Contracts with consumers – where can a business sue and be sued?

Where a business has directed its activities to an EU member state in which a consumer is domiciled, two consequences follow: (i) it can generally only sue the consumer in that member state; and (ii) the consumer can choose to sue the business in that member state (among other options). Since 10 January 2015, that applies regardless of whether the business is itself EU domiciled or has any presence in the EU (see our post summarising the key changes under the recast Brussels Regulation).

The Court of Appeal has considered the test of when a business directs its activities to a member state, in the context of similar rules which apply to determine jurisdiction as between England and Wales, Scotland and Northern Ireland: Wood v Hewitsons LLP [2014] EWCA Civ 1698.

Here the question was whether an English firm of solicitors were directing their activities to Scotland and therefore could only sue their Scottish domiciled client in Scotland. The court applied the principles laid down by the CJEU in Peter Pammer v Reederei Karl Schluter GmbH & Co KG [2012] CLR 972, concluding there was nothing to suggest the nature of the activity was international and the activities were therefore not directed to Scotland.

The case is of interest as there are relatively few cases applying the Pammer principles in practice, and the court in this case appears to have taken a relatively strict approach on the facts in the context of professional services.

Background

Hewitsons, a firm of English solicitors, 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 began English court proceedings against her. Mrs Wood argued that only the Scottish courts had jurisdiction as she was a consumer (which was accepted) and Hewitsons had directed their activities to Scotland.

The county court refused Mrs Wood's jurisdiction challenge. She applied for permission to appeal.

Decision

Lord Justice Lewison, in refusing permission to appeal, considered and applied the following principles from Pammer (a case concerning holiday contracts):

"93. 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.

94. On the other hand, 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."

Most of these factors were neutral in an intra-UK setting. As to the international nature of the activity, Mrs Wood pointed to Hewitsons being a member of a large consortium of international firms and describing itself as a leading UK firm serving a national and international clientele. The judge thought however that that did not begin to suggest that the firm itself was engaged in international activities, given that membership of an international grouping is very common and the website links directed people to firms in Scotland.

Whether activities are directed to a member state will be fact sensitive in each case. The Court of Appeal in this case appears to have taken quite a strict approach in the context of professional services, suggesting that only if Hewitsons were offering to undertake professional work in Scotland would they be considered to be directing their professional activities there. This was not however 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. It is possible that a different view might be taken in such circumstances.