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ECJ rules on incorporation of jurisdiction clauses by
02 July 2015

The European Court of Justice (“ECJ”) has ruled that the method of obtaining acceptance of online terms & conditions of sale by “click-wrapping” constitutes communication by electronic means within Article 23 of the Brussels I Regulation (“Regulation”) meaning that a jurisdiction clause was validly incorporated.

The case of Jaouad El Mardaub v. CardsOnTheWeb.Deutschland GmbH C-322/14 involved the online sale of a car to a car dealer.  A dispute arose when the seller of the car cancelled the agreement before the transfer, purportedly for damage to the vehicle. It was the buyer’s belief that the seller cancelled the sale due to the low sale price. The buyer brought an action in Germany seeking a compulsory transfer of ownership of the car. 

The terms & conditions of sale contained a clause which conferred jurisdiction to the court of Leuven in Belgium. The buyer argued that the jurisdiction clause was not validly incorporated into the agreement because it was not in writing, as required by Article 23 of the Regulation. Article 23 requires that the agreement be in writing, or in a form which accords with the practices of the parties, or, in the case of international trade, in a form which accords with a usage known or which ought to have been known by the parties and which is widely known to the relevant trade. 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 terms & conditions were contained in a webpage which did not open automatically upon registration or upon every individual sale - the buyer was required to click a button in order to open a new window containing the terms. The buyer argued that this so-called “click-wrapping” was in breach of Article 23.

The ECJ rejected the buyer’s claim 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 ECJ reasoned that ensuring the existence of real consent of the parties is one of the aims of Article 23(1) and the buyer had expressly accepted the terms & conditions by clicking the related box on the seller’s website. Article 23 was interpreted as meaning that there must be the “possibility” of obtaining a durable record of the agreement conferring jurisdiction. This condition was satisfied as the buyer had an option to save and print the terms & conditions. The ECJ stated it was irrelevant whether the terms & conditions had actually been durably recorded by the buyer before or after he clicked the box indicating acceptance.

Whilst the decision concerned a jurisdiction clause and whether it satisfied certain formal requirements, it is of interest to online sellers who use the “click-wrapping” method to obtain acceptance of their terms & conditions of sale. 

However, it is important to note that the above case concerned a business to business contract and there are different rules and requirements regarding a jurisdiction clause in a consumer contract. Further the incorporation of terms & conditions by the click-wrapping method alone is not sufficient in the context of contracts with consumers. The new consumer rights directive has clarified what is meant by “durable medium” and simply providing information via a link to a website will not suffice.

It is therefore important to ensure that incorporation of the terms & conditions is not overlooked and that you satisfy the relevant requirements for providing information in a “durable medium”. Unless your terms & conditions are validly incorporated, they will serve no purpose and there may be other consequences in the content of consumer contracts if you do not meet the requirements for providing contractual information, including action by the Competition & Markets Authority.

If you would like to discuss this further or find out more about how the Commercial & Technology team can help your business please contact Sarah Williamson on 0118 952 7247 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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