Judicial revolution allows online alcohol sales
The judgment of the Supreme Administrative Court of 8 September 2022 has broken a relatively uniform line of decisions banning online alcohol sales.
In case no. II GSK 2034/18, Poland’s top administrative court held that the use of the internet for selling alcoholic beverages to a consumer does not violate Art. 96(1) of the Act on Sober Upbringing and Combatting Alcoholism, which provides for the possibility of retail sale of such products at points of sale such as a branch store, separate stands or other self-service establishments where the seller conducts direct sales of alcohol. The reasoning behind the judgment of the Supreme Administrative Court has yet to be published, but the judgment upheld the ruling of the Province Administrative Court in Kraków of 8 June 2018 (case no. III SA/Kr 493/18), which indicates that a similar argumentation is expected. It is worth taking a look at the position adopted in the decision by the lower court.
Previous reasoning of administrative courts
Until now, the leading argument of the administrative courts has been to rely on the closed catalogue of permits listed in Art. 18 of the act. In the judgment of 14 April 2011 (case no. II GSK 431/10), the Supreme Administrative Court stressed that there the parliament did not provide for the possibility of issuing a permit for the sale of alcohol over the internet, limiting its scope to specific points of sale. In this case, an expansive interpretation of the provision would contradict the purpose of the act, which is to limit the availability of alcohol (Art. 2(1)(4) of the act). According to the court, “the ban on the sale of alcoholic beverages over the internet follows directly from the wording of the act” and is manifested first by the lack of explicit authorisation for such sales and second by the wording of the preamble. Therefore, any attempt to expand the scope of availability of alcohol would circumvent the strict regulations that properly shape social policy in this area.
Later, in the judgment of 21 April 2016 (case no. II GSK 2566/14), the Supreme Administrative Court pointed to provisions of civil law which, in its view, clearly rule out the possibility of placing remote orders and delivering alcohol to the customer. This ban, the court reasoned, follows from Civil Code Art. 155 §2, according to which “with goods designated by type, the transfer of ownership of goods, which is the dispositive effect of a binding contract of sale, occurs at the time of transfer of possession of the goods.” The court said it is the moment of delivery of the goods to the purchaser that determines where the contract resulting in transfer of ownership of the goods was executed. The arbitrary place indicated by the customer when placing an order for purchase and delivery of alcohol is not within the point of sale, i.e. a brick-and-mortar store, which absolutely violates the terms of the alcohol retail licence. According to the position of the Supreme Administrative Court adopted at the time, “the performance of business activities within the scope of the permit may take place only at the place listed in the permit,” including the specific address of the point of sale.
In summary, the court held that “regardless of whether the entity organising and conducting alcohol sales via internet has a licence to sell alcohol in a particular store, or has no licence at all, the activity described does not fall within the limits set by the Act on Sober Upbringing.” The operation of a store collecting orders via internet cannot be considered permissible, as the dispositive effect of the sales agreement takes place outside this point, making alcohol available in an unlimited number of places.
But online sale of alcohol complies with the law
A different conclusion was reached by the Province Administrative Court in Kraków, whose judgment of 8 August 2018 became legally final when the cassation appeal was dismissed by the Supreme Administrative Court in September 2022. According to the court in Kraków, the parliament did not regulate any form of alcoholic beverage sales. The act only stipulates that sales are to take place at specific points of sale. In its judgment, the court opted for a liberal interpretation of the Act on Sober Upbringing, according to which a general ban on the sale of alcohol via internet cannot be deduced from the fact that “no provision of the act specifies the forms of sale permitted or banned.” According to the court, use of the internet is “an additional form of communication between the company and potential customers, and thus one of the sales methods operating in today’s reality.”
The Kraków court also distinguished this case on the facts. In the situation cited in the judgment of 14 April 2011, a liquor licence was denied because the applicant indicated in the application that the point of sale was an “online store,” which is not found in the closed catalogue of points of sale set forth in Art. 96 of the act. And the judgment of 21 April 2016 concerned the application of a different contract template than the site’s terms and conditions, the provisions of which, as it turns out, are decisive for the legality of conducting online sales of alcoholic beverages.
Or is the legality of the sale decided by the store?
Like previous judgments of the administrative courts, the reasoning of the judgment of the court in Kraków cited the Civil Code. The court agreed with the position of the Supreme Administrative Court that the transfer of ownership of goods designated by type, which alcoholic beverages undoubtedly are, occurs at the moment of delivery of goods to the purchaser, but the court also pointed to Civil Code Art. 454 §1, which allows the parties to determine the place of the service in the contract. Under the facts cited in the judgment, the court pointed out that when entering into a contract between a store and a consumer, the parties are also bound by the terms and conditions of the site, which is a model contract. One provision of the terms and conditions stated that “if the customer chooses to have the goods delivered to a specified address, the release of the goods to the customer shall take place when the vendor releases the ordered goods to the courier,” and thus on the store premises. The court agreed with the claimant that ordering alcohol via internet with delivery to the customer’s door does not violate the act, and falls within the scope of the retail alcoholic beverage licence issued to the store. Therefore, it should be concluded that whether the sale of alcohol via internet complies with the Act on Sober Upbringing depends on the wording of the contract concluded between the parties. If the agreement, including the terms and conditions, does not contain provisions clearly specifying that the place of performance of the agreement is the delivery of goods to the supplier at the point of sale, the conduct of such activity by the store will be considered unauthorised and will lead to revocation of its licence.
