Berlin Court Orders Whatsapp to Provide Terms & Conditions In

CONTRACTS

Berlin Court orders WhatsApp to provide Terms & Conditions in German Berlin Court of Appeal, Case No. 5 U 156/14 On 8 April 2016, the Berlin Court of Appeal issued a judgment against WhatsApp Inc., prohibiting the use of English Terms & Conditions on its website for contracts with consumers in Germany, unless German Terms & Conditions are provided as well.

In a press release dated 17 May VZBV initiated court proceedings did not provide a telephone or fax 20161, the Federation of German before the District Court of Berlin6. number in addition to its email Consumer Organisations (‘VZBV’) On 9 May 2014 the VZBV address, but only Twitter and announced that the Court of obtained a default judgment7 Facebook account information. In Appeal Berlin2 issued a judgment against WhatsApp8. The default the Judges’ view WhatsApp against WhatsApp Inc. judgment was issued without prior customers are typically familiar (‘WhatsApp’), prohibiting the use oral hearing, since WhatsApp failed with modern means of of English Terms & Conditions on to declare, to the District Court of communication. Therefore, its website for contracts with Berlin, its willingness to defend communication via social consumers in Germany, unless against the VZBV’s legal action, i.e. networks like Twitter and German Terms & Conditions are it refused to accept the formal Facebook shall be acceptable for provided as well (‘Appeal delivery of the statement of claim. WhatsApp customers. Judgment’)3. Further, the Berlin Under the default judgment, Court of Appeal ruled that WhatsApp was ordered to render Item (5) WhatsApp shall be obliged to on its website the following The District Court of Berlin held provide on its website a second information, pursuant to Section 5 that, pursuant to Section 1 of the communication channel, in of the German Telemedia Act German Class Action Act11, the addition to WhatsApp’s (already (‘TMG’)9: (1) its representatives; VZBV would only be entitled to indicated) email address. The (2) the geographic postal address, attack terms and conditions that Appeal Judgment is not yet i.e. business seat; (3) a second are ‘unfair’ on the substance. The binding. communication channel, i.e. in scope of the VZBV’s rights under addition to its already indicated the German Class Action Act shall Facts of the judgment email address; and (4) the public not cover the question of whether WhatsApp advertised its messenger register upon which WhatsApp is certain terms and conditions are service to customers on its German registered and the corresponding made a part of a contract. In the language website. Potential registration number. Finally, the view of the District Court of Berlin customers have to first register and default judgment put an obligation terms and conditions in the agree to the ‘Terms of Service’ and on WhatsApp to (5) use German English language do not form part the privacy policy, which are only Terms & Conditions on its website of a contract, unless the relevant available in English. Further, in regards to its consumers in customer is able to understand WhatsApp’s website did not Germany (the substance of orders them. Upon this assumption, the indicate its representatives, its (1) to (5) above are hereinafter District Court of Berlin concluded business seat, a communication referred to as ‘Item (1) - Item (5)’). that terms and conditions shall not channel other than its email be deemed unclear and address and the public register, in First Instance judgment of 25 incomprehensible according to the which WhatsApp is registered. November 2014 meaning of Section 307(1) s. 2 of In its capacity as a so-called After WhatsApp filed a complaint the German Civil Code (‘BGB’)12 registered consumer organisation against the default judgment, the only because they are drafted in a under Section 4 of the German District Court of Berlin issued a foreign language. Rather, a breach Class Action Act4, the VZBV has First Instance judgment dated will occur only if so-called the right to sue companies, i.e. file 25 November 201410. The First ‘material’ circumstances, which injunctions or legal actions, for use Instance judgment upheld the lead to an unreasonable of unfair terms and conditions default judgment only in relation disadvantage for the customer, are and/or unfair business practices in to Items (2) and (4) above. All given13. WhatsApp’s English Terms the meaning of the German Act other orders contained in the of Service shall not qualify as against Unfair Competition default judgment, including the unfair competition, in particular a (‘UWG’)5. order to use German Terms & misleading commercial practice Conditions vis-à-vis customers in pursuant to Section 5(1) UWG; the Default judgment of 9 May Germany, i.e. Item (5), were District Court of Berlin was 2014 dismissed. apparently convinced that Since WhatsApp showed no customers would understand that reaction to two warning letters Item (3) WhatsApp intends to use the issued by the VZBV on 19 July The District Court of Berlin English version of its Terms of 2012 and 9 October 2012, the expressly accepted that WhatsApp Service14.

