The Europeanisation of Contract Law

Current Controversies in Law

Christian Twigg-Flesner

• Editore: Routledge-Cavendish
• Anno: 2013
• ISBN:
  9781135923280
• Edizione: 2
• Argomento: Law
• Categoria: Contract Law

Critical yet accessible, this book provides an overview of the current debates about the 'Europeanization' of contract law. Charting the extent to which English contract law has been subject to this activity, it is the ideal volume for readers unfamiliar with the subject who wish to understand the main issues quickly.

It examines a range of key developments, including:

• a string of directives adopted by the European Union that touch on various aspects of consumer law
• recent plans for a European Common Frame of Reference on European Contract Law.

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Bringing together advanced legal scholarship, critically examining key developments in the field and considering the arguments for and against greater convergence in thearea of contract law, this is an excellent read for postgraduate students studying contract and/or European law.

1 The concept(s) of Europeanisation

Introduction

This book is about the Europeanisation of contract law. This is a controversial topic which has given rise to a huge amount of scholarly literature – so much so that one can only agree with Thomas Wilhelmsson, who remarked some years ago that writings on this have ‘become so voluminous that it seems impossible to follow in all its details.’¹ Since the first edition of this book was published, the body of literature has continued to grow. The primary purpose of this work remains the provision of a critical account of the field as a whole. It attempts to take stock of developments to date, as well as ongoing activities. More generally, it will also consider the arguments advanced on both sides of the debate about the need and desirability of the process of Europeanisation. It is assumed that the reader will have knowledge of both contract law and some European Union law, but is not familiar with the Europeanisation of contract law itself.

In this opening chapter, the different facets of Europeanisation are explored. The driving force behind this process is, of course, the European Union (EU), and the following chapters concentrate on the EU’s achievements so far, as well as its future plans.

This is therefore predominantly a ‘European law’ book, concentrating on the EU’s impact on contract law. However, to regard the process of Europeanisation purely as a matter for the EU would be to ignore the work that has been undertaken by legal scholars across Europe in this sphere. The remainder of this chapter therefore provides the context within which the EU’s activities are being undertaken.

The context for Europeanisation

Contract law

This books focuses on contract law, i.e. the law relating to the formation, performance and discharge of contractual obligations. It may be distinguished from the law of torts, which is concerned with wrongful acts or omissions causing harm. Both are part of the law of obligations and the wider category of private law.

Trying to provide a succinct definition of contract creates problems in itself, because the notion of ‘contract’ varies from jurisdiction to jurisdiction. Whilst Treitel’s basic description of contract as ‘an agreement [of the contracting parties] giving rise to obligations which are enforced or recognised by law’² goes a long way towards capturing the essence of what a contract is, particular jurisdictions may regard other forms of voluntarily created obligations as forming part of the law of contract. For example, English law does not regard a gift as a form of contractual obligations, unlike French law.³

For present purposes, it is not necessary to explore this further, save to note that the different conceptions of ‘contract’ in the various Member States create an initial hurdle on the way towards Europeanisation, because there may be disagreement about the precise target area of such activity.

‘Europeanisation’ explored

For the purposes of this book, the term ‘Europeanisation’ is used to cover the various activities of the EU which affect contract law, whether it is the creation of free- standing EU rules on contract law, or the process of harmonisation of aspects of national contract law by EU legislation. Of course, the notion of ‘Europeanisation’ is open to different interpretations. For example, this term is also sometimes used in a much wider sense to cover e.g. scholarly activities.⁴ In her recent work, The Emergence of EU Contract Law , Lucinda Miller identifies three different (but related) ways in which ‘Europeanisation’ might be understood: first, it could refer to the development of contract law rules at the European level; second, it could describe the infiltration of EU law-derived rules into national contract laws; and, third, it could be regarded as synonymous with the process of harmonisation.⁵ This is generally the same way in which ‘Europeanisation’ is understood in this book.

Unification, harmonisation, approximation and convergence

A note on terminology: in the Europeanisation debate, there is often reference to terms such as ‘unification’, ‘harmonisation’, ‘approximation’ or ‘convergence’.⁶ Unification suggests that the legal systems of two or more jurisdictions cease to be distinct and are replaced by a single legal text.⁷ ‘Harmonisation’ and ‘approximation’ are synonymous with one another in the European context, and refer to the introduction of common rules on particular aspects in the Member State, although, as will be seen, there is a degree of freedom for each State as to how they give effect to these rules.

Lastly, there is the notion of ‘convergence’, which denotes similarity on particular aspects between different jurisdictions.⁸ According to Brownsword, one can determine convergence in different ways by focusing on:⁹

1. formal doctrine
2. underlying principles
3. the result which formal doctrine indicates in given fact situations
4. the actual result reached in given fact situations
5. values and interests affected by particular disputes
6. contracting practice.

