Harmonisation of Private Law in Europe and the Development of Private Law in Slovenia

Author:Damjan Možina
Position:Doctor iuris, University of Ljubljana

Damjan Mo ina

Doctor iuris, University of Ljubljana

Harmonisation of Private Law in Europe and the Development of Private Law in Slovenia

1. Introduction: Status of private law reform in Slovenia

The Republic of Slovenia, a member of the EU since 1 May 2004, is a former republic of the Socialist Federal Republic of Yugoslavia. It gained independence in 1991 1 , following a referendum 2 after the first free and democratic parliamentary election in 1990. As in other former socialist countries, the official ideology has strongly influenced the legal system. The Communist revolution during and after WWII fundamentally changed the role of the law and of the judicial system. The tradition and development of pre-war private law were interrupted by the introduction of some new concepts, the most important ones concerning private property and free entrepreneurship. Private property was severely restricted. Private owners of immovable property in urban areas as well as owners of rural land exceeding a certain limit were expropriated by way of nationalisation. Another example is the introduction of so-called 'social' ownership (property of the society), mostly superseding state ownership. Private companies were nationalised and private entrepreneurship largely prohibited. Whereas there was an official monopoly of state (later 'social') capital, the management of companies was, at least declaratively, entrusted to the workers by way of an all-embracing system of 'self-management'. However, not all areas of private law were equally affected by these political and legal experiments. A good example is the law of obligations: apart from a few exceptions the Act on Obligations (1978) is certainly comparable to some Western civil (obligations) codes3. Neither 'old' (from 1918 to WWII 4 ) nor 'new' (after WWII) Yugoslavia succeeded in adopting a comprehensive civil code5. The 'old' Yugoslavia wasn't even a unified legal territory; courts continued to apply pre-WWI civil codes: the Austrian Civil Code (in Slovenia and Croatia), the Serbian Civil Code, and the Montenegrin Civil Code. In the 'new' Yugoslavia, private legal matters were regulated by singular laws rather than a code, also due to division of legislative power between the federation and the republics.

The process of private law reform began in the last years of ('new') Yugoslavia with the 1988 Companies Act 6 and continued in the republics after their independence. In Slovenia, priority was given to key areas where socialist legislation was most incompatible with the new social and legal order based on the new Constitution (1991)7. Among the first important steps in the context for this were the (not yet finished) process of denationalisation 8 , the privatisation of companies 9 , and the adoption of the new Companies Act 10 - the latter very clearly under the influence of the German GmbH-Gesetz and Aktiengesetz). The majority of private law, however, continued to be in force. A new property law code was adopted in 200211. Family law 12 and law of succession 13 have remained basically unchanged thus far. The same is true for most of the law of obligations. This shows that a considerable part of the private law regulation was considered satisfactory and unproblematic from the viewpoint of the new social and legal system.

2. Law of obligations: The Yugoslav Obligations Act, Slovenian Obligations Code, and Consumer Protection Act

For decades following WWII, Yugoslavia did not comprehensively regulate the law of obligations. In 1946, the revolutionary authorities annulled all pre-war (i.e., 'bourgeois') legislation, including civil and commercial codes14. However, since the adoption of comprehensive new legislation was not expected to occur soon after, it was allowed to apply the old rules in so far as they didn't contravene any rules and principles of the new political and legal order15. An important quasi-legislative role in commercial contract law (B-to-B) was played by the so-called 'General usances for trade with goods' - adopted in 1954 by the plenum of 'state trade arbitration'. The 'usances' brought about not only a collection of existing trade usages but also new regulation of some key issues of general contract law, effectively becoming a predecessor to the Obligations Act (1978). The leading role in the development of the law of obligations in the years prior to adoption of this act was played by the courts, which applied the old rules creatively and accepted some modern trends, especially in tort law.

