C-478/99

COMMISSION v SWEDEN

OPINION OF ADVOCATE GENERAL GEELHOED delivered on 31 January 2002

I — Introduction II — Legal background

A — The directive on unfair terms

1. By the present action for failure to fulfil 2. Under Article 1 of the Directive, the obligations, the Commission claims that purpose of the Directive is to approximate the Court should declare that the Kingdom the laws, regulations and administrative of Sweden has failed to fulfil its obligations provisions of the Member States relating to under Council Directive 93/13/EEC of unfair terms in contracts concluded 5 April 1993 on unfair terms in consumer between a seller or supplier and a con­ contracts (hereinafter: 'the Directive' or sumer. Article 6(1) provides that Member 'the directive on unfair terms'). 2 The States are to lay down that unfair terms parties are in dispute as to whether it is used in a contract concluded with a con­ necessary to implement through a provision sumer by a seller or supplier is, as provided of law the 'indicative, non-exhaustive' list for under their national law, not to be in the annex to the Directive of terms that binding on the consumer and that the may be regarded as unfair. The Swedish contract is to continue to bind the parties Government takes the view that it is upon those terms if it is capable of continu­ sufficient for the list to be reproduced in ing in existence without the unfair terms. the explanatory note to the implementing law. The Republic of Finland and the Kingdom of Denmark, which have not incorporated the text into their legislation either, support the position of the Swedish Government.

6. The directive provides for minimal har­ 4. Article 4 of the Directive reads as monisation. Under Article 8 of the Direc­ follows: tive Member States may adopt or retain the most stringent provisions compatible with the Treaty in the area covered by the Directive, to ensure a maximum degree of protection for the consumer. '1 . Without prejudice to Article 7, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of 7. The Directive contains an annex entitled the contract and to all the other terms of 'Terms referred to in Article 3(3)' which, in the contract or of another contract on paragraph 1, sets out 17 different types of which it is dependent. contractual terms. The scope of some of

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these is clarified in paragraph 2. In this 10. The annex to the directive has not been regard the 17th recital states: incorporated in that legislation. It is repro­ duced with a commentary in the explana­ tory note to lagen 1994:1512.

'Whereas, for the purposes of this Direc­ tive, the annexed list of terms can be of indicative value only and, because of... the minimal character of the Directive, the III— Procedure scope of these terms may be the subject of amplification or more restrictive editing by the Member States in their national laws.' 11. The procedure ran its normal course under Article 169 of the EC Treaty (now Article 226 EC). The application made by the Commission was received at the Court Registry on 16 December 1999. 8. Under Article 10 of the Directive, Member States were required to bring into force the laws, regulations and adminis­ trative provisions necessary to comply with the directive no later than 31 December The applicant claims that the Court should: 1994.

The Kingdom of Sweden claims that the Treaty (now, after amendment, Article 95 Court should dismiss the action and order EC), has two objectives. First, the Directive the Commission to pay the costs. seeks to harmonise the existing legislation of the Member States on unfair terms in contracts between consumers and sellers or 4 suppliers of goods or services . Article 100a(3) of the EC Treaty (now, after amendment, Article 95(3) EC) states 12. The President of the Court granted the that, in the adoption of measures which Republic of Finland and the Kingdom of have as their object the establishment of the Denmark leave to intervene in the case in internal market, consumer protection will support of the form of order sought by the take as a base a high level of protection. Kingdom of Sweden. The Commission and Secondly, the Directive seeks to improve the Governments of the three Member consumer information regarding applicable States were represented at the hearing of provisions. 5The idea that the effectiveness 25 October 2001. of consumer protection is largely dependent on the consumers' right to information also follows from Article 153 EC (consumer protection), which can also be regarded as one of the bases of the Directive.

