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THE COMMON EUROPEAN SALES LAW, CONSUMER PROTECTION AND OVERRIDING MANDATORY PROVISIONS IN PRIVATE INTERNATIONAL LAW

Published online by Cambridge University Press:  09 April 2013

Christopher Bisping
Christopher Bisping*
Affiliation:
Assistant Professor, University of Warwick, [email protected].
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Abstract

This article analyses the relationship of the proposed Common European Sales Law (CESL) and the rules on mandatory and overriding provisions in private international law. The author argues that the CESL will not achieve its stated aim of taking precedence over these provisions of national law and therefore not lead to an increase in cross-border trade. It is pointed out how slight changes in drafting can overcome the collision with mandatory provisions. The clash with overriding mandatory provisions, the author argues, should be taken as an opportunity to rethink the definition of these provisions.

Keywords

conflict of lawsCommon European Sales Lawmandatory provisionsoverriding mandatory provisionsconsumer protection
Type
Shorter Articles
Information
International & Comparative Law Quarterly , Volume 62 , Issue 2 , April 2013 , pp. 463 - 483
Copyright
Copyright © British Institute of International and Comparative Law 2013

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References

1 COM(2011) 635 final. The document contains the Regulation, to which the text of the Common European Sales Law is appended. In the following ‘Regulation’ refers to the Regulation itself, and ‘CESL’ refers to the Common European Sales Law.

2 See only the latest contribution of 9 July 2012: H Eidenmüller, What Can Be Wrong with an Option? An Optional Common European Sales Law as a Regulatory Tool available at <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2102827>, and more generally, Eidenmüller, H et al. , ‘Der Vorschlag für eine Verordnung über ein gemeinsames Europäisches Kaufrecht (2012) 6 JZ 269CrossRefGoogle Scholar.

3 Law Commission, An Optional Common European Sales Law: Advantages and Problems. Advice to the UK Government, November 2011 available at <http://lawcommission.justice.gov.uk/docs/Common_European_Sales_Law_Advice.pdf>; and Verbraucherzentrale Bundesverband, Ein Gemeinsames Europäisches Kaufrecht Stellungnahme des Verbraucherzentrale Bundesverbandes Zum Verordnungsvorschlag der Europäischen Kommission (available in two parts at <http://www.vzbv.de/cps/rde/xbcr/vzbv/Stellungnahme-vzbv-Gemeinsames-Europaeisches-Kaufrecht-2012-01-13.pdf> and <http://www.vzbv.de/cps/rde/xbcr/vzbv/Gemeinsames_Europaeisches_Kaufrecht-Stellungnahme-vzbv-2012-05-13.pdf>).

4 Regulation Recital 27.

5 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, OJ L 177/6.

6 In the following the focus will be on the Rome I Regulation.

7 Rome I Regulation art 3(3). This might only become an issue where a Member States decides to make CESL available for internal transactions as provided for in Regulation art 13.

8 Rome I Regulation art 6(2). There are two further limitations, which are irrelevant in the present context: employment contracts (Art 8(1) sentence 2) and form of contracts relating to rights in rem or tenancy of land (Art 11(5)).

9 Rome I Regulation art 9.

10 Regulation Recital 12.

11 Rome I Regulation art 9(1).

12 See Part IV.E below.

13 Chapters 7 and 8 CESL (arts 66–86).

14 Basedow, J, ‘Theorie der Rechtswahl oder Parteiautonome Grundlagen des Internationalen Privatrechts’ (2011) 75 Rabels Zeitschrift für ausländisches und internationales Privatrecht 33CrossRefGoogle Scholar.

15 Restatement 2nd Conflicts section 187(2)(a). See also UCC section 1-105: ‘reasonable relation’.

16 eg. Introductory Act to the Civil Code of 1942 art 9 (Brazil); Civil Code of 1948 art 19 (Egypt). For further references see Basedow (n 14).

17 Equally Hague Convention art 2.

18 Italics not in the original.

19 The same is possible under Restatement 2nd Conflicts section 187(1).

20 Brödermann, E, ‘The Impact of the UNIDROIT Principles on International Contract and Arbitration Practice – the Experience of a German Lawyer’ (2011) UnifLRev 589, 595Google Scholar.

21 Vernooij, NW, ‘Rome I: An Update on the Law Applicable to Contractual Obligations in Europe’ (2009) 15 ColumJEurL 71, 73Google Scholar.

