What are the options? - BEUC's position paper on digital products

European consumer organisation BEUC has made no secret of its critical stance toward the European Commission's proposal for an optional instrument that would offer a set of contract terms that parties may, inter alia, choose to apply to their contracts for the supply of digital content (such as films, e-books or music). In particular, BEUC is sceptical of the proposed Common European Sales Law's optional nature, since 'a business selling digital content online will be able to decide between modern European rules or national legislation, which is - as acknowledged by the European Commission - often unclear about the rights to which consumers are entitled in contracts for the supply of digital content. What consumers need is solid legislation applicable to all contracts and not dependent on an opt-in or opt-out basis.'

Yet, what are the alternatives? In a recently published position paper, BEUC outlines the following suggestions for updating the acquis communautaire governing digital content contracts for consumers:

'- A legislative proposal modernising the EU rules on legal guarantees in order to cover digital content products. This could be done via a new Directive on digital content products or in the frame of an eventual revision of the 1999 Sales of Goods Directive. The rules included in chapters 10 and 11 of the CESL could serve as a basis with the appropriate adaptations as indicated in point 5 of this paper.

- Standardisation of key information provided to consumers and the format in which it shall be presented to make this information comprehensible, transparent and easy to access and to read. This initiative should equally take into account the Commission’s own research on consumers’ behaviour towards information load and the way consumption decisions and made.

- Initiatives to address the issues related to lack of the transparency and unfairness of certain contract terms in digital content contracts. They could include guidance on transparency requirements and unfair contract terms, which would help clarify the application of the UCT legislation to digital content contracts and include examples of terms which may be considered unfair under the 1993 Unfair Contract Terms Directive.

- Support better enforcement of EU rules against unfair commercial practices in the field of digital content products through promoting co-ordinated enforcement actions by national consumer organisations and facilitating the co-operation for national enforcement authorities.

- Clarify under which conditions a contract for the supply of digital content can be concluded by a minor.'

Tune in on the European Commission today - press conference at 12.30

Commissioner Reding has called a press conference for 12.30 today on which she will announce a proposal to bring more coherence to European contract law. It is expected that this will entail a proposal for an 'optional instrument' that contracting parties may choose to apply to their agreements.

It should be possible to follow the press conference 'live' through the Commission's website.

To be continued...

Who you gonna call?

While we are all awaiting a following episode on the harmonization of European Contract Law, the European Commission beings to anticipate what will happen when that series will be over. Imagine that we have harmonized European Contract Law in the form of the Optional Instrument that citizens of the Member States and businesses registered in the Member States may choose to apply to their contract instead of a national law system. This means that their contractual relations will be regulated by the provisions of the Optional Instrument, in as far as the Optional Instrument will have substantive rules on that matter. Would you choose, however, to have the Optional Instrument governing your contractual relations if you knew that in case there is a conflict between you and the other party and you end up needing legal counsel and maybe even judicial decision - it would be difficult to find lawyers and judges specializing in European Contract Law to an extent that would enable them giving you a helping hand???

That's one of the questions that I've been wondering about for a long time now, and it surprised me that this subject wasn't further elaborated on by the European Commission. Apparently, they waited until the end of the process of substantive harmonisation was in sight, before they set up plans regarding its enforcement. Maybe I'm too much used to multi-tasking myself... Commissioner Reding mentioned yesterday:

"An independent, well-trained and efficient judiciary is essential for a functioning judicial area and single market in Europe. It caters for good and prompt judicial decisions strengthening predictability and legal certainty. As European law is part of everyday life, citizens and businesses want to know that they can count on a knowledgeable and well-trained judiciary across the Union enabling them to exercise their rights and get justice. But judges and lawyers delivering such justice need to know the rules to be able to apply them effectively. That’s why I want to set a clear and ambitious target for expanding training in how the judiciaries in Europe apply European law. This will help cement our efforts to create an EU-wide area of justice, improving the way the internal market operates. Judicial training is central to a modern and well-functioning judiciary capable of reducing the higher risks and higher transactions costs that impede economic growth. European judicial training is therefore a much needed investment to develop justice for growth." 

The plan is to give some training on European law to half of the legal practitioners in the EU (which means to 700,000 people) by the end of 2020. 

More on that may be found in the press release: European Commission sets goal of training 700,000 legal professional in EU. There is also a website for the European judicial training initiatives and European e-Justice Portal.