IV — The Commission's complaint and the position of the Kingdom of Sweden

terms or formulate them in a way less the contractual terms set out are not auto­ favourable for consumers. It would be matically unfair, but that the national court illogical to provide that the list may be 'the or competent authority must be free to subject of amplification or more restrictive assess the character of the terms in the light editing by the Member States in their of the general criteria of Article 3(1) and national laws' if it were not already repro­ Article 4 of the Directive. However, the list duced in the text of the national provisions. is not intended only to provide examples and indications for the application of the law, but its role is also to serve as a source of information. The Commission doubts that the public, whether affected or not — including consumers, domestic and foreign sellers and suppliers, and the national authorities which are competent to apply 16. In the view of the Commission, it the measures transposing the Directive — follows that the list in the Annex to the always have easy access to the explanatory Directive seeks to establish an effective note. internal market and greater consumer pro­ tection through better information. This result can be achieved by giving more precise and specific substance to the general criteria laid down in Article 3(1) of the Directive. Legal certainty is thus increased both for Swedish and foreign economic 18. In support of its point of view, the operators and consumers, whilst the vari­ Commission makes reference to the judg­ ous competent authorities apply legislation ment in Commission v Denmark from in a more uniform manner. The list con­ which it draws the conclusion that a stitutes a very useful tool for sellers and statement in the explanatory note to a suppliers when they draw up their standard draft law is not an acceptable method of agreements. In this way many disputes can transposition. 6 The Commission also be avoided. The Commission considers that makes reference to Swedish legal literature those aims, particularly the criteria regard­ according to which the importance of the ing precision and information, can be explanatory note in interpreting legislation achieved only if the list in the Annex to has declined as a result of Sweden's acces­ 7 the Directive is made generally known by sion to the European Union. publication of it in the implementing legis­ lation.

contests the view taken by the Commission them, which the Member States are and claims that Community law does not required to transpose with their national require the list in the annex to be imple­ legislation or implement in some other mented by a law, regulation or adminis­ way. In its case-law the Court habitually trative provision. It essentially asserts that shows itself to be very demanding as the list serves only as an instrument for the regards the implementation of provisions interpretation by the national courts and of directives by which rights are conferred authorities of the general criteria defined in on individuals. Article 3(1) and Article 4 of the Directive. It considers that the list is not binding and nor is it intended to create rights and obli­ gations for individuals. Furthermore, the Swedish Government takes the view that information for the public on unfair terms 22. The main question in the present case is is guaranteed in many ways and to a whether it was sufficient, in order for the satisfactory degree. list in the Annex to the Directive to be implemented, for the Swedish Government to make reference, in the legislation by which the Directive itself was transposed, to the preparatory work in which the annex is reproduced in its entirety and accom­ panied by a commentary. In order to answer that question it is necessary to V — Assessment analyse the character and legal significance of the Annex. In the light of that assess­ ment, it is then possible to examine whether, in implementing the Directive, the Kingdom of Sweden has failed to fulfil its obligations under the third paragraph of 20. The central issue in this case is not so Article 249 EC. much whether it is useful or even desirable to reproduce the list of unfair terms in the Annex to the Directive in the national legislation. What is at issue in the present action for failure to fulfil obligations, is the question whether under Community law the Kingdom of Sweden has an obligation to do so. A — The character of the Annex to the Directive

24. It is stated in the preamble to the Directive that the criteria for assessing the 26. Unlike in the national law of certain 9 unfair character of contract terms must be Member States, no distinction is made in fixed in a general way, taking account of the Annex to the Directive between a the requirement of good faith. 8 Under so-called 'black list', with terms which are Article 2(a), 'unfair terms' means the con­ regarded as unfair and in relation to which tractual terms defined in Article 3. The courts or competent administrative auth­ essence of the definition can be found in orities do not have any discretionary Article 3(1). It provides that a contractual power, and a 'grey list', with terms which term which has not been individually are presumed to be unfair, but for which negotiated is to be regarded as unfair if, the burden of proof is in fact reversed. On contrary to the requirement of good faith, the other hand, paragraph 1 of the Annex it causes a significant imbalance in the contains a list of 17 types of terms worded parties' rights and obligations arising under in various ways, which for the most part the contract, to the detriment of the con­ leave some measure of discretion to the sumer. Article 3(2) of the Directive states person assessing them and which are not that the term must not have been individ­ presumed to be unfair under the Direc­ 10 ually negotiated. In assessing whether a tive. These include terms which, for term is unfair it is also necessary to analyse example, 'inappropriately' exclude or limit it against the background of Articles 4 and the legal rights of the consumer 5. Thus, under Article 4(1) the unfairness of (subparagraph b), which require any con­ a contractual term is to be assessed by sumer who fails to fulfil his obligation to referring 'to all the circumstances attending pay 'a disproportionately high sum in the conclusion of the contract' and to a compensation' (subparagraph e), which certain number of other factors, such as the 'unduly' restrict the evidence available to nature of the contract. Article 5 contains in the consumer (subparagraph q) and which particular the well-known rule on inter­ pretation for cases of ambiguity. 9 — See, for example, Articles 6:236 and 6:237 of the Neder­ lands Burgerlijk Wetboek (Netherlands Civil Code). 10 — In the legal literature, the list in the annex is also referred 8 — See 15th and 16th recitals in the preamble to the Directive. to as the 'blue (European) list' [blauwe (Europese) lijst].

