15 Colum. J. Eur. L. Online 13 (2009)

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Anastasia Vezyrtzi

I. INTRODUCTION

In recent years, discussion has intensified on possible harmonization of substantive private law (in particular contract law) in the form of a future European Civil Code, as existing Europeanization through directives is fragmentary and uncoordinated, providing no general principles.[1] The “symbiotic interaction of national law, international conventions and acts of the European Union”[2] forms a complex and insecure legal framework. Divergent rules of contract law in the Member States create obstacles to exploitation of the Internal Market and give rise to distortions of competition.[3] The unification of international private law rules is not sufficient for the facilitation of cross-border trade due to the deficient understanding of the legal rules applicable to the commercial relationship and the inability to calculate contract risks.[4] As Ole Lando points out, “[t]he existing variety of contract laws in Europe may be regarded as a non-tariff barrier to trade.”[5]

II. SHOULD A EUROPEAN CIVIL CODE BE MANDATED?

The primary question under debate among the supporters of unification is whether Europeanization should be mandatory or optional. On the one hand, the “codifiers” believe that the uniform law should be brought into force by codification (legislation). On the other hand, the “cultivators” examine the idea of harmonization from the perspective of “creeping codification.” According to them, a European contract law should grow organically and slowly through the “private” endeavors of academics, legal practictioners, and the international business community.[6]

On the contrary, the adversaries of unification argue that the promotion of a European Civil Code threatens European plurijurality and that there is a completely different mentality between the common law and civil law traditions.[7] Others are in favor of achieving uniformity by way of a multilateral treaty for reasons of legal basis, democratic legitimacy, and acceptability.[8]

As with any codification by legislation, the creation of a European Civil Code presents difficulties, the most important of which are the following:

1) It is far from certain that a legal basis for such a Code can be found in the EC Treaty. According to Article 95, the approximation of the provisions laid down by law should have as their object the establishment and functioning of the internal market.[9]

2) There have been various proposals to restrict the scope of the codification to the law of obligations with its two main branches, the law of contracts and the law of torts, as well as to the law of movable property, especially the law of secured transactions.[10] The reason is that family law[11] and the law of succession are not only the core of the cultural tradition of each country, but, in addition, it is difficult to find a legal basis for their harmonization, as they are not connected with the internal market.[12]

3) Another serious issue raised by the drafting of a European Civil Code is its geographical scope: whether the new Code should be limited to intra-Union border-crossing transactions or whether it should also apply to purely domestic transactions.[13] A limitation on international transactions would cause uncertainty. However, it is recommended to allow, on an optional basis, for an intermediate stage that focuses only on cross-border matters.

4) A major obstacle is that, in contrast to the nineteenth century codifications which could rely on sources limited in scope and origin, modern legal comparison is both purpose-oriented and pragmatic. Due to the “richness and complexity” of the comparative materials to be taken into consideration, a transnational codification demands evaluation of already existing rules, understanding of the purpose served by each rule and its implementation by the courts, and synthesis and careful transfer to every linguistic framework, as we live in a multilinguistic environment.[14]

III. STEPS TOWARD A EUROPEAN CONTRACT LAW

At an academic level, the Commission on European Contract Law, under the chairmanship of Professor Ole Lando, and its successor organization, the Study Group on a European Civil Code, have tried to bring to light the existence of common European legal norms and values by publishing the Principles of European Contract Law (PECL).[15] The method adopted may be compared with the American Restatement of the Law of Contract.[16] Due to the divergent legal systems that exist in the European Union, the Commission has tried, through detailed comparative law research, to provide the best rules of law.[17] From the present perspective, the Principles of European Contract Law, as “soft law” instruments, will serve as a basis that can be used by the European Court of Justice in deciding issues of contract law, by the EU legislator in drafting future directives and regulations, and by the academic as teaching tools in creating a spirit of comparative and international legal thinking among young jurists.[18] Additionally, from a long term perspective they will provide a coherent framework for future legislative work, as the aim of PECL is to serve as a first draft of a part of a European Civil Code.[19]

