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The new EU Directive on consumer protection and its impact on equine business – an overview of the current state of affairs

Wednesday, 09 February 2022
Rules and regulations

Photo © Jenny Abrahamsson for WoSJ. Photo © Jenny Abrahamsson for World of Showjumping.

 

Text written by Sophia Elderson Nosti, Piotr Wawrzyniak and Luc Schelstraete – Schelstraete Equine Lawyers

 


 

On the 25th of January 2021, an article was published on this website regarding the new EU Directive 2019/711 on Consumers Protection (‘the directive’), in which Luc Schelstraete, the managing partner of our firm Schelstraete Equine Lawyers, shared his opinion on the importance for EU member states to take the equine trade into account when implementing the directive.

As of 1st of January 2022 – a year later – the directive has entered into force, and it’s a good time to look at the current state of affairs. How have the different member states implemented this directive into their national legislation and what does this mean for the horse trade? First and foremost, it seems overwhelmingly likely that the differences in the implementation of the directive will have a serious impact on the horse trade and amid the equine countries in the EU it is the Netherlands that seems to be affected the most.

Two important changes

The directive contains two important changes that are relevant for those who wish to buy or sell a horse within the EU. 

First of all, the directive specifies in more detail the requirements for ‘conformity’ – making a distinction between objective and subjective conformity requirements. The first relate to requirements that can be imposed on particular goods, such as a horse, on the basis of its objective purpose of use, while the second to requirements arising from the specific sales agreement. If these criteria are not met, one could appeal to non-conformity.

These criteria are potentially difficult to interpret when it comes to horses. For example, the objective purpose of a horse is difficult to define. A horse can as an example be used for dressage, jumping, recreational riding, or vaulting, and these are just a few of the many things a horse can do. A horse’s ‘conformity’ thus leaves a lot of room for interpretation. 

With the second important amendment, the directive sets the period within which the burden of proof is reversed at one year from the time of delivery – although member states can opt to extend this up to two years. Is a defect discovered within this period of time? Then it is presumed that this defect was already present at the time of the purchase and it is up to the seller to prove otherwise. If the seller fails to do so, the consumer is entitled to repair, or replacement, of the purchased product, and can even in certain cases claim compensation. 

Considering how many different health or behavioral problems that spontaneously can arise in horses, or animals in general, one can imagine that one year, let alone two, is a very long period of time. More so, since the way the horse is cared for, trained and fed are all factors that can influence its welfare – and happens out of the seller’s sight from the moment of delivery. This is undeniably favorable for the consumer’s position, a lot less for sellers’…

Different implementation in different member states

The EU has clearly taken the above mentioned into account while drafting the directive and has given its member states the option to exclude sales contracts relating to living animals from its scope. If not all member states make, or will make, use of the options offered by the directive, there will be different degrees of consumer protection throughout Europe. The way in which member states implement the directive differs per country. We will zoom in on several European countries. 

France has chosen to make use of both options offered by the directive by both extending the reversal of the burden of proof up to two years but at the same time excluding sales contracts relating to animals from the scope of the directive. Germany has only chosen to deviate from the directive with regard to the second option, by also excluding sales agreements relating to live animals and keeping the reversal of proof on six months instead of one year. Also Belgium, although the regulations have not yet been transposed into Belgian law, seems to be inclined to exclude this type of purchase contract, as long as replacing provisions with regard to sales contracts on living animals are issued by Royal Decree. 

Our alliance partner Gulliksson Law Firm has written a very interesting article about how the directive is being transposed in Sweden. In the proposed legislation to implement the directive, Sweden seems to maintain the reversal of the burden of proof on six-months but, also opting for the option to exclude. The Swedish transposition law contains an interesting provision introducing a duty of examination for the consumer in case the animal purchased is more expensive than SEK 4830 (EUR 462,68/ USD 521,30), a provision that in most cases will apply to sales contracts concerning a horse. In short, the provision determines that if the ‘expensive’ animal has been examined by the consumer before the purchase, the consumer cannot invoke the defects that they should have noticed during the examination. By increasing the consumers responsibility before the purchase, the professional seller’s legal protection will be increased. However, when selling an 'expensive' animal, parties can together opt to waive the six months-presumption. 

In the Netherlands on the other hand, the proposed bill to implement the directive into Dutch law did not exclude sales contracts relating to living animals from the scope of the directive. If passed in its current form, professional horse sellers in the Netherlands will bear the burden of proof for the long period of one year after the delivery, should defects be discovered during that particular time frame.

Since so many countries exclude these contracts, the difference between the degree of consumer protection in the Netherlands versus other countries could have impactful consequences for the Dutch horse trade, which is one of the most influential in the world. While the Netherlands may become a lot more favorable destination to buy a horse due to the high degree of consumer protection, sellers may be more inclined to focus on another EU country. This could put the Netherlands in an unfavorable market position. 

For this reason, Schelstraete Equine Lawyers strongly believes in the importance of excluding sales contracts relating to living animals from the scope of the directive and therefore decided to undertake action. Our firm contacted the members of the Dutch Parliament to share our concerns with the proposed transposition bill and asked to take this into account while voting on the approval of the bill. Recently the Dutch Parliament debated the directive and its implementation into Dutch law. Last week it still looked like the Netherlands was to follow Germany and continue with the current six-month period. Nonetheless, the Dutch government and their backbenchers decided to implement a period of twelve months and will not exclude animals from the scope. This difference puts Dutch sellers in a disadvantageous position when selling to a consumer, compared to a German seller. At the same time a consumer buying a horse in the EU is much better off buying a horse from a professional in the Netherlands compared to the similar deal in Germany.

Legislative differences can lead to shifts within the internal market

It goes without saying that the ideal situation would be if legislative differences were not the basis on which buyers and sellers make their decisions on the common market of the EU. The whole idea of the common market is based on creating and maintaining equal conditions and setting aside tariffs, barriers, and any measures of equivalent effect. It is perfectly plausible that the EU legislators in Brussels did not consider the relevance of the equine trade in the EU while preparing the directive. Should they have considered the interests of the equine business across the EU, they might perhaps have prepared a maximum harmonization directive instead of letting the member states go their different ways. It is therefore legitimate to state that from the EU perspective the equine industry remains a relatively small bit compared to the whole of the EU economy. Nevertheless, within the framework of the equine business worldwide this bit is utterly important. Both the process of drafting the directive as well as its implementation in the national laws of the EU member states proved the necessity of lobbying and unifying the equine industry. Having one voice in Brussels, Stockholm, Berlin or The Hague is utterly important. The opportunity to form one front has been lost and most probably the directive will adversely affect the Dutch sellers in the near future. At least they will think twice before selling a horse to a consumer. 

The near future will show how the directive has been implemented across the EU and what the exact consequences are for the horse trade. 

It is not inconceivable that the differences in implementation, however small, will still lead to shifts within the internal market. In any way, whether you are a seller, buyer, or horse enthusiast these are developments to keep an eye on.
 

*Many thanks to Cecilia Tholse Rogmark for providing input on the Swedish implementation. 



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