Reverse Solicitation

My piece for Ogier Leman on 'reverse solicitation' is here.

Any business dealing with residents of another country faces the potential risk that the authorities in the other country might decide that it is somehow actively operating in that other country, rather than only dealing with foreign customers in or from its home territory after being approached by them ('reverse solicitation'). This could mean action being taken by a foreign consumer, ombudsman or regulator, including action in the civil or criminal courts of another country. A recent Irish case has added some colour to the factors that the European Court of Justice ('CJEU' or 'ECJ') has previously said may show that a business is actively doing business in another country; and I've added a list gleaned from guidance applicable to financial services in particular. This post is for information purposes only. If you need advice, please get in touch.

The ECJ has held that a firm based in one EU Member State won't be doing business in another Member State just because its website is accessible in the other country. Nor will it be enough for the firm's website to display its own email/ geographical address, or phone number (without an international dialing code), because that information is needed by consumers in the firm's own home country. 

Instead, a firm must have somehow 'manifested' or demonstrated its intention to establish a commercial relationship (contract) with consumers in the other country. There must be clear expression of the intention to solicit custom from those foreign consumers. 

The sort of objective factors that the ECJ held to be relevant to that question include: the international nature of the business activity (e.g. tourism); telephone numbers with the relevant country code; a web address with the other country's top-level domain name (e.g. “.de” or ".fr"); itineraries to get to the foreign place where the relevant service is provided; mentions/testimonials of clients based in other countries; and using a foreign language and/or currency not also commonly used in the firm's home country.

The Irish courts have also pointed to these factors in various cases with unsurprising results. But a recent Irish case adds a bit more colour... 

A UK-based firm organised group cycling tours in foreign countries, but not the travel to those countries. So the consumers were never going to be using the firm's service in the UK. Customers had to make their own way to where the tours operated locally. The firm stipulated that it was only responsible for the tour from the appointed start time at the meeting point, but it did also arrange the transport of customers from the foreign/local airport to the meeting point. 

While there was evidence that the booking process did not target a customer's specific country of residence (e.g. Ireland), the firm was aware of the country they had come from and this did not have to be from the UK. The website/email addresses ended in ".co.uk" but the contact phone number carried the international "+44" country code. Customer testimonials also stated the customer's nationality, including one from Ireland. Prices were stated in currencies other than GBP, including the Euro, and there was a currency conversion feature on the website, to enable customers to figure out how much they would have to pay in their own currency when paying the price in GBP. Prior to booking, a customer also had to create an online account, giving details of their city, country of residence and post code (not just provide those details in the form to verify the payment card details being used, for example, which may only go to the card acquirer rather than the merchant). 

So, the Irish court held that, before the conclusion of any contract with the consumer, it was apparent from the firm's website and overall activity that the defendant intended to do business with - and enter into contracts with - consumers in Ireland (among other places).

These are not the only factors to consider, of course. For example, the EU's financial services 'passporting' requirements and Brexit have provided opportunities for UK and EU authorities to consider what factors - alone or together in a specific context - could mean that an EU financial services provider may be wrongfully targeting the UK market or vice versa:

• firms must have a 'head office' and hold board meetings in their country/territory of residence/authorisation, so any of those features that are instead based in the other jurisdiction would be problematic from that standpoint alone (i.e. those who decide the firm’s direction, make material management decisions on a day-to-day basis; the finance, settlement and compliance functions - ‘central administrative functions’ - and their systems and records),
• the website should be hosted on local servers in the 'home' territory (and certainly not in any other country where foreign customers are resident);
• no marketing, advertising or services should be directed specifically at other countries/territories or their residents;
• there should not be a foreign language version of the website or customer communications or support specifically for the relevant foreign customers;
• management and staff should not visit any foreign customers or service providers for operational or marketing purposes or to resolve disputes;
• foreign customers should only be able to approach the firm's website or staff in its 'home' territory;
• the firm should not set cookies on the devices of of foreign customers or otherwise monitor their behaviour outside the firm's home territory;
• the firm should not provide services beyond the scope requested by the foreign customer approaching the firm and they should have to request the service each time they wish to use it;
• the firms should keep records (not just a tickbox or contractual provision) showing that it was approached by the customers, not the other way around; 
• the firm should have no agents, intermediaries or outsourced/delegated services outside its home territory or be a member of a foreign payment system, trading exchange/venue or trade body - or vice versa - but could use services in other countries (e.g. hold foreign bank accounts or rely on advice from foreign professional firms);
• being part of a wider corporate group based outside the territory or being funded from outside the territory may also be problematic; 
• customer contracts must not be subject to any law of a country other than the firm's home state or specifically refer disputes to any other jurisdiction;
• a firm should not deposit its clients' money/assets in any institution outside its home territory, or safeguard customer funds outside its home territory (other than as incidental to dealing appropriately with foreign customers in or from the home home territory, supported by correspondent services outside the country where necessary for that purpose).

