Case C-498/16, Schrems – a Facebook consumer or simply in the business of privacy?

This case concerns a person with a Facebook account. He uses it not only to exchange private photographs and chat with about 250 friends but also for publicity purposes. The legal issue is whether this latter activity stops him from qualifying as a ‘consumer’. The definition matters because if he is a consumer, then he and several thousand other Austrians who are aggrieved at Facebook’s use of their personal data will be able to sue in the Austrian courts.

This case concerns a person with a Facebook account. Although the Austrian Supreme Court had anonymised the name of that person to ‘M.S.’, the docket of the Curia website identifies the litigant as Mr Schrems.

The legal issue in this preliminary reference is whether Mr Schrems is acting as a consumer when he uses his Facebook account. The answer matters because if he is indeed a consumer, then he and a few thousand other Austrians who are aggrieved at Facebook’s use of their personal data, will be able to sue in the Austrian courts. If he is not a consumer, then he will need to litigate in Ireland where Facebook has its base in the EU.

EU law governs where an individual may sue another person. The relevant legislation is the EU’s ‘jurisdiction’ Regulation 44/2001. Although the rule of thumb is that a person should sue a defendant in the defendant’s home state, there are many exceptions and one of them is for consumer contracts.

The relevant consumer law provisions are in Article 15 and 16 of the Regulation:

Jurisdiction over consumer contracts
Article 15
1. In matters relating to a contract concluded by a person, the consumer, for a purpose which can be regarded as being outside his trade or profession, jurisdiction shall be determined by this Section, without prejudice to Article 4 and point 5 of Article 5, if:
(a) it is a contract for the sale of goods on instalment credit terms; or
(b) it is a contract for a loan repayable by instalments, or for any other form of credit, made to finance the sale of goods; or
(c) in all other cases, the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, and the contract falls within the scope of such activities.
2. Where a consumer enters into a contract with a party who is not domiciled in the Member State but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that State.
3. This Section shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation.

Article 16
1. A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or in the courts for the place where the consumer is domiciled.
2. Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled.
3. This Article shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

The Austrian Supreme Court judges did not know if those provisions were applicable to Mr Schrems. Furthermore, the CJEU’s discussions in Cases C-464/01, Gruber and C-89/91, Shearson on how to identify a ‘consumer’ did not seem relevant to the present case. This was because the CJEU’s discussions in those cases related to legal persons but the present case was all about private individuals.

Because Judge Kuras of the Austrian Supreme Court and four other judges did not know what the correct interpretation of EU law should be, they decided to make a preliminary reference to the CJEU.

Questions Referred
My unofficial translation of the questions asked by the Austrian Supreme Court reads:

1 Is Article 15 of the EU’s ‘jurisdiction’ Regulation 44/2001 to be interpreted as meaning that a ‘consumer’ loses that status where he has for some time used a private Facebook account together with promoting his published books, advertising his partly-remunerated lectures, running websites, and collecting donations to pursue the legal claims which many consumers have assigned to him, in order to permit a possible legal action after legal costs have been deducted?

2 Is Article 16 of the EU’s ‘jurisdiction’ Regulation 44/2001 to be interpreted as meaning that a consumer in one Member State can bundle his own consumer contract claim together with those of other users who are domiciled in:
a) the same Member State
b) a different Member State
c) a third state
and assert these when this concerns the same commercial transaction with the same defendant, and the same legal relationship, and in circumstances where the claims have been assigned to the person, who is not acting for a commercial purpose or in a professional capacity, and who only acts for the common purpose of pursuing the claims?

Facebook’s use of their users personal data has recently generated a preliminary reference from the German Supreme Court for Administrative Law about the jurisdiction of the Irish data protection authority and the potential jurisdiction of the German courts to regulate data processing in accordance with German law.

Parallel to privacy law is the law of a person’s reputation. In that context, there is a preliminary reference about the legal right of a person in Estonia to bring an action in the Estonian courts which is actually designed to stop harmful comments being left on a Swedish website.