European contract law and the Digital Single Market: Policy Hub

Written by Rafał Mańko

On Friday, 18 September 2015, the EPRS Citizens’ Policies Unit held a Policy Hub devoted to ‘European contract law and the Digital Single Market’. Moderated by Piotr Bąkowski, Policy Analyst with the Citizens’ Policies Unit of the Members’ Research Service, the Policy Hub brought together a renowned expert in the field, Professor Martijn Hesselink (Director of the Centre for the Study of European Contract Law at the University of Amsterdam) and Dr Dirk Staudenmayer (Head of ‘Contract Law’ in the Commission’s Directorate-General for Justice and Consumers). Dr Rafał Mańko, Policy Analyst in the Citizens’ Policies Unit, specialising in private law and author of the recently published EPRS in-depth analysis on the topic, sat on the panel as discussant.

The Digital Single Market Strategy and contract law

In its Digital Single Market Strategy, unveiled in May 2015, the Commission promised to come up with a revised proposal for a Common European Sales Law by the end of the year. The Commission further published an Inception Impact Assessment in July 2015. The original proposal for a Common European Sales Law provided for an ‘optional instrument‘, i.e. a code of sales law which would neither replace nor harmonise national laws, but which could be chosen as a ‘second regime’ within national law. However, although the proposal received backing from Parliament, negotiations stalled in Council and the Juncker Commission promised to make modifications. It is, however, certain that the revamped proposal will not take the form of an ‘optional instrument’, but most probably a directive. The new instrument will focus on digital contracts, but its exact scope (e.g. the inclusion of consumer-to-consumer transactions) remains to be seen. Another aspect of the proposal, highlighted by the Commission, is the ‘country of origin principle‘ whereby online sellers would be able to operate under their national law with regard to a cross-border sales contract.

‘Justice for growth’ or ‘justice for justice’?

The first speaker, Professor Hesselink, alluding to the Commission’s ‘justice for growth’ agenda, proposed to focus on ‘justice for justice’, and to think of contract law not only in economic, but also in moral terms. He also pointed out that social justice not only entails consumer protection, but must also take into account the interests of small traders (especially from Central Europe) who could benefit from the country of origin principle. Professor Hesselink also stressed the need for a ‘democratic contract law’; understood as making decisions on the content of contract law rules following a democratic debate (especially in the European Parliament), rather than through a technocratic process detached from citizens. The speaker underlined that, today, the text of the CESL as adopted by the Parliament in first reading (in February 2014) is the only democratically legitimate version, and that therefore the Commission should take this version into account when drafting its proposal.

Discussing the future proposal

Dr Staudenmayer, in turn, put the future proposal in the context of the Commission Digital Single Market Strategy and highlighted its contours. He underlined the pressing need to regulate contracts for the supply of digital content and the online sales of tangible goods at EU level.
Dr Mańko in his remarks as discussant, pointed out that contract law involves balancing between the interests of various groups, such as consumers, SMEs and large companies, and those balances may differ from Member State to Member State, depending on their political culture and traditions. This could be an argument in favour of a cross-border only EU instrument dealing with contract law, which could exist in parallel with national sales laws applicable to domestic transactions. He also highlighted the importance of the country of origin principle for sole traders, who do not have the means to seek professional legal advice regarding the sales laws of other Member States.
A lively discussion, organised under the Chatham House rule, followed. The Policy Hub – the fourth organised by the Citizens’ Policies Unit – was an excellent occasion for an informal exchange of views between EPRS policy analysts, external experts, MEP assistants, and administrators working in the Policy Departments, as well as the IMCO and JURI Committee Secretariats.