Raise of the online cross-border transactions

The European Commission's works on the Optional Instrument that it supposed to further harmonize European Contract Law are progressing rapidly (see: Contract law - work in progress). We are awaiting the final draft of the Optional Instrument to be published this autumn. One of the main reasons that is being given as a justification for the need for the Optional Instrument is that it would lead to strengthening of the internal market. Consumers would gain more confidence as to their rights and the scope of the protection that they may expect when they conclude online transactions with businesses from other Member States than their own, which would increase the amount of these transactions. It is interesting to mention then that the number of such transactions being concluded is raising rapidly without the Optional Instrument being implemented, too. Research shows that e.g. the number of EU consumers buying goods and services online doubled to 40% compared to 20% in 2005. Many of these transactions are cross-border (see: Online shopping doubles in five years). That makes one wonder whether we should not leave the market to further develop on its own, without introducing further harmonization measures.

Reding on the future of European contract law

Last Friday, EU Justice Commissioner Viviane Reding delivered a keynote speech at the “Towards a european contract law” conference in Leuven. Unfortunately, this speech did not have the same aesthetic elegance as an earlier speech on the topic of cloud computing by Reding, but it is still worth devoting a couple of lines to it.

In her speech, Reding gives a brief overview of the development of European contract law. The speech comes in the usual politically correct forms, but some lines may come in handy the next time you write about European consumer policy. For example. Reding argues that “In many ways, today is a “moment of truth” for European Contract Law.”

In her speech, Reding gives a brief overview of the development of European contract law, including the recent developments concerning the work of the expert group (existing of mainly academics) and the sounding board, made up of representatives of the legal profession, businesses and consumers. Reding also shortly discusses the contributions to the public consultation, presenting different options for the future of European contract law, concluding that the responses show ‘a high degree of controversy about what the Commission should do next.’

Not surprisingly, Reding does at this point not favour full harmonisation of European contract law, nor a compulsory European Code. As expected, the way forward in the view of the Commission is an optional instrument. In a climate of – be it mild – euroscepticism, taking little steps seems the Commission’s only way forward in the process of the development of European private law.

Reding stresses that in the process of making an optional instruments, four issues of concern deserve special attention:
1) It must be made sure that if consumers opt for the instrument they do this consciously, i.e. not by accident;
2) The optional instrument must take into account the reality of the modern information society;
3) The optional instrument must be made effective for small- and medium sized companies;
4) It must be decided whether the optional instrument can only be applies in cross-border transactions or also to domestic transactions.

A proposal by the Commission is expected in November this year.

To read the speech, click here.

Optional instrument more of an option with every day.

The creation process of the European Contract Law as an optional instrument continues with the European Parliament's Legal Affairs Committee approving yesterday a report that favours this option. The European Commission presented a few options that would allow to achieve a more coherent approach to European contract law in its Green Paper (discussed previously on this blog). One of the options was to introduce an optional instrument that would be an alternative to national contract laws, an alternative that parties to a contract could freely choose instead of national laws. It would most likely apply only to cross-border transactions, and would have to guarantee a sufficient level of consumer protection to be attractive. Now, Diana Wallis, a member of the EP, prepared her own report on policy options for progress towards a European Contract Law in which she favors the optional instrument. The European Parliament's Legal Affairs Committee voted overwhelmingly in support of that draft report.

Press relese may be found here.

Procedure file may be found here.

Towards an optional instrument?

Last Wednesday, 27 October, the Legal Affairs Committee of the European Parliament organised an inter-parliamentary meeting on the idea of an optional instrument (OI) for European contract law. On the basis of a number of briefing papers from experts in the field, members of national parliaments and of the EP reflected on the possible advantages and the political attainability of enacting such a facultative set of rules that parties may choose to apply to their contract. The briefing papers can be found on the EP’s website.

Topics that were discussed include:

- the need for an OI, from the point of view of consumers’ organisations, business representatives, judges, and the European Commission;

- the extent to which an OI might increase legal certainty and foster cross-border trade;

- the material, territorial and personal scope of an OI;

- the relation of an OI with substantive rules of national law and rules of private international law.

The workshop was organised with the aim of giving members of national parliaments the opportunity to express their views on the policy direction that the EU should pursue in the field of European contract law, on which the European Commission published a Green Paper and launched a public consultation last Summer (see an earlier post on this blog).

For those of you who are following the discussion on the Green Paper, some upcoming conferences may be of interest:

- 10 November 2010, conference organised by the Centre for the Study of European Contract Law (CSECL) in Amsterdam (in Dutch; the full programme may be found here);

- 3 December 2010, colloquium organised in Brussels on ‘European Contract Law: To an optional tool for the practitioners’ (programme available here)

To be continued...