HARMONIZATION OF
EUROPEAN PRIVATE AND
COMMERCIAL LAW
CESL Academic Conference (Beijing, 2011)
Prof. Tibor Tajti ©
THE STARTING POSITION: THE
“LEGAL MAP” OF EUROPE
Herein of the European Legal Families, SubGroups and the Differences
Wikipedia’s Classification
Scandinavian
law 1
Scotland:
mixed
Russian law
(?)
Common
law
FrancoLatin law
Mixed:
Franco/Latin
& Germanic
Germanic law
THE AVENUES OF RAPPROCHEMENT
OF EUROPEAN PRIVATE AND
COMMERCIAL LAWS
“For the transnational lawyer indeed, the present European
situation is as that of a traveler compelled to use a number of
different local maps each one of difficult use to foreign
lawyers and sometimes containing information which (due to
bias or hidden assumptions of municipal lawyers) can be
misleading. […].”
Mauro Bussani & Ugo Mattei (eds.), The Common Core of
European Private Law (Kluwer Law International, 2002), Preface:
the Context, at 1-2.
The Avenues of Rapprochement
Research
Groups
1. Lando
Commission
2. The Acquis
Group
3. The Common
Core Group
(etc.)
EU
Legislation
-Directive on time
share
agreements
(etc.)
REFORM
PROJECTS
EBRD –
secured
transactions law
reform
GTZ – Serbia
(mortgage law
and land
registries)
ORGANIC
DEVELOPMENT
- Popular contracts
(e.g., franchise,
leasing)
- Regulatory
competition (e.g.,
2002 amendment of
the French
Commercial Code)
[Impact of] INTERNATIONAL EFFORTS
1.The Unidroit Principles of Int’l Commercial
Contracts (2010: 3rd edition)
2.CISG (Uncitral)
EU LEGISLATION
A FRAGMENTED APPROACH
“After a long period of specific consumer directives (19842001), a new phase was inaugurated in 2001, which has been
defined by the redrafting and systematization of consumer
regulations in the quest for an internal market with a more
organic and coherent common law. This phase is
characterised by interaction between consumer regulations
and the creation of a new European Contract Law …”
Micklitz, Stuyck, Terryn and Droshout, Consumer Law (Hart,
2010, at 165.
UNDER THE AUSPICES OF THE ROME
TREATY
CONSUMER
PROTECTION
• Doorstep sales (85/577)
• Consumer Credit Directive
•
•
•
•
(85/102)
Directive on unfair terms in
consumer contracts (93/13)
Timeshare Directive (94/47)
Distance Selling Directive
(97/7)
Price Indication Directive
(98/6) (etc.)
OTHER
• Primarily of administrative
nature restricting freedom of
contract:
- Directive 86/653 on the
coordination of the law of the
Member States relating to the
self-employed agent
• Conflicts of law
- Regulation 44/2001 on
Jurisdiction and the Recognition
of Judgments in Civil and
Commercial Matters (Brussels I)
IS THERE A FUTURE FOR THE
EUROPEAN CIVIL CODE?
MAURO BUSSANI: “The defense of the status quo
[that the time … is not ripe to enact whatever
Restatement or Civil Code] … fits perfectly with the need
of the professional elite to keep the leadership over
national and transnational legal affairs … ”
Mauro Bussani, the Driving Forces behind a European Civil Code, Zbornik Prav.
Fak. Sveuč. Rij. Suppl. Br. 3, xx-xx, at 11.
Reality v. Wishes
REALITY
“whilst it seems that the
European contract law
initiative as described in the
Commission communication of 11
October 2004 (COM(2004)0651) and
reported on in the Commission's First
Annual Progress Report
(COM(2005)0456) should be
seen primarily as an
exercise in better lawmaking at EU level, it is by
no means clear what it will
lead to in terms of practical
outcomes or on what legal
basis any binding instrument or
instruments will be adopted […]”
WHAT WOULD BE
NEEDED
The European Parliament “…
reiterates its conviction,
expressed in its resolutions of 26 May
1989, 6 May 1994, 15 November 2001
that a
uniform internal market
cannot be fully
functional without
further steps towards
the harmonisation of
civil law […].”
and 2 September 2003,
WHERE TO GO FROM
HERE?
The Common Frame of Reference
“That is a text serving as a source of inspiration for law
making and law teaching at all levels.”
Christian von Bar, A Common Frame of Reference for European Private
Law - Academic Efforts and Political Realities, Electronic Journal of
Comparative Law, at 1 (< www.ejcl.org/121/art121-27.pdf >).
