1.

Where a non-profit educational establishment offers its students credit permitting them to pay their registration fees and the cost of study trips in the form of an interest-free instalment repayment plan, does it act as a ‘seller or supplier’ within the meaning of Directive 93/13/EEC? ( 2 ) Furthermore, in circumstances in which the student concerned played no active role in the subsequent proceedings to recover the outstanding debt together with interest and a costs indemnity, does a national court have the obligation to examine of its own motion whether a contract comes within the scope of that directive?

2.

These issues have arisen in a dispute between an educational establishment and one of its students. They provide the Court with the opportunity further to define the scope of Directive 93/13 and the powers and obligations of national courts under it.

3.

Directive 93/13 was adopted on the basis of Article 100a EEC (now Article 114 TFEU). Its aims include ensuring that consumer contracts do not contain unfair terms and protecting consumers against an abuse of power by sellers or suppliers. ( 3 ) Member States may afford consumers a higher level of protection through national provisions that are more stringent than those of the directive. ( 4 )

4.

The 10th recital of the directive states that the rules on unfair terms are to apply to ‘all contracts’ concluded between sellers or suppliers and consumers. It indicates explicitly that, in consequence, inter alia, contracts relating to employment, to succession rights, to rights under family law and to the incorporation and organisation of companies or partnership agreements should be exempted from the directive’s scope. The directive is however to apply to all trades, business or professions including those of a public nature. ( 5 )

5.

Article 1(1) defines the scope of Directive 93/13:

‘The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer.’

6.

Article 2(b) and (c) defines the terms ‘consumer’ as ‘any natural person who, in contracts covered by [Directive 93/13], is acting for purposes which are outside his trade, business or profession’ and ‘seller or supplier’ ( 6 ) as ‘any natural or legal person who, in contracts covered by [Directive 93/13], is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned’.

7.

Article 3(1) provides that ‘a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’.

8.

Directive 93/13 was transposed into national law by the Marktpraktijkenwet (the Law on Market Practices) of 6 April 2010. That law introduced the term ‘undertaking’, instead of the term ‘seller or supplier’ used by Article 2(c) of that directive, in order to define its scope. Article I.1(1) of the Wetboek Economisch Recht (the Code on Economic Law) defines an undertaking as ‘any natural or legal person pursuing a long-term economic aim, including any associations of such persons’.

9.

Article 806 of the Gerechtelijk Wetboek (the Judicial Code) sets out the obligations of the court in the case of a judgment in default: ‘in a judgment in default, the court must allow the claims or defences of the party present, save to the extent that the legal procedure or the claims or pleas might be contrary to public policy’.

10.

Ms Susan Kuijpers was a student at Karel de Grote Hogesschool (Karel de Grote University College, ‘KdG’). On 3 February 2014 she was required to pay a total amount of EUR 1546 to KdG representing her registration fee for the academic years 2012/13 and 2013/14 and her contribution towards a study trip. As she was unable to pay that amount as a lump sum she was granted an interest-free instalment repayment plan by KdG’s study facility service, the KdG studievoorzieningsdienst (‘KdG Stuvo’). Under that plan, KdG Stuvo paid Ms Kuijpers the amount she needed so that she could pay KdG. Starting on 25 February 2014, Ms Kuijpers was to repay EUR 200 a month for seven months to KdG Stuvo. The final instalment of EUR 146 was to be paid by 25 September 2014.

11.

The contract included the following clause:

‘If the sum borrowed is not repaid on time (in whole or in part), interest of 10% per annum shall be payable automatically and without formal notice, calculated on the outstanding debt from the day following the due date, in the absence of settlement. An indemnity to cover debt collection costs shall also be payable in such a case, which shall be set by this contract at 10% of the outstanding debt, with a minimum of EUR 100.’

12.

Despite receiving a letter of formal notice, Ms Kuijpers defaulted on her repayments.

13.

