Jersey & Guernsey Law Review – June 2012
The battle to establish a European
contract law
Christian
von Bar
Europe is
the mother continent of private law. Yet what was once bound together was
denatured in the 19th and 20th centuries, fissioned into a plurality of
national systems of private law. Today that continent is once again deluged by
a mighty wave of codification—perhaps the greatest in its history. In
this predicament the mistakes of past generations can be avoided only if
present legal policy-making is mindful of the pan-European dimension of its
undertaking and remains so. The states of the 21st century no longer need
codifications as a badge of national sovereignty; they achieve sound law for
posterity only if they draft their major legislative proposals in the spirit of
service to all the interconnected citizens of the internal market. That of
course presupposes that European private law can once again be made visible as
an entirety. It is precisely that issue which underlies the current struggle
towards a European contract law—the subject of this article.
I. The new wave of codification
within the fabric of the European Union
1 Jersey
and Guernsey share the need of many States to
modernise their private law, in particular their contract law. The Channel Islands are contemplating adopting a new Contract
Code. Such objectives are very
much in keeping with the current trend; truly there is no shortage of
codification projects at the moment. Never before have there been so many of
them (within as well as outside Europe) in
such a short time – not even in the 19th and first half of the 20th
centuries. Occasionally the goal in such cases is (or has been)
preeminently “just” the elimination of the long-term effects of
Communism from the time before the re-emergence of democracy and the market
economy. However, as may be seen in the case of Romania,
for example, that has not been the main motivation even in Central and Eastern Europe countries. The causes lie much deeper, in the East as
well as the West. Much too often and for far too long the legacy of past
generations has been clung to and its importance has been sentimentalised; this
has allowed some codifications to deteriorate to the state of veritable museum
pieces. It was only the great project of the European Union that succeeded in liberating
(on both national and international planes) the forces which exhorted a
fundamental review of the current state of private law in Europe. These forces were of course also responsible from
the outset for the build up of enormous tension, both outwards and inwards, and
amongst legal scholars no less than in the politics of law. Modernisers and
traditionalists are at loggerheads everywhere and on every level; the
atmosphere between them is at risk of turning rather frosty. That can be seen
vividly in the current political debate about whether the Union
may or should adopt (at the very least) its own sales law.
II. Too many private law regimes
2 For
the more reflective onlookers, however, there has long been much more at stake,
not least the question of whether there are, in a European Union of what will
soon be 28 states, simply too many private law regimes. How can we suppose a
genuine and integrated internal market will emerge on the basis of the current
plurality of legal systems (prospectively we have some 35 with which to reckon)
and the complexity which they cause? Are we not perhaps repeating in the
present wave of codification exactly the same mistake made by the young
national states in the 19th century when they fragmented what until then had
been a largely common European inheritance?
III. Directives and regulations
3 Assuming
one is not inclined to dismiss these questions immediately with a brusque
“no”, one is confronted with the problem of developing a
counteracting model. European Directives, beneficial as they may have been
hitherto, cannot be – and certainly cannot remain – the only
answer. They only ever address particular issues, fields which find themselves
(often only as a matter of happenstance) in the glare of the political
attention of the day. In the field of consumer law the acquis communautaire has
admittedly taken on an appreciable scope. But European private law cannot
really make headway in this fashion and cannot be regarded as being mapped out
by such measures; Directives amount to a repairer’s workshop, not an
architect’s drawing board. The position is different only in the case of
European law-making by means of Regulations. They do not as a rule eradicate
national law as such, but they are capable of setting whole areas of the law on
a European footing. The private international law of the EU Member States will
be entirely European in character in the not too distant future. It is,
however, only individual portions of private law which can be labelled as genuine
European codifications.
IV. European codification in substantive private
law too?
4 Is
it not conceivable and desirable that substantive private law be tackled
comparably? The question has been discussed for some time under
the rubric “European Civil Code”. The provocation was deliberate.
It was due to the name which was adopted by the academic network which later
(together with the so-called Acquis Group) became the main author of the Draft
Common Frame of Reference (DCFR): the “Study
Group on a European Civil Code”. We did not adopt this name because we
were naive enough to believe that a Civil Code replacing the national regimes
of private law was a possibility within our collective lifetime. We merely
wanted to send a signal. The content of that message – the creed of the
Group – was that the future of the law of obligations was European, and
that without that dimension it had no future. The effect was a shockwave: harsh criticism of our approach
emanated immediately from both England
and France.
