Ewoud Hondius, ‘Unfair Contract Terms and the Consumer: ECJ Case Law, Foreign Literature, and Their Impact on Dutch Law’

In the late twentieth century, most European states have adopted legislation on unfair contract terms. The Directive 93/13/EEC on unfair terms in consumer contracts has effectively made the European Court of Justice (ECJ) the final arbiter in interpreting much of this legislation. The present paper explores the impact which the ECJ case law and foreign legal writing has had in an individual Member State, that is, the Netherlands. Seven issues are highlighted. (i) First, especially in the United States, information requirements as to contract terms have been investigated and found wanting. Although it must be conceded that not every consumer will read the small print even when enticed by the legislature to do so, this paper submits that such requirements do have some value. (ii) Contra proferentem interpretation is one of three age-old weapons against unfair contract terms; but, unlike the common law, Dutch law has not made much use of it. (iii) Dutch law has used the overt control over the introduction into the contract and the content of standard contract terms, but the result is of little use to guide parties, attorneys, and judges. Dutch case law, unlike that in Germany, is so much attuned to the circumstances of the case that it hardly establishes useful precedents. (iv) One of the first cases on unfair contract terms decided by the ECJ, the Océano case, caused a major discussion in the Netherlands. Should the Dutch legislature step in and change the sanction of avoidance or nullification into that of considering an unfair term not binding, or should the consequences of ex officio avoidance or nullification be left to the existing statutory provisions? The Hoge Raad eventually came to terms with Océano and the following ECJ case law in Heesakkers v Voet. (v) An issue with regard to which Dutch courts have not yet had the opportunity to tie in with the case law of the ECJ is the problem of geltungserhaltende Reduktion, rejected in the Banesto case, which is in line with German case law. Until Banesto, Dutch case law had in fact accepted the device of geltungserhaltende Reduktion. This paper strongly supports the approach applied by the ECJ and German case law. (vi) Dutch law does not extend the control of unfair contract terms to the main subject matter. This is in line with the EC Directive and the case law of the ECJ (Kásler), and it is an expression of the rejection of the iustum pretium doctrine. The Nordic experience with handling unfair contract terms, without the exception for the main subject matter, demonstrates that the exception is not necessary. (vii) Finally, with regard to enforcement, the Dutch experience shows some surprising discrepancies with that in Germany. The two models may be described as the Dutch poldermodel and the German ‘battle’ model. The final paragraph sets out the conclusion of the foregoing analysis. In dealing with unfair contract terms, a collective approach should be favoured. Indeed, the Unfair Contract Terms Directive itself directs Member States to do so. Unfortunately, this is hidden for practitioners, because their understanding of the Directive will usually be limited to the part which has been transposed into national legislation, and the national legislation usually does not include the relevant provisions of the Directive. Also, it may be argued that a collective breach needs a collective remedy. This has been illustrated by two issues concerning unfair contract terms. The first one is the validity or invalidity of exemption clauses in standard terms. A second example is the question of the (in)validity of an arbitration clause in standard building terms.

Ewoud Hondius, ‘Unfair Contract Terms and the Consumer: ECJ Case Law, Foreign Literature, and Their Impact on Dutch Law’. European Review of Private Law Volume 24 (2016).

First posted 2016-06-16 06:59:48

Leave a Reply