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2. Directive 87/102 guarantees consumers (b) "creditor" means a natural or legal within the Member States a minimum person who grants credit in the course standard of protection in the area of of his trade, business or profession, or a consumer credit. group of such persons;

* Original language: French. 1 — OJ 1987 L 42, p. 4 8 . 2 — Directive 87/102 has been amended twice, by Council Directive 90/88/EEC of 22 February 1990 (OJ 1990 L 6 1 , p. 14), and by Directive 98/7/EC of the European Parlia- ment and of the Council of 16 February 1998 (OJ 1998 (c) "credit agreement" means an agree- L 101, p. 17). Unless otherwise stated, the terms 'Directive 87/102' or 'Directive' are used to refer to Directive 87/102, ment whereby a creditor grants or as amended by the two texts cited above. promises to grant to a consumer a

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credit in the form of a deferred pay- (b) hiring agreements except where these ment, a loan or other similar financial provide that the title will pass ulti- accommodation. mately to the hirer;

(f) credit agreements involving amounts (d) "total cost of credit to the consumer" less than 200 ECU or more than means all the costs, including interest 20 000 ECU; and other charges, which the consumer has to pay for the credit;

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(b) a Statement of the conditions under 6. Under Annex I of Directive 87/102, the which the annual percentage rate of list of 'other essential terms of the contract' charge may be amended. includes:

'1. [In the case of] credit agreements for financing the supply of particular goods and services:

(c) a statement of the amount, number and frequency or dates of the payments which the consumer must make to repay the credit, as well as of the (i) a description of goods or services payments for interest and other covered by the agreement; charges; the total amount of these payments should also be indicated where possible;

(ii) the cash price and the price payable under the credit agreement;

(d) a statement of the [costs connected with the credit] which were not inclu- ded in the calculation of the annual percentage rate of charge but which (iii) the amount of the deposit, if any, the have to be paid by the consumer in number and amount of instalments and given circumstances, together with a the dates on which they fall due ... statement identifying such circum- stances ...

(viii) an indication of the insurance(s) required, if any, and, when the choice of the insurer is not left to the consumer, an indication of the cost thereof; 9. Under Paragraph 1, the VerbrKrG applies to credit agreements concluded '... between a person who grants credit in the exercise of his trade or profession (cred- itor) ... and a natural person unless the credit is ... for a commercial or indepen- (ix) the obligation to the consumer to save dent professional activity in which that a certain amount of money which must person is already engaged (consumer)'. 4 be placed in a special account.

5

The German legislation thus protects not only natural persons who apply for credit with a view to financing the establishment of a future commercial or independent professional activity, but also natural per- 7. Article 15 of Directive 87/102 states: sons who apply for credit for private purposes. On the other hand, it does not cover natural persons who apply for credit with a view to financing an existing trade or independent professional activity.

'[T]his Directive shall not preclude Mem- ber States from retaining or adopting more 3 — BGBl. I, p. 2840. 4 — Paragraph 1(2) of the VerbrKrG defines a 'credit agreement' stringent provisions to protect consumers as '... an agreement whereby a creditor grants or promises to consistent with their obligations under the grant to a consumer for consideration a credit in the form of a loan, a deferral of payment, or other similar financial Treaty.' accommodation.'

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6 — Point I.1 of the order for reference. 11. On 8 December 1993, the firm Berliner 7 — Point I.2 of the order for reference. Kindl Brauerei AG (hereinafter 'the Brew- 8 — The Brewery categorically denied this point of fact in its written observations (points 1 and 2). It maintains that Mr ery') granted Mr Diesterbeck (otherwise Siepert never actually cancelled his declarations of guaran- referred to as ' the principal debtor') a loan tee, even orally. On this matter it must be remembered that the procedure under Article 177 of the EC Treaty (now of DEM 32 000 as well as the lease of a Article 234 EC) is based on a clear separation of functions between national courts and the European Court of Justice property of the value of DEM 58 523. The and that any procedures to determine or establish the truth of the facts of the case is the exclusive responsibility of the purpose of concluding these agreements national court (see in particular the judgments in Case 13/68 was to enable the principal debtor to Salgoil [19681 ECR p. 4 5 3 , 459-461; Case 104/77 Oehls- chläger [1978] ECR 7 9 1 , paragraph 4; Case C-235/95 finance the opening of a restaurant. Dumon and Froment [1998] ECR I-4531, paragraph 25, and Cases C-175/98 and C-177/98 Lirussi and Bizarro [1999], I-6881, paragraph 37). Only this Court may make a ruling on the interpretation or validity of a Community provision on the basis of the facts outlined by the national 5 — Paragraph 7 of the VerbrKrG is worded as follows: court (see in particular the judgments in Oehlschläger, cited

The drawal and stating the name and address of the person national court also dismissed an argument by the brewery to whom notice of cancellation should be sent. If the that an oral cancellation of the declarations or guarantee on consumer is not given such notice as is required by the p a r t of Mr Siepert was not valid under national law subparagraph 2, the right of cancellation shall not be (point III.1 of the order for reference). In these circum- extinguished until both parties have fully performed stances, neither I — any more than the Court — may their obligations, subject to a maximum of one year from the time when the consumer declared his Question the facts of the case without encroaching upon the duties of the national courts with responsibility for deciding intention to conclude the credit agreement.' the dispute in the main action.