Some years ago, an article appeared in the British press claiming that a band
of European professors and MEPs were trying to impose the Code Napoléon
on the UK;
the article even reproduced a painting of the Emperor in the centre of the
page. In France,
articles were published in law journals which heavily criticised the use of the
English language and the readiness of the DCFR to take the English (and Irish)
Common Law into account. The most subtle criticism we ever received came, by
the way, from my own country. The authors complained that some of the DCFR
model rules were too similar to German law!
5 Hence
the point must be repeated loud and clear: a European Civil Code at present
does not have the slightest chance of being adopted – not because the word “Code” in some
parts of Europe is an inflammatory term (the Union already today has a number
of legal texts which bear the description “Code” in their official
title), but rather because neither the political
will nor even the knowledge needed for its preparation can be mustered. The
European map of law still contains too many blank spots, not least in the field
of property law. Nevertheless, the label “European Civil
Code” has given a name to a powerful idea. It will never disappear
entirely from the minds of jurists and it exhorts us to sharpen our awareness
of the wider cultural framework in which we operate. During the parliamentary hearing in the course of her election to the new Commission, the
“European Civil Code” was even mentioned by the new Commissioner
for Justice, Fundamental Rights and Citizenship, Mrs Viviane Reding, and the notion appeared also in the
Commission’s Green Paper on policy
options for progress towards a European Contract Law for consumers and businesses. There, depending on how one interprets them,
it was one out of seven or nine options for the furtherance of European
contract law. However, if one read the text carefully, one realized immediately
that the option to draft a European instrument which would replace national
contract laws in their entirety was only put on the list in order for it to be
turned down. In the meantime, that has long since become reality, in
agreement in fact with the European Parliament. Although in some of its earlier resolutions the
Parliament called for the elaboration of a European Civil Code, there is certainly no longer a majority today
in its favour. Rather, the European Parliament decided to support the project
of drafting an optional European
Contract Law. For purely practical reasons, I myself have always thought
that the elaboration of a European Civil Code (understood in the traditional
sense of a continental Code) is something that we should consider as a long
term option, but for the time being the ideological barriers are so high that
it would be a fruitless exercise to discuss this any further. In that respect,
and until further notice, the light at the end of the tunnel remains switched
off.
V.
A frame of reference
6 What
alternatives are there? One of them (at any rate in the view of its authors)
consists of the creation of a sort of model law, a frame of reference for
important parts of the law of property and obligations and ensuring that effect
is given to it imperio rationis (and
not ratione imperii). The mere idea would admittedly not be worth much; it had
to be moulded in a concrete form to be susceptible to – and deserving of
– sensible discussion. All that academics are able to achieve is of
course just a purely academic text. Thus we named it the Draft Common Frame of
Reference: a text given the political seal of approval in some manner or other,
a genuine Common Frame of Reference in other words, was
something that we were not capable of bringing about. Regardless of what form
that might take (be it eg an inter-institutional agreement between the
constitutional organs of the European Union, a Recommendation or just an
organisational measure internal to the Commission), that was something that
would have to be adopted by others, if at all.
7 During
the long years of its gestation, meanwhile, we gave precious little
consideration to the question of the implementation as a matter of practical
politics of our DCFR. As the Spanish scholar Díez-Picazo once formulated
at a conference, we were in any case dependent on the willingness of others to
an autointegración – by
national legislators potentially interested in the project and equally by the
law-makers of the European Union.
VI. From comparative law to making rules
8 The
drafters of the DCFR ventured an experiment. They took the view that the epoch
of non-binding intra-European comparative law should be allowed to pass and an
era of pan-European rule making heralded in its stead. A European research
network was formed with a size and intensity not experienced before that time.
We took as our starting point the Principles of European Contract Law (PECL),
which the Commission on European Contract Law had prepared under the
chairmanship of the Danish scholar Professor Ole Lando – principles which
in the meantime have assumed global fame. This was agreed
upon with the members of that “Lando Group”; many members of the
Study Group on a European Civil Code (including the author of these lines) had
previously been members of the Lando Group and had contributed to the success
of the project from their own research funds; conversely, numerous members of
the Lando Group also became members of the Study Group, among them Ole Lando
and, from the United Kingdom, Professors Hugh Beale, Michael Bridge and Eric
Clive.