The Seven Possible Avenues of Development
GREEN PAPER FROM THE COMMISSION
on policy options for progress towards a European Contract
Law for consumers and businesses
(Brussels, 1.7.2010, COM(2010)348 final)
Option 1: “mere” publication of the DCFR (for legislators,
teachers and private parties)
Option 2: an “official toolbox for legislator”
Option 3: EU Commission recommendation to Member States to
incorporate the DCFR into national laws
Option 4: DCFR as an alternative system to national laws that
could be chosen by parties (“optional instrument”)
Option 5: EU Directive with minimum common standards
Option 6: EU Regulation with uniform rules replacing national
laws
Option 7: European Civil Code
HOW IS THE DCFR RESOLVING
TENSIONS?
The Case of the doctrine of culpa in contrahendo
(“fault in contracting”)
Black’s Law Dictionary: “The principle that parties
must act in good faith during preliminary contract
negotiations.”
The Difference
GERMAN LAW
“… contracting parties are
under a duty, classified as
contractual, to deal in
good faith with each other
during the negotiation
stage, or else face liability,
customarily to the extent of
the wronged party’s
reliance.”
ENGLISH & US LAW
a/ Generally accepted view: common law does not have
a counterpart
b/ Kessler & Fine: “… the
doctrines of negligence,
estoppel, and implied
contract, among others,
have … served many of the
doctrinal functions of culpa
in contrahendo.”
The Common Frame of Reference on Culpa
in Contrahendo
Negotiation and confidentiality duties
II. – 3:301: Negotiations contrary to good faith and fair
dealing
(1) A person is free to negotiate and is not liable for failure to reach an
agreement.
(2) A person who is engaged in negotiations has a duty to negotiate in
accordance with good faith and fair dealing and not to break off
negotiations contrary to good faith and fair dealing. This duty may not
be excluded or limited by contract.
(3) A person who is in breach of the duty is liable for any loss caused to
the other party by the breach.
(4) It is contrary to good faith and fair dealing, in particular, for a person
to enter into or continue negotiations with no real intention of reaching
an agreement with the other party.
RESEARCH GROUPS ON
EUROPEAN PRIVATE LAW
‘In matters of private law, current attempts to produce a
European private code or at least to establish common
principles of law are … basically in ‘German’ hands (though
one must also mention the ‘Trento Project’ run mainly from
Italy.’ […].’
Basil Markesinis (with Jörg Fedtke), Engaging with Foreign
Law (Hart Publishing, 2009), p. 164.
Research Groups on European [Pure]
Private Law
• Commission on European Contract Law (Lando Commission)
[<
http://www.jus.uio.no/lm/eu.principles.lando.commission/doc.html >]
• Study Group on a European Civil Code [ < http://www.sgecc.net/ > ]
• The Acquis Group – European Research Group on Existing EC Private Law [ <
http://www.acquis-group.org/ > ]
• The Common Core of European Private Law Project (Trento Group) [<
http://www.jus.unitn.it/dsg/common-core/meeting_10_project.html > ]
• Commission on European Family Law (CEFL) [ < http://www.ceflonline.net/ >]
• European Centre of Tort and Insurance Law (ECTIL)
[< http://www.ectil.org/ >]
• European Group on Tort Law (Tilburg Group) [< http://civil.udg.es/tort/ >]
• Ius Commune Casebooks for the Common Law of Europe [< http://www.casebooks.eu >]
•
SECOLA (Society of European Contract Law) [ < http://www.secola.org/ > ]
• Joint Network on European Private Law (CoPECL) [< http://www.copecl.org/ >]
• Uniform Terminology for European Private Law
[< http://www.uniformterminology.unito.it/ >]
Law Reviews:
• European Private Law Review [<
http://www.kluwerlawonline.com/productinfo.php?pubcode=ERPL> ]
• Zeitschrift für Europäisches Privatrecht [ http://rsw.beck.de/cms/main?site=ZEuP> ]
Unorthodox yet Critical Questions
• Is it still justified to separate private and commercial law in the 21 st
century?
• Why the neglect of the problems and laws of other parts of Europe
[but the few main systems]?
• Why the resistance & ignorance to influences coming outside
Europe (primarily United States) in the field of private and
commercial law – and not in many regulatory fields (e.g.,
antitrust/competition law, capital markets and securities regulation)?
• Where are the concrete results of the many EU & European
Projects? Why the constant rewriting?
• Is the European solution rather in minimal harmonization of private
law and enactment of common ‘regulations’ to address concrete
problems? (E.g., tailor-made consumer protection law).
Nothing Changed since 2003?
