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Airbnb is not a real estate agent. So what?

The European Court of Justice has recently ruled that Airbnb's services shall be classified as an "information society service" under the directive on electronic commerce. That should not come as a huge surprise and the ruling does not, at first glance, seem very important. However, the grand chamber's judgment has far-reaching implications for providers of information society services and national legislators.
Mother working on laptop and son reading story book

The facts of the case are rather simple. Airbnb is an intermediation service which, by means of an electronic platform, is intended to connect, for remuneration, potential guests with professional or non-professional hosts offering accommodation services, while also providing a certain number of services ancillary to that intermediation service. The dispute in the main proceedings before the French court that referred the case to Luxembourg concerned the question of whether Airbnb acted as an estate agent without holding a professional license, in breach of the French act known as the ‘Hoguet Law’ which applies to the activities of real estate professionals in France. Airbnb claimed that the e-commerce directive (Directive 2000/31) precluded that legislation.

The European Court of Justice found that Airbnb’s intermediation service was an ‘information society service’ and that the directive applied. In the judgment, the Court pointed out, amongst other things, that an intermediation service, such as the one provided by Airbnb Ireland, is in no way indispensable to the provision of accommodation services since the guests and hosts have a number of other channels in that respect. The Court also stated that the other services offered do not call that finding into question since the various services provided are merely ancillary to the intermediation service provided by Airbnb. Also, the Court stated that unlike the intermediation services at issue in the judgments in Asociación Profesional Elite Taxi and Uber France, neither that intermediation service nor the ancillary services offered by Airbnb Ireland make it possible to establish the existence of a decisive influence exercised by that company over the accommodation services to which its activity relates.

So far, so good. Nothing groundbreaking, but clarifying precedence after the judgment in Uber where the Court had concluded that Uber was a ‘service in the field of transport’ because the principal element was the transport service and not the intermediation element.

The implications of the Court’s conclusion are, however, far-reaching because it also stated that even the fact that the French law was already in force at the time of the enactment of the e-commerce directive that could not have the consequence of freeing France of its notification obligation for restrictions on e-commerce under the directive.

Drawing on the reasoning followed in the judgment in CIA Security International, the Courtfound that that the notification requirement under the directive, which constitutes a substantial procedural requirement, must be recognized as having direct effect. It, therefore, concluded that a Member State’s failure to fulfill its obligation to give notification may be relied on by individuals in a claim for damages and that criminal proceedings cannot be instigated against individuals based on the national law in question.

Are you still confused? Trying to summarize: The Court has concluded that a provider of a cross border information society service cannot be hindered from providing its services even if prohibited by national law that was enacted before the entry into force of the e-commerce directive. Article 3(2) of the directive provides that “Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State.” There are, of course, several derogations from this main principle which are outlined in the directive itself, such as public health, public security and the protection of consumers. As long as such measures are proportionate to such objectives, national restrictions may be introduced, but on the precondition that the member state in which the service is offered has asked the member state where the information service provider is established to take measures against the service provider in question. If the host member state does not take adequate measures, the Commission must be notified before restrictions are introduced. According to Article 3(6) of the directive “the Commission shall examine the compatibility of the notified measures with Community law in the shortest possible time; where it comes to the conclusion that the measure is incompatible with Community law, the Commission shall ask the Member State in question to refrain from taking any proposed measures or urgently to put an end to the measures in question.”

Because of the Court’s conclusion, there are likely many national laws across Europe that cannot be enforced against individuals and companies rendering cross border information society services.