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...

Improper implementation of the Services Directive

While the European institutions are busy preparing new sales' regulations (Consumer Rights Directive and Common European Sales Law), services seemed to be a bit forgotten. This is surprising taking into account that consumers conclude many contracts for provisions of services in various areas of their lives. The Services Directive, which harmonizes these contracts to a certain extent, was adopted on 12 December 2006 and binds in all Member States at the latest as of the beginning of 2010. Or at least, it was supposed to...

Two weeks ago the European Commission referred three Member States (Austria, Germany and Greece) to the CJEU for only partial transposition of the Directive (Services Directive: the Commission refers Germany, Austria and Greece to the Court over incomplete transposition of the Directive). The Directive required EU countries to remove unjustified or disproportionate legal and administrative barriers to the setting up of businesses and the provision of cross-border services in the EU. Another goal thereof is to get rid of unwarranted barriers affecting service recipients (both consumers and businesses) wanting to make use of services from other Member States. All in all, it's supposed to facilitate cross-border provision of services to consumers and businesses, alike. What have the three Member States missed to implement?

"Austria has yet to pass any horizontal transposition laws while in Germany three measures have still to be adopted (one at federal level and two at regional level). In Greece a whole series of measures has yet to be adopted, especially in economically important sectors such as tourism and personal and business services. A law on private employment agencies and a law on estate agents and sales representatives, for example, have still to be adopted."

It's good to know that the poor uncle (that's how European regulation of the provision of services could be perceived in comparison to the regulation of sales contracts) gets any attention from the European institutions, at all.

ICT Tourism Business Platform

Since the Internet became more popular, travel information search and booking has been one of the top five most popular consumers' tasks online. Consumers book flights, hotels and whole package trips online. And even if they decide to make a travel reservation via phone or in person, they often first double check all information on their trip destination as well as hotels, travel companies online. This means that the tourism sector becomes more and more tailor-made to the particular consumer, rather than remaining mass service. It seems that these tailor-made services are often delivered by SMEs instead of big companies, but big companies have an advantage over SMEs of having developed more e-commerce applications and platforms. In order to help SMEs to compete on this market, the European Commission plans to create an ICT and tourism platform (functional by the end of 2012). Such a platform would help SMEs to interconnect via big distribution networks with all important market players and therefore, it would enable their participation in the digital value chain. More on this may be found here.

European (legal) culture & consumers

The best part of my working day today consisted of reading a part of a thesis manuscript dedicated to the cultural dimension of national resistance against the 'Europeanisation of private law'. Having come to the end of the chapter, it seemed interesting to look at possible references to 'legal culture' in the recent proposal for a Common European Sales Law. So here is what I found..

Recital (1) of the proposed Regulation states:
'(...) From the range of obstacles to cross-border trade including tax regulations, administrative requirements, difficulties in delivery, language and culture, traders consider the difficulty in finding out the provisions of a foreign contract law among the top barriers in business-to-consumer transactions and in business-to-business transactions. (...)' (emphasis added)

And the conclusions of the Communication accompanying the proposal say:
'It is also an innovative approach because, in line with the principle of proportionality, it preserves Member States’ legal traditions and cultures whilst giving the choice to businesses to use it.'

It shows that the current initiatives in the field of European contract law steer clear, as far as possible, from interference with the legal traditions and cultures of the Member States. This is confirmed by the fact that the proposed CESL does not include any provisions on topics that generally engage (culturally determined) values, in particular the morality of contracts. It differs in this respect from previous academic proposals for comprehensive sets of contract law rules, such as the PECL and DCFR.

Does this mean that the CESL should be considered not to touch upon any questions of legal culture? Interestingly, in a speech that Commissioner Viviane Reding gave in Leuven in June of this year (on which we posted earlier) she remarked that:
'In the long run, the optional instrument on European Contract Law needs to become embedded in a European legal culture where lawyers, judges and academics progressively develop a joint understanding of the principles of private law as they are common to the legal systems of our Member States and of the evolving acquis communautaire.'

But what then is meant by a 'European legal culture'? In this context, more food for thought can be found in a recent article by Jürgen Habermas on 'Europe's post-democratic era', in which he submits that:
'A Europe-wide civic solidarity cannot emerge if social inequalities between the member states become permanent structural features along the fault lines separating poor from rich nations. The union must guarantee what the constitution of the German Federal Republic calls the "uniformity of living standards". This "uniformity" refers only to a range of variation in social living conditions that is still acceptable from the perspective of distributive justice, not to the levelling of cultural differences.' (emphasis added)

To be continued...

And as a final note here: European legal culture will be the theme of a conference that is being organised in Oxford mid December (more information will follow on this blog), which promises an interesting discussion and - talking about culture & consumers - presents an excellent opportunity to go and see Leonardo in London.

