Monday, 14 November 2011

Only constructive criticism expected... on Common European Sales Law conference

Last week, together with two of my colleagues, I attended a "Conference on European Contract Law - unlocking the internal market for growth" in Warsaw, Poland. The theme of the conference was focused on the new proposal for a Regulation of the Common European Sales Law. You could read previously on this blog about Commissioner Reding's speech given during this conference (Reding on Common European Sales Law), but I wanted shortly to share my observations and most important remarks that were made during these two days.

I have to admit that I have mixed feelings as to this conference, since it tried to be for everyone (academics, practitioners, consumer organizations' representatives, business organizations' representatives, politicians) and therefore at times was for no one (or just a few chosen ones). Due to the large amount of invited speakers their time to talk was limited to ca 10min, which meant that often the questions posed during the discussion were longer than the presentations (!). However, despite the time issues, full schedule and very general remarks made by some, there were many important issues raised by the speakers and by their audience. It's good to have a venue to talk about these issues, even if barely ever a satisfactory solution was mentioned.

I think for readers of this blog mostly the presentations given by the members of the European institutions would be relevant, since they talked about reasons behind the current proposal for the CESL, as well as its future development. And so, Dirk Staudenmayer, representative of the European Commission, assured that the goal during drafting of the CESL was to create a very comprehensible, easily accessible instrument. That need to make the CESL easily accessible influenced the scope thereof (i.e. basically limitation to regulation of sales contracts). He called the structure of the CESL an added value to already existing European regulations, since the CESL's provisions follow the life cycle of the contract (from formation to prescription). That pragmatic approach is visible also in the structure: there is no general and specific part division which allows the readers to avoid having to shuffle back and forth through the regulation. The terminology of the CESL was also made more concrete; general terms (e.g. reasonableness) were deleted as much as possible. The CESL was drafted in a way to assure high level of consumer protection (apparently no one of the national consumer lawyers consulted accused the CESL of providing lower level of consumer protection than in their current national legislations) as well as to protect interests of the businesses. The scope of the CESL protects SMEs, since the European Commission found problems with actions undertaken by SMEs in the common market and wanted to eliminate these problems. Large businesses are excluded from the scope of the CESL, since there were no such problems found with relation to them. Of course, Member States are welcomed to broaden the scope of the application of the CESL to cover large businesses, as well. Additionally, large businesses may choose to use the CESL regulation by adopting their standard contract terms in accordance therewith. The scope of the CESL was extended to cover digital problems, since it's a fast-growing, important for consumers market and these transactions have also been regulated by the Consumer Rights Directive. 

The main problems that had been mentioned as far as the regulation of the CESL is concerned is the lack of any provisions e.g. on legal capacity, agency, national prohibitions. What if the parties to a cross-border contract choose to regulate it by the provisions of the CESL, and one of these parties is 15 years old. The CESL does not determine whether a 15 year old would have a legal capacity to conclude a contract. Laws of which country would then be applicable to determine that?

Another problem that had been mentioned many times was the problem with the legal basis for adopting the CESL in its current scope as a regulation. The legal basis currently given by the European institutions is Article 114 of the Treaty while the academics claim that it should have been Article 352 of the Treaty. The latter one has not been chosen by the European Parliament, as Diana Wallis explained, since it would have excluded it from active participation on the scope and adoption of the CESL. This explanation, while sufficient on a political level, leaves a lot to be required from the legal/ academic perspective.

Diana Wallis reminded everyone about the vote that had already taken place in the European Parliament on the Optional Instrument, in which the European Parliament with clear majority expressed its support for the adoption of the OI. She mentioned that the works on the CESL are especially important in the current financial crisis, as the CESL is perceived as one key to solving financial crisis (by helping to unlock internal market's potential for growth).

Another member of the European Parliament, Klaus-Heiner Lehne, sees the Optional Instrument as a new method to try and develop new ways of harmonisation of the European law. According to him, minimum harmonisation doesn't work and the idea of introducing full harmonisation in the Consumer Rights Directive had failed, as well, due to many exceptions thereof and a limited scope of that directive. In his opinion if we adopt the CESL we will acknowledge that the full harmonisation in Europe will never be achieved. After all, the CESL allows the Member States to shape their national laws as they see fit (with exceptions introduced by e.g. European consumer legislation). However, cross-border transactions are a different matter and that is what the European rules should and would regulate fully. This also means that the CESL is a clear example of how subsidiarity rule works in Europe. 

As far as the idea of using the CESL as a toolbox was discussed, Mr Lehne mentioned that we already have that in the DCFR, so there is no need to treat the CESL as a toolbox. Toolbox, after all, does not need to have a binding force, parties may decide whether to choose to use it and how to use it.

Additionally, it was mentioned that there would be a database created of national case law that will be issued on the interpretation of the CESL, after its adoption. This, hopefully, will allow the judges to interpret the general terms used in the CESL in a similar way. However, the past experience with the CLAB database (that was supposed to lead to a uniform interpretation of the 'unfairness' concept in consumer contracts) showed us that such expectations can be way premature.

I think these are the most important remarks that had been made that might be important to you, readers. At the end of the conference, Mr Lehne warned that as of now people who oppose the idea of the Optional Instrument on principle are excluded from further consultations on the CESL. They expect only constructive criticism at this stage. Too much money and time have been put into this project not to achieve some result now...

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