The recent decision of the High Court in Commerce Commission v viagogo AG [2024] NZHC 713 highlights crucial aspects of the Fair Trading Act 1986 (FTA) in terms of misleading conduct and the unfair contract terms regime.

A long-running legal dispute: Commerce Commission v Viagogo

After a six-year legal battle, the High Court has found Viagogo AG (Viagogo) guilty of various breaches of New Zealand's Fair Trading Act 1986 (FTA). Viagogo operates out of Switzerland as a ticket exchange and resale platform and maintains a purely online presence in New Zealand. The New Zealand Commerce Commission (the Commission)first became aware of potential breaches of the FTA when customers began to register complaints that tickets bought on Viagogo's platform were inauthentic, and opened an investigation in 2017.

Proceedings were first filed with the High Court in 2018. The Commission had initially sought an injunction to prevent Viagogo from making various representations, but the HighCourt had ruled against it, holding that it had no jurisdiction to determine the injunction application as Viagogo had not been formally served with proceedings at its Swiss headquarters. This was overturned by the Court of Appeal,who held that the Court is “not deprived of the ability to make orders that are required to enable it to do effective justice between the parties in the future, in the event that the substantive claim is heard by a New Zealand court, simply because a defendant is to be served overseas or has objected to the jurisdiction of the New Zealand court.”

The High Court ruled in favour of the Commission this year.

The Commission's claims against Viagogo

There were six causes of action brought by the Commission against Viagogo. The first five pertained to representations that the Commission argued breached sections 9, 11 and/or 13 of the FTA.

There presentations were:

• Viagogo's failure to disclose its status as a resale site and not an official seller
• Representations that any ticket received would guarantee evententry
• Inaccurate representations as to the limited number of tickets left for events
• Representations as to initial ticket prices and the corresponding increases after a booking has been made
• Representations that Viagogo was an "Official" or"authorised" vendor of event tickets

The final cause of action was a claim that the entirety of clause 7.4 of Viagogo's terms and conditions was an unfair contract term under the FTA. The clause read as follows:

7.4          Governing Law

This Agreement shall be governed by and interpreted in accordance with Swiss laws, with the exclusion of its conflict of laws rules and the provisions of the United Nations Convention on Contacts for the International Sale of Goods (CISG). All disputes arising out of or in connection with this Agreement, including disputes on conclusion, binding effect, amendment and termination, shall be resolved exclusively by the competence Courts of Geneva, Switzerland. We also have the option of taking legal action against You at Your domicile.

Judgment on Viagogo's misleading representations and contract terms

The High Court ruled that each of the representations made by Viagogo had breached(either individually or a combination of) sections 9, 11 and 13 of the FTA.They were satisfied that many of the representations made by Viagogo were either unqualified or misleading as to the nature and quality of the service they provided and ordered Viagogo to make a number of corrections.

The Court split its analysis of clause 7.4 into two parts. It found that the section of the clause which stated that the governing law of the contract was Swiss law was not an unfair contract term under the FTA. Its reasons for this were threefold:

• There was no evidence showing that Swiss law was overly advantageous for Viagogo compared to New Zealand law.
• The starting point for any adjudicator will be that Swiss law is the same as New Zealand law, and if Viagogo wanted to point out material differences they had the resources to do so.
• There must be a proper law of contract. Deleting the governing law provision would create a vacuum, and the Court was not prepared to determine which law should take priority.

The Court was satisfied that the second part of the clause providing for the exclusive jurisdiction of the Court of Geneva gave rise to a significant imbalance in the parties' rights and obligations under the contract and would cause detriment to a consumer if relied upon. The Court referred to a lack of symmetry (the ability of Viagogo to pursue the consumer in their own jurisdiction but the consumer being limited to Geneva) and the fact that this ruled out any prospect of litigation against Viagogo by a consumer.

Implications for businesses – the ticket to understanding

1. This judgment highlights the importance of consumer protection and fair contract terms in online transactions. Two key takeaways from this are: Businesses should give accurate and clear information about their products and services, and should be careful to determine what the overall impression created by their website or advertisement is.
2. Businesses need to consider the balance and overall fairness of their standard terms and conditions. A clause which grants exclusive jurisdiction to an overseas court could be an unfair contract term which will not be enforced.

Our corporate and commercial lawyers are here to help. For advice on consumer or business-to-business contracts, get in touch with one of our experts.

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Thanks to Law Clerk, Lewis Sutherland, for his assistance with the preparation of this article.

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