27. During the preparatory work for the Directive, the legal character and legal effects of the list were discussed at length. The original proposal by the Commission 28. It is apparent from this historical back­ contained a definition of the expression ground that the list is not intended to be a 'unfair terms' in Article 2(1). Article 2(2) binding list of terms which are unaccept­ provided that 'the Annex contains a list of able per se. The list contains an illustrative types of unfair terms'. In the Annex itself collection of terms that are potentially the following wording could be found: 'the unfair. The list, to use the language of following types of terms are unfair if they 12 Article 3(3) of the Directive, is 'an indica­ have the object or effect of:... '. It must tive and non-exhaustive list of the terms be inferred from this that the authors of the which may be regarded as unfair'. The list proposal intended that the terms set out in is representative in so far as it reproduces the Annex should always be regarded as the most typical and common binding 'unfair' and therefore inadmissible. This terms, but terms which are not mentioned also follows from the 12th recital of the in the list may also be declared to be unfair Commission's original proposal, according in a specific case. On the other hand, the to which 'it is desirable to identify certain appearance of a term in the list is merely indicative and such terms do not necessarily have to be regarded as unfair, for example 11 — The fact that the scope is sometimes illustrated in a remarkably detailed way can be seen from reading, for because the term that is detrimental to example, paragraph 1(g), paragraph 2(a) and 2(c) of the consumers is compensated for by other annex. It follows that terms which have the object or effect of 'enabling the seller or supplier to terminate a contract of terms that are favourable to them. It will be indeterminate duration without reasonable notice except where there are serious grounds for doing so' are included for the court or competent administrative in the terms mentioned in Article 3(3) (paragraph 1(g)). It authority, having regard to all the relevant does not, however, apply to certain specifically mentioned contractual terms and certain transactions (paragraph factors in the individual case, to ascertain 2(c)). Paragraph 1(g) does not affect terms by which a supplier of financial services reserves the right to terminate unilaterally a contract of indeterminate duration without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party 13 — OJ 1992 C 73, p. 7. See Article 3(3) of the amended or parties thereof immediately (paragraph 2(a)). proposal. 12 — See the Proposal for a Council Directive on unfair terms in 14 — At the first reading the Parliament called for 'a binding but consumer contracts presented by the Commission on not exhaustive list of types of unfair terms'. See Amend­ 24 July 1990 (OJ 1990 C 243, p. 2). ment No 11 (OJ 1991 C 326, p. 111).

32. The view taken by the Commission 30. Furthermore, the Court itself has must be assessed against the background of already used the list in the Annex as an the third paragraph of Article 249 EC. aid to interpretation. In its judgment in Under that provision a directive must be Océano Grupo Editorial the Court found binding as to the result to be achieved. The that a term the purpose of which is to national authorities remain competent to confer jurisdiction in respect of all disputes determine the choice of the form and arising under the contract on the court in methods of implementation. the territorial jurisdiction of which the seller or supplier has his principal place of business is unfair. Such a choice-of-forum clause thus falls under paragraph 1(q) of the Annex to the Directive as a term which 33. The Court has clarified the scope of the has the object or effect of excluding or obligation imposed on the Member States hindering the consumer's right to take legal action. In concluding that the choice-of- forum clause was unfair, the Court found 15 —Joined Cases C-240/98 to C-244/98 Océano Grupo that it was of decisive importance that 'it Editorial [2000] ECR I-4941, paragraphs 22 and 24.

