Expert Group work on EU contract law instrument strongly criticised by the City of London Law Society
On 30 June 2011 the City of London Law Society (CLLS) published its response to the European Commission’s “Feasibility Study” on a self-standing set of EU contract law rules. The CLLS response can be read here.
The Feasibility Study was prepared to support the European Commission’s consideration of policy options for the introduction of a European contract law for consumers and businesses – and specifically the Commission’s apparent preference for an optional contract law instrument that would operate in parallel to the existing laws of EU member states. Parties wishing to contract together would be able to choose this “28th regime” in place of the existing law of one of the EU Member States.
We discussed the proposal for a European contract law in this post – which also describes the UK’s strong opposition to a 28th regime – and the subsequent publication of the Feasibility Study by an “expert group” of lawyers, judges and academics in this post. The Feasibility Study was published in May 2011 and started a consultation period ending on 1 July 2011.
CLLS response to the Feasibility Study
In its response, the CLLS is overwhelmingly critical of the Feasibility Study and of the consultation method:
”…it is unclear why the Feasibility Study is so called. It merely contains a draft code. There is no evidence or discussion of whether it would work or be likely to find commercial acceptance. Furthermore, the CLLS does not believe that the two months allowed for considering the Feasibility Study provides sufficient time for detailed consideration, reflexion and consultation with busy practitioners or businesses on the concepts or detail of the document.”
And of the expectations underlying a 28th regime:
“The section [in the Feasibility Study] on the practical relevance of differences in national contract laws conflates a number of obstacles to cross-border trade under the banner of contract law as if having a uniform contract law would make the other factors disappear. Issues such as consumer protections, liability issues, procedures for redress, tax, labelling requirements, language requirements, health and safety requirements, advertising laws, “Cooling off” periods etc etc would still remain and would, if the supplier was being diligent, need to be addressed country by country even if there was a uniform contract law (and even assuming that that contract law was consistently interpreted in each Member State).”
And of the costs:
“The CLLS is concerned about the costs that would arise directly from such an instrument’s introduction (such as the costs of retraining lawyers and Member State judiciaries), and the indirect costs that would flow from such a new law’s operation, including from the uncertainty of its provisions (and hence the judicial time that would have to be spent interpreting such provisions)…”
Of the rationale for a 28th regime:
“…the CLLS repeats its concern that insufficient justification has been put forward for the introduction of such an instrument, especially were the scope of such an instrument to apply to B2B transactions not including SMEs. We remain of the view that the case for introducing an optional instrument as the way to enhance cross border trade within the EU has not been established.”
And of the drafting style:
“…the CLLS believes that the drafting style adopted in the instrument is essentially too high level and lacking in certainty…The lack of clarity in the instrument’s drafting risks leading to uncertainty, unpredictability and divergence of interpretation under a veneer of uniformity.”
The CLLS response also contains a copy of the CLLS’s response to the original European Commission Green Paper on Contract Law.
UPDATE 17 July 2011: The Law Society of England and Wales has also published a detailed response to the Feasibility Study, dated 1 July 2011. The Society supports the initiative to create a non-binding “toolbox” to assist legislators in improving the quality and coherence of European legislation, but does not believe that the need for an optional contract law instrument has been demonstrated. The Society’s response can be read here.
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