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Appeal judgment of 8 April on the CJEU’s binding Opinion Conditions. Further, the Court 2016 that Article 5(1)(c) of the Directive emphasised that consumers would Upon appeal by the VZBV, the requires “communication without not expect terms and conditions to Court of Appeal of Berlin partly set an intermediary17.” Against this be in the English language, since aside the First Instance judgment. backdrop, the Court of Appeal the whole website, including the In addition to the District Court of concluded that the hyperlinks to relevant hyperlinks to the Terms & Berlin’s First Instance judgment, WhatsApp’s Twitter and Facebook Conditions and the privacy policy, the Court of Appeal granted the accounts would not be in line with is offered in the German language, VZBV’s motions in relation to those legal principles as established thereby aimed at the German items (3) and (5). The reasoning by the CJEU, since WhatsApp does market. Consequently, the Court substantially differed from the not “follow” its users on Twitter concluded that the whole set of District Court of Berlin’s view: and WhatsApp’s Facebook page WhatsApp’s Terms & Conditions does not allow users to send shall be invalid and unenforceable, Item (3) messages to WhatsApp. Further, irrespective of whether the Contrary to the District Court of the Court of Appeal pointed out individual clause would, if they Berlin, the Court of Appeal that WhatsApp’s argument that the were drafted in the German concluded that WhatsApp shall breach was minor, is irrelevant language, be valid and enforceable provide on its website a second since the information to be according to their scope and communication channel, in provided to users are deemed substance. addition to WhatsApp’s already essential on the level of EU Even though the Court has not indicated email address. In the legislation. In this context, the admitted Third Instance cassation Court of Appeal’s view, the existing Court of Appeal relied on a proceedings before the BGH21, hyperlinks to WhatsApp’s Twitter previous judgment of the Federal WhatsApp is now seeking to account and Facebook page were Court of Justice (‘BGH’)18 dated override this decision. On 30 May not sufficient. Section 5(1) no. 2 7 May 2015, Case No. I ZR 158/14. 2016, WhatsApp filed a non- TMG originates from admission complaint22. If the Article 5(1)(c) of the E-Commerce Item (5) complaint is successful, WhatsApp Directive 2000/31/EC (‘Directive’) In the Court’s view the fact that a will be permitted to attack the pursuant to which ‘In addition to complex set of contractual terms Appeal Judgment by cassation other information requirements and conditions is only available in appeal23 before the BGH. The non- established by Community law, the English language leads to the admission complaint is currently Member States shall ensure that conclusion that the whole set of pending before the BGH, Case the service provider shall render contractual Terms & Conditions No. I ZR 111/16. easily, directly and permanently shall be deemed void19 because of a accessible to the recipients of the breach of Section 307(1) BGB. Item (1) service and competent authorities, Pursuant to Section 307(1) BGB Finally, the Court dismissed the at least the following information: clauses in terms and conditions VZBV’s further motion, i.e. to (c) the details of the service provided vis-à-vis consumers shall impose an obligation on provider, including his electronic be void if they unreasonably WhatsApp to indicate a competent mail address, which allow him to disadvantage the other party to the representative pursuant to be contacted rapidly and contract with the party using the Section 5(1) no. 1 TMG. The communicated with in a direct and terms and conditions. Such an Court explained that a breach of a effective manner.’ The Court of ‘unreasonable disadvantage20’ may national statutory provision of a Appeal expressly made reference to also arise from the fact that the Member State, such as Section 5(1) the Court of Justice of the relevant clause is not sufficiently no. 1 TMG, shall be deemed unfair European Union (‘CJEU’), which clear and comprehensible. competition only if the violated held in Case C-298/0715 that under The Court held that such breach national statutory provision is Article 5(1)(c) of the Directive the shall be given in particular if based on European law. However, service provider is required to offer consumers are required to accept a Section 5(1) no. 1 TMG does not recipients of the service a rapid, complex set of terms and originate from EU legislation. In direct and effective means of conditions which contain a high the Court’s view, the Unfair communication “in addition to his number of clauses drafted in Commercial Practices Directive electronic mail address16.” Further, difficult legal language in English, 2005/2009/EC shall contain an the Court of Appeal Berlin relied such as WhatsApp’s Terms & exhaustive list of unfair

