Consumer Arbitration in Selected Countries - Part IV - B2C Arbitration: Consumer Protection in Arbitration
Alexander Bělohlávek is Founder and Senior Partner of The Bělohlávek Law Offices, Prague. He is a Member of the International Court of Arbitration at the International Chamber of Commerce (ICC) in Paris as well as Member of the ICC Commission on International Arbitration and a Member of the National Committee of the ICC in the Czech Republic. He has acted as arbitrator or counsel in more than 170 international arbitrations and is listed as arbitrator with the international arbitral centers of several economic chambers in Central Europe. He has published numerous books and articles on arbitration and business law.
Originally from B2C Arbitration: Consumer Protection in Arbitration
IV. Consumer Arbitration in Selected Countries
IV.1. [AUT] [AUSTRIA]
IV.1.1. Principles and sources of consumer protection (substantive-law basis)
312. The Austrian General Civil Code (ABGB [AUT]) has traditionally laid down rules for protection against immoral contractual terms. In 1979, the Code was supplemented with special provisions which stipulated that the other party to the contract must be explicitly informed about any irregular and [potentially] detrimental terms. Section 879(3) of the ABGB [AUT] stipulates that a contractual term is invalid if the obligation is significantly detrimental to one of the parties. The Consumer Protection Act (KSchG [AUT]), in effect since 1979, contains special provisions regulating public supervision over the contents of contractual terms exercised by consumer protection organizations and associations.
313. General provisions (general clause) are primarily incorporated in Section 2(2) of the KSchG [AUT] which stipulates that a term is without effect if it departs, to the detriment of the consumer, from the rules incorporated in that chapter of the Consumer Protection Act. However, Austrian law, namely consumer protection laws (especially the Consumer Protection Act – KSchG [AUT]), is based on several levels of consumer protection mechanisms. Section 6(1) of the KSchG [AUT] generally declares as non-binding on the consumer [für den Verbraucher… nicht verbindlich] any terms which impair the position of the consumer vis-à-vis the professional (unacceptable provisions [unzulässige Vertragsbestandteile]). In conjunction with Section 879 of the AGBG [AUT], this constitutes invalidity [Nichtigkeit, i.e. literally nullity] which some legal systems classify as “absolute invalidity” (an absolute type of invalidity) assessed by the court of its own motion (ex officio). Other terms (other than those listed in Section 6(1) of the KSchG [AUT]) give rise to a burden of proof which requires the professional to prove that the contested contractual term was individually negotiated with the consumer. Another level of consumer protection mechanisms is incorporated in Section 6(3) of the KSchG [AUT] which declares ineffective [unwirksam] any unclear or unintelligible term in [general] contract terms and conditions or in standard form contracts; it is therefore a category analogous to voidability as enshrined in other legal systems (for instance, Czech law [CZE], etc.). However, if we return to the requirement of transparency [Transparenzgebot], the absence of transparency renders the relevant terms unfair, i.e. again absolutely invalid (Nichtigkeit). In certain cases, though, Austrian law de facto applies the concept of voidability which is based on the principles of autonomy, especially in those cases where the parties perform under their contract and express their interest in abiding by the rules they have agreed on.1 Choice-of-court agreements with consumers are without legal effects under Austrian law.2
IV. Consumer Arbitration in Selected Countries
IV.1. [AUT] [AUSTRIA]
IV.1.1. Principles and sources of consumer protection (substantive-law basis)
IV.1.2. Consumer arbitration
IV.2. [BEL] [BELGIUM]
IV.2.1. Principles and sources
IV.2.2. Arbitration
IV.2.3. Mediation
IV.3. [BGR] [BULGARIA]
IV.3.1. Arbitration
IV.3.2. Mediation
IV.4. [CAN] [CANADA]
IV.4.1. The approach adopted by certain provinces
IV.4.2. The Federal approach
IV.4.3. Case law; Decision of the Supreme Court of Canada, Case No. 31067 of 13 July 2007 (Dumoulin et Union des consommateurs v. Dell Computer Corp.)
