New Directions in European Private Law

Takis Tridimas, Mateja Durovic, Takis Tridimas, Mateja Durovic

• Publisher: Hart Publishing
• Year: 2021
• ISBN:
  9781509935628
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

This book brings together leading scholars and practitioners, to explore contemporary challenges in the field of European private law, identify problems, and propose solutions. The first section reassesses the existing theoretical framework and traditional legal scholarship on which European private law has developed. The book then goes on to examine important and practical topics of geo-blocking and standardisation in the context of recent legislative developments and the CJEU case law. The third section assesses the challenging subject of adequate regulation of online platforms and sharing economy that has been continuously addressed in the recent years by European private law. A fourth section deals with the regulatory challenges brought by an increasing development of artificial intelligence and blockchain technology and the question of liability. The final section examines recent European legislative developments in the area of digital goods and digital content and identifies potential future policy directions in which the European private law may develop in the future.

1

Political Disruption, Technological Disruption and the Future of EU Private Law

ROGER BROWNSWORD

I.Introduction

For Europeans, these are challenging times. According to Guido Montani, the surge in populist politics reflects a widespread sense of discontent about the EU’s ability ‘to offer a credible response to the challenges of globalisation, the rise of multinationals, new technologies and uncontrolled migration flows’.¹ In this unsettled context, while we cannot predict the future of European law with any degree of confidence, we can be confident that its future will be shaped, to a considerable extent, by the ways in which Europeans respond to these challenges, including the ways in which, both within and without the EU, they respond to Brexit.²

Against this background, the focus of this chapter is on the challenges presented to Europeans by emerging technologies – technologies such as artificial intelligence (AI) and machine learning, robotics, blockchain and cryptocurrencies. In the recent past, Europeans have found themselves seriously divided about the regulation of biotechnologies (concerning both genetically modified organisms and human genetics),³ and it seems likely that the latest raft of technologies will generate further divisions, particularly about the extent to which it is acceptable to take humans out of the loop by automating processes in health, criminal justice, financial services and so on.

Although the future of law in Europe will surely be shaped by the nature of the responses to these new technologies, this chapter is specifically about the likely trajectory of EU private law;⁴ and, in particular, it is about the disruptive impact of technologies on the ways in which lawyers and regulators think and reason. The central point is that the ‘coherentist’ way in which private lawyers traditionally think and reason is already, and will continue to be, challenged by two technology-provoked mindsets – one of these mindsets is ‘regulatory instrumentalist’, the other more ‘technocratic’. There is currently an uneasy coexistence between these mindsets – not so much an uneasy coexistence between the technology community and the law community,⁵ but between and within different fractions of the law community itself.

This uneasy coexistence is formed around the following three tensions. First, there is a tension between traditional coherentist reasoning (which is characteristic of private law and centres on the application of general legal principles) and regulatory instrumentalist thinking (which is guided by whether the law is fit for purpose and centres on serving regulatory policies). The second tension is between legal reasoning, which relies on rules and standards as its regulatory instruments, and regulatory reasoning, which relies on technological instruments and technical solutions. The latter reasoning goes beyond raising questions about the fitness for purpose of particular rules of private law; it raises the question of whether the rules and standards themselves are fit for purpose as regulatory instruments. The third tension, introducing a further dimension of difference, is between a regulatory approach that engages with a plurality of conflicting and competing interests by seeking out a reasonable balance or an acceptable accommodation of those interests and a renewed form of (constitutional) coherentism that cross-checks the integrity of regulatory interventions relative to fundamental values.

While no one will doubt that technology will play a significant part in shaping the future of EU private law, this chapter highlights three areas to watch: first, the extent to which traditional coherentist thinking survives in the face of digital market-making regulatory instrumentalist thinking – and, concomitantly, whether revisions to the rules reflect a coherentist adjustment or a regulatory instrumentalist correction; secondly, whether the rules of private law are superseded by technological instruments and solutions; and, thirdly, whether a renewed coherentism, supporting distinctively European basic values (such as respect for human rights and human dignity), is able to stand its ground against a technocratic instrumentalism that defaults to balancing, accommodation and underlying utilitarian efficiency.

The chapter is in three parts: first, I deal with the tension between traditional coherentist and regulatory instrumentalist reasoning; next, I focus on the tension between rule-based regulatory thinking and regulatory thinking that relies on technological instruments; and, finally, I consider the tension between a renewed coherentism and a technocratic approach that flattens interests and is underwritten by utilitarian reasoning.

II.The First Tension

Technological developments in the last two centuries have provoked a number of revisions and corrections to a transactional model of contract law that is predicated on a subjective meeting of minds and gives effect to the intentions of the parties. First, subjectivism gave way to a more objective approach; secondly, reasonableness impinged on intention; and, thirdly, the public policy limits on freedom of contract were materially extended.⁶ Thus, when contract law abandoned a pure transactional theory of contractual rights and obligations in favour of an objective theory of agreement, this served to shield carriers against otherwise crippling claims for compensation (when valuable packages were lost or when there were accidents on the railways); and when, in the middle years of the last century, a mass consumer market for new technological products (cars, televisions, kitchen appliances and so on) was developing, a fundamental correction to freedom and sanctity of contract was needed to protect consumers against the small print of suppliers’ standard terms and conditions.