In the judgment, the court indicated that it is also relevant whether the store provides effective mechanisms to ensure that alcohol is sold only to sober adults. In the opinion of the court in Kraków, this condition was met by the claimant, as when ordering goods, the customer had to provide personal details, which would be verified upon receipt based on presentation of an identity card to the courier.
After analysing the reasons stated for the judgment by the Province Administrative Court in Kraków of 8 August 2018, several conclusions can be drawn.
First, the argument that the terms and conditions of sale or the website are conclusive on the legality of alcohol sales via internet does not seem persuasive. Following this reasoning, the vendor’s arbitrary determination regarding the place of performance of the service determines in practice whether it is acting in accordance with the permit. Removing doubts arising from ambiguous provisions of the act by agreement of the parties contradicts the purpose of the Act on Sober Upbringing and Combatting Alcoholism of 26 October 1982. Undoubtedly, the parliament intended to restrict free access to alcohol, “recognising the life of citizens in sobriety as a necessary condition for the moral and material well-being of the Nation” (preamble to the 1982 act). Over the past few years, this act has been subject to several amendments, but despite the boom in distance contracts with the possibility of delivery to the consumer’s door, to date no wording has been adopted explicitly allowing the sale of alcohol via internet, which seems to be a deliberate decision by the parliament not to act in this area.
Second, it is questionable to leave it up to suppliers to verify that the recipient is an adult and is not intoxicated. The criminal liability for serving alcoholic beverages to minors or intoxicated persons would then fall, for example, on the courier. It seems that the likelihood of serving alcohol to people not meeting these criteria is somewhat higher in the case of door-to-door delivery of alcohol, since failure to meet the statutory criteria would force the courier to return the order to the store. It is possible that such an inconvenient obligation would be more than some suppliers could handle.
Third, it also seems inappropriate to compare wholesale regulations to those governing retail sale on the internet. The court found impermissible a different interpretation of the act, which would allow the possibility of wholesale online sales of alcohol as opposed to retail sales. While in the case of retail sales an interpretation in favour of the possibility of using the internet for this purpose seems to contradict the lawmakers’ intention, wholesale sales by remote means do not carry a significant risk of expanding universal access to alcohol. Under the act, wholesale trade in alcoholic beverages constitutes “the purchase of alcoholic beverages for resale to businesses holding the appropriate permits.” This means that wholesale is carried out between companies, and its purpose is to further resell alcohol to an entity authorised to do so under the relevant administrative decision. Such activity does not undermine the aim of the act, which is to inculcate sobriety in the society, as placing orders for delivery of alcohol to a wholesaler or from a warehouse to a store other than at a wholesale point would merely make for more efficient wholesale operations. Additionally, Art. 9 of the act, regulating wholesale of alcohol, does not limit such sales to designated points of sale, unlike Art. 96, which explicitly indicates such a narrowing for retail sales. Thus, the court’s argument for a uniform interpretation of the provisions on retail and wholesale should not meet with approval.
It should be mentioned that an attempt to amend the act, alleged to be “ill-adapted to the current market realities,” was made by a group of 29 members of parliament, who filed a proposed bill that would explicitly allow the sale and delivery of alcoholic beverages by “entities with a licence…, including entities whose activity consists in providing food for closed events organised at a time and place designated by the client, on the basis of an agreement concluded at a distance” (9th Sejm, print no. 486, 24 June 2020). However, legislative work on the proposal only reached the first reading in the Local Government and Regional Policy Committee, and since 15 July 2020 there has been no action on the proposal. It is possible that the judgment of the Supreme Administrative Court of 8 September 2022 will give an impetus to further discussions before the Polish parliament and revive the procedure for amending the 40-year-old Act on Sober Upbringing and Combatting Alcoholism.
Undoubtedly, both judgments look favourably on the activities of stores offering the possibility of online shopping, and consumers themselves wishing to purchase liquor without leaving home. Least satisfied by the operative part of the ruling may be local governments, whose previous practice of denying or revoking permits for retail sale of alcoholic beverages has been validly challenged. However, the breaking of the previous line of decisions by the final judgment of the Supreme Administrative Court does not preclude different positions being taken by other courts and administrative bodies, as the Polish legal system is not based on stare decisis (binding precedent in the form of case law). Nonetheless, this judgment offers a strong argument in the hands of businesses charged with violating the Act on Sober Upbringing and Combatting Alcoholism.
Joanna Prystupa, M&A and Corporate practice, Life Science & Healthcare practice, Wardyński & Partners