EN| German Courts Rule on Whether Uber’s Business Model Is Legal in Germany

The service, or rather non-service, of a provisional injunction issued by Cologne Regional Court led to heated discussions on German-language news websites and blogs in October and November 2019. Uber refused to accept the court documents citing Regulation (EC) No 1393/2007, because the provisional injunction was in a language the company doesn’t understand (i.e. German). The documents were to be served on Uber in the Netherlands because the ride-hailing company’s European headquarters are in Amsterdam. In the end, a Dutch translation was made and served, but the questions whether Uber’s services are legal in Germany under competition law, whether Uber needs a taxicab licence to operate there, or whether Uber is allowed to operate its business model in Germany at all, remain interesting, both from a legal and from a linguistic point of view.

The bone of contention in the Uber case currently before Cologne Regional Court (Landgericht Köln) was the use of the company’s basic UberX app in Germany, whose rollout was announced for Berlin, Munich, Düsseldorf, Frankfurt, Cologne and Hamburg in June 2018. The full wording of the July 2019 injunction has yet to be published.. According to German-language Legal Tribune Online (LTO), Cologne Regional Court issued a provisional injunction (einstweilige Verfügung), prohibiting Uber from using its UberX app for brokering journeys (rides) with private hire cars—or minicabs as they are called in parts of Great Britain.

The type of passenger transport service termed a “private hire car” is defined by Wikipedia as a “a car with a driver available for hire only on a pre-booked basis”. The term vehicle for hire, on the other hand, also includes taxicabs, mostly just called “taxis”, which at least in Germany can also be hailed in the street. In contrast to most other countries, Uber currently does not broker rides with non-professional drivers in Germany, because the law is stricter there than in other countries. Uber currently only brokers rides with private hire car companies in Germany that employ professional drivers and are fully and commercially insured. This restricted business model, which resulted from various rulings by German courts against UberPop and UberBLACK in 2015 and 2017, also applies to the company’s UberX app.

The relevant German law with regard to passenger transport of the type Uber currently offers is the Personenbeförderungsgesetz [German Passenger Transport Act]. Section 49 regulates “transportation […] with private hire cars” (Verkehr […] mit Mietwagen), among other types of transportation. Many German laws have been semi-officially translated into English in the past, often in a thoroughly thought-through manner that is perhaps not always very easy to understand. These translations are commissioned by the German Federal Ministry of Justice and published on its website Gesetze im Internet [Statutes on the internet] at no charge. Sadly, the Personenbeförderungsgesetz is not among the laws translated. The relevant passage (subsection (4) of section 49) that regulates transportation by private hire car (Verkehr mit Mietwagen) might be translated as follows:

EN| “Transportation by private hire car means the transporting of passengers by means of a passenger car that may only be hired as a whole for the purposes of transportation, and which the entrepreneur [i.e. the hirer out; E.V.] uses to carry out journeys whose purpose, destination and course is determined by the hirer, and which are not ‘transportation by taxicab’ pursuant to section 47. It is only permissible to carry out a transport order by private hire car if such a contract is concluded at the entrepreneur’s place of business [Betriebssitz] or his dwelling place [Wohnung]. After the transport order has been completed, the private hire car must return to the place of business without undue delay, provided the car did not receive a further transport order from the place of business or the entrepreneuer’s dwelling place before the journey started, or does not receive a further transport order by telephone [fernmündlich] during its journey.”

DE| “Verkehr mit Mietwagen ist die Beförderung von Personen mit Personenkraftwagen, die nur im ganzen zur Beförderung gemietet werden und mit denen der Unternehmer Fahrten ausführt, deren Zweck, Ziel und Ablauf der Mieter bestimmt und die nicht Verkehr mit Taxen nach § 47 sind. Mit Mietwagen dürfen nur Beförderungsaufträge ausgeführt werden, die am Betriebssitz oder in der Wohnung des Unternehmers eingegangen sind. Nach Ausführung des Beförderungsauftrags hat der Mietwagen unverzüglich zum Betriebssitz zurückzukehren, es sei denn, er hat vor der Fahrt von seinem Betriebssitz oder der Wohnung oder während der Fahrt fernmündlich einen neuen Beförderungsauftrages erhalten.” (Source)

Do Uber drivers receive transport orders “by telephone” while driving along the road? The adverb “fernmündlich” used in the law (literally: “orally over a long distance”) is a word from the legal and bureaucratic sphere that simply means “by telephone”. A smartphone is a “class of mobile phones”, and a mobile phone is a “portable telephone”, according to Wikipedia, so any Uber contractor should be in the clear, at least in this regard, when he or she uses an Uber app, because they are “receiving a further transport order by telephone during their journey”. This interpretation was upheld by the German Federal Court of Justice (Bundesgerichtshof – BGH) in its ruling of 13 December 2018 (case number: I ZR 3/16 – “Uber Black II” decision) with regard to the UberBLACK app (which provides transport services with luxury vehicles).