(a) Basic conclusions
(b) Factual and legal findings
(c) Arguments of the parties and the Court's legal Conclusions
IV.5. [CZE] [CZECH REPUBLIC]
IV.5.1. Arbitration laws
(a) Legal basis and importance of arbitration in the Czech Republic
(b) Amendment to the Arbitration Act (Czech arbitration law in effect since 1 April 2012)
(aa) Concept of the Amendment to the ArbAct [CZE]
(bb) Arbitration agreement concluded by a consumer (arbitration agreement for consumer disputes)
(cc) Independence and impartiality of Arbitrators
IV.5.2. Protection of consumers under substantive law
(a) Sources and principles of consumer protection in contemporary legislation (CC [CZE])
(b) Consequences of unfair terms in consumer Contracts
(c) Proposal for a new Civil Code (NCC [CZE])
IV.5.3. Case law
(a) Judgment of the Constitutional Court of the Czech Republic [CZE], Case No. IV. ÚS 2157/08 of 24 September 2008
(aa) Legal opinion of the Constitutional Court
(bb) Factual and legal findings
(cc) Commentary on the judgment of the Constitutional Court
(b) Judgment of the ConCourt CR, Case No. I ÚS 3227/07 of 8 March 2011 203
(aa) Conclusions and importance of the Decision
(bb) Factual and legal circumstances of the case and court decisions regarding setting aside an arbitral award
(cc) Decision of the Constitutional Court on merits
(dd) Correlation between decision and consumer Protection
(c) Resolution of the Constitutional Court of the Czech Republic, Case No. II. ÚS 3057/10 of 5 October 2011
(aa) Conclusions of the Constitutional Court
(bb) From the facts of the case; decisions of the lower courts
(cc) Constitutional complaint and conclusions adopted by the Constitutional Court in its ruling, including the reasons
(d) Judgment of the Constitutional Court of the Czech Republic, Case No. II. ÚS 2164/10 of 1 November 2011: Correlation between the protection of autonomy in negotiating arbitration agreements and the protection of the weaker contracting party (consumer protection)
(aa) Conclusions of the Constitutional Court
(bb) Factual and legal findings
(cc) Constitutional complaint and conclusions adopted by the Constitutional Court in its ruling, including reasons
1. Result of the proceedings
2. Contractual autonomy and consumer Protection
3. EU-compliant interpretation of consumer protection law
4. Internal inconsistencies in the reasons for the judgment regarding the nature of arbitration and manifest conflict with other rulings of the Constitutional Court
5. Proportionality of fundamental rights in consumer contracts and the requirement of transparency
6. Requirement of appeal
7. Right to a lawful judge and rules concerning the appointment of arbitrator
(e) Judgment of the Supreme Court CR [CZE], Case No. 23 Cdo 1201/2009 of 29 June 2010
(aa) Conclusions of the Supreme Court
(bb) Factual and legal findings
(cc) Decisions of the trial court and the court of appeals
(dd) Conclusions of the court of appeals and the subsequent decision of the Supreme Court, including reasons
(f) Resolution of the SC CR [CZE], Case No. 31 Cdo 1945/2010 of 11 May 2011: Arbitration clause which impairs the position of the "weaker" contracting party; permanent arbitral institutions versus "ad hoc" arbitrators
(aa) Conclusions of the Supreme Court
(bb) Factual and legal findings and decisions of the trial court and the court of appeals
(cc) Cassation appeal
(dd) Decision of the cassation court and the cassation court's arguments
(g) Resolution of the Supreme Court of the Czech Republic [CZE], Case No. 30 Cdo 4415/2010 of 27 July 2011
(aa) Conclusions of the Supreme Court
(bb) Factual and legal findings
(cc) Subject matter of the proceedings before the SC CR [CZE]
(dd) Reasons for the decision
IV.6. [DEU] [GERMANY]: Friendly approach to consumer Arbitration
IV.6.1. Legal control of contractual terms
IV.6.2. Tolerant application of the Directive and national arbitration laws
IV.6.3. Case law
(a) Judgment of the Federal Court of Justice (Supreme Court [DEU]), Case No. III ZR 265/03 of 13 January 2005
(aa) Conclusions of the court
(bb) Factual and legal findings
(cc) Reasons for the decision
(b) Judgment of the Federal Court of Justice (Supreme Court [DEU]), Case No. III. ZR 164/06 of 1 March 2007: Limitation of the right to appoint an arbitrator does not render the arbitration agreement invalid
(aa) Conclusions of the court
(bb) Factual and legal findings
(cc) Reasons for the decision
(c) Judgment of the Federal Court of Justice (Supreme Court [DEU]), Case No. XI 349/08 of 8 June 2010 (M v. N): Law applicable to arbitration agreement and form of arbitration agreement
(aa) Conclusion of the court
(bb) Factual and legal findings
(cc) Arguments of the court
(d) Decision of Krefeld District Court, Case No. 6 O 186/95 of 29 April 1996 (Richard Zellner v. Phillip Alexandre Securities and Futures Ltd.)