MAURO BUSSANI in 2003
“There is a strong disagreement among the experts … [s]ome of
them maintain that a code is absolutely necessary in order
to shape a truly common European law, while other believe
that this project is unworkable, either because the divergences
among the national systems are still too serious (and this implies
that the situation may change in the future, and a code may
eventually be feasible), or because legal harmony can, or
must, be achieved by means other than a code.”
Mauro Bussani, the Driving Forces behind a European Civil Code,
in: Zbornik Pravnog Fakulteta Sveučilišta u Rijeci, [the law
review of the Law School of Rijeka, Croatia], Suppl. Broj 3, xx-xx
(2003), at 9.
THE COMMISSION ON
EUROPEAN CONTRACT LAW
(THE LANDO COMMISSION)
“The Commission on European contract law is the
author of the Restatement called Principles of
European Contract Law in the framework of the
Resolutions of the European Parliament on the
Codification of Private Law”
< http://www.jus.uio.no/lm/eu.principles.lando.commission/doc.html#9 >
The Aim of the Principles
The PECL’s primary objective is “to serve as a basis for a
European Code of Contracts. They are intended as a first
step [and yet] they differ from the American Restatement on
Contracts because they require a more radical approach.
They do not simply select from among several solutions
extant in a single legal system; as they must provide
workable solutions for a widely divergent legal environment,
they are designed to embody rules that do not exist as such
in any European legal system.”
Ole Lando, Principles of European Contract Law: An Alternative to
or a Precursor of European Legislation, 40 Am. J. Comp. L. 573,
577 (1992) (published also in RabelsZ 261 [1992]).
Achievements
1982: establishment of the commission
-non-governmental body of legal scholars (mostly academics)
-none appointed by a government
-subsidies from the EU and various foundations and enterprises
1995: published the first part of the Principles (PECL) (with
comments and notes)
1998: published the second edition of the Principles (PECL) [<
http://www.jus.uio.no/lm/eu.contract.principles.1998/index.html>]
2003: part III of the PECL
However: the PECL remains soft law
THE ACQUIS GROUP
The ‘Principles of Existing EC Contract Law’
(Acquis Principles)
[English text available at <http://www.acquis-group.org/>]
The Acquis Group’s Mission Statement
THE REASON:
“On 12 February 2003, the European Commission published its
communication ‘A More Coherent European Contract Law - An
Action Plan.’ In order to foster a transparent consultation procedure,
the Commission has asked stakeholders to comment on the issues
raised. One of the most important fields of discussion concerns the
intention of the Commission to form a ‘Common Frame of
Reference.’
THE MISSION:
“The Acquis Group intends to contribute to the task of providing
material for the Commission to build the Common Frame of
Reference. Its task is to derive common "Principles of the Existing
EC Private Law" following a new approach by focusing upon the
genuine EC Law itself instead of comparing different national legal
orders. Its research, which will be published as "Principles of the
Existing EC Contract Law", can serve as building material for the
Common Frame of Reference.”
See <http://www.acquis-group.org/>
THE TRENTO PROJECT
“Stating it in very simple terms, we are seeking to unearth the
common core of the bulk of European private law, i.e., of what
is already common, if anything, among the different legal
systems of European Union member states.”
Mauro Bussani & Ugo Mattei, the Common Core Approach
Goals – Legal Cartography
< http://www.jus.unitn.it/dsg/common-core/approach.html >
The ‘Combined’ Method
HOW? - Schlesinger’s
Factual Approach
• Hypotheticals (series of facts
constituting hypothetical
cases) used to allow for
dialogue among legal
scholars with different
cultural background.
• Questionnaires;
Rudolf b. Schlesinger & P. Bonassies (gen. eds.),
Formation of Contracts: A Study of the Common
Core of Legal Systems (Dobbs Ferry, N.Y.,
Oceana, London, 1968.
WHAT? - Sacco’s Analysis
of Legal Formants
• Presumption that statutory
(written) law, scholarly analysis
& court decisions do not
provide a full picture of what
makes law
• Domestic lawyers presume
many ‘legal & meta-legal
formants’ which are invisible
to foreigners
• E.g., the same rule in the Civil
Codes of two countries may
produce radically different
outcomes
Rodolfo Sacco, Legal Formants (1991), American Journal of
Comparative Law.
The Questionnaires: THE MORTGAGE
GROUP
FIRST PART - General questions:
Please provide an overview of the basic features of the law in your
country as it relates to security rights over immovable assets. Your
overview should contain an outline of the following features of your
system:
i) The range of immovable assets which may be subjected to security
rights;
ii) The range of types of security which may be held over immovable
assets;
iii) The range of methods by which security rights are created and the
role of registration;
iv) The extent to which the major form of security right is accessory to the loan it
secures (nature and degree of accessority) and the extent to which the major
form of security right is specific to the immovable assets over which it is held
(nature and degree of specificity);
[…].