9 Neither
the Lando Group nor the Study Group has ever been commissioned to work by the
European Commission. For the first seven years of its existence the Study Group
was financed exclusively by national research funders from a total of six
Member States of the EU at that time; it was only after important parts of the
research were ready for publication that we teamed up with the Acquis Group, mentioned earlier, under the EU’s 6th Framework
Programme on Research and Technological Development in a so-called Network of
Excellence. This made possible the conclusion of the project over the four
following years. Even here, however, it remained a matter of funded research;
it did not amount, as is often wrongly asserted, to work commissioned by the
European Commission. Consequently the Commission never had any influence on the
content of the DCFR.
10 The
DCFR is a purely academic text. It deals with contract law, the law of
non-contractual obligations and some aspects of the law of movable property. In
its full edition this material is embellished with comparative notes on the
laws of all (or as good as all) the Member States. These “notes”
were placed under the commentaries on the model rules. For that reason the DCFR
in its outward appearance resembles a sort of European Restatement or, if one prefers,
a “Code”. It makes comparative law within Europe
productive in fathoming the opportunities to create pan-European rules. It is
only in the mirror of such models that the true position of one’s own
legal system fully emerges; it is only with the help of the fruits of
comparative legal research, compressed into the form of rules, that a
progressive pan-European dialogue becomes possible on what, from a legal policy
standpoint, is an appropriate content and presentational format for private
law.
11 A
typical comparative legal study, usually confined to a few legal systems, tends
(after elaborating on differences in method in resolving the given problem) to
end ultimately with the thesis that the legal systems examined are nevertheless
similar. In essence it is always the same. Comparative law of this type remains
unengaging. It offends no one – and passes away gracefully in oblivion.
The authors of the DCFR, by contrast, wanted to show – and indeed had to
show – their colours. If you develop a model, you have to set out your
stall on content and systematics. That of course also generates opposition, but
it stirs up debate. The latter at any rate has been achieved with the DCFR.
Just in the first two years since its publication the DCFR has been discussed
in considerably more than a thousand articles and monographs; it has developed
into something of a bestseller (in total some 8,500 copies of the paperback
edition have been sold, while for the full edition in six volumes, boasting
6,500 pages but costing a princely €800, the figure is about 900); and it
is currently the subject of a number of large translation projects. In 2012, a
team of translators, working on the initiative of the European Parliament, will
publish the model rules and the explanatory comments of the DCFR in French,
German, Italian, Polish and Spanish. In China,
Japan, Korea, Russia
and the Ukraine
further teams of translators have been formed; some of these are even working
on translating the complete text of the full edition into the language
concerned. As a rule a practical need as well as academic
interest is at the root of these projects; in many of these countries projects
for the reform of private law in the fields covered by the DCFR are under way.
VII. An interim assessment
12 In
view of this it would seem that the core aim of the drafters of the DCFR has
been achieved. The DCFR is pinpointed, consulted and analysed across the globe;
to what extent it ultimately finds its way into national law remains to be
seen. This will vary from one area of the law to another and from jurisdiction
to jurisdiction; moreover, the text will enjoy an appreciably greater resonance
in teaching and scholarly writing than in case law and legislation.
13 However,
in view of current developments in the European Union, it is possible at the
present time to make an interim assessment. Certainly the DCFR will not –
as had once been contemplated in fact – be transformed in the course of
its revision into an “official” European Frame of Reference; for
all that it will in all likelihood nonetheless give the development of the
European Union’s private law a powerful boost. The idea of an official
Frame of Reference for European law making has turned out to be a project beset by both political and
practical challenges. It is not an objective that can be easily described in
political terms and easily championed publicly, nor is it one that can be
straightforwardly implemented. Hence there will not be a CFR. The
“D”CFR remains what it is: an academic model without any official
seal of approval. In that condition it will retain its significance, within and
beyond contract law.
14 At
any rate the DCFR has kept afoot the discussion, initiated by the Lando Group,
about the creation of a contract law for the European internal market – a
European contract law, no less – and has breathed new life into the
debate. Without the DCFR we would not be where we are today: not admittedly on
the eve of codifying an instrument on all the core areas of contract law
relevant to the internal market, but certainly on the eve of adopting a
codification of the Common European Sales Law. Should that be a success, the
door would be flung wide open for following generations. They would be able to
build on this first venture. As regards the law on insurance contracts,
something along these lines seems already to be emerging; the law on service contracts
will, I hope, follow, at any rate for that part of the EU which has introduced
the Euro. The common currency strengthens the common market; the common market
strengthens the common currency. In the field of services, however, the
internal market is working anything but smoothly; the complexity of the legal
situation within Europe urgently needs to be
reduced. First, however, the initial step must succeed and
that is the step being taken in sales law.