On 27 November 2015 KdG issued a summons against Ms Kuijpers, seeking to obtain (under the contract concluded by KdG Stuvo) the principal sum (EUR 1546), default interest at 10% from 25 February 2014 (EUR 269.81) and costs (EUR 154.60) and brought proceedings before the Vredegerecht te Antwerpen (Magistrates’ Court, Antwerp, Belgium). By interim ruling of 4 February 2016, that court awarded the principal sum of EUR 1546 to KdG. However, it reopened the proceedings on the question of interest and costs, in order to hear KdG’s position on the possibility of referring a question to this Court for a preliminary ruling. On 4 March 2016, KdG presented oral submissions on that issue. Ms Kuijpers did not appear at the hearing.

14.

The referring court states that, pursuant to Article 806 of the Judicial Code, since Ms Kuijpers did not appear at the hearing it must allow KdG’s claim save to the extent that the legal procedure or the claim might be contrary to public policy. That raises the issue, first, whether the national court may examine of its own motion whether the contract on which the claim is based falls within the scope of national law implementing Directive 93/13, and, second, whether national legislation precluding such an examination on the basis that the provisions on unfair contract terms are not mandatory in nature is compatible with that directive. ( 7 ) The referring court also expresses doubts as to whether the national legislation limiting the scope of provisions on unfair contract terms to contracts between consumers and ‘undertakings’ ( 8 ) is compatible with Directive 93/13.

15.

Against that background, the referring court has asked the Court for guidance on the following questions:

16.

Written observations have been submitted by the Austrian, Belgian and Polish Governments and by the European Commission. At the hearing on 9 March 2017, the Belgian Government and the Commission presented oral argument and responded to the Court’s questions.

17.

By this question the referring court asks whether it has the power to examine of its own motion whether a contract comes within the scope of Directive 93/13, even though the consumer has not appeared at the hearing. This question is linked to the existence of a national rule that permits courts to examine of their own motion only whether a claim is contrary to national rules of public policy. I shall examine that issue first, since the question whether Directive 93/13 is applicable (and whether its applicability may be examined ex officio) logically precedes the questions on the status of the parties to a particular contract and the lawfulness of its terms.

18.

The Commission submits that the rule that unfair terms are not binding on the consumer is mandatory in nature. The national courts have, therefore, the power and the obligation to examine of their own motion whether a contract falls within the scope of Directive 93/13, even if the consumer does not appear at the hearing.

19.

The Belgian Government agrees with the Commission’s conclusion. It argues that Article 806 of the Judicial Code is in line with that interpretation, since in the process of considering whether or not to raise a public policy issue of its own motion, a national court must first determine whether the provision in fact comes within the scope of the public policy rules. The principle of equivalence requires the same reasoning to be applied to provisions of directives, such as Directive 93/13.

20.

It is indeed settled case-law that a national court must examine of its own motion whether a term in a contract concluded between a seller or supplier and a consumer falls within the scope of that directive and, if it does, whether such a term is unfair. ( 9 )

21.

The question however remains whether the national court is under the same obligation when the consumer has not taken part in the proceedings.

22.

In order to answer that question, several principles already enshrined in the Court’s case-law should be borne in mind.

23.

First, ‘the system of protection afforded by Directive 93/13 is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge. This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms’. ( 10 )

24.

Second, the provision that unfair terms are not binding on the consumer ‘is a mandatory provision which aims to replace the formal balance which the contract establishes between the rights and the obligations of the parties with an effective balance which re‑establishes equality between them’. ( 11 ) It must be regarded ‘as a provision of equal standing to national rules which rank, within the domestic legal system, as rules of public policy’. ( 12 ) The examination of whether the directive is applicable to a given situation logically precedes that analysis (see point 20 above and footnote).

25.

Third, the imbalance which exists between the consumer and the seller or supplier may be corrected only by positive action unconnected with the actual parties to the contract. ( 13 ) That positive action consists in the examination by a court or tribunal of its own motion of the question whether a contract falls within the scope of Directive 93/13 and of the fairness of its terms. Indeed, the protection conferred on consumers by that directive extends to cases in which the consumer fails to raise the unfair nature of the term, whether because he is unaware of his rights or because he is deterred from enforcing them on account of the costs which judicial proceedings would involve. ( 14 )

26.