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34. On the other hand, the Court has also consistently held that the transposition of a directive into domestic law does not necess­ arily require that its provisions be incor­ 36. The normative and binding part of the porated formally and verbatim in express Directive is formed by the criterion defined and specific legislation. Thus, the existence in Article 3(1) EC together with the provi­ of general principles of constitutional or sions of Article 3(2) and Articles 4 and 5, administrative law may render implemen­ which clarify the 'open provision' and tation by specific legislation superfluous. which are inseparably linked to it. Through Depending on the content of the directive, a those rules, the circumstances are specified general legal context may suffice provided under which a contractual term must be that it effectively guarantees the full appli­ regarded as unfair, with the result that the consumer concerned is not bound by it. There is no doubt that rights are accorded 16 — See in particular Case 14/83 Von Colson and Kamann to individuals, and in particular also to [1984] ECR 1891, paragraph 15. 17 — See, for example, Case C-340/96 Commission v United Kingdom [1999] ECR I-2023, paragraph 27. 18 — See, for example, Case C-365/93 Commission v Greece 19 — See, for example, Case 29/84 Commission v Germany [1995] ECR I-499, paragraph 9, and Case C-144/99 [1985] ECR 1661 , paragraph 23 , and Case Commission v Netherlands [2001] ECR I-3541, C-190/90 Commission v Netherlands [1992] ECR I-32Ć5, paragraphs 17 and 18. paragraph 17.

37. The non-binding part of the Directive 38. The Member States are not required by consists of the Annex. On the basis of the any provision of the Directive to provide Directive, the list in the Annex must be that a term referred to in the list in the 23 disassociated from the criterion in Annex must be declared to be unfair. Article 3(1). The Swedish, Danish and Therefore, in my opinion, a Member State Finnish Governments have rightly pointed cannot be required to transpose the Annex out that the rights and obligations accorded to the Directive on unfair terms verbatim to individuals by the Directive do not stem into its national legislation. In that case, the from the list in the Annex. The list is not Member State would be obliged to guaran­ binding on either the national authorities or tee a result that is not prescribed in the individuals. An individual can therefore Directive. The Annex does not form part of never plead purely on the basis of the list the enacting part of the Directive, from that a term in it is in a specific case unfair which individuals may derive rights, but because such an interpretation would con­ merely provides interpretative assistance flict with the wording and scope of for the individuals and for the authorities 22 Article 3(3) of the Directive. The Direc­ where the application of enacting part of tive itself does not provide that the appear­ the Directive is concerned. A reference in the enacting part of a directive to a non- binding annex, which is the case as regards 20 — See the sixth recital in the preamble to the Directive. See Article 3(3) of the Directive on unfair also Case C-144/99 Commission v Netherlands (cited terms, does not thereby confer such char­ above, footnote 18), paragraph 18. 21 — See in this regard Case C-144/99 Commission v Nether- acter on the annex. I consider that that lands (cited above, footnote 18) which concerned the distinction which the Directive itself makes implementation of Article 4(2) and Article 5 of the Directive. The Court stated that the implementation of those provisions in Netherlands law was insufficient. The Netherlands Government had claimed that the aims pursued had been attained through a schematic interpre­ tation by the national courts of the Netherlands Burgerlijk 23 — In this regard, I believe that the argument put forward by Wetboek (Civil Code). the Swedish Government that reproduction of the list in the legislation is likely to lead to a contrario interpretations 22 — The detailed nature of the list, and in particular the on the ground that terms that are not referred to cannot clarifications in paragraph 2 of the Annex concerning the normally be regarded as unfair is irrelevant. That argu­ scope of certain terms, cannot, for that reason, lead to the ment actually calls into question the value of the list in the conclusion that all terms which satisfy the conditions set Annex or, in other words, the contents of the Directive and out must be regarded as unfair and therefore invalid. is out of place in an action for failure to fulfil obligations.

41. In support of its view, the Commission also puts forward a number of other arguments which I do not find convincing 39. Furthermore, I am of the opinion that either. an indicative, non-binding list of examples does not normally find its proper place in a legislative text. I consider that it would have been better if the Community legis­ lature had opted to adopt the indicative list in the form of a recommendation or, possibly, opted for another non-binding 42. First, the Commission points out that instrument such as an interpretative com­ the Directive lays down a minimal harmon­ munication. Such a solution would have isation, which can be seen inter alia from its been more in keeping with the common 17th recital. The Commission's contention guidelines for the quality of drafting of amounts to saying that it would be illogical 25 to prescribe that the list 'may be the subject Community legislation. of amplification' by the Member States if it were not yet reproduced in their legislation.