At the European level, in July 2001 the Commission published its Communication on European Contract Law, which launched a process of consultation and more fundamental discussion about the way in which problems resulting from divergences between national contract laws in the EU should be dealt with. The Communication proposed a non-exhaustive list of four possible scenarios: 1) to take no EC action and leave the solution of any identified problems to the market itself. “Different incentives by Member States and trade associations (e.g., offering assistance and advice on cross border transactions)” could “compensate for economic and psychological risks of cross-border trade activity” and also encourage new types of commercial practices;[21] 2) “to promote comparative law research and cooperation between…academics and legal practitioners” in order to find and develop non-binding common contract law principles, useful for parties in drafting their contracts, national courts and arbitrators in their decisions and, national legislators when drawing up legislative initiatives;[22] 3) to review and improve existing EC legislation in the area of contract law to make it more coherent, or to adapt it to cover situations not foreseen at the time of adoption; [23] or 4) to adopt new comprehensive legislation at EC level. For the last option, the nature of the act to be adopted (regulation, directive or recommendation) and the binding nature of the measures (mandatory, opt-in or opt-out) would need to be further discussed.[24]

A few months later, in November 2001, the European Parliament adopted the “Resolution on the Approximation of the Civil and Commercial Law of the Member States.” The Resolution welcomed the Commission Communication, although it pointed out that its scope could be broader and not restricted to private contract law,[26] and requested a detailed action plan with short-term, medium-term and long-term measures within a fixed timetable.[27] The Parliament proposed the enactment and adoption of a binding European Contract Law as an ultimate goal in 2010.

As a result, in February 2003 the Commission submitted an “Action Plan for a More Coherent European Contract Law,”[28] as a second step in the on-going discussion. The Action Plan first presented and briefly summarized the reactions received in response to the Commission’s first communication and then, by maintaining the consultative character of the process, suggested a mix of non-regulatory and regulatory measures in order to solve the problems identified.[29] It further underlined that in addition to continuing the sector-specific approach, it was also necessary to increase the coherence of the present and future EC acquis in the area of contract law.[30] “A Common Frame of Reference (CFR), establishing common principles and [providing for best solutions in terms of common] terminology [and rules], was seen by the Commission as an important step towards the [objective to improve] the EC acquis” [31] and promote the elaboration of EU-wide general contract terms.[32] Furthermore, the Action Plan pointed out that another objective of the Common Frame of Reference would be to form the basis for “further reflection on the [adoption] of non-sector specific measures, such as an optional instrument in the area of European contract law.”[33]

In October 2004, the Commission published its Communication on “European Contract Law and the Revision of the Acquis: The Way Forward,”[34] as the follow-up to the 2003 Action Plan. The goal of the Communication was, among others, to outline the main role, legal nature, possible structure, and content of the Common Frame of Reference, the adoption of which was foreseen by the Commission for 2009. According to the Commission, “[t]he CFR will provide clear definitions of legal terms, fundamental principles and coherent model rules of contract law, drawing on the EC acquis and on best solutions found in Member States’ legal order.”[35] Some of its possible roles are to be used by: 1) the Commission as a “toolbox…when presenting proposals to improve the quality and coherence of the existing acquis and future legal instruments in the area of contract law;”[36] 2) “the national legislators…when transposing EU directives in the area of contract law into national legislation;”[37] and 3) arbitrators when trying to “find unbiased and balanced solutions to resolve conflicts arising between contractual parties.”[38]

IV. CONCLUSION: RECENT MOVES BY THE COMMISSION

Since the 2004 Communication, the Commission has published two Reports in 2005 and 2007, which summarized the progress of the European Contract Law initiative and the work on the Common Frame of Reference. In December 2007, the Joint Network on European Private Law delivered the Draft Common Frame of Reference (DCFR) to the Commission, prepared by the Study Group on a European Civil Code and the Research Group on EC Private Law (Acquis Group). Finally, in September 2008 the European Parliament adopted its most recent Resolution on the Common Frame of Reference, pointing out, among other things, that “when taking a decision about the content of the CFR, the Commission should bear in mind that the CFR could go well beyond a mere legislative tool and could result in an optional instrument.”[43] The DCFR is currently undergoing an evaluation process by a network of several academic groups and the Commission is preparing a White Paper on a Common Frame of Reference, on the basis of selected parts of the DCFR.

Nevertheless, it is worth observing that despite the fact that since 2001 the Parliament has “call[ed] on the Commission to have recourse to the legal basis provided by Article 95 of the EC Treaty (internal market) for the further consolidation and development of the harmonization of civil law,” the Commission did not confront at all, in any of its Communications, the question of legislative competence, aiming probably to avoid opposition at an early stage.[45] As a result, the problem of legal basis is still in question and will definitely cause an increased debate in the following years.

