Professor, University of Warwick
The Nature and Purposes of the Common Frame of Reference
In this paper, I explain what I, as one of the 'academic researchers', understand to be the purposes of the Common Frame of Reference (CFR), and why I think it deserves support from academic and practising lawyers and businesspeople across Europe2.
In the European Commission's 2001 'Communication on European contract law' 3 and its subsequent Action Plan on Contract Law, which proposed the CFR 4 , the stated aim was to provide "fundamental principles, definitions and model rules" that can assist in the improvement of the existing acquis communautaire, and that might form the basis of an optional instrument if it is decided to create one. Meanwhile a parallel review of eight consumer-related directives is being carried out5. In February, the European Commission adopted its Green Paper on the Review of the Consumer Acquis6. In the autumn of 2007, it published a summary of the responses7.
Meanwhile, a separate group led by Professor Hans Schulte-Nölke has prepared an EC Consumer Law Compendium, explaining the different ways in which the eight directives have been implemented in the Member States8.
What are the purposes of the CFR? It is not a criticism of the commission to say that the purpose was only partially explained in the documents it released. To some extent, we have had to work this out as we have gone along, trying to consider what legislators would find helpful. I would like to offer my conclusions.
Let me start by addressing one thing that the CFR is not intended to be: a European civil code, or a single European contract law to replace the various national laws.
It is quite true that an obvious purpose for the Principles of European Contract Law 9 (PECL) was to be the basis of a European code of contract law that might, one day, replace our 27 or more national and regional laws of contract. Professor Lando himself envisaged as long ago as the late 70s that his principles might form the basis of a harmonising code10. And it is fairly evident that when Professor von Bar set up his group, his ultimate end was a European code of private law, which might replace the national laws. But even if that is still a long-term aim for some participants in the project, it seems to be generally recognised that a European civil code, or even a European contract law or code of obligations, is something for the far distant future.
Within the Lando group, there were many who were doubtful about the notion of a European code of contract law. Quite apart from the difficulty of seeing any legal base for a code in the existing treaties 11 , many members of the Lando group thought that the real value of European principles lay in less ambitious aims. They saw the PECL material as having four immediate targets. These are described in the first PECL article and the introduction and can be described as follows:
For parties to transnational contracts to adopt to govern their contract. Under current principles of private international law, the parties cannot adopt the Principles of European Contract Law as a replacement for a national system, but they can agree to incorporate them into their contract. Given that, at least for business-to-business (so-called B2B) contracts, most national laws allow a large degree of freedom of contract and lay down few mandatory rules, the effect will be much the same.
For arbitrators to apply when the parties have agreed that the contract is to be governed by 'general principles of law', the lex mercatoria, or the like.
To serve as a model for courts and legislators faced with either filling in gaps in their national law or revising it to respond properly to new economic conditions. When the Principles of European Contract Law were being finalised, members of the European Commission were very aware that the then-new democracies of central Europe were busy reforming their civil codes.
To assist in creating further harmonising measures across Europe.
Equally there are many within the Study Group who think in similar terms - or who think it is simply a valuable academic exercise. And the European Commission has vigorously denied that its aim is unification of contract law across Europe.
So what are the purposes of the CFR? There are several. One obvious one is only briefly mentioned in the commission's documents. This is, just as the PECL and the Principles of European Law (PEL) produced by the Study Group, to inspire national reforms of contract law outside the field of application of the acquis12. This aspect will be discussed in other papers. I prefer to concentrate on two other purposes, which were much more heavily emphasised in the commission's documents. The first is to assist in the improvement of the existing acquis communautaire; I call this the 'legislator's guide' or 'toolbox' function. The second is that the CFR might form the basis of an optional instrument, if it is decided to create one.
Let us start with the idea of the CFR as a legislator's guide or toolbox. The European Commission's Way Forward document stated that the CFR would set out:
common fundamental principles of contract law, including guidance as to when exceptions to such fundamental principles could be required;
definitions of key concepts; and
model rules, which would form the bulk of the CFR13.
Annex I to the paper suggests that the CFR should cover most of the rules of general contract law - for example, most of those to be found in the already-published Principles of European Contract Law 14 or the UNIDROIT Principles of International Commercial Contracts 15 , with rules for consumer contracts and on topics such as sales and insurance.
I do not want to go into a theoretical discussion of what constitutes a principle, what is a definition, and what is a model rule. It is not clear that the commission has any particular distinction in mind; it may be that they intended the phrase as a composite notion covering whatever the ultimate document was to contain.
However, it seems to me that the division between principles, definitions, and model rules can be explained in terms of the possible functions of the CFR. To describe this, it may be easier to take 'principles', 'definitions', and 'model rules' in the reverse order.
The commission is reviewing, and may revise, eight consumer directives. Part of the review will be concerned with how the directives have been implemented in the Member States, and, in particular, whether the provisions on 'minimum harmonisation' have hindered achievement of the aim of eliminating internal market barriers caused by differences between the laws of the Member States16. However, the review is also concerned with the coherence and substance of the consumer acquis.
If the directives are to be revised, the commission will find it useful to have 'model' rules that it can use or adapt to replace the existing articles of the various directives. For example, the CFR might contain model rules showing how principles that underlie the various sector-specific provisions can be given a wider application, so as to eliminate current gaps and overlaps. This would be a more 'horizontal' approach.
In addition, the Action Plan seems to envisage that the proposed rules in the CFR may go beyond the existing consumer acquis. They may include what the authors of the CFR think are, to quote the Way Forward document, the "best solutions" found in Member States' legal orders17. This might reflect what is to be found in those Member States that give consumers more than the minimum protection required by current directives - an issue that will become particularly important if there is to be a move toward more 'full' harmonisation. States that already have strong measures of protection will not want to give them up, and it may be quite difficult to agree on new, universal standards. It is true that, in its latest document, the European Commission seems to contemplate full harmonisation in only limited, 'targeted' areas (such as the length of withdrawal periods and the means of withdrawing). Nonetheless, 'model rules' for consumer contracts are essential. So are model rules for any other area in which the commission is contemplating legislation in the foreseeable future.
We can see the commission making use of draft 'model rules' already. The Green Paper on the Review of the Consumer Acquis asked questions at a number of different levels - for example, whether full harmonisation is desirable 18 , whether there should be a horizontal instrument 19 , and whether various additional matters should be dealt with by the Consumer Sales Directive20. It is clear that many of the questions arise from text in the draft CFR that researchers presented at stakeholder workshops in 2006.
Model rules will not be enough, however. Directives frequently employ legal terminology and concepts that they do not define. The classic example, referred to in the European Commission's papers, is the Simone Leitner case21. The ECJ had to decide whether the damages to which a consumer was entitled under the provisions of the Package Travel Directive must include compensation for non-pecuniary loss suffered when the holiday was not as promised. This head of damages is recognised by many national laws but was not recognised by Austrian law. The ECJ held that 'damage' as referred to in the directive must be given an autonomous...