Furthermore, in accordance with the principle of Member States’ procedural autonomy, in the absence of harmonisation of the national mechanisms, the procedural rules that make that positive action possible are a matter for the national legal order, on condition, however, that they are no less favourable than those governing similar domestic actions (principle of equivalence) and do not make it in practice impossible or excessively difficult to exercise the rights conferred on consumers by European Union law (principle of effectiveness). ( 15 )

27.

This Court had the opportunity to address the issue of undefended proceedings in Asturcom Telecomunicaciones, which concerned a contract containing an arbitration clause. An arbitration award was adopted in the consumer’s absence and she did not appeal against it within the period prescribed by national law. Thus, the award became final. When Asturcom sought to enforce that award, the competent national court expressed the view that the arbitration clause was unfair. However, the applicable national law made no provision for the court or tribunal having jurisdiction to determine whether an arbitration clause was unfair when adjudicating on an action for enforcement of an award that has become final. In those circumstances the national court asked this Court whether it could determine of its own motion whether the arbitration agreement was void and, accordingly, to annul the award if it were to find that the arbitration agreement contained an unfair arbitration clause. ( 16 )

28.

In the light of the importance of the principle of res judicata, this Court held that the need to comply with the principle of effectiveness cannot be stretched so far as to mean that a national court is required to make up fully for the total inertia on the part of the consumer concerned who neither participated in the arbitration proceedings nor brought an action for annulment of the arbitration award, which therefore became final. ( 17 )

29.

However, it held that the principle of equivalence requires that inasmuch as the national court or tribunal seised of an action for enforcement of a final arbitration award is required, in accordance with domestic rules of procedure, to assess of its own motion whether an arbitration clause is in conflict with domestic rules of public policy, it is also obliged to assess of its own motion whether that clause is unfair in the light of the directive, where it has available to it the legal and factual elements necessary for that task. ( 18 )

30.

In VB Pénzügyi Lízing, the national court sought to clarify whether it was obliged to undertake, of its own motion, an investigation with a view to establishing the factual and legal elements necessary to assess whether a term conferring exclusive territorial jurisdiction was unfair, where the national procedural rules permitted that only if one of the parties so requested. ( 19 ) This Court held that in order to safeguard the effectiveness of consumer protection the national court must, in all cases and whatever the rules of its domestic law, determine whether or not the contested term was individually negotiated between a seller or supplier and a consumer, so as to establish whether it falls, within the scope of Directive 93/13. ( 20 )

31.

That approach was confirmed in Banco Español de Crédito (a case concerning the fairness of a term relating to interest for late payment of instalments of a loan). The Court found that a procedural rule which completely prevents the court before which an application for order for payment has been brought to assess of its own motion whether contractual terms are unfair where that consumer has not lodged an objection, even though it already has all the legal and factual elements necessary for that task available to it, is liable to undermine the effectiveness of the protection intended by Directive 93/13. ( 21 )

32.

In ERSTE Bank Hungary the Court developed that statement further by explaining that the effective legal protection guaranteed by Directive 93/13 is based on the premiss that one of the parties to the contract will bring an action before the national courts. ( 22 ) I note that, in those circumstances the consumer, if he was not the party that initiated proceedings, is likely to find himself on the receiving end of those proceedings; and the judgment will affect his legal situation, whether he participates in the proceedings or not.

33.

In my view, the following principles can be derived from the case-law: (i) the principle of effectiveness does not require the national judicial system to intervene where none of the parties to a contract has brought proceedings before the national courts; (ii) where proceedings have been brought, those courts must, of their own motion, in all cases and whatever the rules of their domestic law, examine whether a contract falls within the scope of Directive 93/13; (iii) if it does, they must, also of their own motion, examine the fairness of that contract’s terms; (iv) the mandatory nature of the rules that that directive lays down means that they must be applied irrespective of the status afforded to the national rules implementing them by the national legal order and of the parties’ procedural actions or submissions.

