20th January 2022

New borders to consumer protection

As the picture becomes clearer of how EU Exit will affect the rights of UK consumers, Elisabetta Sciallis and Jacqueline Minor take stock of the emerging landscape.

By Jacqueline Minor & Elisabetta Sciallis
The advent of new rules underlines the potential for divergence. UK consumers will not (usually) get the benefit of these changes
Those wishing to take formal actions against an EU trader… are obliged to comply with the relevant national law of each EU member state
These are considerable changes and ultimately new barriers for consumers, particularly the vulnerable and the digitally disadvantaged

Since the UK’s withdrawal from the EU, there have been significant changes for consumers who wish to purchase cross-border or have other dealings with cross-border elements. This article takes stock of some important trends and changes we have seen regarding cross-border access to justice in the 10 months since 31 December 2020, when the UK became a third country. In particular we look at the challenges, opportunities and policy issues as they relate to: the changing nature of cross-border complaints; new EU laws and potential divergence; cross-border court remedies and the removal of direct instruments available for consumers; and changes in cross-border enforcement and consumer protection.

Fresh cross-border issues

In the wake of EU Exit and the emergence of the COVID-19 pandemic, according to data from the UK International Consumer Centre (UK ICC), there has been both an increase in cases related to traditional sources of cross-border detriment, and the emergence of some new issues directly related to the EU Exit restructuring. In terms of the traditional sources of cross-border consumer complaints, e-commerce, holiday/flight cancellations, timeshares and holiday clubs remain significant. However, there has been a significant increase in issues with intermediaries, fraud and subscription traps.

Many of the complaints regarding purchases made through booking intermediaries have related to flight cancellations where passengers reported a lack of refund in line with their rights, a situation that appears to have been exacerbated by the pandemic. According to Regulation 261/2004, if a flight is cancelled by the operator, the consumer should be refunded within seven days. However, in some instances airlines have been refusing to deal with consumers who booked via an intermediary.

In such cases the intermediaries initially denied liability; however, more recently they have started agreeing to help consumers, although often for a charge and with mixed results. There also remain consumers who have been waiting in excess of 12 months for refunds, often where the intermediary and airlines are unwilling to compromise. Regarding fraud, approximately half the fraud cases received by the UK ICC related to purchases made using e-commerce and, in particular, consumers who had become involved in financial trading, such as making investments in foreign exchange or cryptocurrency.

EU Exit and the pandemic have also added new types of complaints and further levels of complexity for those seeking justice cross-border. New complaints include issues with unexpected VAT and customs charges on cross-border deliveries. Often consumers have simply not been made aware that VAT, custom charges and handling fees are now due on certain transactions. For example, in transactions that were initiated pre-EU Exit, but in which delivery took place under the new rules, customers have incurred unexpected double charges.

There are also added complexities and uncertainties such as when dealing with multi-party claims (particularly with the use of intermediaries) and concerning subscription services; for example, where a consumer paid an annual subscription to receive beneficial travel rates.

Changing consumer environment

Markets rarely stand still, and the best businesses evolve, adopt new technology and delivery models, create new products and services, and meet emerging consumer demand. But with innovation come new unfair practices, new opportunities to exploit consumers, particularly the most vulnerable, and newly exposed gaps in consumer protection legislation.

With that in mind, the EU evaluated the effectiveness of its existing consumer rules, decided that a number of improvements were called for and brought forward proposals that eventually resulted in the quaintly named ‘Omnibus Directive’ (Directive 2019/2161), which will apply in the EU from the end of May 2022. The Directive makes important changes: it aims to ensure that consumers purchasing digital content, goods and services enjoy the same rights and remedies as in the offline world; it puts in place new rules governing so-called ‘free’ services where a user provides their data in return for services, and it creates transparency requirements for online marketplaces. Of course, none of these new rules will apply in the UK, although companies operating in both jurisdictions may choose to adopt a single set of terms and conditions.

The advent of new rules underlines the potential for divergence. UK consumers will not (usually) get the benefit of these changes. The UK government has also declared its intention to modernise consumer law, by publishing a Green Paper in 2018 and commissioning the independent Penrose Report, published earlier this year. It has also launched an extensive consultation on Reforming Competition and Consumer Policy, in July this year. It may be too early for these to yield concrete proposals but government bills in the UK can generally be guaranteed a speedy passage through the legislative process and rapid entry into force.

An individual jurisdiction, like the UK, can often adapt to market developments with greater agility than the EU, which needs to muster support across a majority (at least) of its Member States. But, as with the recently announced delay to the introduction of the UKCA marking, the UK government may come under pressure from stakeholders resistant to the cost of complying with different and potentially conflicting rules. The economic heft of the European Single Market will have to be weighed against the desirability of introducing new rules which, in the view of the government, better suit the needs of UK consumers.

Going to court after EU Exit

A significant cross-border issue post-EU Exit is related to litigation. If consumers have a cross-border dispute with a trader that cannot be resolved through the help of the UK ICC or by the use of Alternative Dispute Resolution (ADR), then consumers are left with few options other than to take legal action against the trader.