VIII.
A common European sales law ante portas
15 To this end the European Commission
presented its proposal on 11 October 2011: the Proposal for a Regulation on the
Common European Sales Law. The Proposal’s substantive
(contract law) rules (which extend beyond sales to some aspects of contracts
for ancillary services) were prepared by a body of experts under the
supervision of the Commission. The provisions of the Proposal concerned with
when and how the substantive laws can be made applicable were drafted solely by
the Commission following consultation with its political advisers. The
substantive sales law of the draft Regulation can be traced back to (and
indeed, borrows heavily from) the DCFR. This was the source of inspiration and,
even though its model rules of course have not been adopted on a one-to-one
basis, the DCFR has passed its first great practical test in European sales
law.
16 That is true not just for the sales
law core of the Regulation (which as a matter of technique has been shunted
into Appendix I), but also for its general political approach. The
“Common European Sales Law” is in many regards based on an entirely
new concept. Thus, (i) first and foremost, this is a substantive sales law and
not an international sales law in the sense of law on the application of law.
The draft Regulation does not contain a single provision on private
international law; it merely constitutes substantive law for matters with a
foreign connection. Consequently, it is only applicable in accordance with the
rules of the Rome I Regulation. For that reason, technically speaking, art 6(2)
of the Rome I Regulation also remains unaffected and, where foreign law is
chosen, consumers are guaranteed the application of those mandatory provisions
of their own law which are more beneficial to them than those of the chosen
foreign law. In reality, however, it will not be necessary to carry out this
comparison of the consumer protection of national and foreign law in any given
case, since once the parties have chosen the Common Sales Law there will no
longer be a more advantageous national consumer contract law subsisting
alongside it. The reason is not because a difference in
values could not occur in some exceptional situation, but rather because the
corresponding autonomous law, according to its own claim to apply, would no
longer be applicable to the case in hand. Hence, by means of the Regulation
(ii) national sales law is to be created – more precisely, primarily
national sales law for cross-border cases. As a matter of external appearance,
therefore, some 28 new national sales laws will come into existence. What at
first sign seems to be the very converse of reducing legal diversity is in
truth a quantum leap in harmonization of law: the form taken by the Regulation
makes it certain that these European sales laws in the nation legal systems
will be the same down to the last full-stop. In this regard (iii) the national
legislatures are left with only a few options to shape the law to their taste:
they may decide (a) whether to make the Common European Sales Law available to
their citizens for the purposes of contractual relationships which are entirely
within their borders, and (b) whether to insist on one or both of the
contracting parties being either a consumer or an SME – in other words,
whether the Common European Sales Law should be on offer to large businesses as
lex contractus.
17 Finally, (iv) the Common European
Sales Law is conceived as a so-called “Optional Instrument”. This
may even be the most important point. It means that the Common European Sales
Law is able to leave the autonomous sales laws untouched. It is only the
parties (and no one else) who decided whether a contract should be concluded
under the European sales law or (other) national sales law. The application of
the European Sales Law presupposes that it has been chosen. Here once again we
find the central idea of the DCFR: the European Sales Law will only
govern imperio rationis; it knows it
will flourish or founder according to the wisdom of the citizen. Ratione imperii it is only the
implementation of this idea that is effected by means of a Regulation; it could
not work without it.
IX.
In Europe they always complain
18 Not
even this type of non-invasive form of law harmonisation can apparently hope to
be greeted with approval in all quarters. European projects are not having an easy time these days – and
certainly not in the British Isles. The
immediate aftermath of the Brussels summit in
December 2011 on reducing public deficits and regulation of the financial
markets made for disconcerting in headlines in the British press; there were
rants about a “Fourth Reich”, about a “crusade” against
Europe, and in some quarters even the United Kingdom’s withdrawal
from the European Union was advocated. As coincidence would have it, it was on
precisely the very same days that the House of Commons came to discuss the
Draft Regulation for a Common European Sales Law. The stance taken by the House
was one of hostility; on 7 December 2011 it resolved to
raise an objection under art 6 of the second Protocol to the Treaty on the
Functioning of the European Union on grounds of subsidiarity.
