1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 28 – Consumer and Health Protection Bilateral screening: Chapter 28 PRESENTATION OF MONTENEGRO Brussels, 15-16 April 2013

2. Chapter 28: Consumer and Health Protection Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts Zvezdan Čađenović Union of Employees zcadjenovic@yahoo.com Marina Marković Ministry for Information Society and Telecommunication marina.markovic@mid.gov.me M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION

3. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Content Chapter 28: CONSUMER AND HEALTH PROTECTION  Relevant Acquis  National Legislation  Institutional Framework  Level of transposition (key rules)  Enforcement  Future activities

4. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Relevant acquis  Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, as last amended by Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights Chapter 28: CONSUMER AND HEALTH PROTECTION

5. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union National Legislation  Law on Consumer Protection, OG RMN No. 26/07 (Art. 2 [1, 11, 16 and 17], Art. 62 to 66, Art. 114, Art. 129(1)[14] LCP) Applicable on every term in consumer contract which is not individually negotiated  Law on Obligations, OG MN No. 47/08, applicable on every term in contract which is not individually negotiated. General contract law applicable in B2B, B2C, B2P, and P2P transactions. Art. 136-138 provide for a content review of standard terms (“Adhesion Contracts (standard contracts) and general terms”), and Art. 101 – 108 separate chapter on nullity of contracts.  Law on Electronic Communications, OG MN No. 50/08, 70/09, 49/10, 32/11, regulates unfair terms in consumer contracts in electronic communication and provides a list of 7 diferent types of obligations (contractual), prohibited to be imposed by operator of electronic communication Chapter 28: CONSUMER AND HEALTH PROTECTION

6. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Institutional Framework  Beside MoE and Authority for Inspection Surveillance, other main institutions and stakeholders: -Agency for Electronic Communications -Courts, issue a decision as to whether terms in use are unfair, and to prohibit the use of such terms (Art. 114 LCP) -Arbitration Board for Out-of-court Settlement of Consumer Disputes, ADR scheme for consumer protection -Banking Ombudsman, ADR scheme for consumer protection in area of banking and other financial institutions -Consumer NGO`s, eligible to initiate proceeding in front of the Courts and inform consumers on final Court decision establishing term unfair (Art. 114(1) and (4) LCP). Chapter 28: CONSUMER AND HEALTH PROTECTION

7. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules I) Level of transposition: High  Definitions (Art. 2(1), (11), (16) and (17) LCP): -Consumer shall mean a natural person who buys, orders, accepts, uses goods or services, including public services, for non-business, namely non-professional purposes, or to whom the offer for a goods or service is targeted; -Trader shall mean a person who sells goods or provides services to consumers -Form (model) contract shall mean a contract that was previously composed by the producer or trader without any involvement of the consumer Chapter 28: CONSUMER AND HEALTH PROTECTION

8. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules II)  General clause of unfairness (Art. 63 (1) LCP): -contrary to the requirement of good faith -creates imbalance in the parties´ rights and obligations (not “significant “imbalance ) -to the detrimen of consumer  Additional criteria not transposed (Art. 4(1) Directive): -nature of goods and services -circumstances atending conclusion of contract -other terms of contract Chapter 28: CONSUMER AND HEALTH PROTECTION

9. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules III)  Burden of proof (Art. 63(3) LCP): -Burden of proof that a term has been individually negotiated is on the trader  Non exhaustive list and “black list” (Art. 64 (1) LCP): -The general clause of unfairness is supplemented by an non exhaustive and type of “black“ list of contract terms that are regarded as unfair (Annex No. 1 Directive). -Annex No 2 Directive, partially transposed only indent (d) (Art. 64 (2) LCP): (Exception from Annex No 1 p. (L) in case of price-indexation clauses (eligible under art. 8 Directive, and widens the protection of consumers)) Chapter 28: CONSUMER AND HEALTH PROTECTION

10. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules IV)  Exclusion of certain contractual terms, not transposed (Art. 1 (2) Directive): -Exclusion of terms reflecting mandatory statutory or regulatory provisions, provisions and principles of international conventions, which directly or indirectly determine the terms of consumer contracts (Albeit Consititution Art. 9).  Exclusion of main subject matter and of the adequacy of the price and remuneration not transposed (Art. 4(2) Directive): - Exclusion of definition of the main subject matter and of the adequacy of the price and remuneration, in so far as these terms are in plain intelligible language (eligible under art. 8 Directive, and widens the protection of consumer consumers) Chapter 28: CONSUMER AND HEALTH PROTECTION

11. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Level of transposition (Key rules V)  Transparency principle (Art. 65(1) LCP): - In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must be drafted in plain, intelligible language.  Contra proferentem rule partially transposed (Art. 65(2) LCP): -Where there is doubt about the meaning of a term, the interpretation favourable to the consumer shall prevail. (not “most favorable“). -Directive art. 5(3) not transposed (ambiguous concept whether this rule shall not apply in the context of the procedures laid down in art. 114 LCP) Chapter 28: CONSUMER AND HEALTH PROTECTION

12. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Enforcement I  Unfair contract term is null and void (Art. 66(1) LCP);  Consequence for the contract as whole aligned with Directive art. 6(1) - contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms (Art. 66(2) LCP);.  No time limit for the remedies on invalidating an unfair term or a contract which contains such terms (Art. 108 LoO) Chapter 28: CONSUMER AND HEALTH PROTECTION

13. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Enforcement II  Courts : -individiual complaints; -collective complaints: individual consumer, consumer organizations or other interested parties can submit a complaint with a competent court against individual trader, two or more traders involved in the same economic sector, or traders’ associations, in order to abate the provisions of the contract referring to general clause of unfair terms or “black listed” terms (art. 114(1) LCP). -collective complaints: a pre-formulated provision of the consumer’s contract may be disputed before the court in respect of its legal effect in the respective case as well as in respect of similar provisions of future contracts (art. 114(3) LCP). -Possibility for the courts to declare ex-officio a contract term as unfair (art. 114(4) LCP and Art. 107(1) LoO) -Possibility to declare provisions of the general terms and conditions null and void even in case if such general terms and conditions have been approved by the competent authority (Art. 138 (1) LoO) Chapter 28: CONSUMER AND HEALTH PROTECTION

14. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Enforcement III  Authority for Inspection supervision: -no possibilities to bring an action to the court; -initiating misdemeanour procedure in case of infringement of “language requirement” (Art. 129(1) [19] LCP) (fines: 1.000 to 15.000 Euros for legal entity; 150 to 1.500 Euros for responsible person in legal entity; 400 to 4.000 Euros for entrepreneur)  Agency for Electronic Communications: -ex-ante control of standard contracts by the Council of the Agency for Electonic Communications  Arbitration Board, Banking Ombudsman -Arbitration vs. settlement proposal (in case of financial institutions regulated by Law on Banks) Chapter 28: CONSUMER AND HEALTH PROTECTION

15. Chapter 28: Consumer Protection and Public Health M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Future plans  ME in 3 rd and 4 th quarter 2010 initiated a detailed screening of 11 CP directives (including Unfair Contract Terms), supported by IPA 2009 Project (AIM)  Guidelines for Harmonization of Montenegrin CP legislation (blueprint for new LCP), http://www.mek.gov.me/ResourceManager/FileDownload.aspx?rid=126923&rT ype=2&file=Guidelines%20for%20Harmonisation%20of%20Montenegrin%20% 20CP%20Legislation.pdf http://www.mek.gov.me/ResourceManager/FileDownload.aspx?rid=126923&rT ype=2&file=Guidelines%20for%20Harmonisation%20of%20Montenegrin%20% 20CP%20Legislation.pdf  Draft new Law on Consumer Protection, fully harmonized with Unfair Contract Terms Directive and ready to be adopted by GoM (Art. 101 – 107 Draft LCP) : Chapter 28: CONSUMER AND HEALTH PROTECTION