Before EU Exit, the EU framework for judicial cooperation in civil matters provided several specific procedures to access justice cross-border, such as the European Enforcement Order, the European Order for Payment and the European Procedure for Small Claims. Judgements were directly enforceable in another EU country via these routes thanks to the so-called ‘Brussels Regime’. The Brussels Regime dates back to the Brussels Convention of 1968 and comprises a series of EU legislative instruments and treaties, which operate in a reciprocal manner between EU Member States. There were also a number of international conventions, the most significant of which are the 2007 Lugano Convention (which has very similar scope and rules to the Brussels I Regulation) and the EU/Denmark agreement.

However, the UK/EU Trade and Cooperation Agreement setting out arrangements post-EU Exit does not include civil justice, meaning that the above instruments are no longer available in the UK. The Brussels Regime has now ceased to apply in the UK, and UK consumers will not be able to pursue traders via these routes unless they lodged their complaint before the end of December 2020.

This means that since EU Exit, there are far fewer options available to consumers. The Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (SI 2019/479), which came into force in January 2021, have been made to address reciprocal arrangements which no longer exist due to the withdrawal of the UK from the EU. These Regulations make amendments to legislation in the field of civil judicial co-operation, including addressing questions about the court in which disputes should be adjudicated and the recognition and enforcement of judgments.

The rules continue the particular protections offered to consumers domiciled in the UK by the Brussels Regime, including a right to be sued and a right to sue in relation to a consumer dispute only in the part of the UK in which they are domiciled (regardless of the domicile of the other party). This is therefore quite similar to the position before EU Exit. However, these rules will not be applied reciprocally by the courts of EU Member States. Other than this, the only convention that applies post-EU Exit is the 2005 Hague Convention on Choice of Court Agreements but it applies only in specific circumstances. For example, this convention may affect consumers in relation to any Ts & Cs they may have signed but it is not an accessible procedure like the Small Claims procedure referred to above. The UK has applied to re-join the Lugano Convention, although at the time of writing this application is still pending. If it is accepted, this will set out the jurisdiction rules for consumers and allow a mechanism for judgments to be enforced in other countries.

In a nutshell the above means, as far as UK consumers are concerned, those wishing to take formal actions against an EU trader will now need to start their claims in the appropriate UK court as ordinary civil claims and are obliged to comply with the relevant national law of each EU Member State. This is likely to include the need for UK consumers to make representations directly in foreign courtrooms. These are considerable changes and ultimately new barriers for consumers, particularly the vulnerable and the digitally disadvantaged. There are no straightforward, clear, low-cost and quick instruments that UK consumers can use to pursue a trader located in Europe as before EU Exit.

Enforcement of consumer law

Before its withdrawal from the EU, the UK was an active member of the Consumer Protection Cooperation (CPC) network. The network was put in place to enable enforcement bodies such as the Competition and Markets Authority (CMA) to work with their counterparts across Europe by requesting them to take action against practices causing harm to consumers at home. The CPC Regulation was reinforced in 2020 to facilitate coordinated action across the EU in the case of a widespread infringement. The UK can no longer make use of the Regulation and UK enforcers have also lost the benefit of regular structured contact with their European opposite numbers; meetings of the CPC network were an occasion to share intelligence and know-how with other consumer bodies. Over time the loss of access to the formal procedures and the benefits of personal contacts and knowledge-sharing will have an impact upon the effectiveness of cross-border enforcement.

In its 2018 White Paper, the Commission committed itself to pursuing agreements on mutual cooperation in the consumer field. It cites, in particular, the USA and Canada (and, eventually, China). Such an agreement might also be possible with the UK, although it would be unlikely to provide the same degree of integration as the CPC network.


Whilst recent socio-economic and political events suggest we are likely to see a more rapid divergence from substantive laws in some sectors more than others, EU Exit has left a significant gap in consumers’ access to justice, meaning there is considerable work to be done on the procedural side to find new
routes to redress.

The ideal direction of travel for cross-border disputes post EU Exit is to find and implement new solutions that allow UK consumers to continue to feel confident in entering contracts with EU suppliers, reassured in knowing that, in case of problems, they would find an established set of organisations and remedies to deal with their disputes. Conversely, leaving the current status quo in place will lead to ineffective, complex and expensive means of redress which may well have an adverse effect on UK consumers’ confidence, resulting in fewer cross-border transactions with the EU. The same would be true for EU consumers wanting to buy from UK businesses, thus affecting the performance of the UK market as a whole. In the meantime, given the complexities introduce by EU Exit and the vacuum in procedures for resolving cross-border consumer disputes, the UK ICC can play a role in helping consumers navigate such issues.


About the authors

Elisabetta Sciallis is the UK ICC Executive, a qualified lawyer and accredited mediator and arbitrator, specialising in cross-border dispute resolution and access to justice. She is a member of the Law Society Civil Justice Committee. Jacqueline Minor is a retired EU official. Between 2008 and 2013 she was Director for Consumer Policy in the European Commission and from 2013 until 2017, she headed the Commission’s Representation to the UK.

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