19 This
initiative, which had at least threatened to draw out the legislative process, has fortunately
fallen at the first hurdle. It would have succeeded only if a total of one third of the national
parliaments (or its chambers) were likewise inclined to the view that the
proposed Regulation is not compatible with the principle of subsidiarity. It
fell short of the required quorum of 18 parliamentary chambers by a wide
margin. When the deadline (12 December 2011) expired, it could muster only four
votes. The other votes,
alongside that of the House of Commons, were given by the
Austrian Bundesrat, the Belgian Senate and the German
Bundestag.
20 That
the creation of a Common European Sales Law should fall foul of the principle
of subsidiarity appears indeed to be simply incomprehensible. Who else if not
the European Union is able to create such a law? The argument pressed by Eurosceptics
is all the more subtle for that reason. Their main argument is downright
perfidious. It is targeted at the legal basis chosen by the Commission for the
Regulation: art 114 TFEU. That provision is concerned with harmonization of law
in the internal market. In contrast to the residual competence under art 352
TFEU, art 114 TFEU does not require unanimity in the Council. If the adoption
of the Common European Sales Law were to rest on art 352 TFEU, the project
would be dead. That point of course has not escaped the attention of its opponents,
who consequently maintain that the Common European Sales Law is not in truth
directed at any harmonization of law. It leaves the national sales laws
untouched and merely adds a European one and that, they argue, is not possible
under the present constitution of the EU. Thus one defends oneself against an
apparent invasion with the argument that the measure is insufficiently
invasive! The relevance of the measure to the internal market is also called
into question. Both arguments are weak. The Common European Sales Law
harmonises the law of all Member States for cross-border sales contracts
– not by means of private international law, but by adding to the
substantive law. For cross-border cases in future, where the parties elect, it
will just be the rules of the Common European Sales Law which are applicable
– with the same rules applying everywhere. Such cross-border cases will
be chiseled out from the autonomous law, which continues to subsist; that too
is a matter of harmonization of law. On the other hand, it is not an instance
of creating a new legal form which was not previously known to the autonomous
laws, as for example in the case of the European Cooperative. Each autonomous
law has a sales law and, unlike the law of legal persons, sales law does not
have a numerus
clausus of legal forms. It is not a new type of sales law which is being
fashioned, but rather a sales law of the Member States which is made uniform
for defined categories of cases and which, moreover, incorporates the whole
spectrum of existing consumer contract law acquis
communautaire. As regards the
relevance of the project to the internal market, the Commission has presented
impressive figures which demonstrate how many obstacles in accessing the market
are caused by the current legal diversity. A further dimension which has been
given less attention is the potential for opening up the market which the
prohibition on discrimination in art 20 of the Services Directive (2006/123/EC)
entails. The broader that one construes the notion of “service”
within the meaning of the Directive, the more the Common European Sales Law
will undermine the argument of service providers that legal diversity and legal
uncertainty are sufficient reasons not to provide their services to particular
regions of the EU. Thus the Union will wind
its way to a conclusion – if needs be, without the blessing of the
British and German parliaments.
X. Jersey and Guernsey
21 Jersey
and Guernsey need not “really” be troubled at all by any of this;
the Channel Islands are in the comfortable
situation of an observer, looking into the European Union from outside. An
outsider, it must be appreciated, sometimes sees things more clearly than one
whom such legislation might directly affect, whether they be a private individual
or a member of a national constitutional body anxious about its powers. Outsiders can confine themselves
to the question of whether they wish to make use of a foreign text as a source
of inspiration. Given this perspective one will tend perhaps to address
the subject with greater equanimity. If, on the other hand, the project for a
contract law code for the Channel Islands should come to fruition and should
other proposals from the DCFR, besides text which has found its way into the
Draft Common European Sales Law, be honoured with inclusion, then the
modernisation of private law in Europe will
have advanced another step.
Christian von Bar is Professor of Private Law and
Director of the European Legal Studies Institute of the University
of Osnabrück, Germany. He was
a member of the Lando Commission, Chairman of the Study Group on a European
Civil Code and one of the speakers of the academic network which prepared the
Draft Common Frame of Reference. He is a special adviser to the European
Commission. His current principal field of research is in European property
law.