Overview
1. Federal Court of Justice rules on bank’s right of retention after withdrawal from loan and purchase agreements if consumer sells vehicle
Germany’s highest civil court, the Federal Court of Justice (Bundesgerichtshof, “BGH”), recently issued two rulings regarding the scope of a bank’s right of retention after a consumer withdraws from a loan agreement that is linked to a purchase agreement. In both cases, the consumer had purchased a car and financed the purchase price with a bank.
As with all consumer loan agreements (subject to limited exceptions), the consumers had a statutory withdrawal right for 14 days regarding the loan agreement (sec. 495 German Civil Code, Bürgerliches Gesetzbuch (“BGB”)). If the contract from which the consumer with-draws is closely linked to another contract and both contracts form an economic unit – in the case of the vehicle, the loan agreement and the purchase agreement, because the purchase price is financed – the effect of the withdrawal also extends to the purchase agreement as a linked contract (sec. 358 et seq. BGB).
In both cases, the BGH ruled that the consumers were able to withdraw well after the usual 14 day period had expired because the bank’s mandatory information on the interest rate owed under the loan agreement was incomplete.
After withdrawal from a contract, the parties must return to each other what they have received in the performance of the contract. In the case of consumer goods, the seller may refuse to make such repayment until he has received the returned goods or the consumer has provided proof that the goods have been dispatched (sec. 357 para. 4 BGB).
In both cases decided by the BGH, the consumers had sold the financed vehicles to third parties at some point and repaid the loans in full while continuing to pursue the case in court. They then asked the banks to return all payments made under the loan agreements. The bank refused, arguing that it now had a permanent right of retention over the repayments because, having sold the vehicles, the consumers were permanently unable to make the vehicles available to the bank.
The BGH sided with the banks, thereby resolving a longstanding debate in the legal community.
Further details (available only in German):
Click here and here.
Relevant for: Mobility providers, finance providers.
2. Court ruling on the scope of the obligation to pay interest when a consumer with-draws from a loan agreement for the purchase of a vehicle
The Higher Regional Court of Cologne (Oberlandesgericht Köln) ruled on how long a consumer must pay interest on a loan taken out to finance the purchase of a vehicle if the consumer withdraws from the contracts.
In this case, a consumer had purchased a vehicle and financed the purchase with a bank. As with all consumer loan agreements (subject to limited exceptions), the consumer had a statutory withdrawal right for 14 days regarding the loan agreement (sec. 495 German Civil Code, Bürgerliches Gesetzbuch (“BGB”)). If the contract from which the consumer withdraws is closely linked to another contract and both contracts form an economic unit – in the case of the vehicle, the loan agreement and the purchase agreement, because the purchase price is financed – the effect of the withdrawal also extends to the purchase agreement as a linked contract (sec. 358 et seq. BGB).
According to German law, after withdrawing from the contracts, the consumer is still obliged to pay the agreed interest for a time period beginning with the disbursement of the loan amount (sec. 357b para. 3 BGB). However, there are differing views as to when this obligation ends. In its decision, the Higher Regional Court of Cologne ruled that the consumer must pay interest until he returns the vehicle to the lender (who, for the purposes of reversing the contractual relationships, assumes the role of the seller under the purchase agreement). The court argues that this is justified because the consumer can make use of the purchased good until it is returned. Other courts had ruled in the past that consumers were only obliged to pay interest until they declared their withdrawal from the contract.
Until Germany’s highest civil court, the Court of Justice (Bundesgerichtshof), rules on the matter, it is likely to remain a subject of debate.
Further details here (available only in German and behind paywall)
Relevant for: Mobility providers, finance providers.
3. The European Commission accepts requests to review transactions that meet no European merger control threshold
On Friday 18 August 2023, the European Commission, under Article 22 of the European Merger Control Regulation (“EUMR”), accepted the request of various EU Member States to review Qualcomm’s planned acquisition of Autotalks, an Israeli semiconductor manufacturer specialized in vehicles-2-everything.
Article 22 EUMR is not new. However, the use and interpretation of the Commission and Member State’s remit is. On 26 March 2021, the Commission published new guidance that allowed it to review any transaction that (i) affects trade, and (ii) threatens to significantly affect competition within the territory of a Member State. The Member State may refer such transaction to the Commission for review, even if the jurisdictional thresholds are not met.