In conclusion, Europeanization and globalization have inevitably dictated a new way of thinking and living. In my opinion it is of great importance to establish a European cultural identity and to understand that we all share similar legal, moral, and cultural values. On the way towards European legal unity, collaboration between politicians, lawyers, academic professors, and courts is essential. In addition, a central permanent institute could guarantee continuity and collaboration providing the necessary administrative infrastructure.[46] Despite the need for gradual progress and the costs in terms of money, time and human resources, the drafting of a European Civil Code should be taken seriously as one possible end goal. Contemporary jurists should always keep in mind that even the European Union was once a walk in imaginary gardens and now it is a union in action.

Endnotes

[1] On the insufficiency of the existing legal framework, see Gerrit Betlem & Ewoud Hondius, European Private Law After the Treaty of Amsterdam, 9 EUR. REV. PRIV. L. 3, 9 (2001); Ole Lando, Why Codify the European Law of Contract?, 5 EUR. REV. PRIV. L. 525, 526–27 (1997); Christian von Bar, A European Civil Code, International Agreements and European Directives, in STUDY OF THE SYSTEMS OF PRIVATE LAW IN THE EU WITH REGARD TO DISCRIMINATION AND THE CREATION OF A EUROPEAN CIVIL CODE 147–51 (manuscript June 1999).

[2] Jürgen Basedow, Codification of Private Law in the European Union: the Making of a Hybrid, 9 EUR. REV. PRIV. L. 35, 37 (2001).

[3] Communication on European Contract Law: Joint Response of the Commission on European Contract Law and the Study Group on a European Civil Code, 10 EUR. REV. PRIV. L. 183, 194–206 (2002).

[4] See, e.g., Stefan Grundmann, The Structure of European Contract Law, 9 EUR. REV. PRIV. L. 505, 520–21 (2001).

[5] Ole Lando, Optional or Mandatory Europeanization of Contract Law, 8 EUR. REV. PRIV. L. 59, 61 (2000).

[6] For an analysis of the debate, see, for example, Klaus Peter Berger, The Principles of European Contract Law and the Concept of the “Creeping Codification” of Law, 9 EUR. REV. PRIV. L. 21, 23–28 (2001); Lando, supra note 1, at 531–34; Lando, supra note 5, at 65–69; Basil S. Markesinis, Why a Code is not the Best Way to Advance the Cause of European Legal Unity, 5 EUR. REV. PRIV. L. 519, 522–24 (1997); Kristina Riedl, The Work of the Lando-Commission from an Alternative Viewpoint, 8 EUR. REV. PRIV. L. 71, 79–82 (2000).

[7] See, e.g., Hugh Collins, European Private Law and the Cultural Identity of States, 3 EUR. REV. PRIV. L. 353 (1995); Pierre Legrand, European Legal Systems Are Not Converging, 45 INT’L & COMP. L.Q. 52, 58 (1996) (“to penetrate the ‘legal’ one must appreciate the ‘social’ that underpins it, otherwise the ‘legal’ literally does not make sense”); Pierre Legrand, Against a European Civil Code, 60 MOD. L. REV. 44 (1997); Sixto Sánchez Lorenzo, What do we Mean When we Say “Folklore”? Cultural and Axiological Diversities as a Limit for a European Private Law, 14 EUR. REV. PRIV. L. 197 (2006); Stephen Weatherill, Why Object to the Harmonization of Private Law by the EC?, 12 EUR. REV. PRIV. L. 633 (2004).

[8] Walter Van Gerven, A Common Law for Europe: The Future Meeting the Past?, 9 EUR. REV. PRIV. L. 485 (2001).

[9] Case C-376/98, Germany v. Eur. Parl. & Council of the Eur. Union, 2000 E.C.R. I-08419, ¶¶ 83–84; T. Koopmans, Towards a European Civil Code?, 5 EUR. REV. PRIV. L. 541 (1997); Winfried Tilmann, The Legal Basis for a European Civil Code, 5 EUR. REV. PRIV. L. 471 (1997); Walter Van Gerven, Coherence of Community and National Laws. Is There a Legal Basis for a European Civil Code?, 5 EUR. REV. PRIV. L. 465, 467–69 (1997).

