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An important milestone victory against opaque online trading platforms – and a strong signal for investor protection
Since an economically adequate out-of-court settlement could not be reached, our client decided to file a lawsuit at the Regional Court of Leoben to enforce his claims against the Cypriot investment firm Itrades Global (CY) Ltd, operator of the CFD trading platform „InvestFW“. Our law firm was ultimately able to achieve a full ruling in favor of the plaintiff in court. The court clarified that the defendant grossly breached its information and duty of care obligations and must reimburse our client for his entire suffered loss amounting to 45,000 euros. The first-instance judgment was fully confirmed by the Higher Regional Court of Graz as the appellate court, and an ordinary appeal to the Supreme Court was declared inadmissible.
The case highlights central issues of investor protection in connection with the brokering of highly speculative derivative financial products by CFD trading platforms of European investment firms. At the center of the court's decision were, in particular,
- the international jurisdiction of the court seised,
- the disclosure obligations of CFD trading platform operators,
- the customer's qualification test as well as
- the inadmissibility of classification as a professional client in the event of the client's obvious inexperience.
Clear decision on international jurisdiction: Private investors can sue at their place of residence for online trading losses
The defendant Cypriot investment firm initially raised the objection of the lack of international jurisdiction of the Austrian courts, referring to the agreed general terms and conditions and the classification of the plaintiff as a „professional client“.
However, the court ruled clearly in favor of our client: mere classification as a professional client is not sufficient to deny the plaintiff's consumer status. Rather, the decisive factor is how the investor actually acts within the contractual relationship and what objective is pursued with the investment. Since the plaintiff showed no entrepreneurial activity, he was undoubtedly to be granted consumer status. The Cypriot jurisdiction agreed upon in the terms and conditions was therefore legally ineffective. The defendant specifically targeted the acquisition of Austrian customers with German-language advertising accessible in Austria, a German-language website, and Austrian telephone area codes. As a result, our client was able to successfully rely on consumer jurisdiction, according to which the courts responsible for the consumer's place of residence have international jurisdiction. The Regional Court of Leoben was thus authorized to rule on the merits of our client's claims—an important interim victory for aggrieved Austrian retail investors.
Bad advice with consequences: Cypriot CFD broker liable for inadequate disclosure
Due to the granted consumer status, the Austrian courts had no doubt about the applicability of Austrian substantive law either.
Although the defendant primarily acted as a broker for high-risk financial instruments (CFDs), it was determined that she also provided individual investment advice. She is therefore subject to increased duties of care and disclosure toward the plaintiff. In the case of high-risk investment products such as CFDs, options, and other derivative transactions, retail investors must—as the courts have confirmed—be informed particularly clearly and completely about potential loss risks and the functioning of the respective financial instrument. The inadequate advice led the plaintiff to make investment decisions that he would not have made had he been properly informed. Since the investments in CFD transactions resulted in a total loss, the incurred loss of EUR 44,821.22 had to be compensated.
Furthermore, the remaining balance of EUR 178.78 was deducted from the plaintiff by the defendant, invoking English-language general terms and conditions. Since the defendant's website was operated in German and there was no transparent incorporation of foreign-language contractual clauses, the general terms and conditions were classified by the court as surprising and thus legally ineffective. This amount, therefore, also had to be refunded. The claim was granted in its full amount of a total of EUR 45,000.00.
Professional representation against dubious trading platforms – We fight for your rights
The present case demonstrates the importance of sound legal representation in complex capital market issues. Our law firm was able to secure full compensation for the aggrieved investor before Austrian courts – despite international components, high-risk financial products, and disputed terms and conditions. If you also feel you have suffered damages due to faulty investment advice or if foreign online trading platforms are refusing to pay out your funds, we are happy to assist you with our experience and expertise in capital market law.
For further information and individual consultation, please feel free to contact us Roman Taudes and his team are available at any time. Contact us at office@atb.law or by phone at +43 1 39 123 45.
