The Proposal for a Regulation on a Common European Sales Law (CESL): An Introduction
© Springer International Publishing Switzerland 2015Javier Plaza Penadés and Luz M. Martínez Velencoso (eds.)European Perspectives on the Common European Sales LawStudies in European Economic Law and Regulation410.1007/978-3-319-10497-3_1
1. The Proposal for a Regulation on a Common European Sales Law (CESL): An Introduction
Universidade Lusíada de Lisboa, Rua da Junqueira, 198, 1350-004 Lisbon, Portugal
Ana Sofia Gomes
The Common European Sales Law proposal, is the first legislative initiative to come out of the European contract law debate. For more than two decades, there was an intense change of opinions and knowledge about the virtues of uniform legislation for contract law considering the legal traditions of the Member States, but also the good functioning of the internal market.
The proposal for a Regulation on a Common European Sales Law, has resulted from an effort to unify contract law, this having been established as a priority in European Union Law. This instrument would be the first establishing an optional regime of special substantive rules for cross-border contracts.
This is the latest in a series of harmonisation projects. Previous efforts include the Franco-Italian Project; and global efforts such as the CISG, the UNCITRAL and the UNIDROIT. Europe-wide projects include the Principles of European Contract Law—PECL —Lando Group—the European Contracts Code—Gandolfi Project—and the European Civil Code—Von Bar—; whilst similar initiatives relating to legal science are the Common Core of European Private Law and the Acquis Group.
The Common European Sales Law proposal, is the first legislative initiative to come out of the European contract law debate. For more than two decades, there was an intense change of opinions and knowledge about the virtues of uniform legislation for contract law considering the legal traditions of the Member States, but also the good functioning of the internal market (Knöfel and Bray 2012/2013).
The proposal for a Regulation on a Common European Sales Law1, has resulted from an effort to unify contract law, this having been established as a priority in European Union Law. This instrument would be the first establishing an optional regime of special substantive rules (Mankowski 2012) for cross-border contracts.
This is the latest in a series of harmonisation projects. Previous efforts include the Franco-Italian Project; and global efforts such as the CISG , the UNCITRAL and the UNIDROIT. Europe-wide projects include the Principles of European Contract Law -PECL —Lando Group—the European Contracts Code—Gandolfi Project—and the European Civil Code—Von Bar—; whilst similar initiatives relating to legal science are the Common Core of European Private Law and the Acquis Group.
In the field of EU harmonisation, there are some Directives with impact on European Contract Law, representing a first step to a greater objective.
The strengthening of the internal market and the promotion of the cross-border sales in the EU, were also the concerns tacked into account on the adoption of some regulations in the field of the law of obligations, even if it was in a purely conflict of laws perspective—the Rome I2 and Rome II regulations3—or in a jurisdictional perspective—the Brussels I regulation4.
In the Resolutions of 26 May 19895 and 6 May 1994,6 the European Parliament supported the establishment of a Common European Code of Private Law.
This position led to the development of various studies, some which were already being prepared by various working groups. Some of the scholars involved in UNIDROIT, led by Ole Lando, came together to form the Committee on European Contract Law, and began, in 1982, a new project: the development of the Principles of European Contract Law, which was completed in 2003 (Lando and Beale 2000; Lando et al. 2003).
In parallel, the European Academy of Private Law, based in Pavia, coordinated by Giuseppe Gandolfi, prepared a draft of a European Contract Code (Gandolfi 2008). In 1998, Von Bar headed another major project developed by the Study Group on a European Civil Code, which drafted a European Civil Code (Von Bar 2001).
The Common Core of European Private Law was formed under the direction of Ugo Mattei and Mauro Bussani, in 1995. Later on, in 2002, the European Research Group on Existing EC Private European Law (Acquis Group) took the responsibility of drawing up the Principles of the Existing EC Contract Law (Acquis Principles) (Research Group on the Existing EC Private Law (Acquis Group) 2009). The members of the “Study Group on a European Civil Code” and those of the “Acquis Group”, cooperated in the framework of the “Joint Network on European Private Law” (Palao 2011).
The European Council meeting in Tampere on 15–16 October 1999, found it necessary to “achieve a higher degree of compatibility and convergence between the legal systems of the Member States”,7 and instructed the Council of the European Union to conduct until 2001, “an overall study on the need to approximate Member States’ legislation in civil matters in order to eliminate obstacles to the good functioning of civil proceedings”.
