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This is Part 2 of a series on the High Court route for UK Amazon sellers whose accounts have been deactivated and whose funds have been withheld. Part 1 set out, in outline, why a coordinated claim is, in our view, properly arguable. This part looks more closely at the contractual structure. Amazon has built around its sellers, and at the standard defence Amazon has been running before the Financial Ombudsman Service – a defence that is arguably considerably weaker than Amazon’s behaviour suggests it thinks it is.
Two contracts, two companies, one sign-up flow
When a UK business signs up to sell on Amazon, it does so through what feels like a single registration process. It is, in fact, contracting with two different companies under two separate agreements.
The first is Amazon Services Europe Sàrl, a Luxembourg-incorporated company that runs the marketplace itself — the listings, fulfilment, A-to-z claims, storage of stock, returns handling, and, crucially, the suspension and deactivation of selling privileges. We will call it ASE. Its contract with the seller is the Business Solutions Agreement. It is governed by Luxembourg law and contains a Luxembourg jurisdiction clause. ASE is not regulated by the Financial Conduct Authority.
The second is Amazon Payments UK Limited — APUK — a UK-incorporated company authorised by the Financial Conduct Authority as a payment institution under the Payment Services Regulations 2017. APUK receives the buyers’ payments, holds them in safeguarded accounts, and disburses them to the seller. Its contract with the seller is the Selling on Amazon Payments User Agreement. It is governed by English law and English jurisdiction.
That separation is not, in our view, accidental. It is the structural feature on which Amazon’s standard defence against seller fund-freezes has been built — and which the Financial Ombudsman Service has, in a developed line of recent decisions, increasingly declined to accept.
The standard fact pattern
The seller who comes to us almost always has the same story. They have built a serious trading business on Amazon: hundreds or thousands of fulfilled orders, an established product range, a stock position. At some point ASE has deactivated the seller account. The reasons vary — a KYC documentation issue, a VAT-establishment dispute, an authenticity or counterfeit allegation, a missed or failed verification interview, or a dispute about whether the seller is an individual or a business — but the operational consequence is the same. ASE pulls the selling privileges, and ASE tells APUK to hold the funds.
APUK then puts the funds into what Amazon calls a reserve, often described as a 90-day hold. The 90 days expire. The funds are not released. The seller writes to Amazon. The seller receives template replies, or no replies. The seller writes again. Months pass. In the cases we have reviewed, the hold has typically run for one to three years; in one published Ombudsman decision, the funds were held for nearly three years and ran into six figures across multiple currencies.
Throughout, the seller is told that the matter is “under review.” No specific concern is articulated. No investigative progress is shown. The seller has no way to test what is being said. And meanwhile ASE continues to charge the seller storage fees on stock it is holding and will not release.
Amazon’s defence — and why it has been failing
Amazon’s case, when the seller complains, has always run along the same lines: the operational decision was ASE’s, ASE is in Luxembourg and is not FCA-regulated, and APUK is therefore entitled to act on ASE’s instruction without further enquiry. This is the corporate-architecture defence — the argument that the two contracts and the two companies insulate APUK from responsibility for what ASE has decided.
The Financial Ombudsman Service has now repeatedly rejected this defence. Across the published decisions we have reviewed, APUK is the FCA-authorised entity; it holds the money and cannot disclaim responsibility for retaining it by pointing to a corporate affiliate. The Ombudsman’s standard remedy has been the release of the funds, together with eight per cent simple interest from the date the funds should have been released, and, in several cases, an additional sum for inconvenience.
That is a meaningful tailwind for any seller considering a High Court claim. It is not, however, a substitute for one. The Ombudsman has compensation limits, cannot order disclosure, and cannot rule on the underlying contractual interpretation in a way that binds Amazon in future cases. The High Court can do all three.
What the contract actually says
APUK’s Selling on Amazon Payments User Agreement contains, in its operative provision, language to the effect that APUK may restrict access to the seller’s account balance “in such amounts and for such time as we reasonably deem necessary.” The clause is supported by a list of triggers — financial risk, suspected breach, inability to verify identity, a dispute involving the account, and system security — and is paired with a separate suspension clause and a broad exclusion of liability for losses arising from suspension.