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character of the Directive, Member States 45. Secondly, the Commission relies in are also given still further alternatives. more general terms on the abovementioned They may thus opt for the indicative list judgment in Commission v Denmark. That 26 to be made binding in their legislation. case concerned the implementation in Den­ The Directive also gives national courts, as mark of Article 1(1) of Directive 28 part of the organisation of the Member 75/117/EEC, under which workers are States, the option to offer greater protec­ granted an unconditional right to equal pay tion to consumers. As the Finnish Govern­ 'for the same work or for work to which ment points out, in practice it will often be equal value is attributed'. The Commis­ the national courts or the consumer sion's criticism related to the claim that ombudsman that supplement or clarify the Denmark had implemented the principle of indicative list in the Annex to the Direc­ equal pay in its legislation only as regards 27 tive. same work and not as regards work of equal value. The Court rejected the argu­ ment put forward by the Danish Govern­ ment that in the preamble to the draft law the expression 'same work' was interpreted in so broad a sense that that expression also covered work of equal value. A declaration to that effect in the explanatory note to the draft law was not sufficient to ensure that the persons concerned are adequately 29 informed.

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of their obligations and rights and the list. It is necessary to examine whether the courts the opportunity to guarantee that Kingdom of Sweden has satisfied that they are observed. A reference made in the obligation. explanatory note to the law is not therefore sufficient.

49. The Swedish Government has stated that the issue of the list in the Annex to the 47. In the present case the Annex to the Directive was discussed in depth during the Directive on unfair terms constitutes a preparation of lagen 1994:1512. Event­ non-binding part. It concerns the trans­ ually, the Swedish legislature chose not to position of the non-exhaustive and indica­ incorporate the list in the legislation, but to tive list of unfair terms, and in that case, reproduce its contents in the explanatory less strict requirements for implementation note in order to facilitate the application of are sufficient. Consumers' rights do not the law. According to the Swedish Govern­ stem from the Annex, but from the enac­ ment, this is the usual legislative technique ting part of the Directive. in Sweden and legislative texts generally do not contain lists of examples.

is an important instrument in the inter­ publication and dissemination of the list. It pretation of laws. After the text of the law, has merely stated that this method may be it constitutes one of the most important insufficient for informing nationals of other sources for the interpretation and appli­ Member States, because the list is not 32 cation of that law. According to the contained in the Swedish legislation itself. Swedish Government, most of the terms referred to in the Annex to the Directive (to be precise 14 out of 17) have already been declared to be unfair in Swedish case-law and the Marknadsdomstolen (Market Court) made express reference to the list in a judgment delivered in 1997. 54. In the light of the above considerations, however, I consider that the Swedish rules give the courts, the economic operators concerned and the public the possibility to gain a sufficient degree of knowledge of the 52. The Swedish Government has further text of the list in the Annex to the Directive. contended that information to the general The list can be consulted with ease in public is guaranteed in several ways. Apart official and semi-official sources. Fur­ from the explanatory note, other prepara­ thermore, the indicative and non-exhaus­ tory documents such as the opinions of tive nature of the list is also evident. The parliamentary committees, are available objective of the list, to provide an aid to free of charge on the internet. Furthermore, interpretation in ascertaining whether a the Konsumentverket (National Board for contractual term is unfair, is attained Consumer Policies) has issued various pub­ together with the result to be achieved lications which are directed at sellers and within the meaning of the third paragraph suppliers and consumers and which of Article 249 EC. describe contractual terms that are regarded or may be regarded as unfair by Swedish courts. The Konsumentverket is the competent national administrative authority for consumer protection and, in that capacity, forms part of Sweden's organisation as a Member State.

57 . I therefore propose that the Court should:

(1) dismiss the application;

(2) order the Commission of the European Communities to pay the costs in accordance with Article 69(2) of the Rules of Procedure;

(3) order the Republic of Finland and the Kingdom of Denmark to bear their own costs in accordance with Article 69(4) of the Rules of Procedure.

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