Injunctions Directive, Article 1 Injunctions Directive, Article 2 Injunctions Directive, Article 3 Injunctions Directive, Article 3

ECLI:DE:BGH:2018:130918UIZR26.17.0

The profit skimming action of a consumer association with profit participation of a professional litigation funder is unlawful.

A telecommunications company (defendant) charged its customers since 2012 with the completion of telephone and DSL contracts for return debit notes amounting to 13 € and for reminders an amount of 9 €.

The plaintiff, a registered consumer protection association, considered those amounts to be excessive, and that the defendant deliberately committed an unfair business act and thereby made a profit at the expense of a large number of customers.

The plaintiff, therefore, filed a claim against the defendant by way of a staged action pursuant to article 10 UWG for the surrender of the profit to the federal budget.

To finance the proceedings, the plaintiff engaged a litigation funder to indemnify him in the event of costs being incurred and to share in the profits skimmed off in the event of victory. The Federal Office of Justice agreed to the contract concluded between the plaintiff and the litigation funder.

The LG upheld the action by partial ruling at the information stage after the auxiliary petition. On the appeal of the plaintiff, the OLG condemned the defendant after the main request. The defendant's appeal against this was successful.

The main legal issue was to determine if a claim filed by a consumer protection association on profit skimming according to article 8 paragraph 3 no 3 UWG (which transposes Directive 2009/22/EC) might be compatible with the engagement of a litigation funder, who in case of victory would share part of the profits skimmed off.

In order to check if the claim on profit skimming might be abusive pursuing to article 10 UWG, the Federal Court of Justice (BGH) considered that this issue had to be examined based on article 242 BGB, which prohibits the unlawful exercise of rights, rather than on article 8 paragraph 4 UWG.

The involvement of a litigation funder would take away the impartial, disinterested choice of decision of the consumer protection association as to the exercise of legal actions and thus, contradict the purpose of article 10 UWG.

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The Federal Court of Justice (BGH) overruled the judgment of the Court of Appeal (OLG). The defendant’s revision-appeal was considered justified, because the plaintiff’s action was unlawful, due to an abuse of rights.