The clause is wide. It is not, however, unlimited, and the language is more constraining than Amazon’s conduct suggests it believes.
“Reasonably deem necessary” is an objective standard. A party with this kind of contractual discretion must exercise it according to the contract. The English courts have, in a line of cases culminating in the Supreme Court’s decision in Braganza v BP Shipping, made clear that such discretions must be exercised rationally, in good faith, and by reference to relevant considerations only. Whether APUK has met that standard, in cases where it has held a seller’s money for two or three years on the basis of an unspecified concern reported by ASE, is, in our view, a serious question that has not yet been put to an English court.
“For such time as” is a temporal limit. A clause that permits retention for the time taken to complete an investigation is not a clause that allows indefinite retention. If an investigation is not being progressed — and across the decisions we have reviewed, the Ombudsman has consistently identified a lack of meaningful investigative activity on Amazon’s part — the clause runs out of work to do.
The point is not that the clause is invalid. The point is that it does less work for Amazon than Amazon has been treating it as doing. That is precisely the kind of question on which an authoritative determination would be of value.
The good-faith question
There is a second contractual argument, less doctrinally secure than the first, but worth running alongside it. The relationship between an Amazon seller and APUK has many of the features the courts have identified since the Post Office Group Litigation in 2019 as marking out a “relational” contract: a long-term arrangement, substantial mutual dependence, and a position in which one party’s livelihood is bound up with the other’s discretionary decisions. In such contracts, the courts have been willing to infer a duty of good faith — a duty to refrain from exercising discretionary powers arbitrarily, capriciously, or for collateral purposes, rather than a duty to release funds on demand.
The good-faith argument is less settled than it was. The Court of Appeal and the Supreme Court have, in cases since 2021, signalled some caution about implying good-faith duties as a matter of routine. The argument is therefore a supporting strand rather than the main rope. But it remains, in our view, properly available, and it colours the exercise of the contractual discretion in a way that is unattractive to Amazon: prolonged silence, the absence of demonstrated investigative progress, and the resort to corporate-affiliate explanations are exactly the kind of conduct a court alive to good-faith considerations is likely to view critically.
The exclusion clause
The Payments Agreement contains a broad exclusion of liability for losses of “any kind, direct or indirect” arising from suspension of the service. Two things should be said about it.
First, the Unfair Contract Terms Act 1977 applies. Section 3 of the Act bites on standard-form business-to-business contracts; it is not confined to consumer contracts and does not require the seller to be a small business. The reasonableness test it imports is a real obstacle for a clause of this width, written into a standard-form contract on which a payment institution proposes to exclude liability for retaining a customer’s money.
Second, even if the clause survived the UCTA test on some narrow formulation, it does not, in our view, defeat a claim in unjust enrichment for the time value of money wrongly retained or a claim for breach of statutory duty arising under the Payment Services Regulations 2017. The Financial Ombudsman has already held, in one of the decisions reviewed, that the exclusion clause forbids APUK from retaining fees taken for a service that was never provided. The logic of that decision is straightforward and extends, with greater force, to the retention of the principal sum itself. In our view, a clause that claims to exclude liability for retaining money that belongs to someone else is, in our view, on the wrong side of the line.
Where this is going
The combination matters. A contractual discretion that has to be exercised reasonably and rationally; a relational backdrop in which good faith is properly engaged; an exclusion clause that does not cover the most important measure of loss; and a developing FOS line in which Amazon’s standard structural defence has now been rejected by five different ombudsmen — taken together, the result is a serious case, not a hopeful one.
In Part 3 we will move from the contractual framework to the restitutionary and statutory claims: the unjust enrichment argument, the question of how APUK’s safeguarding obligations under the Payment Services Regulations 2017 interact with its asserted right to retain funds at ASE’s direction, and the practical question of jurisdiction over the Luxembourg entity.
If your account has been deactivated
If you are a UK-established Amazon seller whose selling account has been deactivated and APUK is still holding funds that have not been released to you, we would like to hear from you. Time matters — the limitation under the Limitation Act 1980 cuts off the oldest claims, and the earlier we see the documentation, the better placed we are to assess where you sit on that timeline and whether your case fits within the cohort we are assembling.
Please contact Michael Coyle at michael.coyle@lawdit.co.uk or via the contact form at lawdit.co.uk.
