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.

REACH safeguard clause: EC allows first use by France and hints at flexible application

At the end of October, the European Commission authorised the first use, by a Member State, of the safeguard clause contained in the REACH Regulation. France has been allowed to ban cellulose wadding insulation materials used in buildings, to protect the public from exposure to ammonia released from ammonium salts in the materials. The authorisation will lapse in July 2015 lest an EU-wide ban on the substance, prepared  by France, will replace it by then.

As this was the first use of the measure, it remained to be seen how the EC would assess the French ban and the reasons for introducing it. It has adopted a great measure of deference to the national justifications invoked (in particular, incidents reported and initial measuring), even if the language of the safaguard itself is fairly restrictive.

Geert.

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Text of the safeguard clause (courtesy of REACHonline):

ARTICLE 129: Safeguard clause
1. Where a Member State has justifiable grounds for believing that urgent action is essential to protect human health or the environment in respect of a substance, on its own, in a preparation or in an article, even if satisfying the requirements of this Regulation, it may take appropriate provisional measures. The Member State shall immediately inform the Commission, the Agency and the other Member States thereof, giving reasons for its decision and submitting the scientific or technical information on which the provisional measure is based.
2. The Commission shall take a decision in accordance with the procedure referred to in Article 133(3) within 60 days of receipt of the information from the Member State. This decision shall either:
(a) authorise the provisional measure for a time period defined in the decision; or
(b) require the Member State to revoke the provisional measure.
3. If, in the case of a decision as referred to in paragraph 2(a), the provisional measure taken by the Member State consists in a restriction on the placing on the market or use of a substance, the Member State concerned shall initiate a Community restrictions procedure by submitting to the Agency a dossier, in accordance with Annex XV, within three months of the date of the Commission decision.
4. In the case of a decision as referred to in paragraph 2(a), the Commission shall consider whether this Regulation needs to be adapted.

 

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.