Mobility@McDermott: Monthly Update (04/2024)

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1. “No re-export to Russia” clauses become mandatory for certain contracts within the EU

As of March 20, 2024, so-called “no re-export to Russia” clauses have become mandatory for certain types of contracts concluded by EU companies. The EU has amended EU Directive 833/2014 so that companies must now require their contractual partners not to re-export certain goods or technologies to Russia.

The purpose of the amendment is to prevent non-EU companies from circumventing EU bans of exports to Russia by re-exporting goods to Russia. The no re-export requirement applies to non-EU countries with the exception of companies from certain “partner countries” including the US, Japan, CANZUK, Norway and Switzerland. While companies are free to draft the language of the required clauses, they must include adequate remedies that can be activated in the event of a breach, such as monetary penalties.

The requirement applies only to certain products, such as jet fuel and aircraft parts, firearms but also electronic integrated circuits and other sensitive goods. It does not apply only to future contracts: As of March 20, 2024, any contract concluded on December 19, 2023 or later must contain a “no re-export to Russia” provision. For contracts entered prior to that date, such a provision must be included if performance under such contracts is rendered under such con-tracts after December 19, 2024.

Relevant for: All companies.

Further details here

2. German Federal Court of Justice rules on warranty claim for classic car

Is a car seller liable for a faulty air conditioner in a 40-year-old car? In a decision dated April 10, 2024, the German Federal Court of Justice (Bundesgerichtshof, “BGH”) confirmed that this is indeed possible.

In this case, a consumer had sold a classic Mercedes 380 SL first registered in 1981 to another consumer and had excluded any warranty (Gewährleistung) for defects, as is generally possible under German civil law for consumers selling used goods. In the advertisement, the seller also stated that the air conditioning worked “without any problems”. Two months after receiving the vehicle, the purchaser realized that the air conditioner was not working and demanded that the seller pay the repair costs.

Previously, a regional court had ruled that the purchaser had no claim because the seller had validly excluded any warranty for defects in the purchase agreement. While the agreement of a certain condition – for example, the air conditioning system will work – usually results in the exclusion of the warranty for such a condition, the regional court argued that this was different in the present case because the purchaser had to expect that maintenance and repairs would be necessary on a 40-year-old car.

The Federal Court of Justice disagreed, stating that, even in the case of classic cars, its long-standing rule applies that a warranty exclusion does not apply to aspects for which the parties have agreed a condition. Otherwise, the exclusion would be meaningless.

Relevant for: Sellers and purchasers of vehicles.

Further details here (available only in German)

3. Car infotainment systems to fall under German media regulation

In a decision that it called “groundbreaking”, the German Commission on Licensing and Supervision (”ZAK”) classified in-car infotainment systems used in Audi, BMW/Mini and Tesla vehicles as so-called “user interfaces”.

As a result, the OEMs must now ensure free and not arbitrarily restricted access to media offerings on their infotainment systems. In practice, that means that public broadcasting services and private broadcasters that provide regional information must be easily accessible through the infotainment interfaces.

In case of Tesla, the Tesla media player that also allows for the integration of third-party apps, was considered a media platform by ZAK. As a consequence, one third of the player’s capacity must be reserved for traditional broadcasting services including public and television programs. Tesla will also be required to disclose to providers and regulators how the requirements will be implemented.

Relevant for: OEMs.

Further details here (available in German only)

4. Car subscription provider loses court case for not allowing direct debits from Lithuanian bank account

A car subscription provider that only accepted direct debit mandates for German bank accounts lost in court to a consumer protection agency. A customer had asked the company to use a Lithuanian bank account to debit his monthly car subscription payments, but the car subscription provider refused.

In a decision dated March 8, 2024 which could still be appealed, the Regional Court of Düsseldorf found that such a practice violated article 9 para. 2 of the EU SEPA Regulation. According to this provision, payment recipients are not allowed to specify the member state in which the payment account is located.

In court, the car subscription argued unsuccessfully that its refusal to accept the Lithuanian bank account was not legally binding, as stated in the footer of the email sent to the customer. The court ruled that it did not matter whether the refusal was legally binding. It was sufficient that the customer understood the email to mean that the payment recipient would only accept bank accounts which were located in certain countries for direct debit.

Relevant for: All companies.

Further details here (available only in German)

5. German Federal Court of Justice applies workshop risk principles to “expert assessment risk”

In our January 2024 Mobility Update, we presented the German Federal Court of Justice’s rulings in five cases on the allocation of “workshop risk”.

In a ruling dated March 12, 2024, the BGH has now applied the same standards to the “expert assessment risk”, i.e. the risk that an expert assessing damage to a vehicle after an accident may overcharge without the claimant being responsible for this, is generally not borne by the claimant. The claimant is therefore entitled to reimbursement from the liable party even if the expert’s invoice is inflated. The liable party, on the other hand, can then demand the assignment of any claims the claimant may have against the expert.

Further details here (available only in German)

Relevant for: Insurance companies, vehicle owners.

6. No right of withdrawal after loan agreement has been completely fulfilled

The German Federal Court of Justice ruled on January 23, 2024 that consumers no longer have a right of withdrawal under a loan agreement once the agreement has been fully performed.

The BGH’s ruling follows a landmark decision by the European Court of Justice in December 2023 in which the Court ruled that consumers no longer have a right of withdrawal after the parties to a contract have fully performed their obligations, regardless of having received withdrawal information or of compliance with other statutory requirements by the lender.

The ruling illustrates that this legal issue, which had previously been controversial, has now been resolved in favour of creditors not only at the EU level, but also at the national level.

Relevant for: Banks, finance providers.

Further details here (available only in German)

7. German Federal Court of Justice to rule on withdrawal right applicability 

On May 15, 2024, the German Federal Court of Justice (Bundesgerichtshof) will hear a case on the applicability of German law withdrawal rights on a contract between a consumer residing in Germany and a Swiss company.

The consumer entered into two contracts in 2010 and 2013 which were titled “purchase and service agreement” regarding 1400 teak trees with a duration of 17 and 14 years, respectively, and paid a total of EUR 77,200 to the Swiss company. Under the contract, the Swiss company was responsible for growing and maintaining the trees and eventually cutting and selling them. The contract stated that it was governed by Swiss law and provided that Swiss courts would have jurisdiction in the event of disputes. The consumer did not receive any information about their right of withdrawal. Under Swiss law, there was no right of withdrawal.

In August 2020, the consumer declared their withdrawal from the two agreements, arguing that they were governed by German law under the Rome I Regulation and that German courts were competent under the Lugano Convention, an international treaty between, among others, the EU member states and Switzerland.

Most importantly, the consumer argued that the two contracts in question were financial services so that the right of withdrawal was – unlike the right of withdrawal for distance purchase agreements – not subject to a time limit. As they had not been informed of their right of withdrawal, they argued that the withdrawal period had never started.

It will be interesting to see whether the German Federal Court of Justice will take the opportunity to further define the term of “financial services” which is highly relevant in practice. The lower courts had largely sided with the consumer.

Relevant for: All companies.

Further details here (available only in German)

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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