The concerns about the proper functioning of the internal market led the European Parliament8 stated that “greater harmonisation of civil law has become essential in the internal market and calls on the Commission to draw up a study in this area…”.9 The Commission begin to work on it10, considering fundamental “to find out if the coexistence of national contract laws in the Member States directly or indirectly obstructs functioning of the internal market, and if so to what extent.”11
The Commission took into account the existence of potential impediments to cross-border transactions, based on the disparity of laws in force in the Member States. Such obstacles include conflicts between mandatory rules of the different Member States that prevent freedom of choice from clauses that lead to the current practices of Member States, especially when formalised in standard contracts. Furthermore, the ignorance of the diversity of legal systems by any Contracting Parties may prevent their willingness to conclude cross-border procurement, and also prove onerous to the party whose law is not applicable to the contract, either because the right choice has not been made, or because it is not their national law that is applicable in the absence of choice of law. All of the above constitute obstacles. This burden arises from the need to obtain legal advice either seeking prior information regarding its implementation and eventual litigation monitoring, which may constitute a competitive disadvantage “in a situation where a foreign supplier is competing with a supplier established in the same country as the potential client.”12
It was important to note that at that time, that an horizontal measure providing for the complete harmonisation of contractual law provisions may be considered for adoption at Community level where there are contractual obstacles that cannot be resolved through the principle of subsidiarity.13
Following the European Parliament point of view14, and after its communication to the European Parliament and the Council on “A more coherent European contract law,”15 the Commission presented an Action Plan16, proposed the adoption of specific measures and sectorial regulatory and non-regulatory measures to address the problems posed by the existence of different laws regarding contracts. The objective of these measures is to improve the consistency of the acquis in the context of contract law, by launching two lines of action: improving the quality of existing legislation,17 and developing a common frame of reference,18 with the aim of creating a common pattern in contractual matters, composed of common principles on procurement, which could serve as the future basis for reflection on an instrument within European contract law. Moreover, the Commission found that “the creation of a common frame of reference is an intermediate step to improve the quality of the Community acquis in the area of contract law”19 and that “an improved acquis should enhance the uniform application of Community law and to facilitate the proper functioning of cross-border transactions and, therefore, the completion of the internal market.”20
The development of the Principles of European Contract Law and the improvement of the quality of legislation21, as well as the development22, and the adoption of a Draft CFR—by 2009—as a tool to improve the coherence and quality of EU legislation—with regard to material standards of EU procurement23, where considered by the Commission.
Following an invitation for an expression of interest ,24 a network of CFR experts was formed. Some members were part of the Study Group on a European Civil Code and others joined the new European Research Group on Existing EC Private Law (Acquis Group),25 for the preparation of the draft CFR, and the submission of a proposal by the end of 2007. A draft version was completed during this time and published in 2008 (Von Bar et al. 2008). The definitive version of the Draft Common Frame of Reference (DCFR) prepared by the Study Group on a European Civil Code and the Research Group on Existing EC Private Law (Acquis Group) was published in 2009 (Von Bar et al. 2009).
However, and despite the early adoption of a CFR by 2009,26 this was never adopted, and the Commission opted to prepare a Green Paper “On policy options for progress towards a European contract law for consumers and businesses.”27 The Commission stressed, in this document, the importance of filling in gaps in contract law, by adopting suitable instruments for removing the disparities between national laws, harnessing the potential of the internal market, and meeting the economic targets set by the EU instruments, whilst also recovering from the economic crisis.28
The main goal of the Green Paper was to expose the options on how to strengthen the internal market by making progress in the area of European contract law.
Despite basing its legitimacy on the Stockholm Programme (2010–2014),29 in which the Council invites the Commission to present a proposal for the CFR and to continue its examination of the question of contract law, the Commission recognised that this action may give rise to sensitive issues of subsidiarity and proportionality.30 In order to identify sensitivities with regard to strategic options, the Paper identified seven potential points of contention regarding the legal nature of the instrument of European contract law. Among those initiatives were options of soft law and hard law, conducing to harmonisation31, stricto sensu unification32, and standardisation33.
In the opinion of the Committee on the Green Paper,34 it can be seen that this institution was advocating the adoption of a “Toolbox”, an optional regulatory regime providing more favourable circumstances for contracting parties, and an alternative to national provisions, provided that all of these options are available in all EU languages.
Other initiatives were important in this field such as the Communication “A Common European Sales Law to facilitate cross-border transactions in the single market”35 and the Communication “Europe 2020”36 and the “European Digital Agenda”.37
However, the DCFR 2009, has been very important once it was the last step of the Draft CESL, prepared by the “Expert Group” for a Common Frame of Reference on European Contract Law, appointed by de Commission,38 which presented a “feasibility study”, for an European contract law for consumers and businesses.39
The proposal for a Regulation of the European Parliament and the Council on a Common European Sales Law40, was presented following the absence of agreement regarding an instrument establishing a compulsory scheme. The legislative process hasn’t been linear41, but the adoption by the European Parliament of a legislative resolution of 26 February 2014 on the proposal for a regulation of the European Parliament and of the Council on a Common European Sales Law42, seems to indicate that the concretization of this first challenge, is getting closer. The Commission presented the proposal as an internal market legal basis, i.e. the article 114.1 of Treaty for the Functioning of the European Union (TFEU)43, which enables the European Institutions to: “adopt the measures for approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object of establishment and functioning of the internal market.” That have the effect of triggers the application of the ordinary legislative procedure.44 Although the legal basis of the proposal met some criticism (Fleischer 2012; Wendehorst 2012; Micklitz and Reich 2012; Sánchez Lorenzo 2011), Council left the assumption of a final position on this matter to the final forecast of the structure and the scope of the proposal45 and the European Parliament on its Legislative Resolution of 26.02.201446, maintains the legal basis of the proposal.
