He, therefore, commenced proceedings in the Landgericht Krefeld – the District Court in Krefeld, Germany - seeking an order that COTW transfer ownership of the car to him.

COTW responded that the German courts did not have jurisdiction in the case. This was because the terms and conditions of sale on its website (the “T&Cs”) provided that the courts of Leuven, Belgium shall have “exclusive jurisdiction” to settle any and all disputes which may arise.

Mr El Majdoub argued that the contract based on the T&Cs including the jurisdiction clause had not been validly incorporated into the sale agreement, as it was not “in writing” in accordance with the requirements in Articles 23(1)(a) and 23(2) of the Brussels I Regulation.

He argued that the webpage containing the T&Cs did not open automatically upon registration and upon every individual sale. Instead, there was a hyperlink to the T&Cs requiring an extra click in order to open them (known as ‘click wrapping’). He argued that the requirements of Article 23(2) are only met if a window containing the T&Cs opens automatically.

Brussels I Regulation

The 2001 Brussels Regulation (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) at Article 2(1) lays down the general principle that “persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State”.

Article 3(1) provides that “persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7” of Chapter II.

Section 7, entitled ‘Prorogation of jurisdiction’, at Article 23(1) and (2), provides (emphasis added):

“1. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either:

(a) in writing or evidenced in writing; or

(b) in a form which accords with practices which the parties have established between themselves; or

(c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.

2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.”

The issue referred to the CJEU

The question is, therefore, whether an agreement formed by ‘click-wrapping’ can be regarded as a “communication by electronic means which provides a durable record of the agreement” and, therefore, as being in writing, within the meaning of Article 23(2). If that were the case, the agreement conferring exclusive jurisdiction on a Belgian court would be valid and the German district court would not have jurisdiction to hear the dispute.

In order to determine the point on jurisdiction, the German district court decided to stay the main proceedings and to refer the following question to the CJEU for a preliminary ruling:

‘Does so-called “click wrapping” fulfil the requirements relating to a communication by electronic means within the meaning of Article 23(2) of [the Brussels I Regulation]?’

The decision of the CJEU

The CJEU noted that on the COTW website a potential purchaser must accept COTW’s T&Cs by clicking the relevant box before making a purchase. However, that did not automatically open the T&Cs. To open the T&Cs, the purchaser must make an extra click on a hyperlink to the T&Cs.

While it was common ground that the T&Cs contain a jurisdiction clause providing for the jurisdiction of a court in Leuven, Mr El Majdoub argued that the click-wrapping method of accepting the T&Cs does not fulfil the requirements laid down in Article 23(2), in that the window containing those conditions does not open automatically on registration on the site or during a transaction. Consequently, the jurisdiction clause cannot, in his view, be invoked against him.

The CJEU observed that the requirements of Article 23 must be strictly interpreted in so far as they exclude both jurisdiction of the courts of the State in which the defendant is domiciled as determined by the general principle laid down in Article 2, and the special jurisdiction provided for in Articles 5 to 7.

The court has a duty to examine (i) whether the clause conferring jurisdiction was in fact agreed between the parties as it is that consensus between the parties which justifies the primacy granted to the choice of a court other than that which would otherwise have had jurisdiction, and (ii) that the requirement for “writing” is met so as to ensure that consensus is in fact established.

In the present case, it is clear that the purchaser agreed to the T&Cs by clicking the relevant box on COTW’s website. However, according to Article 23(2), the validity of the jurisdiction clause depends on the possibility of providing a durable record of that agreement.

In that connection, the CJEU decided that, on a literal interpretation of Article 23(2), the requirement for a durable record of the agreement conferring jurisdiction is met if there is the possibility of providing a durable record of the agreement, regardless of whether the text of the T&Cs has actually been durably recorded (e.g. saved or printed) by the purchaser before or after he clicks the box indicating that he accepts the T&Cs.

Therefore, click-wrapping, which makes printing and saving the text of the T&Cs possible before the conclusion of the contract, constitutes a communication by electronic means which provides a durable record of the agreement, within the meaning of Article 23(2).

Consumer contracts

In reaching this conclusion, the CJEU noted that there is a difference between the position under Article 23(2) and the position under Article 5(1) of the Distance Contracts Directive (Directive 97/7/EC) in respect of consumer contracts. Under Article 5(1) a consumer must “receive” written confirmation or confirmation in another “durable medium available and accessible to him”.

In an earlier decision (Content Services Ltd v Bundesarbeitskammer (5 July 2012) Case C-49/11) the CJEU held that where information on a website is only accessible via a hyperlink it does not meet the requirements of Article 5(1) of the Distance Contracts Directive as the information is neither “given” by the undertaking nor “received” by the consumer, and a website cannot be regarded as a “durable medium” within the meaning of Article 5(1). In the context of Article 5(1), therefore, making information accessible only via a hyperlink does not meet the requirement of the Distance Contracts Directive in relation to the provision of written confirmation of information.

The CJEU said that that interpretation cannot be applied to Article 23(2) of the Brussels I Regulation, since both the wording of Article 5(1) of Directive 97/7, which expressly requires the communication of information to consumers in a durable medium, and the objective of that provision, which is specifically consumer protection, differ from those of Article 23(2). The decision in relation to Article 23(2) is, therefore, only applicable to B2B contracts.

Comment

Mr El Majdoub had argued that the requirements in Article 23(2) were not met because the webpage containing the T&Cs did not open automatically. However, following the logic of the earlier ruling in respect of Article 5(1) of the Distance Contracts Directive, it could have been argued that even opening the page automatically would not itself “provide” a durable record given that he has to make his own record by saving or printing and that if he omits to do so and returns to the page at a later time, the T&Cs may by then have been changed (thus not providing a durable record).
Notwithstanding this, the decision of the CJEU is a practical outcome and will be welcomed by online B2B merchants.

This decision will also apply to the “Recast Brussels Regulation” (Regulation (EU) 1215/2012), which replaces the 2001 Brussels Regulation for proceedings instituted on or after 10 January 2015.

 


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