M-EPLI Roundtable on the Proposed Common European Sales Law

On Friday 9 December a roundtable conference on the recently proposed Common European Sales Law (CESL) was organised by M-EPLI at the Brussels Campus of Maastricht University. The purpose of the conference was to critically evaluate the proposal, and particularly to address the question of whether the choices made in the proposal are the right ones (see also the blog post by our Edinburgh colleagues).
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The conference was chaired by M-EPLI Director Prof. Dr. Jan Smits and included presentations from Prof. Eric Clive of Edinburgh University and Prof. Gisella Ruehl of the Friedrich-Schiller University Jena, offering a general perspective on the CESL and on aspects of private international law, respectively. In addition, M-EPLI fellows Dr. Gary Low and Dr. Nicole Kornet intervened in the second panel of the day to discuss the choice of legal basis for the CESL and the significance of the proposal in light of the UN Convention on Contracts for the International Sale of Goods (CISG). Last but not least, the presentations were followed by comments from representatives of Eurocommerce, the European Consumers’ Organisation (BEUC), the Council of Bars and Law Societies of Europe (CCBE), the Federation of Enterprises in Belgium (FEB) and the European Commission.

First to outline their position was Ms Fatma Sahin, a Maastricht University alumnus and currently advisor to the Internal Market and Consumer Affairs Committee at Eurocommerce, the European Federation for retail, wholesale and international trade. While noting at the outset that Eurocommerce is still in the process of formulating its position on the new proposal, Ms. Sahin went on to outline the main issues and concerns identified by Eurocommerce thus far. First and foremost, Eurocommerce considers that the proposed CESL could give rise to considerable legal uncertainty, mainly due to the fact that it does not cover all aspects of contract law (meaning parties would still need to rely on national law for such matters), but also given the possibility of divergent interpretations of various terms contained in the instrument on the part of national courts. Secondly, while Eurocommerce does support the principle of full harmonisation of consumer rights on which the CESL is based, many (though not all) of its members oppose its limitation to cross-border contracts, particularly as they doubt whether (many) Member States will avail themselves of the opportunity to extend the applicability of the CESL to domestic contracts. Thirdly, as far as the level of consumer protection is concerned, Eurocommerce finds this to be high and indeed perhaps too high, at least in terms of the potential costs it could entail for Small and Medium-Sized Enterprises (SMEs). Fourthly, it considers that the CESL should not also be applicable to B2B contracts as proposed (or at least not at this stage) given the existing instruments in this area such as the CISG. Finally, it stresses the fact that differing national contract laws are by no means the only obstacle to cross-border trade in the EU (there are also fiscal and linguistic barriers, to name but a few) and, equally, not all traders wish to sell in Member States other than their own. These considerations brought Ms. Sahin to the conclusion that “the proposal as it currently stands will not be very helpful for us.”
Mr. Simone Cuomo, also a Maastricht University alumnus and presently Senior Legal Advisor to the CCBE, then proceeded to set forth the CCBE’s views on the CESL. Mr. Cuomo too began by explaining that the CCBE is yet to reach a final position on the proposal – with the key issues currently being mooted within their contract law working group – and that his comments would therefore be of a general nature. Broadly speaking the CCBE welcomes the proposal, bearing in mind that it has previously advocated the adoption of a single optional instrument covering both B2C and B2B contracts. However, the proposal remains a controversial topic within the CCBE, especially as between the civil and common law jurisdictions but increasingly also as between civil law countries themselves. Hence questions such as whether the material scope of the proposal is sufficient, whether the level of consumer protection is sufficiently high or whether Article 6(1) of the Rome I Regulation should be amended remain open, with differing views having been expressed in the working group. Nevertheless Mr. Cuomo is of the overall opinion that the instrument “deserves a chance”, although there are still a number of possible shortcomings which should be addressed. In particular, he believes the CESL should also be applicable to domestic contracts, not least because of the practical difficulties to which such a distinction could give rise.