The process of Europeanisation seeks to achieve both harmonisation and convergence. It will be seen that the focus at the European level is largely on convergence with regard to formal doctrine and the results such doctrine indicates ((i) and (iii) in Brownsword’s classification), rather than any of the other factors. Unsurprisingly, this focus has not gone without criticism.¹⁰

A brief detour into legal history¹¹

Although the current debate about Europeanisation is of recent origin, to some it may seem as if history is turning full circle. In the twelfth century, continental Europe went through a process of re- developing and adopting Roman law (the ius civile ), which evolved into the ius commune , that is, the ‘common law’. In essence, the many different principalities and kingdoms that existed across Europe at the time shared a common law, which served to supplement existing local laws and customs. In addition, the ius commune provided a common legal language, and it was deployed in interpreting local laws to achieve a degree of consistency.¹²

The rise of the nation-State in the nineteenth century, and the creation of larger and stronger States on the continent, also resulted in the ‘nationalisation’ of the ius commune ,¹³ producing such well-known codifications as the German Civil Code¹⁴ and the French code civile.¹⁵ A side- effect of this development was that legal scholarship, which until then was truly European, also became a national matter, and legal education, legal training and professional requirements started to diverge. Foreign judgments, as well as scholarly literature, were disregarded. Whereas previously, Latin had been the common legal language across Europe, it was replaced by the respective domestic languages.

English law was not part of the continental ius commune . It does not follow in the Roman tradition, unlike the continental legal systems; although some Roman law principles have found their way into English law, both in the common law and in the principles of equity. Unlike on the continent, there was never a wholesale codification of private law in England. Instead, the law of contract evolved through individual decisions by the courts. The different paths taken by English law on the one hand and the majority of the other European jurisdictions on the other is frequently referred to as the ‘common law– civil law divide’. This divide is still regarded as perhaps the greatest difficulty in the Europeanisation of contract law today. It is, of course, an over- simplification to refer to all the non-English jurisdictions in Europe collectively as the ‘civil law’ systems, because these sub- divide further, e.g. into those following the Romanistic legal tradition or the Germanic tradition, as well as the Nordic systems which form a distinct group and do not have a civil code. Their common features of these legal traditions permit their broad classification as ‘civil law’ systems. But even though the common law may appear very different from the civil law systems, Zimmermann has argued persuasively that these differences are less stark than widely assumed.¹⁶

Whatever common origins there are, the situation that remains today is that there are more contract law systems in the EU than there are Member States,¹⁷ and several different legal traditions.

The problem today–variety of legal systems and identifying the applicable law

The variety of legal systems poses an obvious problem for any contract involving parties from more than one jurisdiction, particularly in the EU where the internal market relies on cross- border trade. Whenever there are contractual negotiations between parties based in different jurisdictions, there are two procedural questions to be tackled (in addition to whatever the substance of their agreement might be): (i) which court would deal with any disputes which might arise (jurisdiction); and (ii) which law would govern the resolution of that dispute (applicable law)?

These questions are resolved through the principles of private international law (also known as the conflict of laws).¹⁸ As an early example of Europeanisation, the Member States of the EU agreed separate conventions on jurisdiction (Brussels Convention¹⁹ ) and applicable law (Rome Convention²⁰ ). Following the broadening of the EU’s competence²¹ in this field,²² the Brussels Convention has been replaced by the ‘Brussels’ Regulation (44/2001),²³ and the Rome Convention by the ‘Rome I’ Regulation (593/2008).²⁴

It is beyond the scope of this book to examine either measure in depth. With regard to questions of jurisdiction , it suffices to note that, if the parties have not provided for this in the contract, the Brussels Regulation, in ‘matters relating to contract’,²⁵ allocates jurisdiction to ‘the courts for the place of performance of the obligation in question’ (Article 5(1)(a)). For consumer contracts (i.e. those between a trader²⁶ and a person acting for a purpose regarded as outside his trade or profession), there are separate provisions which apply primarily²⁷ where a contract has been concluded in the consumer’s domicile, or where the trader directs his activities to that Member State and the contract is within the scope of these activities (Article 15(1)(c)).²⁸ In deciding where to take legal action, the consumer has the choice between the courts of his domicile or that of the trader (Article 16(1)), but he may only be sued in his domicile (Article 16(2)).

As far as the applicable law is concerned, the Rome I Regulation provides the relevant rules to determine this. Fundamentally, the choice of the applicable law is down to the parties to a contract, who can select which law they wish to govern their contract.²⁹ However, party autonomy in this regard is restricted in several ways: first, the law chosen must be the law of a particular jurisdiction, which means that ‘non- state laws’ (such as the Principles of European Contract Law (PECL)) cannot be chosen (although they can be incorporated into the contract).³⁰ Second, if the parties choose one law, but ‘all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen’, then the rules of law of the country where ‘all the other elements are located’, and which cannot be derogated from by agreement between the parties, will apply.³¹ These rules are commonly known as ‘mandatory rules’, i.e. provisions which the parties cannot displace through the terms of their contract. Similarly, the choice of the law of a non-EU Member State cannot preclude the application of ‘mandatory rules’ of EU law where ‘all other elements relevant to the situation … are located in one or more Member States …’.³² The choice of law by the parties is therefore subject to the ‘mandatory rules’ of the jurisdiction with which the contract is otherwise connected.

As far as consumer contracts are concerned, t...