CJEU confirms validity of jurisdiction clauses agreed electronically by "click-wrapping"

In a very recent decision, the Court of Justice of the EU has clarified the requirement under the Brussels Regulation for a jurisdiction agreement to be "in writing" or "evidenced in writing" in the context of a contract concluded online: El Majdoub v CarsOnTheWeb.Deutschland GmbH (Case C‑322/14).

The seller's general terms and conditions containing the relevant jurisdiction clause had been incorporated into the contract by way of “click-wrapping”. This means that the webpage containing the terms and conditions does not open automatically upon registration or in the process leading to the individual transaction. Instead, to view the terms and conditions, the contracting party has to click on an additional link. The CJEU held that this was a valid jurisdiction clause, as the click-wrapping method of accepting the terms and conditions was equivalent to writing for the purposes of the Brussels Regulation.

Given that a few national courts had taken a different position, businesses will certainly welcome this decision as many use the click-wrapping method to incorporate terms and conditions in contracts concluded online. Dr Mathias Wittinghofer, a partner in our Frankfurt office, comments on the decision below.

Background

Under the Brussels Regulation (Council Regulation (EC) No 44/2001 on the recognition and enforcement of judgments in civil and commercial matters), agreements on jurisdiction must comply with the formal requirements set out in Article 23(1). Most notably, the agreement needs to be “in writing” or “evidenced in writing”. Article 23(2) adds that “[a]ny communication by electronic means which provides a durable record of the agreement shall be equivalent to writing”.

The present case was referred to the CJEU for a preliminary ruling at the request of the Regional Court of Krefeld in Germany. The dispute before the Krefeld court concerned a contract for sale concluded on the internet. Both parties were professional car dealers. The contract included the seller's general terms and conditions, which had been incorporated by way of “click-wrapping”.

The terms and conditions included a jurisdiction clause providing for the jurisdiction of a court in Leuven, Belgium. The purchaser contended that the click-wrapping method of accepting such terms and conditions did not fulfil the requirements laid down in Article 23(2) because the general terms and conditions had not opened automatically. The purchaser referred to German case law on the Brussels Regulation where the lower courts had held that communication by electronic means should only be equivalent to “in writing" if the purchaser was able to receive the agreement in writing without taking any further action.

Decision

The CJEU rejected that view and held that click-wrapping constitutes a communication by electronic means which provides for a durable record of the agreement within the meaning of Article 23(2). The Court said that this method is sufficient where it "makes it possible to print and save the text of those terms and conditions before the conclusion of the contract”.

The key elements of the CJEU's reasoning were these:

• It held that, under Article 23(2), a valid agreement on jurisdiction involving communication by electronic means only requires there to be the mere possibility of obtaining a durable record of the agreement of the parties. It held that this is the case “regardless of whether the text of the general terms and conditions has actually been durably recorded by the purchaser before or after he clicks the box indicating that he accepts those conditions”.
• The CJEU also pointed to the Explanatory Report of the Lugano Convention of 30 October 2007, the "twin sibling" of the Brussels Regulation. This Report suggests that the test of whether the formal requirement in Article 23 is met is “whether it is possible to create a durable record of an electronic communication by printing it out or saving it to a backup tape or disk or storing it in some other way”. The Report also suggests that this test is met “even if no such durable record has actually been made”, meaning that “the record is not required as a condition of the formal validity or existence of the clause”.
• The CJEU further referred to the history and purpose of Article 23. In particular, the CJEU looked to the Explanatory Memorandum on the Brussels Regulation. This memorandum emphasizes that the need for an agreement to be "in writing or evidenced in writing" should not invalidate a choice-of-forum-clause accessible only on screen. The CJEU argued that for this reason the purpose of Article 23(2) is “to treat certain forms of electronic communications in the same way as written communications in order to simplify the conclusion of contracts by electronic means, since the information concerned is also communicated if it is accessible on screen”. Where electronic communication offers the same levels of clarity and reliability, in particular for evidentiary purposes, “it is sufficient that it is possible to save and print the information before the conclusion of the contract”.
• The CJEU finally underlined the different scope of the Brussels Regulation on the one hand and the Directive 97/7/EC on the protection of consumers on the other hand. In relation to the latter, the Court had held that “a business practice consisting of making information accessible only via a hyperlink on a website does not meet the requirements” set out by its Article 5(1). That provision requires that the consumer must actually receive “written confirmation” or “confirmation in another durable medium available and accessible to him” prior to the conclusion of the contract. However, the CJEU explained that one cannot read the same meaning into Article 23 of the Brussels Regulation. After all, “both, the wording of Article 5(1) of Directive 97/7 … and the objective of that provision, which is specifically consumer protection, differ from those of Article 23(2)”.

Comment

The CJEU's decision is also applicable under the recast of the Brussels Regulation (Regulation (EU) No 1215/2012) which came into force early this year. The reason is that the new Article 25(2) has the same wording as the former Article 23(2). There might, however, be a change with regard to the relevance of the national domestic law. This is because the wording of Article 25(1) of the new Regulation allows for the validity of an agreement on jurisdiction to be determined under national domestic law, i.e. the law of the member state whose court is chosen under the clause.

Please note that with regard to business-to-consumer (B2C) contracts, even if a jurisdiction clause is contained in terms and conditions incorporated into the contract via the click-wrapping method, it is unlikely to be effective. This is because under Articles 17 to 19 of the Regulation (formerly Articles 15 to 17) jurisdiction clauses in consumer contracts are not effective unless very specific prerequisites are met.