The transposition deadline for the Omnibus Directive
Peli Partners, Bucharest
Peli Partners, Bucharest
The deadline for the implementation of Directive 2019/2161 of 27 November 2019 amending Directive 93/13/EEC, Directives 98/6/EC, 2005/29/EC and 2011/83/EU as regards the better enforcement and modernisation of European Union consumer protection rules (the Omnibus Directive) is quickly approaching. The Omnibus Directive is aimed at consolidating and boosting consumer protection laws, and modernising e-commerce and digital content regulations. Every Member State is expected to pass one or more pieces of legislation to align with it.
With only a month or so to go, Romania does not seem very advanced in its legislative procedure to ensure the implementation of the Omnibus Directive by the required deadline. The National Authority for Consumer Protection (NACP) has released a draft law earlier this year, but it does not appear to have made its way through the legislative labyrinth (the Implementation Law). NACP has always been an avid protector of consumer rights, vigilant at sanctioning small or big companies when deemed appropriate according to national laws – almost to the point of becoming overzealous.
As such, it does not come as a surprise that when the Omnibus Directive opportunity arose, NACP was the first to initiate the legislative proposal; firstly by aligning to the European legislation, but also by adding amendments which would further strengthen its grip over companies which must comply with the unfair terms legal regime.
The Implementation Law is intended to amend three pieces of Romanian legislation:
- Law no 193/2000 on unfair terms in contracts concluded between professionals and consumers (the Abusive Clauses Law);
- Law no 363/2007 on fighting unfair business-to-consumer commercial practices and harmonising regulations with European consumer protection legislation; and
- Governmental Emergency Ordinance no 34/2014 regarding consumer rights in contracts concluded with professionals as well as for the amendment and completion of certain normative acts.
As the Omnibus Directive and the Implementation Law are quite extensive, we will focus on the amendments proposed to the Abusive Clauses Law and their potential impact over the activity of the financial services professionals.
Amendments proposed to the Abusive Clauses Law
Current provisions under the Abusive Clauses Law
The unfair or abusive terms included by professionals in consumer contracts (including in financial services agreements) has always been a strong concern for NACP, generating numerous disputes over the last decade. NACP applied many sanctions to banks, particularly in respect to portfolios of agreements. Thousands of consumer litigations were initiated by individuals against banks.
Under the current form of the Abusive Clauses Law, a professional which uses standard documentation providing unfair terms in its relationship with consumers can be sanctioned by the NACP. To enforce sanctions, the NACP must submit with the court a claim to compel the professional to amend the ongoing agreements by eliminating the unfair terms. In addition, unfair terms can be annulled by the courts following the claims of consumer protection non-governmental organisations (NGOs) or individuals.
In relation to NACP claims, the courts may compel the professional to amend all its ongoing standard agreements and eliminate the unfair terms. In addition, the courts may apply a fine to the uncompliant professional.
An enforceable court decision rendered against a professional sanctioned following a claim submitted by NACP does not directly benefit consumers, because they are not part of the trial and do not have a direct claim against the non-compliant professional. Commonly, a consumer would have to initiate a separate lawsuit to obtain the restitution of the amounts paid based on clauses that were deemed unfair. To this end, the consumer could use the decision rendered in a dispute involving the NACP as favourable case law, which is not binding for the courts under Romanian legislation.
The Implementation Law amendments
The Omnibus Directive allows each Member State to implement an effective, proportionate and discouraging sanctioning regime for professionals which are non-compliant with the unfair terms legislation. Each sanction can be applied according to the Omnibus Directive, either with respect to the use of pre-determined unfair clauses as regulated under internal law, or in case a professional continues to use in its activity clauses that have been deemed as being unfair by a court of law.
Broadening the effects of a court decision sanctioning unfair terms
Based on the EU framework regulated under the Omnibus Directive, the NACP has included in the Implementation Law an ingenious but controversial mechanism, involving the extension of a court decision’s effects to third parties outside of the procedural frame of a dispute.
The proposal of NACP is to extend the effects of a final court decision rendered based on the Abusive Clauses Law in a dispute between NACP and a certain professional, stating that such a ruling will compel the professional to:
- amend the ongoing standard agreements by eliminating the unfair terms; and
- repay to the portfolio of consumers all the amounts received by the professional as a result of including unfair terms.
The novelty resides in the provision obliging professionals to automatically repay the amounts received based on the unfair terms to the entire portfolio. This solution might raise concerns as it might fail to address differences between consumers.
Easier enforcement for consumers to recover the amounts paid based on unfair terms
Another addition to the Implementation Law is that the final court decisions obtained by the NACP will form the ground for an enforcement action, taken by the consumers against the relevant professional, for the swift restitution of the amounts paid based on unfair terms without being required to first go through a lengthy and costly litigation against said professional.
However, such a proposal goes against the principle that a court decision cannot be binding in relation to a person which was not party to the proceedings. Moreover, this also raises other practical issues, for example:
- obtaining a legalised copy of the court decision required to initiate the enforcement procedure;
- proving that a certain consumer’s agreement was part of the same portfolio for which NACP applied a sanction; and
- determining the amount to be repaid and indicating it in the enforcement request submitted with the bailiff and the enforcement court etc.
Other amendments specific to the Omnibus Directive
The Implementation Law proposes other amendments in line with the Omnibus Directive, such as:
- increasing the threshold amounts of the fines;
- including a 4 per cent turnover fine; and
- including several circumstances, either aggravating or mitigating, which must be considered when sanctioning a company for using unfair terms.
Amendments proposed by consumer protection organisations
The Implementation Law was subject to public debate. As such, an active consumer protection organisation, CREDERE, submitted its own proposals to improve the Implementation Law and render it more effective for the consumers. Some of its most important proposals are as follows.
Extending the powers of a consumer protection NGO under the Abusive Clauses Law
The proposal states that a court decision obtained by a consumer protection NGO against a professional should bear the same effects as if it were obtained by the NACP, as detailed in the previous section (ie to compel the professional to eliminate the unfair terms and reimburse the amounts, to be considered a writ of execution for the consumers etc).
Practical matters in relation to the consumers’ access to the court decision
As mentioned above, the Implementation Law presents some practical difficulties for the consumers which would seek to enforce to their own advantage the NACP’s court decisions. As such, the consumer protection NGO has proposed for the Implementation Law to provide the consumer’s right to access the court file and obtain a legalised copy required to initiate the enforcement procedure. This would be possible based on a certificate issued by NACP or by the consumer protection NGO which was part of the initial dispute to acknowledge the capacity of the beneficial consumer.
Larger fines for professionals which do not comply with court decisions
The consumer protection NGO proposes including a fine calculated as 4 per cent of the turnover generated in Romania by the professional which has failed to comply with a court decision declaring the abusive nature of certain clauses. The consumer protection NGO argues there have been many cases in which companies, including banks, have intentionally disregarded the court’s instructions in relation to unfair terms and continued to use such sanctioned clauses in their standard documentation.
In its opinion, this practice would be discouraged if a fine calculated on a turnover basis was applicable.
Accelerating the court proceedings for unfair terms disputes
Currently, a regular unfair terms dispute, irrespective of whether the plaintiff is the NACP, a consumer protection NGO or a consumer, can be quite lengthy, depending also on the court and the amount of evidence presented before it.
The proposal is to declare that such disputes are deemed under the law as being urgent and gain the privilege of being resolved by the courts with priority. This would imply shorter periods of time between each hearing (the proposal is for a maximum of 30 days) and unfolding the process in special conditions, such as court holidays, state of urgency and so on.