Case Summary and Outcome

The Court of Justice of the European Union (CJEU), in a preliminary ruling, held that a privacy rights activist and campaigner, Max Schrems, could not lose his status as a “consumer” in his contractual relationship with Facebook because of his activities in campaigning and litigating against Facebook. This meant that he should be able to rely on the European Union’s special rules on jurisdiction in cases concerning “consumers” (Regulation 44/2001), which allow “consumers” to sue the other party to their consumer contract before their own domestic courts (rather than the courts where the other party is based). This was relevant to Mr. Schrems as he wanted to bring data protection claims against Facebook Ireland before the Austrian courts. The preliminary ruling followed a request from the Austrian Supreme Court to the CJEU. The CJEU reasoned that activities such as publishing books, giving lectures, operating websites, fundraising and being assigned the claims of numerous consumers for the purpose of their enforcement in judicial proceedings did not entail the loss of a private Facebook account user’s status as a “consumer”. However, the CJEU did not agree that Regulation 44/2001 could be interpreted as giving the Austrian courts jurisdiction to hear, at the same time as considering Mr. Schrem’s personal claim against Facebook, the similar claims of third parties that had been assigned to him. Although this case hinders the ability of one person to bring class action consumer rights cases before their domestic courts, the decision promotes freedom of expression by clarifying that a person will not be deprived of certain consumer rights protections under EU law simply because they publicly campaign against the party that they are in a consumer contract with.

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Facts

Maximillian Schrems, an Austrian citizen, had been a Facebook user since 2008. He started using Facebook only for personal purposes with a personal account under a false name. Since 2010, he had been using his Facebook account solely for his private activities such as exchanging photos, chatting, and posting content. Since 2011, he had opened a Facebook page registered and established by him to promote his activities as a privacy activist. He used the page to keep followers updated on his legal proceedings against Facebook Ireland, his lectures, his participation in panel debates and his media appearances. He also used it to call for the donation of funds and to publicize his books. In 2011, he lodged 23 complaints to the Irish Data Protection Commissioner against Facebook Ireland (one of them reached the Court of Justice of the European Union – Schrems v Data Protection Commissioner).

Mr. Shrems had published two books about his legal proceedings against alleged infringements of data protection, had given lectures (some of which were remunerated), and had registered a number of internet websites such as blogs, online petitions and crowdfunding sites to finance legal proceedings against Facebook Ireland. He also founded a non-profit organization, the purpose of which was to seek to uphold the fundamental right to data protection. In doing so, it sought to provide financial support for strategic cases to be taken against undertakings which potentially endangered the right to data protection. In the course of this work, over 25,000 people worldwide had assigned to him their claims to be brought against Facebook Ireland in the present case.

Mr. Schrems claimed, in essence, that Facebook Ireland had committed several infringements of data protection provisions under (among others) Austrian, Irish and EU law. Mr. Schrems brought an action before the Regional Civil Court in Vienna seeking declaratory relief, an injunction prohibiting the use of his data for certain purposes, disclosure concerning the use of his data, the production of accounts and damages in respect of variation of contract terms, harm suffered and unjustified enrichment.

He was claiming that he had standing to bring the case in Austria on the basis of both his own rights, and similar rights which seven other Facebook users residing in Austria, Germany and India had assigned to him for the purposes of his action against Facebook Ireland. He claimed that he and the seven others were “consumers” and that, according to Article 16 of EU Regulation 44/2001, the Regional Civil Court had international jurisdiction as the “forum of a consumer”.  Article 15 of EU Regulation 44/2001 states that the rules of jurisdiction for “consumers” will apply where a consumer contract has been concluded by a person (the consumer) “for a purpose which can be regarded as being outside his trade or profession.” Article 16 of EU Regulation 44/2001, which provided specific jurisdictional rules for “consumers,” stated that “[a] consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled.” [emphasis added]

The Regional Civil Court dismissed his claim on the ground that, since he was also using Facebook for professional purposes, he could not rely on that provision regulating consumer contracts. Furthermore, the Regional Civil Court found that the jurisdiction to hear the assignors’ claims could not be assigned to Mr. Schrems.

On appeal, the Higher Regional Court in Vienna upheld the claims related to the contract between Mr. Schrems and Facebook Ireland, but dismissed the appeal as it concerned the assigned claims on the ground that the forum of a consumer could only be invoked by an applicant relying on his own claims.

The parties brought an appeal on a point of law (i.e. Revision) to the Supreme Court of Austria, which subsequently referred the following questions for preliminary ruling by the Court of Justice of the European Union:

The Supreme Court then referred the following questions for preliminary ruling:

1. Is Article 15 of Regulation No 44/2001 to be interpreted as meaning that a “consumer” within the meaning of that provision loses that status if, after the comparatively long use of a private Facebook account, he publishes books in connection with the enforcement of his claims, on occasion also delivers lectures for remuneration, operates websites, collects donations for the enforcement of his claims and has assigned to him the claims of numerous consumers on the assurance that he will remit to them any proceeds awarded, after the deduction of legal costs?
2. Is Article 16 of Regulation No 44/2001 to be interpreted as meaning that a consumer in a Member State can also invoke at the same time as his own claims arising from a consumer supply at the claimant’s place of jurisdiction the claims of others consumers on the same subject who are domiciled (a) in the same Member State [of the EU], (b) in another Member State, or (c) in a non-member State, if the claims assigned to him arise from consumer supplies involving the same defendant in the same legal context and if the assignment is not part of a professional or trade activity of the applicant, but rather serves to ensure the joint enforcement of claims?

