A German regional court has issued a temporary injunction against Uber, the fast-growing, U.S.-based online chauffeur service which is no stranger to legal challenges from taxi-cab rivals and regulators around the globe.
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In its ruling, the Frankfurt Regional Court said the company could no longer offer its phone apps to connect drivers with passengers, stating that Uber's network of drivers lacked the necessary commercial licenses to pick up passengers.
Uber responded in a statement that it planned to appeal the court decision and in the meantime would continue operating across Germany, a country where its customer base has grown fivefold so far this year.
The court's decision raises the stakes for Uber in Germany. The company has had to fend off legal challenges for months in Berlin and Hamburg on issues ranging from licensing to whether its drivers are fully insured to carry passengers.
But San Francisco-based Uber, which allows users to summon taxi-like services on their smartphones, has faced regulatory scrutiny and court injunctions from its early days, even as it has expanded rapidly into roughly 150 cities around the world. German law allows drivers to pick up passengers without a commercial license if they charge no more than the operating cost of the trip. As the middleman connecting drivers and passengers Uber stands to take a cut of any charges and the court issued an injunction against the service.
The company offers two main services, Uber, its classic low-cost, limousine pick-up service and Uberpop, a newer ride-sharing service, which connects private drivers to passengers - an established practice in Germany that nonetheless operates in a legal gray area of rules governing commercial transportation.
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"You cannot put the brakes on progress. Uber will continue its operations and will offer Uberpop ridesharing services via its app throughout Germany," Michel Doermer, an Uber spokesman in Frankfurt, said in a statement.
Legal experts said the ruling would apply nationwide unless it succeeds in overturning the injunction or limiting its scope.
Founded in 2009 and valued at $18.2 billion after its latest funding round in June, Uber Technologies contends that it is an electronic marketplace that connects drivers with customers, not a transportation service itself.
Drivers must carry a valid driving license and undergo a background check before they pick up passengers, Uber says. The suit was brought by Taxi Deutschland, a Frankfurt-based consortium of taxi companies operating in major cities across Germany. Taxi Deutschland offers its own taxi-hire apps for smartphones.
The ruling drew praise from other industry groups including Taxi.eu, saying it put Uber drivers on a "level playing field" with the 150,000 drivers it counts in its pan-European network.
Germany's Federal Ministry of Transport issued a statement following the court decision reiterating that rules on passenger transport services were a matter regulated state by state.
Last week, an administrative court in Hamburg overturned a previous Uber ban by the Hamburg Ministry of Economic Affairs, saying the ministry did not have jurisdiction and that a ban would contravene passenger transport regulations.
Uber has appealed a ruling against it in Berlin and continues to operate pending a final verdict. Other German cities have also been considering bans, according to media reports. Earlier in August, a Paris court demanded that Uber change how its driver invoice system works to meet local rules.
Even in its home city of San Francisco, Uber has had to overcome legal and regulatory hurdles from city authorities concerned its services sidestep rules governing commercial transport and by taxi companies hoping to keep competition out.
Taxi drivers across Europe caused chaos in June by protesting against the service but Uber services have continued to grow in popularity.
Uber last week said it was experiencing "huge demand" for its services in German cities including Berlin, Frankfurt and Hamburg and that it planned to expand into Cologne and Stuttgart by the end of this year.