Clive on (Warsaw conference on) Common European Sales Law

Eric Clive's summary and first impressions on the Warsaw conference on European contract law can now be found on the European Private Law News blog. The first reactions from stakeholders (consumer and businesses organisation) and academics seem to be generally favourable and constructive towards the proposal on a Common European Sales Law.

Reding on Common European Sales Law

The text of Commissioner Reding's speech at the currently ongoing conference on the future of European Contract Law, organised by the Polish presidency, is now available on the website of the European Commission. Reding emphasises the potential role of the recently proposed Regulation on a Common European Sales Law:

'The optional Common European Sales Law will provide companies with an easy and cheap way to expand their business to new markets. It will bring more choice, security and a better deal to consumers. In the Commission's analysis, it's a win-win situation: for businesses and consumers who want to take advantage of our Single Market. Europe needs to develop and exploit such win-win situations. Because we have no time to lose in our fight for stability, growth and competitiveness of this marvellous continent. Some say in these days that Europe is in danger. I do not share this negative view. I believe Europe is full of opportunities and of potential that we just need to unlock with determination. And the optional Common Sales Law is one of these opportunities.'

Some first-hand news on the conference proceedings will probably follow next week when Joasia, who is attending the conference, will be back from Warsaw. Furthermore, Eric Clive promised to post on the conference on the Edinburgh European Private Law blog.

2020 vision on health and consumers

Today, the European Commission presented its proposals for its new Health and Consumer Programmes for the period 2014-2020. Commissioner Dalli observed that '[t]hese two programmes are about people; about fostering the conditions for people to live to their full potential and play a key role in society and in the economy. Keeping people healthy and active for longer is good for people and is good for jobs and growth. Confident, empowered consumers create thriving markets. I am confident the two programmes will make a significant contribution to achieving Europe 2020 goals – to create smart, sustainable and inclusive growth by the end of this decade'.

The proposed Consumer Programme aims at improving possibilities for consumers to actively take part in the internal market, in particular by:

- enhancing product safety through effective market surveillance;
- improving consumers' information, education and awareness of their rights;
- consolidating consumer rights and strengthening effective redress, especially through alternative dispute resolution;
- strengthening enforcement of rights cross-border.

In relation to these points, the Commission indicates that it intends to enhance consumer awareness of available rights under EU law, for instance through giving more publicity to the work of the ECC-net (network of European Consumer Centres).

Online music in Europe

This short video outlines problems that European regulators face with regard to creating a single market for transactions concerning online music. Illegal downloading, problems with online licensing, databases and copyrights are all mentioned.

Write as if you were writing it for your Grandma - tips on simplifying legal language.

In a recent talk "The right to understand" for TED Sandra Fisher-Martins, translator and language-activist, made some interesting remarks about the complexity of language used in documents (legal, medical etc.) and how we could simplify it (btw, she also gives astounding statistics on literacy rates in Portugal). She argues for a civic movement, consumers becoming more demanding as to what is not only their daily need, but also a civic right: the right to understand.

"Next time you're handed a document you don't get, demand to understand. Put pride to one side for a bit and ask until it's all clear."

She also argues for drafters of these documents to write them in a way that general public would understand and not only the drafters themselves. After all, as Einstein once mentioned:

"If you can't explain it simply, you don't understand it well enough".

So how do you simplify the language? She advises to write the documents as if you were writing it for your grandmother, without patronizing her and with respect. You use three techniques to do it:

"First of all, you start with what's most important. Grandma is busy. She's not going to read three full pages just to get to the main idea. (...) Second, use short sentences. Because Grandma. like any of us, if the sentences are too long, by the time she gets to the end, she won't remember the beginning. Finally, the third: use simple words - those that Grandma already knows."

Opt-out tools from targeted online advertising: it's just an illusion putting me back in all this confusion...

A recent study on online behavioral advertising (Why Johnny Can't Opt Out) conducted by researchers at Carnegie-Mellon University showed that consumers are having serious troubles to use opt-out tools that advertising companies provide to them in order to enable consumers to opt out of receiving ads targeted based on their Web-surfing behavior. Some consumers that were tested couldn't find the opt-out page without additional instruction received from the test moderator. Some consumers got confused and thought that they would need to pay for using the opt-out tools. Consumers who managed to find opt-out tools, often managed to opt-out only from one type of ads instead of from all of them. Additionally, there were complaints made that the opting-out process took a long time (ca. 45 minute for some). The test results show that the self-regulatory measures that advertising companies implemented at the moment in the US to enable consumers to stop targeted advertising are less than satisfactorily efficient. This data should be interesting to European legislators who struggle at the moment with the implementation of the ePrivacy Directive. (see e.g. Cookies going stale)

(see: Consumers Don't Understand Opt-Out Tools)