[10] Lando, supra note 1, at 526; Konstantinos Kerameus, Problems of Drafting a European Civil Code, 5 EUR. REV. PRIV. L. 475, 478–79 (1997) (“any work towards a European civil code should start from matters technical in substance and preferably devoid of ideological or nationally coloured extrapolations”).

[11] Masha Antokolskaia, The Harmonization of Family Law: Old and New Dilemmas, 11 EUR. REV. PRIV. L. 28 (2003).

[12] T. Koopmans, Towards a European Civil Code?, 5 EUR. REV. PRIV. L. 541 (1997), at 543–44.

[13] Michael Joachim Bonell, The Need and Possibilities of a Codified European Contract Law, 5 EUR. REV. PRIV. L. 505, 513 (1997); Ulrich Drobnig, Scope and General Rules of a European Civil Code, 5 EUR. REV. PRIV. L. 489, 491–93 (1997); Kerameus, supra note 10, at 479.

[14] Kerameus, supra note 10, at 476–80; see generally Barbara Pozzo, Harmonization of European Contract Law and the Need of Creating a Common Terminology, 11 EUR. REV. PRIV. L. 754 (2003).

[15] THE COMM’N ON EUR. CONTRACT LAW, THE PRINCIPLES OF EUROPEAN CONTRACT LAW: PARTS I AND II (2000); THE COMM’N ON EUR. CONTRACT LAW, PRINCIPLES OF EUROPEAN CONTRACT LAW: PART III (2003).  Another remarkable project in the field of contract law that should be mentioned is the publication of the UNIDROIT Principles of International Commercial Contracts (2004).  On the issue of whether the EPCL and the UNIDROIT Principles compete each other or not, see Michael Joachim Bonell, The UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law: Similar Rules for the Same Purpose?, 1 UNIFORM L. REV. 229 (1996).

[16] Basedow, supra note 2, at 39; Riedl, supra note 6, at 81–82

[17] Communication on European Contract Law, supra note 3, at 221.

[18] Id. at 226–27.

[19] Id. at 223–24.

[21] Id. at 49–51.

[22] Id. at 52–56.

[23] Id. at 57–60.

[24] Id. at 61–69.

[26] Id. ¶ 9.

[27] Id. ¶ 14.

[28] Commission Communication for a More Coherent European Contract Law—An Action Plan, COM (2003) 68 final (Feb. 12, 2003); [hereinafter Action Plan]; Christian von Bar & Steven Swann, Response to the Action Plan on European Contract Law: A More Coherent European Contract Law (COM (2003) 68), 11 EUR. REV. PRIV. L. 595 (2003); Antonio Gambaro, The Plan d’ Action of the European Commission—A Comment, 11 EUR. REV. PRIV. L. 768 (2003); Martijn W. Hesserlink, The European Commission’s Action Plan: Towards a More Coherent European Contract Law?, 12 EUR. REV. PRIV. L. 397 (2004); Dirk Staudenmayer, The Commission Action Plan on European Contract Law, 11 EUR. REV. PRIV. L. 113 (2003).

[29] Action Plan, supra note 28, Executive Summary.

[30] Id. at 55–80.

[31] Id. at 59.

[32] Id. at 81–88.

[33] Id. at 89–97.

[34] Commission Communication on European Contract Law and the Revision of the Acquis: the Way Forward, COM (2004) 651 final (Oct. 11 2004);  Dirk Staudenmayer, The Way Forward in European Contract Law, 13 EUR. REV. PRIV. L. 95 (2005).

[35] Staudenmayer, supra note 34, at 3.

[36] Id.

[37] Id. at 5.

[38] Id.

[43] Id. ¶ 11.

[45] See Stephen Weatherill, Reflections on the EC’s Competence to Develop a “European Contract Law,” 13 EUR. REV. PRIV. L. 415–18 (2005) (“The debate is therefore to be conducted with respect for ‘the problem of competence’ but the Commission has the question ‘should we do this?’ much higher up the agenda than the question ‘are we competent to do this?’”).

[46] W. Snijders, The Organization of the Drafting of a European Civil Code: A Walk in Imaginary Gardens, 5 EUR. REV. PRIV. L. 483 (1997); Koopmans, supra note 12, at 546.