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Decision Overview

The Court of Justice of the European Union (Court) considered the two questions on the interpretation of Regulation 44/2001 separately.

The meaning of “consumer” under Regulation 44/2001

The Court first had to examine whether Article 15 of Regulation 44/2001 was to be interpreted as meaning that the activities of publishing books, lecturing, operating websites, fundraising and being assigned the claims of numerous consumers for the purpose of their enforcement did not entail the loss of a private Facebook account user’s status as a “consumer” within the meaning of that provision.

The Court first recalled the general principle under EU law that persons domiciled in a Member State must be sued in the courts of that Member State. It went on to note that derogations to this general principle were provided for in an exhaustive list, and had to be strictly interpreted.

Therefore, the Court reasoned that the notion of “consumer” under Articles 15 and 16 of Regulation 44/2001 had to be strictly construed. First, the Court noted that reference had to be made of the position of the person concerned in a particular contract, having regard to the nature and objective of that contract and not to the subjective situation of the person concerned. Secondly, the Court explained that the special jurisdiction rules for “consumers” only apply to contracts “concluded outside and independently of any trade or professional activity or purpose, solely for the purpose of satisfying an individual’s own needs in terms of private consumption”. [paras. 29-30] This was because the special rules were designed to protect weaker parties, and such protections are unwarranted in cases of contracts for trade or professional activity.

Therefore, the special jurisdiction rules for “consumers” in Regulation 44/2001 only applied where the contract had been concluded between the parties for the purpose of a use of the relevant goods or services that is other than a trade or professional use. The Court clarified that where the contract was concluded for a purpose that was partly concerned with a person’s professional activity, Articles 15 and 16 of Regulation 44/2001 only applied if the link between the contract and the trade/profession was so slight as to be marginal and, therefore, had a negligible role in the context of the supply in respect of which the contract was concluded. [para. 32]

The Court noted that, when applying these rules in the context of contracts for services of a digital social media network which are intended to be used over a long period of time, subsequent changes in the use which is made of those services must be taken into account. A social network user can only rely on the special rules on jurisdiction in bringing a case, in such circumstances, where they can show that their predominantly non-professional use of those services had not subsequently become predominantly professional. Nonetheless, the Court was careful to clarify that the fact that an individual has acquired expertise or knowledge in the field covered by the services under contract, or that they have given assurances to represent the rights and interests of the users of those services, cannot deprive them of their status as a “consumer” under Regulation 44/2001. The Court observed that, if they were so deprived, then this would “have the effect of preventing an effective defence of the rights that consumers enjoy in relation to their contractual partners who are traders or professionals, including those rights which relate to the protection of their personal data.” [para. 40]

In light of the above, the Court held that the notion of “consumer” under Article 15 Regulation 44/2001 must be interpreted as meaning that the activities of publishing books, lecturing, operating websites, fundraising and being assigned the claims of numerous consumers for the purpose of their enforcement did not entail the loss of a private Facebook account user’s status as a “consumer” within the meaning of that article.

The possibility of bringing class actions in the Member State where one of the consumers is domiciled

The Court then focused on the second question on the interpretation of Article 16 Regulation 44/2001. Namely, whether the provision applies to proceedings brought by a consumer for the purpose of asserting, in the courts of the place where he is domiciled, not only his own claims but also the claims assigned to him by other consumers domiciled in (i) the same Member State, (ii) in other Member States, or (iii) in non-member countries.

The Court repeated that as this provision was a derogation from the general principle of jurisdiction it was to be interpreted strictly. The Court clarified that the special rules on jurisdiction in cases concerning “consumers” was “inspired by the concern to protect the consumer as the party deemed to be economically weaker and less experienced in legal matters than the other party to the contract, the consumer is protected only in so far as he is, in his personal capacity, the plaintiff or defendant in proceedings. Consequently, an applicant who is not himself a party to the consumer contract in question cannot enjoy the benefit of the jurisdiction relating to consumer contracts. The same considerations must also apply to a consumer to whom the claims of other consumers have been assigned.” [para. 44] The Court clarified that Article 16 Regulation 44/2001 applied only to an action brought by a consumer against the other party to the contract, which necessarily implied that a contract had been concluded by the consumer with the trader professional concerned. It opined that this meant that attribution of jurisdiction was more predictable.

The Court disagreed with the argument put forward by Mr. Schrems and found that the fact that he was bringing claims on his consumer rights before the courts where he was domiciled that were similar to those which were assigned to him did not, as such, bring those assigned claims within the jurisdiction of the courts where he was domiciled. The Court also stated that the jurisdiction of courts could not be established through the concentration of several claims in the person of a single applicant. [para. 48]

In light of this, the Court held that Article 16 of Regulation 44/2001 must be interpreted as meaning that it did not apply to the proceedings brought by a consumer for the purpose of asserting, in the courts of the place where he was domiciled, not only his own claims, but also claims assigned by other consumers domiciled in the same Member State, in other Member States or in non-member countries.

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