The court stated that, due to technical progress, any “transmission by telephone” should be deemed to include “emails, text messages, or other means of mobile communication”. (Dabei erfasst der Übermittlungsweg „fernmündlich“ im Hinblick auf die zwischenzeitliche technische Entwicklung ohne weiteres auch die Benachrichtigung des Fahrers per E-Mail, SMS oder auf einem anderen Weg mobiler Kommunikation; marginal number 33.)

However, in its decision (marginal number 34), the German Federal Court of Justice also ruled that transport orders for private hire cars that were received “by telephone” had to be “received at the entrepreneur’s place of business first” (erteile Beförderungsaufträge müssen zunächst am Betriebssitz des Unternehmers eingehen). If the driver was informed about the transport order “in a direct manner and at the same time as the entrepreneur’s place of business is informed” (wenn der Fahrer unmittelbar und gleichzeitig mit dem Betriebssitz über einen Beförderungsauftrag unterrichtet wird), then the business model would fail to conform to the second sentence of section 49(4) Personenbeförderungsgesetz.

In agreeing with Berlin Higher Regional Court (Kammergericht), the German Federal Court of Justice also defined what the verb “to receive” (eingehen) meant with regard to transport orders. The court initially stated that the driver of a private hire car (der Fahrer eines Mietwagens) was bound to his place of business not only by the requirement to return to it after each journey, but also in terms of communications (kommunikationstechnisch an den Betriebssitz gebunden). The law only provided for an exception to the requirement that the driver should return to his actual place of business after fulfilling an order where a further order was forwarded to him during the course of his current journey. However, this “forwarded order had first to be received at the place of business” (nur wenn ein zuvor am Betriebssitz eingegangener Auftrag weitergeleitet werde; marginal number 14).

The court additionally agreed with Berlin Higher Regional Court, the lower court, that an order exclusively counts as having been “received” (eingegangen) if it is “accepted by a (natural) person or is recorded, for example by an answering machine” (durch eine Person angenommen oder etwa durch einen Anrufbeantworter aufgezeichnet werde; marginal number 14). Furthermore, the private hire car business-model did not allow orders to be placed “via direct communications between a (prospective) passenger and the driver, without a further person at the company’s place of business being involved in these communications” (unmittelbare Kontaktaufnahme zwischen Fahrgast und Fahrer ohne Einschaltung einer weiteren Person am Betriebssitz des Unternehmens; marginal number 14).

Uber stopped providing its UberBLACK services in Germany in 2014, according to German news website Der Spiegel. Nonetheless the company tried to keep the service potentially legal by fighting all the way to the German Federal Court of Justice, which then finally decided the case in the “Uber Black II” decision of December 2018 mentioned above.

According to German-language website Taxi Times, Uber changed its mode of operation for UberX, its basic-service app, in an attempt to comply with the December 2018 ruling. Taxi Times reported that since January 2019 Uber has been emailing any German order received on its system to the private hire car company’s place of business first. After a lag of 30 seconds, Uber then forwards the order to the driver’s mobile device. Whether this is enough to meet the requirement that a private hire car has to be “bound to its place of business in terms of communications” (kommunikationstechnisch an den Betriebssitz gebunden) surely remains an open question.

In December 2019, Uber lost a further German case, this time before Frankfurt Regional Court (Landgericht Frankfurt am Main). The court ordered Uber to stop operating its services in the way it had been providing them in Germany on the grounds that Uber’s business practices constituted unfair competition (wettbewerbswidrig) (judgment of 19 December 2019, case number: 3-08 O 44/19). One aspect of the case was the “requirement to return to the place of business”, which the claimant (an association of taxi offices) claimed was being ignored by many Uber contractors in practice.

According to German-language Legal Tribune Online (LTO), Uber swiftly introduced changes to its operational model immediately after the December 2019 ruling (a hearing in November 2019 had sent “signals” that it might lose the case, the company said). Any private hire car driver commissioned by Uber will have to be “on their way back to their place of business” when they accept a further order, not waiting somewhere. Additionally, the “requirement to return” will be checked automatically by the Uber system; infringing drivers will be excluded from working with Uber.

The case before Cologne Regional Court mentioned at the beginning of this article has yet to be finally decided. The fight Uber vs. German taxi drivers over the interpretation of section 49(4) of the German Passenger Transport Act continues.

Edward Viesel

Please note: in order to improve readability of this article, when quoting from German court decisions in the original German, I have often shortened phrases or adapted them to the present English-language text without indicating such changes.