The Questionnaires: THE MORTGAGE
GROUP
SECOND PART – Hypothetical cases:
E.g., “Case 15
Daniel granted bank B a security over his house for a loan. Five
years later Daniel defaults on the loan.
The bank wants to enforce its security by availing itself of a clause
of the security agreement whereby, if Daniel defaults, bank B
automatically becomes absolute owner of the house.
Daniel claims that such a clause is invalid and unenforceable.”
[US: strict foreclosure – Civilian systems: lex commissoria]
The Questionnaires: THE MORTGAGE
GROUP
THIRD PART – Meta-Legal Formants:
“[…] Finally, the level called “Metalegal Formants” asks the
reporter to provide any other information that she considers
relevant and that affect the operative and descriptive levels,
such as
- policy considerations,
- economic factors,
- social context and values,
- reform proposals,
- as well as the structure of the legal process (organization of
courts, administrative structure and practice, etc.)
when it is relevant for the solution of a given problem.”
Common Core Publications
• Published Books Reinhard Zimmermann and Simon Whittaker, Good Faith in European
•
•
•
•
•
•
•
•
•
•
•
Contract Law, Cambridge University Press, 2000 (ISBN 0-521-77190-0)
James Gordley, The Enforceability of Promises in European Contract Law, Cambridge
University Press, 2001 (ISBN 0-521-79021-2)
Mauro Bussani and Vernon V. Palmer, Pure Economic Loss in Europe, Cambridge University
Press, 2003 (ISBN 0-521-82464-8)
Eva-Maria Kieninger, Security Rights in Movable. Property in European Private Law, Cambridge
University Press, 2004 (ISBN 0-521-83967-X) and 2009 (ISBN-13: 9780521104142)
Franz Werro and Vernon V. Palmer, The Boundaries of Strict Liability in European Tort Law, “,
Stämpfli-Carolina Academic Press, 2004 (ISBN 1-59460-005-8 / 978-1-59460-004-3)
Ruth Sefton-Green, Mistake, Fraud and Duties to Inform in European Contract Law, “Cambridge
University Press, 2005 (ISBN 0-521-84423-1) and 2009 (ISBN-13: 9780521844239)
Michele Graziadei, Ugo Mattei, Lionel Smith, Commercial Trusts in European Private Law,
Cambridge University Press, 2005 (ISBN 0-521-84919-5) and 2009 (ISBN-13: 9780521849197)
Barbara Pozzo, Property and Environment -.Old and New Remedies to Protect Natural
Resources in the European Context, Stämpfli-Carolina Academic Press, 2007 (ISBN 978-3-72722030-2)
Thomas MÖllers and Andreas Heinemann, The Enforcement of Competition Law in Europe
“Cambridge University Press, 2008 (ISBN-13: 9780521881104)
Monika Hinteregger , Environmental Liability and Ecological Damage in European Law,
“Cambridge University Press, 2008 (ISBN-13: 9780521889971)
J. Cartwright and M. Hesselink, Precontractual Liability in European Private Law, Cambridge
University Press, 2009 (ISBN-13: 9780521516013)
G. Brüggemeier, A. Colombi Ciacchi and P. O’Callaghan (eds), Personality Rights in
European Tort Law, Cambridge University Press, 2010 (ISBN-13: 9780511685989).
THE EBRD SECURED
TRANSACTIONS REFORM
PROJECT
“Recognising the potential role of security in easing the
chronic shortage of credit in the former communist countries,
the EBRD selected secured transactions laws for its first
major legal transition project in 1992. Since then, it has been
constantly working to achieve improvement in this
area.”
John Simpson & Joachim Menze, Ten Years of Secured Transactions
Reforms (Law in Transition, 2000), at 20.
The EBRD Model Law
1994: Final Draft of the EBRD Model Law on Secured
Transactions (accepted on the Annual Meeting in St. Petersburg/Russia)
- compatible with UCC Article 9 as well as with the Australian,
Canadian and New Zealand’s Personal Property Security Acts
- tried to find the balance between the registration-based
common law systems and the registration-hostile German law
(yet more influenced by common law solutions)
Later:
- Core Principles for a Secured Transactions Law (<
http://www.ebrd.com/pages/sector/legal/secured/core.shtml >)
- Guiding principles for the development of a charges registry
ORGANIC DEVELOPMENT
ILLUSTRATED
THE FATE OF NEWCOMER ADVANCED
CONTRACTS IN CENTRAL AND EASTERN
EUROPE: FRANCHISE CONTRACTS
How Do Courts Shape Development in CEE?
