Tag: CESL

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Proposed EU e-commerce rules further reduce choice for consumer contracts.

I have referred repeatedly in the past to an inevitable attraction which some find in harmonising private, incuding contract law, in the Member States. The Common European Sales Law (CESL) proposal is dead, and for good reason. Its demise however has not led to the European Commission leaving the path of harmonisation in contract law. The EC has now selected bits and pieces of the CESL approach which it reckons might pass Member States objections. The proposed ‘fully harmonised’ rules on e-commerce formally do not close the door on party autonomy in the contracts under their scope of application. Yet in forcing regulatory convergence top-down, the aim is to make choice of law for these contracts effectively nugatory.

The EC itself formulates it as follows (COM(2015)634, p.1:

“This initiative is composed of (i) a proposal on certain aspects concerning contracts for the supply of digital content (COM(2015)634 final), and (ii) a proposal on certain aspects concerning contracts for the online and other distance sales of goods (COM(2015)635 final). These two proposals draw on the experience acquired during the negotiations for a Regulation on a Common European Sales Law. In particular, they no longer follow the approach of an optional regime and a comprehensive set of rules. Instead, the proposals contain a targeted and focused set of fully harmonised rules.”

Consequently the same proposal reads in recital 49 ‘Nothing in this Directive should prejudice the application of the rules of private international law, in particular Regulation (EC) No 593/2008 of the European Parliament and of the Council and Regulation (EC) No 1215/2012 of the European Parliament and the Council‘: that is, respectively, Rome I and Brussels I Recast’.

Consequently and gradually, choice of law for digital B2C contracts becomes redundant, for the content of national law converges. Support for this in my view is not rooted in fact (the EC’s data on the need for regulation have not fundamentally changed since its doomed CESL proposal), neither is it a good development even for the consumer. National consumer law is able to adapt, often precisely to the benefit of the consumer, through national Statute and case-law. Turning the EU regulatory tanker is much more cumbersome. The circular economy, recently often debated, is a case in point. Many national authorities point to limitations in contract law (incuding warranty periods and design requirements) as an obstacle to forcing manufacturers, including for consumer goods, to adopt more sustainable manufacturing and distribution models. The EC’s current proposals do no meet those challenges, rather, they obstruct them.

Geert.

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Current set-up for Common European Sales Law (justifiably) rejected by the UK

The UK Government, a short while ago [perusal was in my in-tray for a few weeks] concluded its consultation on the need for a Common European Sales Law, with a rejection. The main lines of respondents’ arguments, were:

‘Evidence of need: Respondents did not believe that sufficient need for the proposal had been demonstrated. They were unconvinced that contract law presented a significant enough barrier to warrant such a complex and wide ranging proposal.‘

I agree.

‘Legal uncertainty: Respondents believed that the content of CESL would lead to significant legal uncertainty. There was felt to be a fundamental problem in creating a distinct law for the sale and supply of goods and services, separate from other contractual procedures. Respondents argued this would only lead to uncertainty and incoherence. Jurisprudence in the area would also take years and perhaps decades to establish, creating an additional burden on the UK’s judicial system and on the Court of Justice of the European Union. This would lead to significant delays and expense in the resolution of disputes and interim uncertainty regarding the interpretation of the law.’

I agree. Current regulatory competition, including relevant case-law by national and EU courts, does the job the CESL wishes to address just fine.

‘Confusion: Respondents believed that the introduction of a second regime of contract law would create confusion for both consumers and businesses. They argued that a new law was neither necessary nor practical and specifically noted the length and complexity of the CESL proposal. Many respondents believed that the implementation of further legislation in this area would make it harder, not easier, for businesses to agree contracts and for consumers to know their rights with certainty when purchasing across borders.’

I agree. The CESL addresses alleged uncertainty by adding a layer of complexity.

‘Cost.’ (of disclosure, training, litigation). Here too I agree.

As prof MacQueen et al note on their blog entry on the topic, the UK’s rejection focusses very much on the draft CESL as it stands – it leaves quite a few doors open to either improvements of the draft, or alternative ways of achieving better results.

As often, one of the EU’s most recalcitrant Member States subjects its proposed laws to the most careful scrutiny.

Geert.

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Lies, Damn Lies and Statistics. On the Boundaries of European Private International Law and the European Ius Commune

A bit of a heavy-handed title however I am often reminded of this maxim, credited (perhaps incorrectly) to Benjamin Disraeli KG. Over at SSRN I refer to it in discussing the statistical merits of the proposed Common European Sales Law. Over and above the (lack of) justification for the proposal, its relationship with European Private International Law is very unclear. The European Commission marches on with its harmonisation of European conflicts law however I for one would argue that with the proposed CESL it may have hit the proverbial wall.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2002866

Geert.

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