24 Feb 2021

Information Society Service through the Eyes of the CJEU

On December 3, 2020, the Fourth Chamber of the Court of Justice of the European Union (CJEU) rendered a judgement in the case Star Taxi App SRL v Unitatea Administrativ Teritorială Municipiul Bucureşti prin Primar General and Consiliul General al Municipiului Bucureşti providing some extremely interesting conclusions, to say the least.  But let us leave the conclusions for later, and first touch upon the factual bits and pieces of the case.

The Romanian company SC Star Taxi App SRL is a manager of an application which places users of taxi services directly in touch with taxi drivers all over Romania.  The app, available in both Apple Store and Google Play, allows users to run a search, which then displays a list of taxi drivers available to take a fare.  The customer is then free to choose a particular driver from the list, certainly the one closest to him, and hitch a ride.  The company, however, does not forward bookings to taxi drivers and does not set the fare, which is paid directly to the driver at the end of the journey.  On December 19, 2017, the Bucharest Municipal Council (“Council”) adopted Decision No 626/2017 (“Decision”), which extended the obligation to obtain prior authorization for the activity of ‘dispatching’ to cover operators of IT apps, such as Star Taxi App.  Star Taxi App was fined 4 500 Romanian lei, which is approximately EUR 929, for having infringed that legislation.

Taking the view that its activity constitutes an information society service to which the principle of the exclusion of prior authorization provided for in the Directive on electronic commerce (“E-Commerce Directive”) applies, Star Taxi App brought proceedings against the Council before the Regional Court in Bucharest, Romania, seeking annulment of the Decision.  The Regional Court was obviously bamboozled and passed its request to the CJEU for clarification as to whether a service that puts taxi passengers directly in touch with taxi drivers via an app constitutes an information society service.  In case the CJEU’s answer to that question is ‘yes’, the Regional Court further asked the CJEU to assess the validity of the Council’s Decision in light of the E-Commerce Directive.

By CJEU’s judgment from December 3, 2020, the Court notes, first of all, that the service offered by Star Taxi App corresponds to the definition of ‘information society service’ in the E-Commerce Directive, as it is provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.  In that regard, it is irrelevant that such a service is provided free of charge to the person seeking to be or being transported around the city, since it gives rise to the conclusion, between Star Taxi App as the provider of that service and each authorized taxi driver, of a contract for the provision of services and to the payment by the taxi driver of a monthly subscription.  Accordingly, the CJEU has taken into consideration its previous case-law, the famous Airbnb Ireland case and Asociación Profesional Elite Taxi case, a service might not be regarded as falling within the concept of ‘information society service’ even if it displays the characteristics contained in the definition, which is particularly the case if it appears that the intermediary service forms an integral part of an overall service the principal component of which is a service coming under another legal classification.  One of the first things the CJEU assessed was whether the Decision is in line with the EU acquis i.e. whether it constitutes a “technical regulation” under the Information Directive 2015/1535/EU.  

According to the Information Directive, Member States must immediately notify the Commission of any draft “technical regulation”.  National legislation affecting an information society service is classified as a “technical regulation” if it is specifically aimed at information society services and is obligatory to the provision or use of the service in question in a Member State or a large part of a Member State.  Considering that the Decision failed to even mention information society services and covers all kinds of dispatching services without distinction, whether provided by telephone or app, the CJEU said that it did not constitute a “technical regulation”.  Therefore, the notification obligation did not apply.  CJEU’s stance is that the E-Commerce Directive prohibits Member States from allowing access to, or the provision of, information society services subject to a prior authorization scheme or any other requirement of equivalent effect.  Nonetheless, that prohibition does not cover authorization schemes that do not specifically and exclusively target information society services, as in the case of the Decision.

In that regard, the CJEU claimed that it was for the referring court, in this case the Regional Court, to ascertain whether there were overriding reasons relating to the public interest justifying the authorization scheme for taxi “dispatching” services.  On the other hand, it said, a scheme where the grant of authorization was subject to requirements that were technologically unsuited to the service concerned, could not be regarded as an authorization scheme justified by an overriding reason relating to the public interest.

Ultimately, the CJEU arrived at the following conclusions:

  1. a service that consists of putting taxi passengers directly in touch, by means of an app, with taxi drivers constitutes an “information society service” where that service is not indissociably linked to the taxi transport service, such that it does not form an integral part of that taxi transport service;
  2. local authority legislation that makes the provision of an information society service subject to obtaining prior approval, to which other providers of taxi booking services are already subject, does not constitute a “technical regulation” under the Information Directive;
  3. the E-Commerce Directive does not preclude the application, to the provider of an “information society service”, of an authorization scheme previously applicable to providers of economically equivalent services that do not constitute “information society services”; and
  4. the Services Directive precludes the application of such an authorization scheme unless it is in line with the criteria set out in the Directive, which is a matter for the referring court to decide.

Serbia – relevant for?

A very similar app exists in Serbia, Yandex Go, formerly known as Yandex Taxi.  Having updated the initial 2018 version of the app, and improving the whole Yandex experience, they formed Yandex Go in the summer of 2020, with the aim of expanding and upgrading their services in the future. However, probably everyone’s go-to app is Car:Go, but we will wait and see how big of a splash it makes on the market. We will keep you posted!