In which concerns the establishment and functioning of the internal market, the ECJ consider47 that “(…) a measure adopted on the basis of article 100a of the Treaty [now article 114 TFEU] must genuinely have as its object the improvement of the conditions for the establishment and the functioning of the internal market”.
Taken into account the objectives of the proposal, it seems to be the result of the proposal, as identified in art 1, paragraphs 2 and 3. The ECJ also consider that the use of such legal basis confers, in its scope of application, a discretion to choose the most appropriate harmonization technique.48 The forecast of the CESL as a second contract law regime49, idea that has been underlined by the Legislative Resolution of the European Parliament,50 creates a real way to approximate de legislation of the Member States Knöfel and Bray (2012/2013).
1.3 Objective and Subject Matter
The purpose of the regulation is to improve the conditions for the establishment and the functioning of the internal market by making available51 a uniform set of contract law rules for cross-border transactions for the sale of goods , supply of digital content and for related services, where de parties to a contract agree to do so (art 1).
In which concern the benefits resulting from the implementation of the regulation, paragraph 2 identifies the reduction of unnecessary costs of the cross-border transactions and an implementation of a high level of legal certainty52.
The future regulation is also supposed to guarantee (…) a high level of consumer protection , to enhance consumer confidence to internal market and encourage consumers to shop across borders” (paragraph 3). The possibility of achievement of those objectives was object of several critical comments (Eindenmuller 2012; Smits 2012).
1.4 Scope of Application
a. Personal Scope of Application
The Commission didn’t identify any reason of concern as regards contracts concluded between natural persons (C2C) and those concluded between B2B, since one of the B is not a SME.
In this context, the parties covered are: the seller, or the supplier, who is a trader, and the other is either a C or an SME. The parties under the scope must be in some commercial relations as B2C or B2SME only (art 7). The definitions of consumer (art 2 (f) of CESL Proposal), trader (Article 2 e) and SME (Article 7 (2)), are essential to determine the personal scope of application.
The trader is any natural or legal person who is acting for purposes relating to that person’s trade, business, craft, or profession. The trader could be a big enterprise or a SME under the criteria of art 7 points (a) and (b). In which concerns the contracts B2B with a part SME, it has been point out that the non SME part would have some practical difficulties to determine whether the other part fulfil the criteria or not, to be considered a SME (Knöfel and Bray 2012/2013). Due to the optional nature of the future regulation, the question related to false statements, can arise from the information provided by the parties, especially if the contract is a B2SME, is not solved by the regulation. That’s not a question of lack of interest by the European legislator53, but only a tentative of not having more hesitations by their addresses. It was also noted that once more or less 90 % of the enterprises are SME, the question won’t have a huge importance.
The service provider is a seller of goods or supplier of digital contents who undertakes to provide a customer with a service related to those goods or that digital content (art 2 point b)54. The consumer is any natural person who is acting for purposes which are outside that person’s trade, business, craft or profession55. This concept was criticized due to the lack of connexion with other similar provisions (Sánchez Lorenzo 2013), for not considering elements frequently used by the acquis (Behar-Touchais 2012), such as the possibility of considering a B acting as a C if the professional objective doesn’t prevail, and also for not including the non-profit making entities (Knöfel and Bray 2012/2013), and it is expected to achieve some improvements. The Legislative Resolution of the European Parliament of 26.02.101456, suggest the introduction of the following text to the final part of the provision: “where the contract is concluded for purposes partly within and partly outside that person’s trade and the trade purpose is so limited as not to be predominant in the overall context of the contract, that person to be a consumer.” The adoption of this suggestion will be in line with the critics, but it’s not granted.
Nevertheless, the possibility of application to B2B depends on the position of the Member State (art 13b).
The application of the future regulation to business to business contracts was one of the questions in discussion, and it’s not excluded so far that a change to the prevision of article 7 will be made57. The argument in favor of that solution is that the CESL is an offer to the parties and there must be no limitation to the parties included, as it has been pointed out by the rapporteurs of the Committee on Legal Affairs58.
b. Territorial Scope of Application—Crossborder Contracts
The CESL proposal is applicable to Cross-border contracts. The art. 4 provides so59. On the same time this provision contains the territorial scope of application of the regulation (Wendehorst 2012). Apparently, this proposal won’t be applicable to purely domestic situations, as long as each Member State doesn’t decide for the internal application of the regime (art. 13 a), what could be a first step towards a future adoption of a code in Europe. This provision that has never been considered by the expert groups (Schulte-Nölke 2011), and is criticized due to the difficulty to distinguish between cross-border and purely domestic contracts (Knöfel and Bray 2012/2013), was introduced to the proposal by the European Commission. The idea of create a new optional regime to be in force in all Member States, even in purely domestic situations, would have had an effect more inefficient on the legislative procedure (Knöfel and Bray 2012/2013