34.

The fact that the consumer was not the party that initiated the proceedings, that he did not appear at the hearing or that he did not invoke Directive 93/13 cannot alter that conclusion.

35.

Against that background, the Belgian legislation permitting courts to examine of their own motion only whether a claim is contrary to national rules of public policy, without being entitled at the same time to consider whether the claim in question contravenes the principles laid down by Directive 93/13, could appear problematic.

36.

However those rules must be interpreted in accordance with EU law. Where the national court has the power, under internal procedural rules, to examine of its own motion the validity of a legal measure in the light of national rules of public policy, it must also exercise that power regarding EU rules of a mandatory nature, in accordance with the principles of equivalence and effectiveness. Subject to that interpretation, I agree with the Belgian Government’s approach, based on Asbeek Brusse and de Man Garabito, ( 23 ) that under Article 806 Judicial Code the national court is obliged to assess of its own motion whether a clause is unfair in the light of Directive 93/13 in the same way as it does for national rules of public policy.

37.

I therefore conclude that a national court has the power and the obligation to examine of its own motion whether a contract comes within the scope of Directive 93/13, even where it has not been specifically requested to do so, inter alia because the consumer has not taken part in the proceedings.

38.

Before addressing the substance of Questions 2 and 3, which are best treated together, their content must be defined.

39.

The use of the term ‘undertaking’ in the wording of Question 2 seems curious in the context of consumer protection. I surmise that it is explained by the wording of the provisions of national law which underlie this request for a preliminary ruling.

40.

As the Belgian Government explains in its written submissions, the term ‘undertaking’, which has its origins in competition law, was used by the Belgian legislature in order to transpose into the national legal order the term ‘seller or supplier’ used in Article 2(c) of Directive 93/13 into national law. ( 24 ) It seems likely that it is what led the national court to ask whether a free educational establishment which provides subsidised tuition, such as KdG in the present case, can be regarded as an ‘undertaking’ within the meaning of EU law.

41.

However, it follows from the need for a uniform application of EU law that, where a provision thereof makes no reference to the law of the Member States with regard to a particular concept, that concept must be given an autonomous and uniform interpretation throughout the European Union which must take into account the context of the provision and the objective pursued by the legislation in question. ( 25 )

42.

Directive 93/13 indeed defines the term ‘seller or supplier’, without reference to national law. It therefore follows that that expression must be regarded, for the purposes of the application of the directive, as designating an autonomous concept of EU law which must be interpreted in a uniform manner throughout the European Union.

43.

The meaning of the term ‘seller or supplier’ cannot thus depend on the way the national legislature chose to transpose that term into national law. Whether the national legislation transposing the directive uses ‘seller or supplier’, ‘business’, ‘trader’, ‘undertaking’ or ‘professional’, it should be interpreted in a uniform manner according to the definition set out in Article 2(c) of Directive 93/13. What matters here is therefore not what the concept of ‘undertaking’ means in the context of competition law, or how it is construed in the case-law on the provision of services. It is whether a contract concluded between a consumer and a body such as KdG falls within the scope of Directive 93/13.

44.

Against that background, I understand the referring court’s purpose in asking both Questions 2 and 3 to be to determine whether a free educational establishment which provides subsidised tuition, such as KdG, should be regarded as a ‘seller or supplier’ within the meaning of the definition in Article 2(c) of Directive 93/13.

45.

The Belgian Government submits that a free educational establishment which provides subsidised tuition, such as KdG, cannot be considered as a ‘supplier of services’ within the meaning of Directive 93/13. A contract of ‘services’ requires an element of remuneration, which here is either absent or, if not absent, minimal. That is because the public establishment in question carries out tasks in the social, cultural and educational fields which are directed towards the population as a whole. The Austrian Government is of the same view.

46.

By contrast, the Polish Government argues that such an educational establishment is a ‘seller or supplier’ within the meaning of the directive. The contract between an educational establishment and a student falls within the professional activities of that establishment. Whether or not it makes a profit as a result is irrelevant.