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21. It maintains that, quite apart from the afforded by the Directive extends to a question referred, Directive 87/102 is not guarantee, Mr Siepert cannot in any event applicable to the main proceedings. rely on Community law in order to cancel his declaration of guarantee. Only Para- graph 7 of the VerbrKrG affords him that possibility.

Firstly, the Brewery claims that the Direc- tive defines a 'consumer' as a natural person acting for purposes outside his trade or profession. Therefore it cannot apply to The Brewery concludes by stating that the an individual who, as in this case, is main proceedings do not fall within the applying for credit with a view to financing ambit of the Directive, but solely within the the establishment of a commercial activity. provisions of the VerbrKrG. This type of 'consumer' is protected only by the German legislation in question.

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considered by the national courts [are] 25. It 14 applies to instances where the outside the scope of Community law but authorities of a Member State have, on where those provisions [have] been ren- their own initiative and unilaterally, exten- dered applicable by domestic law ...' 11 ded the scope of Community law to situations which Community law was not intended to govern.

The Court has also ruled that: '[T]he Court of Justice has jurisdiction under Article 177 Thus, in the Gmurzynska-Bscher case, 15 of the Treaty to interpret Community law the German legislature referred to the where the situation in question is not Common Customs Tariff Nomenclature — governed directly by Community law but applicable to imports from third coun- the national legislature, in transposing the tries — to determine the rate of a national provisions of a directive into domestic law, tax applicable to the importation of goods has chosen to apply the same treatment to from another Member State. purely internal situations and to those governed by the directive, so that it has aligned its domestic legislation with Com- munity law.' 12

Similarly, in the Dzodzi case, 16 Belgian law extended the benefit of certain Community rights — in particular the right of resi- dence — to foreign spouses of Belgian nationals even where a Belgian national had never exercised his right to freedom of 24. However, I do not consider this line of movement within the Community. case-law to be relevant in this instance. 13

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system of Directive 90/434/EEC 18 — Furthermore, this extension clearly took applicable to mergers, divisions, transfers place within the limits of the area the of assets and exchanges of shares concern- Directive was intended to cover, that is ing companies of different Member consumer credit. 19 States — to 'internal' merger operations between Netherlands companies.

27. In these circumstances I consider that the credit agreements concluded by the parties to the main proceedings fall within 26. However, the present case differs fun- the scope of Directive 87/102 and, more damentally from the above cases. specifically, Article 15 which contains the provision allowing wider protection than the minimum prescribed.

Directive 87/102 provides for a minimum 28. I would therefore propose that the standard of harmonisation. It explicitly Court should declare it has jurisdiction to authorises Member States to retain or give a preliminary ruling on the question adopt more stringent provisions for the referred to it. protection of consumers.

Accordingly, by extending the application V — Reply to the question referred for a of the Directive to persons and situations preliminary ruling not expressly covered by it, the German authorities have not acted autonomously or unilaterally, but in pursuance of the Direc- tive itself and in a manner entirely consis- tent with the intentions of the Community 29. The national court is essentially asking legislature. The 'extension' of the scope of whether the Directive can be applied to a the Directive effected by the German contract of guarantee concluded by a authorities accordingly finds a basis in natural person which secures the repay- Community law. ment of credit granted to a third party by a commercial establishment.

32. To reply to this question, in accordance with methods of interpretation accepted by the Court, 23 the wording, scheme and objectives of Directive 87/102 must be 36. A guarantee constitutes a personal examined. security. More precisely, what is concerned is an agreement by which a person makes a commitment to the creditor, in the form of 20 — Case C-45/96 [1998] ECR I-1199, hereinafter 'the Diet- a guarantee, to discharge the obligation of zinger judgment'). the principal debtor should the latter have 21 — 1 —Council Directive of 20 December 1985 to protect the consumer in respect of contracts negotiated away from failed to do so himself. 2 4Therefore a business premises (OJ L 372, p. 31). guarantee represents neither 'a loan', nor 22 — Judgment in Dietzinger, paragraph 17 to 22. 23 — On methods of interpretation of the Court of Justice, see in 'a deferred payment', nor 'other similar particular Mertens de Wilmars J., 'Réflexions sur les financial accommodation' within the méthodes d'interprétation de la Cour de justice des Communautés européennes', Cahiers de droit européen, meaning of the Directive. 1986, p. 5 to 20; Fennelly N., 'Legal interpretation at the European Court of Justice', Fordham international law journal, 1997, p. 656 to 679, and Murray J., 'Observations on the Interpretative Process of the Court of Justice', Community law in practice. Including facets of consumer 24 — See Cornu G., Vocabulaire juridique, Presses universitaires protection law, 1997, p. 41 to 61. de France, Paris, 1987, p. 125.