22 Shamil Bank of Bahrain v Beximco Pharmaceuticals Ltd [2004] EWCA Civ 19 [2004] 1 WLR 1784.

23 See Part IV.D below; and n 75.

24 Art 8(1) sentence 2; the wording of art 6(2) is marginally different but with no change as to the substance.

25 Morse, CGJ, ‘The EEC Convention on the Law Applicable to Contractual Obligations’ (1982) 2 Yearbook of European Law 107, 136–7CrossRefGoogle Scholar; Philip, A, ‘Mandatory Rules, Public Law and Choice of Law’ in North, PM (ed), Contract Conflicts (North-Holland 1982) 81, 99–100Google Scholar (who advocates simultaneous application of both laws if they grant different favourable rights to the consumer, but application of the chosen law where this is more favourable); Plender, R and Wilderspin, M, European Private International Law of Obligations (3rd edn, Sweet & Maxwell 2009) 9–063Google Scholar.

26 Rome I Regulation art 4, or, for consumer contracts, art 6(1).

27 See Bisping, C, ‘Consumer Protection and Overriding Mandatory Rules in the New Rome I Regulation’ in Devenney, J and Kenny, M, European Consumer Protection – Theory and Practice (CUP 2012) 239CrossRefGoogle Scholar.

28 ibid.

29 Fawcett, JJ, Harris, JM and Bridge, M, International Sale of Goods in the Conflict of Laws (OUP 2005) 13.302 ffGoogle Scholar; see further Part IV.E below.

30 Rome I Regulation art 21; 1955 Hague Convention art 6.

31 Kegel, G and Schurig, K, Internationales Privatrecht (9th edn, CH Beck 2004) 516 ffGoogle Scholar.

32 MW Hesselink, ‘How to Opt into the Common European Sales Law? Brief Comments on the Commission's Proposal for a Regulation’ Amsterdam Law School Legal Studies Research Paper No 2011-43; Centre for the Study of European Contract Law Working Paper No 2011-15 available at <http://ssrn.com/abstract=1950107> 7.

33 Regulation art 8(2).

34 The idea of a blue button was first promoted by H Schulte-Nölke, ‘Europäisches Vertragsrecht als blauer Button im Internet’ (2007) Zeitschrift für das gesamte Schuldrecht 81. See further Beale, H, ‘The Future of the Common Frame of Reference’ (2007) 3 ERCL 247CrossRefGoogle Scholar.

35 Regulation art 9 and Annex II.

36 Regulation art 13.

37 The terminology is not universally accepted, for an overview of the different approaches see Rühl, G, ‘The Common European Sales Law: 28th Regime, 2nd Regime or 1st Regime?’ (2012) 19 Maastricht Journal of European and Comparative Law 149CrossRefGoogle Scholar (Maastricht European Private Law Institute Working Paper No 2012/5, available at <http://ssrn.com/abstract=2025879>).

38 It has been pointed out that this name is misleading as there are more legal systems within the EU than Member States (the UK eg encompasses three legal systems), G Dannemann, ‘Draft for a First Chapter (Subject Matter, Application and Scope) of an Optional European Contract Law’ (2011) OUCLF available at <http://ouclf.iuscomp.org/articles/acquis_group2.shtml>; the name is further misleading as the parties are free to choose a non-EU law to govern their contract; Fornasier, M, ‘28. versus 2. Regime – Kollisionsrechtliche Aspekte eines optionalen europäischen Vertragsrechts’ (2012) 76 Rabels Z 401CrossRefGoogle Scholar; Rühl (n 37) in fn. 8; Stürner, M, ‘Kollisionsrecht und Optionales Instrument: Aspekte einer noch ungeklärten Beziehung’ (2011) GPR 236, 239Google Scholar.

39 Basedow, J, ‘Fakultatives Unionsprivatrecht oder: Grundlagen des 28. Modells’ in Joost, D, Oetker, H and Paschke, M, Festschrift für Franz Jürgen Säcker (CH Beck 2011) 29, 31Google Scholar.

40 Explanatory Memorandum to the draft Regulation (n 1) 8.

41 Recital 14 Regulation.

42 Rome I Regulation art 6(1).

43 Rome I Regulation art 3.

44 Rome I Regulation art. 25 declares that earlier conventions remain applicable.

45 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations, OJ L 199/40.

46 Regulation art 7(2).

47 Regulation art 13(2).

48 Part III.

49 See Part II, above.

50 The requirements are defined more precisely in art 6(1) Rome I Regulation. The essence of the test is whether the professional (= trader) entered the consumer's home market. If the consumer ventured out and approached the trader on the latter's home market, then art 6 Rome I Regulation is not applicable. See Plender and Wilderspin (n 25) 9–047 ff.