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commercial practices between In any event, the upcoming Tahz0?text=&docid=66600&pageIndex= 0&doclang=EN&mode=lst&dir=&occ=first companies and consumers. decision from the BGH to be &part=1&cid=1233475 Consequently, the Court held that followed by a third instance 16. CJEU, judgment dated 16 October the VZBV shall not be entitled to judgment, whether it confirms the 2008, C-298/07, para. 25. 17. CJEU, judgment dated 16 October file an injunction for breach of Appeal Judgment or, alternatively, 2008, C-298/07, para. 31. Section 5(1) no. 1 TMG. permits the cassation proceedings, 18. Bundesgerichtshof - BGH. will provide further legal clarity. 19. Kammergericht Berlin, judgment Conclusions In the meantime, it is worth dated 8 April 2016, Case No. 5 U 156/145, pages 49 et seq.; full text “Companies’ terms and conditions recommending that companies, available at http://www.vzbv.de/sites/de are frequently lengthy and which target consumers in fault/files/whatsapp_kg_berlin_urteil.pdf generally hard to understand for Germany, take the principles set 20. In German: unangemessene consumers. It is an important forth in the Appeal Judgment of Benachteiligung. 21. Bundesgerichtshof - BGH. message to other international 8 April 2016 from Berlin’s Court of 22. ‘Nichtzulassungsbeschwerde’ companies that the millions of Appeal into account. pursuant to Section 544(1) s. 1 German German users of WhatsApp will Code of Civil Procedure not have to contend themselves Dr Philipp Süss Partner (Zivilprozessordnung - ZPO). Dr Alexander Hardinghaus Associate 23. ‘Revision’ pursuant to Section 542 et with terms of use in a foreign Reed Smith LLP, Munich seq. German Code of Civil Procedure language,” said Klaus Müller, [email protected] (Zivilprozessordnung - ZPO). Executive Director of the VZBV24. [email protected] 24. http://www.vzbv.de/sites/default/ files/en_kom_2016-05-13_pm_whatsap However, the Appeal Judgment has p_ibu.pdf not yet become final and absolute. 1. http://www.vzbv.de/sites/default/files/ 25. Targeting on the German market also Even if it should become binding, en_kom_2016-0513_pm_whatsapp_ib triggers jurisdiction of German courts. u.pdf According to Section 32 of the German this will not establish a general 2. Kammergericht Berlin. Code of Civil Procedure requirement for international 3. Kammergericht Berlin, judgment (Zivilprozessordnung - ZPO), the court in companies to provide dated 8 April 2016, Case No. 5 the jurisdiction in which the tortious act U 156/145; full text available at http://ww customers/potential customers in was committed shall have jurisdiction; in w.vzbv.de/sites/default/files/whatsapp_kg this context unfair competition is deemed Germany with terms and _berlin_urteil.pdf a tortious act. conditions in the German 4. Unterlassungsklagengesetz - UKlaG. 5. Gesetz gegen den Unlauteren language. The Appeal Judgment Wettbewerb - UWG. will have an inter partes effect. 6. Landgericht Berlin. Further, the Appeal Judgment dealt 7. So-called ‘Versäumnisurteil’ pursuant with a very specific case, i.e. a to Section 331(3) of the German Code of Civil Procedure (Zivilprozessordnung - scenario where a company requires ZPO). its customers to agree on a 8. Landgericht Berlin, judgment complex set of terms and (Vesäumnisurteil) dated 9 May 2014, conditions containing a high Case No. 15 O 44/13; full text available at http://www.vzbv.de/cps/rde/xbcr/ number of clauses drafted in vzbv/WhatsApp-LG-Berlin-15_0_44_ difficult legal English language, 13.pdf whereas the company’s services 9. Telemediengesetz - TMG. 10. Landgericht Berlin, judgment dated and offerings as such are entirely 25 November 2014, Case No. 15 O 44/ offered to customers in the 13; full text available at http://www.v German language and even the zbv.de/sites/default/files/downloads/Wha hyperlink to the terms and tsApp-LG-Berlin-2014-11-25.pdf 11. Unterlassungsklagengesetz - UKlaG. conditions is presented in German. 12. Bürgerliches Gesetzbuch - BGB. The present proceedings clearly 13. Landgericht Berlin, judgment dated demonstrate that the underlying 25 November 2014, Case No. 15 O 44/ 13, pages 11 et seq. statutory provisions of the BGB 14. Landgericht Berlin, judgment dated and the UWG, in conjunction with 25 November 2014, Case No. 15 O 44/ Section 5 TMG, apply 13, pages 12 et seq. internationally, provided that a 15. CJEU, judgment dated 16 October 2008, C-298/07, VZBV v. deutsche company targets consumers in internet versicherung AG; full text Germany25. In particular those available at http://curia.europa.eu/ju requirements cannot be waived by ris/document/document.jsf;jsessionid=9e way of a governing law clause. a7d2dc30d597f42af1bf154f4e815dd9c7 d781b874.e34KaxiLc3qMb40Rch0Saxu

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