While these modifications to the law reflected some disturbance to the surface of legal doctrine, a deeper disruption was also taking place. This deeper disruption was to traditional coherentist thinking, for coherentism now found itself in tension with a quite different form of legal reasoning – one that was represented by regulatory instrumentalist thinking.⁷ These two forms of legal thinking and the tension between them are elaborated in this part of the chapter.

A.Coherentism

For present purposes, we can treat coherentist thinking as being defined by the following five characteristics.⁸

First, for coherentists, what matters above all is the integrity and internal consistency of legal doctrine. This is viewed as desirable in and of itself. Secondly, coherentists are not concerned with the fitness of the law for its regulatory purpose. Thirdly, coherentists approach new technologies by asking how they fit within existing legal categories (and then try hard to fit them in). Fourthly, coherentists believe that legal reasoning should be anchored to guiding general principles of law. In the case of questions about the enforcement or non-enforcement of transactions, the foundational principles are that parties should be free to make their own deals and that it is the fact that parties have freely agreed to a deal that justifies holding them to the bargain. Fifthly, the function of private law, together with its guiding principles, is largely concerned with ex post correction and compensation.

Coherentism is thus the natural language of litigators and judges, who seek to apply the law in a principled way.⁹ It is also the default mode of thinking for many lawyers who take it that being trained ‘to think like a lawyer’ is synonymous with being trained to apply general principles of law to situations and phenomena both familiar and novel.¹⁰

So, for example, developments in modern biotechnology have raised questions about the patentability of products and processes the working of which cannot be demonstrated by taking model machines into patent offices;¹¹ and these same developments, like developments in both information technology and blockchain, have raised questions about the way in which fundamental concepts and distinctions in property law map onto a range of ‘things’, such as cell lines,¹² gametes,¹³ personal data¹⁴ and cryptoassets.¹⁵

However, according to Edward Rubin, the days of coherentism are numbered. Nowadays, Rubin claims, we live in the age of modern administrative states where the law is used ‘as a means of implementing the policies that [each particular state] adopts. The rules that are declared, and the statutes that enact them, have no necessary relationship with one another; they are all individual and separate acts of will.’¹⁶ In the modern administrative state, the ‘standard for judging the value of law is not whether it is coherent but rather whether it is effective, that is, effective in establishing and implementing the policy goals of the modern state’.¹⁷

In contrast to such modern regulatory thinking, coherentism presupposes a world of, at most, leisurely change. It is not geared for making agile responses to rapidly emerging and highly disruptive technologies. When they are called on to respond to new technological developments, lawyers who reason like coherentists tend to try to classify the new phenomena within existing legal categories. For example, while the initial response to embryonic e-commerce was clearly driven by a regulatory concern that e-transactions should be legally recognised and supported, there was, and still is, a distinctly coherentist response that tries to apply the legal template for offline contracts and the principles of contract law to the emerging world of online transactions.¹⁸

Similarly, in the case of blockchain, one of the principal topics of coherentist conversation is whether a smart contract is to be regarded as, in principle, a legally enforceable contract (as per the law of contract).¹⁹ To be sure, some of the examples that might be given to illustrate the nature of smart contracts do not sit easily with the template for fiat contracts. Nevertheless, even with unhelpful examples out of the way, there will still be some puzzlement. In particular, coherentists will wonder where we find the offer, the acceptance and the consideration when all that we have is a piece of software that is coded to transfer a specified value from A’s wallet to B’s wallet on the occurrence of some specified event. Moreover, because the technology is designed to guarantee that, on the occurrence of the specified event, the value is duly transferred from A to B, coherentists will wonder whether it is possible to apply doctrines that allow for the avoidance of a transaction – for example, doctrines such as duress and undue influence, or misrepresentation – to a smart contract; or how, in the event that the technology fails to perform, we should determine whether there has been a breach (and, if so, how we are to decide upon the nature of the breach and the appropriate remedy).²⁰ Furthermore, coherentists will doubt that a smart contract can be viewed as a contract when the terms and conditions are not written in natural language and when there are no humans in the blockchain loop. To the coherentist, the idea that a smart contract can be likened to an agreement for the supply of goods or services (the staple of the law of contract) will be perplexing indeed.²¹

B.Regulatory Instrumentalism

In contrast with coherentism, we can treat regulatory instrumentalism as being defined by the following six features.²²

First, as Rubin explains, regulatory instrumentalism is not concerned with the internal consistency of legal doctrine. When regulatory instrumentalists raise questions about consistency, they are typically making sure that particular regulatory interventions will complement others in serving specified regulatory objectives.²³ Secondly, it is entirely focused on whether the law is instrumentally effective in serving specified regulatory purposes. Regulatory instrumentalists do not ask whether the law is...