This post is for information purposes only. If you need advice, please get in touch.

APCOA's Parking Problem

Imagine my surprise when I received a £140 debt recovery notice for a £1 parking charge that I'd paid via APCOA's parking app, alleging “parking without a valid payment or permit”. I called the collection agency (Debt Recovery Plus) and explained that both the app and my credit card statement show that I paid the £1 to park my car at the relevant location (for the second year running, I might add). But, "Aha!" they said. We can see that the registration number entered in your version of the APCOA app has one letter different to your car's actual registration number (an "O" instead of a "P"), so neither the payment APCOA took from your credit card nor the permit it issued to you were valid. That means APCOA can now charge you a £140 penalty!

There are so many things wrong with this that I'm actually kind of hoping it goes to court. Here's the gist of what I've written to all concerned (yet their processes grind on): 

1. APCOA knew of the mistake (through its licence plate recognition system), yet had proceeded to charge my credit card by submitting the payment to its card acquirer as a valid transaction; and duly issued the parking permit for my vehicle, regardless of the typo in the app (for the second year running). My contract debt of £1 was discharged. The end. Everything that followed was of no legal consequence at all, void, unenforceable. You cannot somehow revive or rely on a contract debt once it is discharged. It's irrelevant that I missed a deadline in a later document APCOA wasn't entitled to issue in the first place. The “terms and conditions of use” at the location don't entitle APCOA to collect a parking fee of £1 and then seek payment of further charges as if it had not already been paid. If English contract law were to allow that, the wheels of commerce would come to an abrupt halt. 
2. If APCOA regarded the typo in the app as a problem at all, then it had elected not to take the point and reject my payment, so it could not later claim that the typo somehow rendered the attempted transaction invalid.
3. APCOA had suffered no loss, because they had received the £1 charge and not refunded it.
4. APCOA is also estopped by its conduct from claiming that the payment/permit was invalid, issuing the parking charge notice and other enforcement activity. By issuing the notice with the correct registration at my address, APCOA (and later the collection agency) demonstrated that it was on notice that I was the registered keeper of the relevant vehicle at the relevant location on the day in question and that I had paid a £1 parking charge using my card (also registered to the app).
5. To charge 140 times the amount of a contract debt is extravagant and unconscionable in comparison with any legitimate interest, particularly in circumstances where APCOA had in fact accepted payment for a £1 charge and both it and its collection agency were aware of an obvious mistake. The charge is also not a genuine pre-estimate of any loss, since there is no loss!
6. The debt recovery firm is also on notice of the obvious mistake and is similarly estopped, but has no better claim to payment than APCOA in any event.
7. To the extent that APCOA seeks to rely on the “terms and conditions of use” as the basis for additional charges, those terms and conditions fail the fairness and transparency tests and/or are otherwise unenforceable under the Consumer Rights Act 2015. 
8. Any contract formed on the day for the use of the car park would be rectifiable for obvious mistake to cure the minor typographical error in the reference to the registration number. Alternatively, APCOA breached the contract by collecting my payment but failing to apply it to the vehicle that it knew to be the one I had parked, for which the damages are at least equal to the amount they subsequently try to claim from me in charges (plus my costs). 
9. The debt collection agency has also misrepresented that the UK Supreme Court decision in Cavendish Square Holding BV v Makdessi [2015] UKSC 67; [2016] AC 1172 entitles APCOA or the agency to act as they have. 
10. Both APCOA and the debt recovery agency have acted wrongfully on several occasions in pursuing the amount of the charge. In all of the circumstances, APCOA and its collections agency are in breach of their duty not to trade unfairly under The Consumer Protection from Unfair Trading Regulations 2008. 

While some of the remedies to which I am entitled may well be beyond the jurisdiction of the small claims court, they would include:

• judgment in my favour on any attempt to recover the charges;
• An order that each of the parking charge notice and debt recovery notices are void and/or unenforceable. 
• An order that any contract formed by my App and the terms and conditions of use of the car park at the Location should be rectified by the court to cure the minor typographical error in the reference to the registration number. 
• Damages equivalent to all amounts sought by APCOA and its collections agent and my costs and expenses incurred, including (where recoverable under the relevant court rules) legal fees and expenses in defending any proceedings.   

I have written to APCOA, the debt collection agency and APCOA's Managing Director for UK and Ireland, putting them on notice of the above and reserving all my rights and remedies. So far, their highly automated processes grind on...