51 This is in deviation from art 4 Rome I Regulation which makes the characteristic performer's law applicable; in a sale situation the characteristic performer is the seller.

52 Rome I Regulation art 6(2).

53 Morse (n 25); Philip (n 25) 81; Plender and Wilderspin (n 25) 9–063.

54 BGB section 312d.

55 ibid section 357(2); only where the value of the goods is below €40 can the cost by agreement be imposed on the consumer.

56 Commissioner of Public Works v Hills [1906] AC 368; Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79.

57 See the references in the previous footnote. For the proposition that the law on penalty clauses operates as a consumer protection device see Campbell Discount Co Ltd v Bridge [1962] AC 600, Philips v The Attorney General of Hong Kong [1993] 61 BLR 41, and Chen-Wishart, M, Contract Law (4th edn, OUP 2012) 557CrossRefGoogle Scholar.

58 According to Recital 11, CESL should ‘maintain or improve the level of protection that consumers enjoy under [EU] consumer law’.

59 Recital 11 and passim.

60 Recital 24.

61 Ragno, F, ‘The Law Applicable to Consumer Contracts’ in Ferrari, F and Leible, S (eds), Rome I Regulation. The Law Applicable to Contractual Obligations in Europe (Sellier European Law Publishers 2009) 129, 152Google Scholar.

62 Discussed with further references in Morris, Dicey and , Collins (eds.), The Conflict of Laws (14th edn, Sweet & Maxwell 2006) 13–033Google Scholar; and Ragno ibid 153.

63 Recital 12.

64 The Rome I Regulation only allows choice of State law, no other instruments, which can only be incorporated qua terms into a contract (Recital 13). Fornasier (n 38).

65 Eidenmüller et al. (n 2) 273.

66 Now TFEU art 81(2)(b); see Rome I Regulation Recital 2.

67 TFEU art 114(3).

68 Basedow (n 39); Fornasier (n 38).

69 Rühl (n 37); Fornasier (n 38).

70 There are various names suggested for such an approach. Rühl (n 37) refers to it as the ‘1st regime’ on basis of the fact that CESL would take precedence not only over the rules of private international law but also of the autonomous national laws. Other authors use terms such as einheitsrechtliche Lösung/Ansatz (uniform law solution/approach) (Busch, C, ‘Kollisionsrechtliche Weichenstellungen für ein Optionales Instrument im Europäischen Vertragsrecht’ (2011) 22 EuZW 655Google Scholar; Schulte-Nölke, H, ‘Der Blue Button kommt – Konturen einer neuen rechtlichen Infrastruktur für den Binnenmarkt’ (2011) 19 ZEuP 749Google Scholar); second regime model (M Stürner (n 38) 236) and model of direct or immediate application (Fornasier (n 38)); Heiss, H and Downes, N, ‘Non-Optional Elements in an Optional European Contract Law’ (2005) 13 ERPL 693Google Scholar; E Lein, ‘Issues of private international law, jurisdiction and enforcement of judgments linked with the adoption of an optional EU contract law regime’ available at <http://www.europarl.europa.eu/webnp/webdav/site/myjahiasite/users/emartinezdealosmoner/public/Lein%20EN.pdf>.

71 eg Rühl (n 37) 12/13.

72 TEU art 5.

73 The same view is taken, in principle, by Magnus, U, ‘CISG and CESL’ in Bonell, MJ, Holle, M-L and Nielsen, PA, Liber Amicorum Ole Lando (Djoef Publishing 2012) 225, 239–41Google Scholar. He suggests, however, to resolve the problem by understanding ‘Article 11 Proposal as an exception to Article 6 (2) Rome I Regulation’. This seems difficult to square with the express reference to ‘matters addressed’ in Regulation art 11, which shows that it is to do with substantive law not choice of law issues. Therefore Magnus too concludes that a ‘clear formulation in Article 6 (2) Rome I Regulation that this provision does not apply … would however be certainly preferable’. The liber amicorum Ole Lando contains several further articles on CESL, some of which even contrast it to CISG: MM Fogt, ‘Private International Law Issues by Opt-out and Opt-in Instruments of Harmonization: A Comparison between CISG and CESL’ 119; J Basedow, ‘An EU Law for Cross-Border Sales Only – Its Meaning and Implications in Open Markets’ 27. None of these articles deal with the question addressed here.

