The Development of European Private Law and the European Commission’s Action Plan on Contract Law

• Author: Hugh Beale
• Position: Professor, University of Warwick, Member of the Study Group on a European Civil Code
• Pages: 4-16

Hugh Beale¹

Professor, University of Warwick, Member of the Study Group on a European Civil Code

The Development of European Private Law and the European Commission's Action Plan on Contract Law

The Development of European Private Law and the European Commission's Action Plan
on Contract Law²

1. Introduction

My purpose in this paper is to provide a brief overview of developments in European contract law and to introduce the work of some of the groups involved. By 'European contract law' I do not mean the 'hard law' of the EC directives or regulations but the work that is being done by groups in comparative study of the various systems and the development of 'soft law' in the form of statements of common principles underlying the various laws of contract of the member states. In particular, I will speak about the Commission on European Contract Law, which was led by Professor O. Lando of Copenhagen, and its successor, the Study Group on a European Civil Code (SGECC)³, which is led by Professor C. von Bar of Osnabrück. First, I will give an overview of what has been or is being done, then I will explain the uses that we think may be made of the work of the Lando and von Bar groups under the European Commission's Action Plan on European Contract law.

2. The Principles of European Contract Law

Many of you may have seen the Principles of European Contract Law produced by the Commission on European Contract Law led by Professor Lando⁴. These are often called the PECL or, by everyone except Lando himself, the Lando Principles.The Lando Principles are in the form of a series of articles, accompanied by a commentary explaining how they relate to each other and the principles as a whole, to give the reader help in understanding them. There are also notes that explain how each article relates to the various national laws, with references to primary or secondary sources in each national system⁵.

Essentially, the project was to produce a statement of the principles that the group thinks underlie the private law of all the individual member states of the EU. I will return to the purpose of the principles after I have described the SGECC.

3. The Study Group on a European Civil Code

Professor von Bar was a member of the Lando group, and his project grew out of it. Its aim is to do what the PECL have done for general contract law for, more or less, the rest of private law.

The SGECC comprises several teams. Each team is led by a distinguished professor. Most consist of a team leader and a number of young researchers - usually students who are at the same time working on their PhDs - who do much of the comparative research. The teams are based in universities in different countries. In Germany (under Professor C. von Bar in Osnabrück) there are teams working on torts, unjust enrichment, and negotiorum gestio ('benevolent intervention') and (under Professor U. Drobnig at the Max-Planck-Institut in Hamburg) on personal security and security of movable property. In the Netherlands, there are teams working on sales (under Professor E. Hondius in Utrecht); service contracts (under Professor J. Barendrecht in Tilburg); and long-term contracts such as those of agency, distribution, and franchising (under Professor M. Hesselink in Amsterdam). More recently, other teams have begun work: one on the transfer of property in movables (under professors B. Lurger in Graz and J. Rainer in Salzburg); one on rental of moveable property (led by Professor K. Lilleholt in Bergen)⁶; and one on trusts (headed by Dr. Swan at Osnabrück)⁷.

The Lando group has been subsumed into this larger study group, and an additional team has commenced revision of the PECL to take care of issues that have arisen both in the work on specific contracts and more generally.

4. Other groups

What other groups are there, and what are they doing? I am not able to give an account of all of them, but it may be of interest to outline the work of those with which I am most familiar.

A number of groups apart from the SGECC are working on restatements of the common principles of European law. The works will have a roughly similar format - statements of principles in the form of articles. These groups include:

- the Academy of European Private Lawyers (Gandolfi group), which has produced a code of general contract law^*8;

- the EC group on tort and insurance law (sometimes called the Spier group, as Professor Jaap Spier was a founding member)⁹; and

- a team, established by the late Professor F. Reichert-Facilides and now chaired by Professor Heiss, working on insurance contracts¹⁰.

Also working in part on statements of principles, but taking a slightly different line, is the European Research Group on Existing EC Private Law (Acquis Group)¹¹. This group is working specifically on the principles and policies that underlie the existing acquis communautaire. There is a second group based in Turin, looking at terminology in EC contract law¹².

Then there are a number of groups that take other approaches. Three will be well known to this audience. The Common Core of European Private Law (or Trento) Project looks at how typical cases would be resolved in the various national systems¹³. The Leuven Centre for a Common Law of Europe is producing the Casebooks on the Common Law of Europe series, which aims to present what is common to the various national laws and is found in the acquis to a student audience¹⁴. The Society of European Contract Law organises conferences on the general theme of European contract law and publishes the conference papers¹⁵. Many of the papers take an interdisciplinary approach - e.g., employing economic analysis of law.

There are, of course, a number of well-established comparative law institutions that have shown some interest in European contract law. I would mention in particular the Association Henri Capitant¹⁶ and the Société de Législation Comparée.

In addition, a number of new groups have been established in the last few months, of particular note being the Research Group on the Economic Assessment of Contract Law Rules, organised from Tilburg, and the Study Group on Social Justice in European Law¹⁷.

5. A European Civil Code?

The name of the study group led by Professor von Bar suggests that its aim is no less than to produce a European civil code, starting with the law of obligations. Is this really what it is about? Was the aim of the Commission on European Contract Law to produce a single European law of contract?

To be honest, views differ. To some people, the case for a European code is obvious. First, having different legal systems within the EU hinders trade within the internal market and is inconvenient. We have managed to achieve technical harmonisation in, for example, the voltages for electrical appliances; we should do the same for our laws. Secondly, the continued existence of different national legal orders perpetuates the national barriers that the EU is seeking to overcome. For some, a European civil code would serve the same purpose of aiding political integration that civil codes have so often served in the past.

Thus, for years there have been strong voices in favour of a European code, or at least a European code of contract law. Professor Lando himself envisaged as long ago as the late '70s that his Principles of European Contract Law might form the basis of a harmonising code¹⁸. In 1989, the European Parliament passed a resolution requesting that a start be made on the preparatory work for drawing up a European code of private law¹⁹. It is clear that the body contemplated unification of the different private laws that are important for the development of a single market.

There are many arguments both for and against a European civil code. Even within the Lando group, there were many who were at best ambivalent about the notion of a European code of contract law that would replace the various individual national laws, or even harmonise them by acting as a form of directive that member states would have to implement by changing the substance of their laws. Quite apart from the difficulty of seeing any legal base for a code in the existing treaties, especially in light of the decision of the European Court of Justice in the 'Tobacco Advertising' case²⁰, many members of the Commission thought that the real value of European principles lay in less ambitious aims. Moreover, whatever the views in the European Parliament may be, there is no sign in recent European Commission documents²¹ that unification or even substantive harmonisation is anywhere on their agenda. So - and because I am one of the doubters - I want to concentrate in this paper on the other uses to which the Lando Principles and the work of the SGECC may be put.

6. The value of statements of principles

First, there is the question of contracts between parties in different jurisdictions. Private international law allows the parties, broadly speaking, to choose which law shall govern their contract and lays down rules to determine which law shall apply if the parties have not made a choice. But, as Professor Lando so clearly saw, that is only a partial solution to the problem. One of the parties will have to find out about a foreign legal system, and the same party may...