(e) Judgment of the BGH [DEU], Case No. XI ZR 349/08 of 8 June 2010: Arbitration clauses in contracts between a consumer and a foreign securities broker
(aa) Conclusions of the court
(bb) Factual and legal findings and decisions of the trial court and the court of appeals
(cc) Decision and arguments of the Federal Court of Justice (BGH [DEU])
(f) Judgment of the BGH [DEU], Case No. III ZR 16/11 of 19 May 2011 (C. v. D.): Non-performance of formal requirements and impossibility of subsequent validation of the arbitration agreement
(aa) Conclusion of the court
(bb) Factual and legal findings
(cc) Arguments of the court
IV.7. [DNK] [Denmark]
IV.8. [ESP] [SPAIN]
IV.8.1. Spanish approach to consumer arbitration
IV.8.2. Case law - Decision of the Madrid Court of Appeals [ESP], Case No. 28079370102010100498, 12 November 2010 (Juan Pedro v. Metrovacesa S.A.): The principle of good faith protects both the consumer and the professional
(a) Legal opinion of the Court
(b) Factual and legal findings and other conclusions of the Court
(c) Notes on the judgment
IV.9. [EST] [ESTONIA]
IV.10. [FRA] [FRANCE]
IV.10.1. Legal control of contractual terms
IV.10.2. Consumer arbitration
IV.11. [GBR] [UNITED KINGDOM]
IV.11.1. Sources and principles of consumer protection
IV.11.2. Consumer arbitration
IV.11.3. Case law
(a) Decision in Zealander & Zealander v. Laing Homes Limited of 1999
(b) Decision in Picardi v. Cuniberti of 2002, Westminster Building Company Limited v. Beckingham of 2004 and Allen Wilson Shopfitters and Builders v. Buckingham of 2005: Importance of the information provided to consumer
IV.12. [HRV] [CROATIA]
IV.13. [HUN] [HUNGARY]
IV.14. [CHE] [SWITZERLAND]
IV.15. [ITA] [ ITALY]
IV.16. [LTU] [LITHUANIA]
IV.17. [LVA] [LATVIA]
IV.17.1. Latvian arbitration laws
IV.17.2. Case law - Judgment of the Latvian Constitutional Court, Case No. 2004-10-01 of 17 January 2005
IV.18. [MEX] [MEXICO]
IV.19. [NLD] [NETHERLANDS]
IV.20. [NOR] [NORWAY]
IV.20.1. Arbitration
IV.20.2. Mediation
IV.21. [POL] [POLAND]
IV.21.1. Tradition of consumer protection in Poland
IV.21.2. Conditions for consumer arbitration
IV.22 [PRT] [PORTUGAL]
IV.23 [RUS] [RUSSIA]
IV.24. [SVK] [SLOVAKIA]
IV.24.1. Sources and principles of consumer protection
IV.24.2. Consumer arbitration
IV.24.3. Case law - Resolution of the Regional Court in Pre'ov [SVK], Case No. 17CoE/99/2010 of 15 February 2011
(a) Conclusions of the court
(b) Factual and legal findings and reasons for the trial court's decision
(c) Decision and arguments of the court of appeals
(d) Notes on the judgment
IV.25. [SWE] [SWEDEN]
III.25.1. Sources and principles of consumer protection
III.25.2. Consumer arbitration
IV.26. [USA] [UNITED STATES OF AMERICA]
IV.26.1. Support for consumer arbitration
IV.26.2. Limitation of consumer arbitration
IV.26.3. Proposal for a new federal law in the U.S. (draft Arbitration Fairness Act, AFA [USA])
IV.26.4. Enforcement of arbitral awards rendered in the U.S. in consumer disputes abroad
IV.26.5. Case law
(a) Decision of the Supreme Court of the United States of America, No. 82-500 of 23 January 1984 (Southland Corp. et al. v. Keating et al.); 465 U.S. 1 (1984): Special protection afforded to franchisees
(aa) Main conclusions of the decision
(bb) Factual and legal findings
(cc) Arguments of the parties and the Court's legal conclusions
(dd) Notes on the judgment
(b) Decision of the Supreme Court of the United States of America, No. 93-1001 of 18 January 1995 (Terminix v. Dobson)
(aa) Main conclusions of the Court
(bb) Factual and legal findings
(cc) Arguments of the parties and the Court’s legal Conclusions
(c) Judgment of the Court of Appeal of California, No. A068753 of 3 November 1998 (Badie v. Bank of America)
(aa) Conclusions of the Court
(bb) Factual and legal findings
(cc) Arguments of the parties and the Court’s legal conclusions
(d) Judgment of the United States Court of Appeals, Sixth Circuit, No. 98-028 30 / 99-3854 of 8 September 2000 (James D. Stout; Shirley A. Brown v. J.D. Byrider, a/k/a Docherty Motors, Inc.; T & J Acceptance Corporation, d/b/a Carnow Acceptance Company)
(aa) Conclusions of the Court
(bb) Factual and legal findings
(cc) Arguments of the courts
(e) Judgment of the Supreme Court of Arkansas, No. 1981594 of 15 September 2000 (Alabama Catalog Sales v. Harris): Jurisdiction over the validity of arbitration agreements
(aa) Conclusion of the Court
(bb) Factual and legal findings
(cc) Arguments of the courts
(f) Judgment of the Supreme Court of Arkansas, No. 99-1398 of 21 September 2000 (ShowMeTheMoney v. Williams): Requirement of mutuality of arbitration clauses
(aa) Conclusion of the Court
(bb) Factual and legal findings
(cc) Arguments of the courts
(g) Decision of the Supreme Court of the United States, Case No. 09-893 of 11 April 2011 (Vincent Concepcion & others v. AT&T Mobility LLC): Prevalence of the purpose of arbitration over special consumer protection
(aa) Conclusions of the Court
(bb) Factual and legal findings
(cc) Arguments of the courts
(dd) Commentary on the decision