74 Swiss Act on Private International Law art 120(2).

75 Briggs, A, The Conflict of Laws (2nd edn, OUP 2008), 173Google Scholar; Dicey, Morris and Collins (n 62) 32–105; Fawcett, Harris and Bridge (n 29) 13.99, questioning, however, whether the policy requiring consideration was strong enough for a court to insist on it; see Re Bonacina [1912] 2 Ch 394.

76 Fawcett, Harris and Bridge (n 29) 13.99.

77 CESL art 85(e).

78 Regulation art 13(1).

79 F Enderlein and D Maskow, International Sales Law (Oceana 1992) art 6 No 3.1 available at < http://cisgw3.law.pace.edu/cisg/biblio/enderlein.html>; R Herber, Article 6, in Commentary on the UN Convention on the International Sale of Goods (P Schlechtriem ed, 1998) No 24; M Lorenz, Artikel 6, in International Einheitliches Kaufrecht: Praktiker-Kommentar und Vertragsgestaltung zum CISG, No 20 (W Witz, H-C Salger and M Lorenz eds, 2000); U Magnus, Artikel 6, in J von Staudingers Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Wiener UN-Kaufrecht (CISG) (1999) No 55; G Reinhart, UN-Kaufrecht (1991) art 6 No 8; H Rudolph, Kaufrecht der Export- und Importverträge (1996) art 6 No 1, No 6.

80 Honnold, JO, Uniform Law for International Sales under the 1980 United Nations Convention (3rd edn, Kluwer 1999) 103.2Google Scholar.

81 Schwenzer, I (ed), Schlechtriem and Schwenzer: Commentary on the UN Convention on the International Sale of Goods (CISG) (3rd edn, OUP 2010)Google Scholar, art 6 No 31 citing as an example, in fn 92, mandatory formal provisions that in this case override art 11 CISG.

82 CISG is not available for choice where the contract is purely internal as it requires a ‘sale of goods between parties whose places of business are in different States’ (art 1(1)). This does not have any effect on the general relation between CISG and mandatory provisions though. Signatory States could expand its scope to include domestic transactions.

83 The expression ‘action of Contracting States’ is Honnold's (n 80), art 6 No 84.

84 Even if rather indirect via accession to the EU and subjection thereby to EU directives.

85 CISG art 1.

86 Rome I Regulation art 9(2).

87 Rome I Regulation art 9(3).

88 Planck, MaxInstitute for Comparative and International Private Law, ‘Policy Options for Progress towards a European Contract Law’, (2011) 75 Rabels Z 371Google Scholar.

89 ibid 407 [88].

90 Directive 86/653/EEC, OJ 1986 L 382/17.

91 Regulation 961/2010/EC, OJ 2010 L 281/1.

92 Max Planck Institute (n 88) 407 [89].

93 Dannemann (n 39) in Part E; Stürner (n 38) 238.

94 BGH XI ZR 82/05, 13 December 2005 (2006) NJW 762.

95 Cour de Cassation 1st Civil Chamber, 23 May 2006 (2006) Bulletin des arrêts de la cour de cassation civil, no 258.

96 English v Donnelly 1958 SC 494, a Scottish decision, which is also relied on in England as precedent for the proposition that consumer credit law is of an overriding mandatory nature. See further Bisping (n 27) 248.

97 See OFT v Lloyds [2008] 1 AC 316; this is misconceived; see Bisping, C, ‘Avoid the Statutist Trap. The International Scope of the Consumer Credit Act 1974’ (2012) 8 JPIL 1Google Scholar.

98 Dicey, Morris and Collins (n 62) 1-058; for a critique see Mann, FA, ‘Unfair Contract Terms Act 1977 and the Conflict of Laws’ (1978) 27 ICLQ 661CrossRefGoogle Scholar.

99 CESL art 6.

100 UCTA 1977 section 26.

101 Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers, OJ L 133/66 in Art 3(n) defines linked credit agreements as including situations where the credit is granted by a third party.

102 Arts 79–86.

103 See only Eidenmüller et al (n 2) 270 and 286.

104 UCTA 1977 section 26(3) and (4).

105 Emphasis added.

106 See above Part IVA.

107 See above Part IVD.

108 Leible, S, ‘Kollisionsrecht und vertikaler Regulierungswettbewerb’ (2012) 76 Rabels Z 374, 387 ffGoogle Scholar.

109 See eg the complaint by the German Bundestag available at <http://dipbt.bundestag.de/dip21/btd/17/080/1708000.pdf>.

110 Bisping (n 27) 245, 249.

111 Joined cases C-369/96 and C-376-96, [1999] ECR I-8453.

112 ibid 29.

113 ibid 31 and 33.

114 ibid 34, 39, 51 and 64.

115 ibid 35.