47.

The Commission considers that a distinction should be made between the main educational activity of KdG and its occasional ancillary activity as a credit establishment. The present case concerns the latter. Although KdG’s main educational activity is one of general interest falling outwith Directive 93/13, its occasional ancillary activity falls within the scope of that directive.

48.

In my view, the starting point for interpreting ‘seller or supplier’ must be the actual wording of the definition in Article 2(c) of Directive 93/13. That concept comprises the following elements: ‘any natural or legal person’‘whether publicly or privately owned’, ‘acting for purposes relating to his trade, business or profession’ and ‘a contract covered by the directive’.

49.

That definition must be interpreted taking into account its context and the aim pursued by the legislation in question. ( 26 ) It is objective in nature and based on certain verifiable elements. ( 27 ) The term ‘seller or supplier’ is particular to Directive 93/13 and, in my view, wider than the terms used by various other consumer law instruments. ( 28 )

50.

The first part of that definition, namely any natural or legal person, whether publicly or privately owned, makes it clear that the classification, legal status and specific characteristics under national law of the person at issue are irrelevant for the purposes of its qualification as a ‘seller or supplier’. ( 29 )

51.

The use of the word ‘any’ indicates that the definition is to be construed broadly, in order to cover all natural or legal persons that may impose unfair contractual terms on consumers.

52.

The second part of the definition requires that the seller or supplier be acting for purposes relating to his trade, business or profession.

53.

The directive does not delimit in any way those activities other than the fact that they consist in trading goods or supplying services. ( 30 ) The approach is functional: the contract must form part of activities that are undertaken as part of a person’s trade, business or profession. The definition of ‘consumer’ and the definition of ‘seller or supplier’ both depend on the sphere in which the person concerned acts. ( 31 ) The ‘consumer’ and the ‘seller or supplier’ are at opposing ends of the legal transaction. The consumer, deemed to be vulnerable and in a weaker position, is situated at one end; and the seller or supplier, who is in a position of strength permitting him to impose his own terms on the transaction, is situated at the other end. The definition contains no condition concerning the nature or the purpose of the activities of the seller or supplier.

54.

Furthermore, there is nothing in the directive excluding a particular kind of trade, business or profession from its scope. It is true that the 10th recital indicates that several types of contracts are not intended to be covered, such as those relating to succession rights, ( 32 ) but there is no equivalent provision as regards any particular type of professional activity. On the contrary, the 14th recital expressly states that the directive also covers trades, businesses or professions of a public nature.

55.

In Šiba, the Court held that a lawyer who provides a legal service for a fee, in the course of his professional activities, to a natural person acting for private purposes is a ‘seller or supplier’ within the meaning of Article 2(c) of Directive 93/13 and that the public nature of those activities did not invalidate that finding. ( 33 )

56.

In the wider context of directives related to consumer rights, the Court has likewise held that the term ‘trader’ used in the context of the Unfair Commercial Practices Directive does not exclude from its scope bodies pursuing a task of public interest. The Court therefore ruled that ‘trader’ includes a public law body charged with a task of public interest, such as the management of a statutory health insurance fund. ( 34 ) In my view, that approach can legitimately be transposed to the concept of ‘seller or supplier’ in the context of Directive 93/13 (which, moreover – unlike the Unfair Commercial Practices Directive – expressly states that it includes activities of a public nature within its scope).

57.

Although the Court there referred to the ‘trader’ as being a party which carried out a gainful activity, it did so in order to stress that it did not exclude from the Unfair Commercial Practices Directive’s scope either bodies pursuing a task of public interest or those which are governed by public law. ( 35 ) Tasks of a public nature and interest are often conducted on a not-for-profit basis overall. I am accordingly of the view that the profit- or non-profit-making character of the organisation is irrelevant to the definition of ‘seller or supplier’ for the purposes of a particular contract.

58.

Regarding the nature of the service provided, I do not consider that the argument presented by the Belgian Government and the Commission that public education financed mainly by the State budget cannot be considered to be a service under Article 57 TFEU means that, as a result, educational establishments are excluded from the scope of Directive 93/13 when they conclude contracts that include unfair terms.