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39. However, Directive 87/102 contains a series of provisions which indicate that its scope is strictly limited to synallagmatic agreements. 40. It is clear from the wording of these provisions that the agreements governed by Directive 87/102 are characterised by the existence of reciprocal obligations between the parties concerned. On this point, I do not consider that the Dietzinger judgment can be transposed to this case. Thus, within the framework of the defini- tion of 'credit agreement', the words 'a creditor grants or promises to grant to a consumer a credit' already make it clear that the contractual relations governed by the Directive are bilateral relations. 41. The provisions also make it possible to define more closely the concept of 'consu- 25 — Point 19 (my italics). In his Opinion in the Dietzineer case, Advocate General Jacobs had however stated: 'It is apparent from Article 1 as a whole [of Directive 26 — My italics. 85/577] ... that the contracts covered are those under which a trader supplies goods or services to a consumer' 27 — My italics. (point 19). 28 — My italics.

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mer' which appears in Article 1 of the ing a credit agreement as 'an agreement Directive. whereby a creditor grants a consumer credit ... and under which the consumer repays the credit, including any interest and charges ...' 30

Directive 87/102 appears to adopt a very broad definition of the term 'consumer'. It covers 'a natural person ... acting for 42. In so far as the guarantor is not party to purposes which can be regarded as outside the credit agreement, he cannot be consid- his trade or profession.' At first sight, a ered as a 'consumer' under Directive natural person who accepts to provide a 87/102. guarantee on the obligations of a third party outside his profession can therefore be regarded as 'a consumer' within the meaning of the Directive.

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directive is not applicable. The Commis- 47. The proposals for a directive presented sion concludes from this that the Commu- by the Commission to the Council also nity has not adopted any specific stance — contained like references. favourable or unfavourable — with regard to guarantees.

In its initial proposal, the Commission, for 45. I find it difficult to concur with the instance, had suggested that a credit agree- Commission on this point. ment 'shall contain the essential contrac- tual conditions and at least the following particulars ... details of the security required if any'. 35

46. Directive 87/102 contains a number of references to real securities and personal securities. Similarly, the amended proposal for a directive provided that '[T]he written agreement shall contain at least ... an indication of the security required if any.' 36

50. As the Brewery has rightly pointed out, the Commission and the Parliament con- sider, in the documents cited above, whe- In 1995 and in 1997, the Commission ther de lege ferenda the provisions of the presented two reports on the operation of Directive must be extended to personal Directive 87/102 and how Member States securities. It follows de lege lata that had transposed it into national law. 37 guarantees are excluded from the scope of the Directive.

52. Directive 87/102 pursues a general objective of consumer protection. 40 Its preamble provides: 'Whereas the consumer should receive adequate information on the conditions and cost of credit and on his obligations; whereas this information should include, inter alia, the annual percentage rate of charge for credit, or, failing that, the total amount that the consumer must pay for credit; whereas, pending a decision on a 'Whereas the programmes of the European Community method or methods of calcu- Economic Community for a consumer lating the annual percentage rate of charge, protection and information policy provide, Member States should be able to retain inter alia, that the consumer should be existing methods or practices for calculat- protected against unfair credit terms and ing this rate, or failing that, should estab- that a harmonisation of the general condi- lish provisions for indicating the total cost tions governing consumer credit should be of the credit to the consumer.' 42 undertaken as a priority; [sixth recital]

54. Most of the provisions of the Directive Whereas differences of law and practice are designed therefore to enable the con- result in unequal consumer protection in sumer to be precisely aware of the cost of the field of consumer credit from one the credit as well as any additional cost Member State to another' [seventh recital]. items.