•
1
Beginning of
transition to
capitalism
1990
New
transaction
appears
Supreme (or high) Court
decision
- Voluntary adherence -
1995
1998
First
disputes
& problems
- Court proceedings
2003
2009?
If the local parliament
not “too busy” with
other things –
will become regulated
FRANCHISE IN HUNGARY (1)
• More than 500 businesses claim to be a ‘franchise system’ on the Hungarian
Franchise Associations’ website;
• Irrespective of the importance, ‘franchise’ is not a ‘nominated’ (i.e., regulated)
contract in Hungary;
- plan: to include it into the new Civil Code (IN THE MEANTIME BECAME
EGULATED BY THE CIVIL CODE, BECAME A NOMINATED CONTRACT)
- [earlier] in case of dispute, the courts could choose to apply the rules on
one of the following nominated contracts:
1. ‘sales’ (“adásvétel”) or
2. ‘commission’ (“megbízási szerződés”) or
3. undertaking contract (“vállalkozási szerződés”) or
4. licensing.
• PRICE: UNCERTAINTY AS TO THE RIGHTS AND DUTIES OF PARTIES
Nagy Csongor István & Zsófia Oláh, Chapter on Hungary, volume I, p. 289, in: Messmann & Tajti,
the Case Law of Central and Eastern Europe – Enforcement of Contracts (EUP, 2010).
FRANCHISE IN HUNGARY (2)
The problem of CHARACTERIZATION:
- In case of ‘franchise’ agreements, the court has to apply the
rules of that nominated contract, which DOMINATES in the given
contract (LEVEL OF SUBJECTIVITY?);
- E.g., the obligations of the FRANCHISEE:
a/ If rules on commission contracts are applied:
- due diligence but NOT achieving a particular result
b/ If rules on undertaking contracts are applied:
- due diligence INSUFFICIENT – particular result must be
achieved (e.g., establishing a clientele of a certain level)
FRANCHISE IN POLAND: CAN THE
ASYMMETRIC NATURE OF FRANCHISE
BE TOLERATED?
Decision of the Appeal Court in Katowice (4 March 1998, 1
ACa 636/98)
- Franchisees wanted to get out of franchise as the scheme has
proved to be unprofitable to them;
- Have tried to rely on the argument that the franchise contract
was asymmetric and their business failed because franchisor
dictated everything;
- Argument: the franchise contract cannot be enforced as its
asymmetric nature is against the principles of the freedom of
contract and good morals;
- First instance courts ruled for the plaintiffs (franchisee) – yet the
Appeal Court ruled against the application of “inherited old
concepts of morals”;
FRANCHISE IN POLAND
Excerpts from the Judgment (2)
A. Nature of the newcomer ‘franchise’:
“There cannot be any doubt that [franchise] is an innominate
contract, typified by mixed content, merging elements of such
nominated contracts as lease of rights, sale, mandate, license
and agency.”
B. The asymmetric nature:
“Distributive franchise is usually featured by strong dependence, even
subordination, to the person organizing the distribution network. Charging
uniform prices for given types of products is also a feature this way of doing
business. Granting the network partners a free hand to decide on prices could
constitute a hold on development of the distributive network. […].
There are no grounds to share the plaintiff’s view that only they were
burdened with the commercial risks of the business undertaking. It is the
franchisor who shares with their partners its schemes of conducting business
activity, allows the use of its business name, trademark, logotypes, professional
experience etc. Failures in the pursuit of such activity cannot remain without
any impact on the general image of the franchisor on the market, its
commercial standing, competitiveness …”
(Messmann & Tajti, p. 656-57.)
.”
FRANCHISE IN POLAND
Excerpts from the Judgment (3)
C. Can the franchisor charge royalties in addition to fees (or
charging two ‘fees’)?
“The Circuit Court did not pay sufficient attention to the scope of
the respective obligations of the franchisor and to the nature
of the contract concluded by the parties. [Yet to do so would have
been important given that by the virtue of this contract] the
franchisor granted to its partners not just access to a complex
network but also to its intellectual property rights, [and on top of
that it obliged itself to] provide on-going help [to franchisees] in
realization of the commercial undertaking.
There are, therefore, no grounds to conclude, as the Circuit
Court did, that the two types of fees overlap and that the
provision regarding the obligation to pay the initial fees
violates good morals.”
Messmann & Tajti, at 659.
Thank you for your attention and
questions!