59.

It of course true that the Court has held that courses offered by certain establishments forming part of a system of public education financed entirely or mainly by public funds are excluded from the definition of services, since by establishing and maintaining such a system the State is not seeking to engage in gainful activity, but to fulfil its duties towards its population in the social, cultural and educational fields. ( 36 )

60.

However, there is also consistent case-law that courses offered by educational establishments essentially financed by private funds (in particular, but not necessarily, by students and their parents) constitute services within the meaning of Article 57 TFEU, since their aim is to offer a service for remuneration. ( 37 )

61.

It appears from those two lines of case-law that the Court considers that the essential element in defining services for the purposes of Article 57 TFEU is whether the service is offered for remuneration and not the nature of the tasks performed.

62.

Case-law on the Unfair Commercial Practices Directive ( 38 ) confirms that approach inasmuch as it includes a public law body charged with a task of public interest, such as the management of a statutory health insurance fund, within the scope of that directive. ( 39 ) The Unfair Commercial Practices Directive has the same legal basis as Directive 93/13, namely Article 95 EC (formerly Article 100a EEC, now Article 114 TFEU) on the approximation of laws. That legal basis expressly emphasises the need to legislate for a high level of consumer protection, ( 40 ) an aim that is not addressed by Article 57 TFEU on freedom to provide services.

63.

Finally, the wording of Directive 93/13 does not include any limitation on the nature and the purpose of the activities in question or the way they are financed. On the contrary, it expressly includes activities of a public nature within its scope. ( 41 )

64.

I therefore consider that the fact that a natural or legal person may provide subsidised tuition is no impediment to it being deemed to be a ‘seller or supplier’ within the meaning of Article 2(c) of Directive 93/13.

65.

As regards the third part of the definition of a ‘seller or supplier’ (a contract covered by the directive), Article 1(1) and Article 3(1) of Directive 93/13 make it clear that the directive applies to the terms of ‘contracts concluded between a seller or supplier and a consumer’ which have not been ‘individually negotiated’. ( 42 ) The 10th recital of the directive underlines the broad scope of that concept. ‘All contracts’ concluded between sellers or suppliers and consumers (with the exception of contracts such as those relating to employment, to succession rights, to rights under family law and to the incorporation and organisation of companies or partnership agreements) are covered by the directive. ( 43 ) A contract may be written or oral. ( 44 ) The purpose of the contract is irrelevant in determining the scope of the directive. ( 45 )

66.

Crucially, Directive 93/13 defines the contracts to which it applies by reference to the capacity of the contracting parties, according to whether or not they are acting for purposes relating to their trade, business or profession. That criterion corresponds to the idea on which the system of protection implemented by the directive is based, namely that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge. As a result, the consumer may find that he has to agree to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms. ( 46 )

67.

It follows from the above that a ‘seller or supplier’ within the meaning of Directive 93/13 is a natural or legal person, public or private, regardless of its legal status or characteristics that: (i) offers goods or services of any kind or description; (ii) enters into a contract with a consumer; where (iii) that contract is related to its professional activities. The nature (public or private), the subject matter (public or private tasks, tasks in the public interest) and the result (profit- or non-profit-making), are all irrelevant. The purpose of the contract is also immaterial, as long as it is concluded between a consumer and a seller or a supplier and relates to the latter’s business, trade or profession.

68.

I therefore consider that a free educational establishment which provides subsidised tuition may be considered as a ‘seller or supplier’ within the meaning of Directive 93/13 when it enters into a contract covered by that directive for purposes related to its activities. Whether that is so in the present case, and whether the contract concluded between Ms Kuijpers and KdG falls foul of the mandatory rules laid down by that directive, are for the national court to determine.

69.

In the light of all the foregoing considerations, I propose that the Court should answer the request for a preliminary ruling from the Vredegerecht te Antwerpen (Magistrates’ Court, Antwerp, Belgium) as follows: