Reproduced with permission of the author.
Consiglio Nazionale Forense
1. Preliminary remarks
1. The Green Paper forming the object of the Commission Communication n. 348 of 1st July 2010 is set in a very complex context, which results from initiatives carried out by academic groups, businessmen, as well as by the European Parliament, Council and Commission to promote the drafting of a body of common principles on European private law and a directive on consumer rights. Since 1989, resolutions, communications, directives, and proposals for directives have been issued in these two fields, in parallel with initiatives on family and succession law, as well as a draft common frame of principles in the insurance sector.
Since the beginning, these initiatives have been closely followed by Consiglio Nazionale Forense, the National Bar Council that represents lawyers in Italy (who currently account for about 240.000 practitioners). The Italian Bar Council is made up of twenty-six members elected by their Bar Associations to represent one district each.
In June 2000, the Italian Bar Council hosted a meeting of the Study Group for a European Civil Code. During the last decade, the Council has organised a number of workshops to discuss the principles of European private law; in this field too, it co-operates with EU institutions, the Council of the Bars and Law Societies of the European Union (CCBE) as well as with national lawyers' associations in a number of initiatives.
Workshop proceedings are published on a yearly or two-yearly basis. The latest workshop was held on 14th January 2011: speakers and panelists included members of the CCBE delegation to the European Commission in their capacity as stakeholders' representatives as well as lawyers and university professors who are members of Associazione Civilisti Italiani (the Italian Association of Civil Law Practitioners).
Enclosed in the workshop proceedings was a note by the Ministry of Justice expressing the Italian Government's opinion in favour of the approval of rules aiming to harmonise European contract law and their support for the codification of uniform private law .
The remarks below summarise the work performed by the Italian Bar Council over the past few years.
2. With regard to the objectives initially pursued and the purposes set by EU institutions, the Green Paper aims to consult stakeholders by restricting the scope of action to contract law for consumers and businesses, as stated in its title; non-contractual relations are therefore excluded.
In this respect, it is to be noted that from a systematic point of view, it does not seem possible to separate contract law from the law of obligations in which it is included. In addition, because contract law is a set of general rules, it may have different levels of application (B2C, B2B, B2b, C2C), but each level should be based on consistent and general rules applicable to all contracting parties, without prejudice to any appropriate specificities and exceptions to be envisaged when contracting parties have a considerable status.
On the other hand, it is useful to emphasise that despite any attempt to bound the scope of application of the instrument to a restricted and limited area, the experience gained from EU directives on contracts has shown that rules have a natural tendency to expand permeating the interpretation and evolution of general principles in the law of obligations.
3. In addition to considering the position of EU institutions on these matters, one should also consider the sources of community law on which the questions addressed by the Commission to stakeholders are based: namely, the various directives on consumer rights and the unified proposal for a directive (whose scope of application has now been restricted to distance-selling and off-premises contracts only). This point is one of the key issues related to the technical drafting of the instrument as well as to the law policy to be chosen and covers the degree of recognition that such a document -- no matter whether it is a collection of terms and concepts or a toolbox, recommendation, directive, regulation, or civil code) -- should have for the consumer rights already established by existing directives as well as the level of harmonisation it should deploy.
4. The objectives set in the Green Paper are commendable and more limited than those realistically identifiable, like the goal of simplifying and improving the EU law-making process; as a matter of fact, once a text has been drafed on this matter (regardless of its nature as a source of law), the EU legislator should not depart from its terms, definitions, concepts, and principles, whenever provisions -- even with a more limited and specific scope -- have to be promulgated. Alongside economic goals -- saving transaction costs, provinding legal certainty, easing cross-border transactions, boosting the economic activity in the internal market -- , the adoption of such a text should not disregard social goals (like the protection of vulnerable groups), the protection of fundamental rights, the connection between the constitutional principles recognised within the European Union and the rules govering relations between private parties, as well as remedies regulations, which form part of substantive law.
5. The Green Paper does not disregard the research performed and proposals put forward by the groups of scholars who have been working on the Principles of European Contract Law, the drafting of a European Civil Code, the consumer law acquis, the terminology and concepts of contract law, the social aspects of European private law. The Green Paper shows awareness of the results achieved by this research work and makes reference to the content of PECL and the Draft Common Frame of Reference. From a methodological point of view, one might wonder whether the DCFR -- as amended by experts and as a result of the consultation of stakeholders' representatives -- is to be considered as the text that will be the instrument on which the Green Paper has consulted stakeholders, or whether further consultations will be held on the substance of the proposals suggested by experts and stakeholders' representatives. The reason for this question is that, although the subsidiarity principle has not been violated and the specific competence of the European Commission (and other EU institutions) is not challenged, nor is there any "internal democratic deficit" resulting from the introduction of an instrument that responds to the aims above, it should be recommended, for the future, that adequate information be disseminated on the text to be adopted and a debate be launched so as to enable all the parties concerned to provide their input.
2. Drafting technique
1. With regard to the drafting technique, while the economic goals are clearly expressed in the purpose of the Green Paper, what is not made clear is that if the instrument became more than a mere recommendation, parties should choose -- within the framework of their autonomy -- not only to adopt other rules than those applicable under their national laws or the "Rome I" Regulation, but also to apply mandatory rules. Otherwise, the instrument would be subject to all the modifications that the most powerful contracting party would be capable of imposing on the other party, thus thwarting the economic and social purposes that this initiative wishes to pursue.
2. Again from a methodological perspective, it should also be clarified that the legal text to be elaborated should not merely result in a restatement of existing rules, but should also include new constructive content, for a number of reasons: because any reference to existing legislation would imply referring to rules that are never general in nature; because any intervention of the EU legislator in a specific sector would leave some gaps unfilled; because the body of rules being investigated concerns the de futuro regulation of contractual relations and no existing model rules (including national ones) are to be considered as binding.
3. The Green Paper does not even clarify how the new instrument should be interpreted, thus implying that every Member State will be free to interpret it in a way that is compatible with the hermeneutical rules of its scientific and professional community. Once a legal text has been approved, the interpreter cannot be bound as to its interpretation, nor is it possible to establish that the main source of the meaning is the intent of the legislator. Mens legislatoris is not a restriction on the interpreter of legal texts, hence the distinction between black letter and comment applies from a scientific (or academic) perspective, not on the formal level nor on the level of practical experience.
4. Again from a methodological point of view, it should be clarified whether the terms in B2C (and possibly B2c) contracts can be qualified as unfair. The Green Paper assumes -- and this assumption can be shared -- that the terms on the choice of the law applicable cannot be considered as unfair. This assumption can be shared for a number of reasons: because nothing is established in this respect in the relevant directive; because each national law may comprise rules in favour of one party and rules in favour of the other party; because in case national law is in favour of the business to the detriment of consumers, the instrument (like the "Rome I" Regulation) would ensure that consumers will benefit from the same level of protection as guaranteed by the law in their country of residence.
3.1. Types of contracts. Business-to-consumer contracts
Consumer contracts include types of contracts which do not perfectly coincide in all national systems. The differences recorded regard not only the definition of consumer, but also the economic transactions to which the rules on unfair terms can be applied. The legal experts, who are more sensitive to systematic issues in the various countries, have discussed the relationship existing between the contract general provisions and special provisions and, where codes exist, between the contract general provisions of the civil code and the consumer right special provisions or "codes". With a view to coordinating and implementing the consumer contract rules more easily, the intention expressed in the Green Paper to achieve systematic coordination by means of the CFR appears to be commendable. Clearly, if the CFR tackles only business-to-consumer (B2C) contracts, there will be (at first) two levels of contract regulations: the general contract rules and the consumer contract rules. The latter shall be placed at the highest protection level so that the protection of consumer rights is at least the same for all countries in the CFR, considering that remarkable differences have been detected in national systems.
Again in this case, however, differences in the interpretation of rules cannot be avoided. Nevertheless, they are a necessary and unavoidable consequence of European private law and, in more general terms, of E.U. law: the translation of directives and regulations into the various languages, the conceptual process entailed by legal terminology, the mistakes sometimes made in translations, the transposition of E.U. law into national law, as well as the lawmakers' and judges' cultures, backgrounds and ways of thinking are some of the factors which make these differences inevitable. In other words, it is a brunt which must be born anyway and which could be reduced as a result of the uniform implementation and interpretation of rules and the type of legal source used.
Hence, the coordination of rules through a model matching the national ones appears useful. Instead of having to adjust their contractual models to the individual national models, companies can refer to a single model provided it is capable of ensuring the highest level of protection for consumer rights. What is maintained by some classes of companies is right, namely that in the countries where the protection level is lower, setting uniform standards could increase costs; however, these costs are offset, if not reduced, by the savings that companies could record by using the same models for all E.U. member States. Therefore, the contracts drawn up by companies could be more transparent and consumers could address to all businesses, also abroad, more easily and at foreseeable terms and conditions.
From the consumer protection viewpoint, no exceptions can be made for small and medium enterprises (SMEs), by lowering the protection level or the instrument scope of application. This is also in their interest since an informed consumer, who realizes that there is lower protection in the contractual models used by small and medium enterprises, could also be encouraged to address to large companies to buy goods and services. The quality of services is also measured through its legal status in the comparison between contractual models.
3.2. Business-to-business contracts
The model of wide contractual autonomy ,which is usually attributed to business-to-business (B2B) contracts, has been repeatedly denied by the current economic reality and legal evolution: in many systems, special rules have been introduced regarding specific types of clauses (for example the hold harmless and limitation of liability clauses), specific contractual models (such as the sub-supply contracts) or even general principles designed to avoid the abuse of economic dependence by a company whose size allows to exert greater contractual power vis-à-vis its counterpart. This means that a further level of contract rules, regarding B2b contracts and matching the level of B2B contract rules, already exists. Therefore, the instrument with which the CFR should be adopted, could consider this trend, which also refers to the protection of small and medium enterprises vis-à-vis large companies.
4.1. What should be the legal nature of the instrument of European Contract Law?
Option 1 -- Publication of the results of the Expert Group
Indeed, the first option does not seem to result from a real choice, but rather from a necessary political line: with a view to knowing all the possibilities regarding the decision of the Parties, the interpretation trends and the legislative innovations, it is essential for the outcomes of experts' works to be disseminated as widely as possible. In order to involve all stakeholders, scientific communities and professionals it appears useful to spread the results already reached and the works in progress. The mere publication of results is somehow the necessary preliminary phase of every possible solution adopted by the Commission.
However, it is not exhaustive. The natural convergence of legal systems' evolution is a process underway, albeit too slow. There are no social or economic reasons to preserve the legal systems' diversities in contract law, and we cannot even say that the so-called competition of legal systems, which could be a positive result of international trade, develops itself at all levels of economic transactions, by giving priority to large transactions rather than B2C and B2b contracts.
Option 2 -- An official "toolbox" for the legislator
Also the second option does not seem to result from a real choice, but rather from a trend for drafting regulations and contracts which, if addressed to Parties of different countries, should anyway be the prerequisite for any transnational standard-setting. Hence, the drafting of an inventory of terms and concepts, as proposed by expert groups and classes of stakeholders is the foundation for any attempt to enhance the commitment and the results of the E.U. systems' intervention which, however, must be carried out in line and in full coordination with the E.U. bodies (Option 2 b).
Option 3 -- Commission Recommendation on European Contract Law
The weakness of the recommendation instrument is evident. Apart from the nature of the instrument, the replacement of national law with the recommended model appears to be highly unlikely. Possibly, it could be practicable where there is no civil code or general law on obligations and contracts, but civil codes have their own life and internal strength and this protects them from recommendations. They yield only to stronger interventions.
Option 4 -- Regulation setting up an optional instrument of European Contract Law
The option of a regulation establishing an optional tool is acceptable for all the reasons expressed by the Commission. It would provide the Parties with a further opportunity compared to the choice of the law governing the contract, if they have different nationalities. Nevertheless, if it could be applied also to the Parties having the same nationality, it would extend the contractual autonomy, which is now limited to the mandatory implementation of the rules in force in the State of which the Contracting Parties are citizens. The objections raised by many parties in relation to the uselessness, cost and impracticability of a "28th model", which would match those prevailing in the national systems, seems to be easily overcome: considering that it is a choice entrusted to the Parties, it can be easily discarded without problems. A completely different matter is the above-mentioned issue, namely whether the choice is imposed by the stronger Contracting Party on the weaker one by including a clause on the applicable law into the contractual model. Nevertheless, considering the prevalence of the adhering Party's consumer law, where more advantageous, this risk should not be in the offing.
After all, the regulation appears to be necessary for coordinating these rules with those envisaged by the Rome I Regulation. The additional model could spare the settlement costs and also the charges for the judicial system and the Parties' legal assistance. It would facilitate competition between professionals, but also between courts, since the Party who decides to resort to the court could choose between the two possible options (its own judge or the other Party's), by evaluating only the time schedule and the reliability of the justice administration system, thus avoiding having to know other national systems in-depth.
Option 5 -- Directive on European Contract Law
The option regarding the instrument of directive does not appear advisable in this sector. The reason is that it would enable national lawmakers to interpret and implement the proposed model in a different way, thus leading to a multiplication of models which would worsen, rather than improve, the formation technique and would not reach the hoped-for result of more uniform implementation and interpretation of the economic transactions' legal status and, hence, of greater law certainty.
Option 6 -- Regulation establishing a European Contract Law
The option of a regulation establishing a European Contract Law is opposed by many parties on the basis of subsidiarity and proportionality principles, as well as by others for reasons of E.U. bodies' competence and even insufficient "democratic nature" of an instrument regarding this matter. Indeed, many sectors are already regulated by directives and, hence, subjected to a more or less marked harmonization. Particularly in this regard, the methodological issues mentioned at the beginning of this paper, should be discussed: the advisability of a fragmentation of contract regulations by type of Contracting Parties, economic transactions, alleged or real contractual power and its national differentiation.
Option 7 -- Regulation establishing a European Civil Code
The same methodological reasons also regard the adoption of a E.U. contract code: we could think of gradual harmonization entrusted, at first, to a regulation regarding contracts only and, subsequently, to its extension to other sources of obligation, special contracts and other matters now included in the Draft Common Frame of Reference (2009 version). Nevertheless, as noted at the beginning of this paper, from the systematic viewpoint it seems more appropriate not to detach contract law from the body of rules on the sources of obligation.
In the solutions proposed, an answer has already been provided to the other issues.
By way of completion to the considerations made on the text and the answers related to the issues proposed in the Green Paper, see the works included in the
List of publications by the Consiglio Nazionale Forense (CNF)
Furthermore, the proceedings of a workshop co-organized by Consiglio Nazionale Forense and Associazione Civilisti Italiani in 2009 were published under the title Il Draft Common Frame of Reference, Cedam, Padova, 2009, edited by Guido Alpa, Giovanni Iudica, Ubaldo Perfetti, and Paolo Zatti.