OGH Requests ECJ Interpretation of Consumer Rights Directive

Sept 16, 2022 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, OGH) has requested the European Court of Justice (ECJ) to rule on whether the automatic renewal of a distance contract should give rise to a new right of withdrawal.

The starting point was a case pending before the Austrian Supreme Court between the Austrian Association for Consumer Information (Verein für Konsumentenschutz, VKI) and an online learning platform for students (defendant).

According to the defendant's GTC, when a subscription is booked for the first time, the subscription can be tested free of charge for 30 days thereafter and can be cancelled without notice at any time during the trial period. The subscription will become fee-based only after 30 days; in the event of failure to cancel the subscription within 30 days, the fee-based subscription period agreed upon in the booking process will then go into effect. The subscription is automatically renewed after expiration of the trial period if the subscription is not cancelled in a timely manner. Consumers are informed about their Right of Withdrawal from the subscription.

The VKI takes the position that Article 9 of the Consumer Rights Directive and Section 11 of the Distance and Off-Site Selling Act (Fernabsatz- und Auswärtsgeschäftegesetz, FAGG) do not contain any restrictions concerning the first-time conclusion of a contract. The defendant is of the opinion that an automatic extension of a contract does not automatically establish a second right of withdrawal for consumers.

According to the Austrian Supreme Court, the legal materials relating to Section 11 FAGG make it clear that the right of withdrawal is not limited to the initial conclusion of a contract; instead, the extension of limited contractual relationships or changes in content are indeed subject to the FAGG, thus establishing a right of withdrawal.

The relevant legal literature, however, questions whether an automatic renewal of a distance contract gives rise to a new right of withdrawal. Furthermore, it seems doubtful that the automatic extension of a contract constitutes a “distance contract” in the first place.

The ECJ has already ruled on an amendment to a loan contract, stating that such a contract cannot be categorised as "a contract concerning financial services".

Because the proceedings depend on how Article 9 of the Consumer Rights Directive should be interpreted, the Austrian Supreme Court has now suspended the proceedings and requested a preliminary decision by the ECJ.

OGH 3 Ob 103/22a (20 July 2022)