Article 3 of the Directive provides that any 53. More specifically, Directive 87/102 advertisement, or any offer which is dis- aims to provide adequate information to played at business premises, in which a

person is offered credit in which any figures ing of credit in the form of an advance on a relating to the cost of the credit are current account ... the consumer shall be mentioned — such as the rate of interest informed at the time or before the agree- — shall mention the 'annual percentage ment is concluded ... of the credit limit if rate of charge'. 43 any [as well as] the annual rate of interest and the charges applicable ...'. Paragraph 2 provides: 'Furthermore, during the period of the agreement, the consumer shall be informed of any change in the annual rate of interest or in the relevant charges at the time it occurs.' Similarly, Article 4 of the Directive requires that credit agreements be made in writing. In the written agreement, the consumer is to be informed of the amount, number and frequency of the payments which he must make to repay the credit. The agreement must also include a statement of the cost 55. All these provisions are intended to items which were not included in the inform consumers on the exact nature of calculation of the annual percentage rate their obligations. They aim, in particular, to but which have to be paid by the consumer. make them aware of the exact amount The written agreement must also contain which they are obliged to pay or repay the 'other essential terms of the contract.' under the credit agreement. Annex I to the Directive lists as examples of these terms, inter alia, the amount of the credit limit; the terms of repayment of the credit; the cash price and the price payable under the credit agreement; the amount of the deposit, if any, the number and amount of instalments and the dates on which they 56. It follows that the Directive seeks in fall due; the cost of any insurance required particular to enable consumers concluding to guarantee repayment of the credit, etc. and performing credit agreements to be fully aware of what is involved. It is also intended to protect them from certain risks inherent in consumer credit, such as any abusive practices by professional providers of credit, financial commitments underta- ken without due reflection or what might Obligations of this kind in regard to be termed 'illusory purchasing power'. information are further to be found in Article 6 of the Directive. The first para- graph of the article provides that, 'where there is an agreement between a credit institution ... and a consumer for the grant-

They maintain that the protection provided 61. Accordingly, appropriate protection of by the Directive should be extended to a personal guarantors implies that they guarantor when he gives a guarantee on a should be informed of matters other than private basis, outside of his trade or the terms and amount of the credit. As the profession. In the area of consumer credit, German 4 5 and Finnish 46 Governments a guarantor is in a 'weak' position compar- have rightly pointed out, this information able to that of the borrower. He is often a should relate in particular to the solvency friend or relative of the debtor who makes of the debtor, the legal regime in the matter a commitment under emotional pressure. of guarantees (general framework, subsidi- The need to protect the guarantor is all the ary guarantee, joint and several guarantees, greater as he agrees to be answerable for etc.) and on the precise conditions under the repayment of the credit without this which the guarantor can be obliged to commitment giving rise to any reciprocal repay the credit. It might also be thought agreement on the part of the creditor or the useful, where the borrower has taken out principal debtor. insurance to guarantee repayment of his debt, to inform the guarantor of any legal remedies available to him against the insurer.

59. I am broadly sympathetic to the con- cerns expressed by those parties. However, quite apart from the fact that Directive 62. From this point of view, the duties in 87/102 is not intended to apply to personal regard to information laid down in Direc- securities, it would seem that the extension tive 87/102 do not therefore seem well they advocate is not such as to ensure adapted to the needs of personal guarantors appropriate protection for guarantors. who on a private basis commit themselves to repayment of consumer credit. 44 — See, inter alia, the observations by the Commission (point 7); M . Siepert's observations (point III.6), and the arguments expounded by the French Government during 45 — Points 15 and 18 of its observations. the oral procedure. 46 — Point 9 of its observations.

The grounds of the Dietzinger judgment on this point are, moreover, laconic. They are confined to outlining some of the charac- 64. The furnishing of a guarantee is in fact teristics of a guarantee — the fact that it is closely connected to a credit agreement in closely linked to the credit agreement and two respects. that the 'guarantor' may either assume joint and several liability for payment of the debt or be the guarantor of its repayment — in 47 — See the observations of the Spanish Government (point 8); order to establish, almost automatically, the observations of the French Government (point 4.2); the observations of the Commission (point III. 1), and the the principle that a contract of guarantee observations of M. Siepert (point III.4). 48 — Point 18. may fall within the scope of Directive 49 — Dietzinger judgment, point 20. 85/577.

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It is true that the reference to the ancillary mers. It does not however follow from that nature of the guarantee shows that the proposition that all consumers are pro- Dietzinger judgment involved a very parti- tected in all circumstances by the Directive cular application of the maxim accessorium [85/577]: like other directives with consu- sequitur principale. 50 The Court held that mer protection as their aim, the Directive where a credit agreement falls within the [85/577] applies to certain transactions scope of Directive 85/577, the contract of only...' 52 guarantee should be tied to the outcome of the principal contract.

66. This, however, seems to me insufficient to justify in this instance bringing the guarantee within the scope of Directive 68. In the present case, Directive 87/102 87/102. 51 It is clear from the wording, applies to credit agreements. I do not scheme and objectives of Directive 87/102 believe it can be applied to contracts of that that directive cannot apply to a guarantee. contract of guarantee concluded for the purpose of guaranteeing repayment of consumer credit.

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