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Unfair terms in consumer contracts - RWE Vertrieb AG v Verbraucherzentrale Nordrhein-Westfalen e.V.

27/03/2013

Locations

United Kingdom

On 21 March 2012, the Court of Justice of the European Union published its judgement in the case of RWE Vertrieb AG v Verbraucherzentrale Nordrhein-Westfalen e.V. (Case C‑92/11).

On 21 March 2012, the Court of Justice of the European Union published its judgement in the case of RWE Vertrieb AG v Verbraucherzentrale Nordrhein-Westfalen e.V. (Case C‑92/11). The case relates to a request for a preliminary ruling from the Bundesgerichtshof (Germany) on the application of the Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts. The German court asked clarity on the ability of a German undertaking supplying natural gas, having the right unilaterally to amend the price charged to its customers if they are on a special tariff (Sonderkunden).  Instead of opting for the standard tariff which German gas suppliers are obliged to offer consumers, those customers entered into (special) contracts on the basis of freedom of contract. The gas undertaking argued that the disputed term, which forms part of the general terms and conditions applicable to the customers in question, cannot be reviewed for unfairness as the term merely refers to the German legislation applicable to standard tariff contracts. That legislation allows the supplier to vary gas prices unilaterally without stating the grounds, conditions or extent of such a variation, while ensuring, however, that customers will be notified of the variation and will be free, if appropriate, to terminate the contract. 

The German court was uncertain in particular about the scope of the exclusion from review for unfairness of standard terms which merely reproduce mandatory statutory or regulatory provisions. By its judgment of 21 March, the Court of Justice answered that such terms must be subject to review for unfairness if the statutory provisions they reproduce are applicable only to another category of contracts. The Court noted that it is for the national court to assess in each individual case whether such a term allowing a supplier of gas unilaterally to alter the price satisfies the requirements of good faith, balance and transparency . When making that assessment the national court must accord fundamental importance to the following criteria in particular:

  • the contract must set out in transparent fashion the reason for and method of the variation of the charges; and 

  • the right of termination conferred on the consumer must actually be capable of being exercised in the specific circumstances.

 

Moreover, the Court dismissed the applications by the German Government and RWE to limit the temporal effects of its judgment in order to limit its financial consequences. This will effectively require gas suppliers who have now been found to be in breach of the Directive to reimburse all additional amounts paid by the consumers. Full full judgement, please click here.

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