Leiden Law Blog

Desperately searching for growth

Posted on by Jeroen van der Weide and Pieter De Tavernier in Private Law
Desperately searching for growth Viviane Reding

Against the background of a worsening debt crisis, European leaders are desperately seeking growth in their local economies. Amongst them Mario Monti, Italy’s Prime Minister, and the newly elected French President François Hollande, the latter wanting to renegotiate Europe’s budget discipline pact to include a clause on growth. In her speech ‘The Common European Sales Law - breaking the mould to help businesses and customers’ (Brussels, 6 March 2012), EU Justice Commissioner Viviane Reding proclaimed the Single Market to be ‘our best lever of growth’.

The CESL as an economic tool

To improve the establishment and the functioning of the internal market the European Commission launched on 11 October 2011 a Proposal for a Regulation on a Common European Sales Law (CESL). The fundamental purpose of the CESL is economically driven: it should promote and facilitate cross-border activity. This objective is not reached by requiring amendments to the pre-existing national contract law, but by creating within each Member State’s national law a self-standing uniform set of contract rules on sales law, including provisions to protect consumers. This second regime should be identical throughout the EU and exist alongside the pre-existing rules of national contract law.

Application and Content

The CESL should apply on a voluntary basis, upon the express agreement of the parties, to a cross-border (sales) contract. It constitutes an optional instrument available for cross-border contracts between a trader and a consumer (T2C) or between traders (T2T) if at least one party, seller or buyer, is a small or medium-sized enterprise (SME). The CESL largely reflects provisions of the Draft Common Frame of Reference (DCFR) as well as the Principles of European Contract Law (PECL), the Uniform Commercial Code (UCC) and the Convention on the International Sale of Goods (CISG).

Criticism

Academics, consumer organisations and economic players are strongly divided about the efficiency of the instrument. Will the CESL actively boost trade within the EU? Does more choice for consumers lead to better choices? Shouldn’t the European Commission provide a framework for drafting model contracts that are tailored to individual sectors (self-regulation) rather than harmonising the contract law of the Member States? Moreover, the CESL is subject to fierce ongoing debate over the competence of the European Union to enact this instrument. Several national parliaments and governments (e.g. Germany, the UK, Belgium, The Netherlands) and more recently the European Economic and Social Committee (ECOSOC) have expressed serious doubts about the compliance of the CESL with the principles of subsidiarity and proportionality. Problems of concurrence are to be expected with the current law on cross-border sales: CISG and the Rome I Regulation.

Success or failure?

European leaders are intensively searching for structural measures to restore economic growth. It is doubtful whether the CESL will be effective at this point. Neither businesses nor consumers will opt for a uniform set of contract rules on sales law without clear and convincing evidence of the added value of the instrument in cross-border sales. At the same time fundamental juridical problems have to be solved. These do not only relate to issues of competence and proportionality, but also to the convergence of the CESL with current legal sources on international sales law.

Latest news: Max Planck Conference 11-12 May 2012

On 11 and 12 May 2012 the Max Planck Institute for Comparative and International Private Law (Hamburg) hosted a conference on CISG and CESL. At the conference leading scholars on cross-border sales expressed their deep concerns about the content and scope of the CESL. There was a strong and unanimous feeling that the instrument is not fit to be implemented without taking criticism into consideration – even though the CESL marks a milestone in the development of European contract law.

Add a Comment

Name (required)

E-mail (required)

Please enter the word you see in the image below (required)

Your own avatar? Go to www.gravatar.com

Remember me
Notify me by e-mail about comments