The preparation of the Obligations Act was based on a draft (so-called 'Sketch') prepared by Professor Mihailo Konstantinovic16. In the later stages of the preparation, the draft was modified considerably, causing its author to decline further co-operation in the project. Regretfully, almost no travaux préparatoires for the Obligations Act are publicly available; thus, the reasons for adoption of specific solutions are unclear. The act on 'obligational relations' (the Obligations Act), adopted in 1978 as a Yugoslav federal act 17 , comprises a wide range of influences from different European codes - the Swiss Obligationenrecht, Italian Codice Civile, German BGB, and Austrian ABGB - with none of them prevailing. Following the Italian and Swiss example of a monistic approach, commercial and non-commercial ('civil') contracts are regulated uniformly. Characteristic of the act is a very distinct influence of uniform sales law, the Hague Conventions on Uniform Sales Law, predecessors of the United Nations Convention on Contracts for the International Sale of Goods (CISG); therefore, the accordance of many provisions with the CISG is not surprising18. Apart from the chapter on conclusion of contracts and provisions on sales contracts, the most prominent example is the general exemption clause for damages resulting from breach of contract (the Obligations Act, or OA, article 263), which is very close to article 79 of the CISG. On the other hand, the OA also includes some outdated solutions and approaches, examples being the absence of a uniform notion of breach of contract and a very different treatment of non-performance (delay), defective performance (material and legal defects), and impossibility of performance. The prevailing views upon the OA among legal scholars also show that, despite the new act, the understanding and interpretation of the law of obligations were still much influenced by the traditions of old civil codes, above all the Austrian ABGB19.

Interestingly, the Yugoslav Obligations Act (1978) was an attempt to achieve some of the goals of consumer protection, later pursued by the European consumer protection directives, by using very similar mechanisms, albeit without the concept of consumer. Apart from the regulation of unfair contract terms in OA articles 142-144, the most important examples are producer's liability (OA article 179) and the system of a one-year obligatory 'guarantee for proper functioning' for a wide range of 'technical' goods (OA articles 501-507) - a liability of producer and seller, in addition to (non-mandatory) liability of the seller for material defects20.

After Slovenian independence, it was only natural that the Yugoslav Obligations Act, having been well accepted by Slovenian lawyers and having stood the test of practice, continued to be in force. In 2001 Slovenia adopted a new code of obligations (in force since 1.01.2002) 21 , but it can hardly be called new - apart from regulation of some contract types that were previously unregulated in the Yugoslav Obligations Act 22 and some minor and no conceptual changes, the modifications were mostly of 'cosmetic' nature: in fact, it is the Yugoslav Obligations Act with new numbering of articles. Ironically, the expert group preparing the reform decided that there was no need for reform23. Among the sources for such a decision were discussions with experienced judges. It seems that the aim of adopting the Slovenian Obligations Code was more a formal "Slovenisation" than an actual modernisation of Law of Obligations.

In 1998, the Consumer Protection Act was adopted 24 , creating a new branch of law of obligations by providing some special rules on limitations of party autonomy in relations between sellers and consumers regarding unfair contract terms, guarantee for proper functioning of goods, contract of sale, instalment sale, door-to-door sale, distance contracts, time-share contracts, and producer's liability. However, the relation between party autonomy and interventionism did not fundamentally change, since, as already indicated, already the Yugoslav Obligations Act contained several mandatory regulations (e.g., mandatory guarantee for proper functioning of the goods sold).

Another issue needs to be addressed in brief: Gaining independence from Yugoslavia was certainly beneficial for Slovenia in very many respects. On the other hand, Slovenia ceased to be a part of a relatively large system of (inter alia) private law. The same Obligations Act was used and developed by many courts in a much (about 12 times) bigger country, a great number of legal scholars discussed the same questions; there were several commentaries and books, etc. The law of obligations is, in spite of the reforms in Slovenia and Croatia, still the same or very similar in all of the former Yugoslav republics, but discussion between judges and...

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