While the guidance focused on digital and pharma sectors, which are innovation driven, the Commission by accepting the request highlights that the application of Article 22 is not sector specific and the competition authorities of the Member States can use this power to catch any and all transactions that potentially raise concerns. In fact, on the same day, the Commission accepted another request to review the acquisition of Nasdaq Power by EEX (both active in on exchange trading of power contracts).
While the European Court of Justice is set to rule on the guidance and (new) interpretation of Article 22, companies and their counsel should consider closely potential competitive effects of their transactions.
Further details here (available in English)
Relevant for: All companies.
4. European Digital Services Act to be implemented in Germany
The Federal Ministry for Digital Affairs and Transport has published a draft law for the implementation of the European Digital Services Act (Regulation (EU) 2022/2065) (the latter, the “DSA”). As a reminder: The DSA introduces a comprehensive framework for online platforms. While at its surface it mostly aims at large social platforms, it will apply to certain online marketplaces as well, especially those platforms that connect consumers and businesses to enter into distance contracts (Fernabsatzverträge). Regarding the latter, the regulation will require the platform provider to, inter alia, include certain provisions in their terms and conditions and to identify the persons that intend to offer products on the platform (like a “know-your-customer light” obligation). Breaches of the regulation might result in fines and will give platform users a claim for damages.
The DSA provides for a ramp-up period: It has applied to certain platforms since 16 November 2022, whereas it will start to apply for a bulk of other platforms from 17 February 2024 on. Companies therefore only have a couple of months left to check whether they are in scope of the regulation (there are a couple of helpful exemptions!) and make the required amendments.
While the DSA as an EU regulation applies directly in Germany, it still requires a local law to set out, inter alia, the competencies of the local authorities. This is what the German draft implementation law is about: It proposes the German Bundesnetzagentur as competent authority. In addition, it aligns several other laws already in effect in Germany with the DSA.
Further details on the implementation law here (available only in German)
The DSA can be found here
Relevant for: Vehicle platform provider (e.g. used car sales platform providers and, depending on the contractual structure, vehicle subscription providers).
5. German government releases guidance on cooperation in supply chain
The German Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, “BAFA”) and the Helpdesk on Business & Human Rights, a service offered by the German federal government, have published guidance on supply chain collaboration.
The document focuses on the implications of Germany’s Act on Corporate Due Diligence Obligations in Supply Chains and is intended to inform companies about what they should be asking of their suppliers when intending to comply with the legal framework. It provides helpful practical guidance on a subject with which many businesses are still unfamiliar.
Further details here (available in English)
Relevant for: OEMs, suppliers.
6. Draft of revised Road Traffic Act (Straßenverkehrsgesetz) released by German government
On 18 August 2023, the German government initiated an amendment to the Road Traffic Act (Straßenverkehrsgesetz, “StVG”) implementing a voluntary commitment made in the coalition agreement.
Up to now, the fluidity and safety of traffic were the decisive references of road traffic law, with the result that car traffic was given priority in cities. In the future, climate and environ-mental protection, health and urban development will also be taken into account. Therefore, the new regulations of the StVG intend to give the states and the responsible municipal authorities more leeway for decision-making to be able to meet specific local requirements more quickly and flexibly.
If passed, the amendment of the Road Traffic Act will pave the way for new regulations in the Road Traffic Law, especially the Road Traffic Ordinance (Straßenverkehrsordnung), which will then standardize new authorizations for municipal authorities (such as, e.g., orders for special lanes for certain climate-friendly types of mobility or 30 km/h zones).
Further details here (available only in German)
Relevant for: Mobility Providers.
7. Updated vehicle registration ordinance to be become effective in September 2023
The new German vehicle registration ordinance will come into effect on 1 September 2023. Under the new rules, both consumers and businesses will be able to register vehicles in a digital process without having to visit a government office. Previously, there was no option for car dealers to register vehicles digitally.
Under the new rules, both consumers and businesses will also have the right to immediately use the vehicle on the road for a period of up to ten days after digitally registering a vehicle while the paperwork and the required stickers for the license plates are being sent out by the authorities. This makes the registration process much more flexible. During the pandemic, appointments for in-person vehicle registration were scarce especially in bigger German cities, resulting in week-long delays before vehicles could be put on the road.
Further details here and here (available only in German)
Relevant for: Mobility Providers, vehicle manufacturers.