16. Chapter 28 – Consumer and health protection Unfair terms in consumer contracts in electronic communication Marina Marković senior advisor - economic analyst Ministry for Information Society and Telecommunication marina.markovic@mid.gov.me M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION

17. Chapter 28 – Consumer and health protection M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION  Law on Electronic Communications Off. Gazette of Montenegro 50/08, 70/09, 49/10, 32/11  Proposal Law on Electronic Communications National Legislation

18. Chapter 28 – Consumer and health protection M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION  Article 102 – Terms of use –Everyone has the right to use public electronic communications services, under specified conditions and prices, if it is technically possible. –Operators of public electronic communications are required to make available to the public current prices, tariffs and general terms of delivery of services –Users of public communication services and operators have the right to object to the Agency in connection with access to or the provision of services. –The Agency's decision can be appealed to the Ministry within 15 days from the date of receipt of the decision.  Article 104 – Subscriber agreement –Content of the Contract –Duty to notify changes in the contract - The operator is obliged, at least 30 days before any changed terms of the subscriber agreement to notify its subscribers Rights and protection the interests of users

19. Chapter 28 – Consumer and health protection M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION  Article 114 – Objection and complaint – The user of public communications service has the right to object to the operator about access and quality of services, and regarding the bill for the provided services.  Article 115 – Limitations of a subscriber – If the subscriber filed a complaint or appeal dealing with the amount in the account or to the enforcement of certain consumer rights under this law and the law governing the protection of the consumer, the operator can’t take the measures referred to in paragraph 1 of this Article to the Agency's final decision, if the subscriber paid within the undisputed part of the bill or the amount corresponding to the average value of the last three undisputed invoice. Rights and protect the interests of users

20. Chapter 28 – Consumer and health protection M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION  Article 146 – Users rights  Article 147 - General terms for provision of services - The operator shall define clear and unambiguous general terms for provision of services  Article 148 - Approval and publication of general terms - The operator shall submit the terms referred to in Article 147 paragraph 4 of this Law to the Agency for approval, 30 prior to the application thereof. - In the procedure for granting approval the Agency shall consider the compliance of general terms with this Law. Future plans Proposal Law on Electronic Communications

21. Chapter 28 – Consumer and health protection M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION  Article 149 - Pricelist of services –The operator shall publish the pricelist of services on its website prior to its application and shall make it available to the users in its offices.  Article 150 - Subscriber agreement -Content of subscriber agreement  Article 151 - Term of agreement and obligations in the event of termination ⁻ The subscriber shall have the right to terminate subscriber agreement at any time. ⁻ The operator shall, at least 30 days prior to the possible change in terms defined in the subscriber agreement, inform its subscribers thereof, in writing and in a clear, visible and unambiguous manner, as well as via SMS service, when possible. Proposal Law on Electronic Communications

22. Chapter 28 – Consumer and health protection M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 28: CONSUMER AND HEALTH PROTECTION  Article 152 - Obligations of operator and the Agency –In relation to a standard subscriber agreement, the operator shall obtain the approval of the Agency for each of the offered electronic communications services, prior to the provision thereof. –The Agency shall assess the compliance of the standard subscriber agreement with this Law within 15 days from the date of the receipt thereof.  Article 162 - Objection and complaint –The user shall have the right to file a complaint to the operator regarding the access to and quality of services and regarding the bill for the provided services. –If the operator rejects the user’s objection or fails to make a decision within eight days from the date of objection receipt, the user shall have the right to file a written complaint to the Agency, within 15 days from the date of expiry of the period referred to in paragraph 3 of the Article hereof. Proposal Law on Electronic Communications

23. Thank you for your attention. QUESTIONS