Ms. Ursula Pachl, deputy Director-General of the BEUC, then presented the position of that organisation in considerable detail. In line with previous BEUC position papers on the subject (on this, see my previous article on the Expert Group Feasibility Study), Ms. Pachl stressed that the BEUC has not been convinced that European consumers actually need an optional contract law instrument at all. In particular, the BEUC questions the validity of the Commission’s corresponding impact assessment, and especially its claims regarding the transaction costs currently faced by businesses wishing to expand into other Member States and the overall opportunity cost of not introducing a common European sales law. The BEUC also considers that the impact assessment fails to take into account the eventual impact of the Consumer Rights Directive once this has been implemented by the Member States. Moreover it points to other studies (including its own) which suggest that the reluctance of consumers to enter into cross-border contracts stems from a fear of fraud or non-delivery and ultimately of being unable to obtain redress in the event of problems or defects, rather than from substantive differences between national laws. Furthermore, while the BEUC accepts that the level of consumer protection provided in the CESL proposal is relatively high, it believes that this level is likely to be lowered as the proposal passes through the legislative process. In addition, it finds the description of the CESL as ‘optional’ misleading in the B2C context, as the only choice consumers will have in practice is whether or not to enter into the contract – an informed choice of law being impossible for them. So all in all the BEUC opposes the proposal, and would prefer to see the Commission continuing to focus on harmonisation of consumer law, for example with a directive on digital content.
A starkly contrasting view was presented by Mr. Stefaan Verhamme, member of the Board of the Belgian Institute for Company lawyers and Legal Advisor at the FEB. Mr. Verhamme began by professing his belief in the common European sales law project, stating that he and his colleagues see the potential of the CESL for facilitating cross-border trade and improving the functioning of the internal market. On the other hand, Mr. Verhamme did point to three main issues of concern to Belgian lawyers and companies. First, while companies are in favour of an optional regime, they fear that the instrument will eventually become mandatory in nature. Second, the CESL should override Article 6 of the Rome I regulation, as the residual application of national consumer laws would contradict the aim of simplification and legal certainty for companies. Third, the level of consumer protection must be proportionate, since an excessively high level would serve as a disincentive for businesses to opt in. So in short, the FEB and the Belgian Institute for Company Lawyers are in favour of the proposal, but equally believe certain critical issues remain to be dealt with.
Finally, the position of the European Commission on a number of the points raised in the course of the conference was outlined by Ms. Mihaela Carpus-Carcea, policy officer at DG Justice. As regards the added value of the CESL over the CISG (that is, the key question posed by Dr. Kornet in her presentation), Ms. Carpus-Carcea noted that not all of the 23 Member States that apply the CISG apply the whole of it, and in any case the CESL regulates a series of other matters not covered in the CISG, such as defects of consent, unfair contract terms and the mandatory rules protecting SMEs. On the point of the need for a common European sales law, Ms. Carpus-Carcea defended the Commission’s impact assessment, arguing that the Commission’s figures essentially corresponded with those of businesses they had consulted, and pointed to a Eurobarometer study in which 70% of consumers and businesses said they would apply the CESL were it to be adopted. On the other hand, Ms. Carpus-Carcea accepted that certain aspects of contract law were not covered by the CESL, noting that it simply was not possible to include some of these aspects (e.g. illegality of contracts) due to the widely divergent views of the Member States. Equally she accepted that the CESL may be interpreted differently by different national courts, but observed that this is a general problem for EU law and that the proposal to create a database of judgments will aid common interpretation.
As a final question to Ms. Mihaela Carpus-Carcea, M-EPLI fellow Dr. Bram Akkermans asked when the Commission expected the CESL proposal to be adopted. It may come as no surprise that in response the Commission representative could only express her hope that it would be adopted sooner rather than later. Indeed the proposal has been earmarked for accelerated adoption, but whether it will be adopted anytime soon (if at all) remains difficult to say.

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