The Common European Sales Law — Some Policy

The Common European Sales Law - Some Policy Questions - Dr. Christian Schmies 28. June 2013

I. The CESL in the Context of European Private Law Harmonisation (1) - Overview - • The Starting Point: Fragmented Harmonisation of European Private Law • Traditional Method of European Private Law Harmonisation Ø Harmonisation by way of Directives § necessity of implementation into national law by each member state Ø Sectoral Harmonisation § e. g. Consumer Credit, Unfair Terms and Conditions Ø Minimum Harmonisation § Discretion Left to Member States to go beyond European legislation – • e. g. adding additional layers of consumer protection Innovative Character of CESL Ø Optional Regime („ 28 th Regime) § precedents in other areas of European law Ø European Regulation instead of European Directive § 2 Full harmonisation

II. • A Need for CESL in Business – to – Consumer (B 2 C) Transactions? Limited Amount of Cross-Border Trade in Goods in European Union Ø Only 1 in 10 EU companies trade in goods across borders Ø 33% of EU consumers buy online domestically but only 8% buy online cross-border Ø Estimate: At least EUR 26 billion are lost in foregone trade due to differences in contract law • Variety of Barriers for Cross-Border B 2 C Business Ø Legal Systems / Tax / Language / Culture / Logistics Ø What is the relative importance of differences in national legal systems? § • European Commission estimates additional transaction costs for companies wishing to target EU consumers in other countries at EUR 10, 000 per country Jurisdictional Competition as Alternative to CESL? Ø Jurisdictional competition in European consumer law is intentionally limited § § 3 Art. 6 Rome I Convention 27 different national mandatory consumer protection laws apply

II. • A Need for CESL in B 2 C Transactions? Potential benefits of CESL for Cross-Border B 2 C business Ø Choice of „neutral“ law easier in cross-border cases than choice of one of the „national“ laws Ø With CESL, European traders could apply one set of rules across the EU § no further need to look at national mandatory consumer protection laws § significant reduction in transaction cost for trader Ø Product range offered to consumers may increase in particular in small and medium-sized economies 4

II. • A Need for CESL in B 2 C Transactions? Potential Problem for CESL to become popular in B 2 C Transactions Ø European consumers may be reluctant to agree to choice of optional new CESL § information cost regarding new law § „sunk cost effect“: time / energy invested in existing system may decrease willingness to accept new regime § already high level of consumer protection within EU may make it irrational to explore CESL as alternative option for consumer § However: consumers may be forced to accept CESL if trader only accepts contracts under CESL Ø Argument of „one set of rules“ across EU is too simplified § significant matters are out of scope of CESL – § Potential lack of uniform interpretation of CESL across member states – 5 e. g. legal personality / lack of capacity / illegality / representation creation of special European court system for jurisdiction on CESL?

III. • A Need for CESL in Business – to – Business (B 2 B) Transactions? Significant Differences in the case for CESL in B 2 B and B 2 C transactions Ø Different legal systems potentially less important in B 2 B transactions § International Chamber of Commerce (2012): - „the difference among European systems of contract law is not a significant problem for crossborder trade in B 2 B transactions. “ Ø Less restrictions for jurisdictional competition in B 2 B transactions § No need for an additional regime to avoid 27 mandatory consumer protection regimes Ø With the United Nations Convention on Contracts for the International Sale of Goods (CISG) a uniform sales law is already in place § 6 23 EU member states are contracting states to the CISG

IV. • Intangible Benefits of CESL „Epistemic“ Benefits of CESL Ø CESL has spurred a multitude of research, publications and conferences strengthening the pan-European legal discussion on contract law matters • Benefits of CESL as a legal tool-kit Ø for other areas of European law Ø for other jurisdictions § as model for own legislation § as chosen law in international transactions – However, Commission Draft does not provide for choice of CESL if none of the parties is domiciled in EU Ø as a first step to mandatory rather than optional harmonisation • 7 CESL as an instrument to strengthen European Identity

Partner Profile Dr. Christian Schmies Curriculum Vitae • • Telephone: +49 69 17095 -975 E-Mail: christian. schmies@hengeler. com Practice Areas • Investment Law • Banking and Banking Regulatory • Insurance Supervisory Law • Capital Markets 8 Admitted to bar 2007 • Frankfurt School of Advanced International Studies, Johns Hopkins University, Bologna/Washington D. C. (M. A. ) • Office: Rheinische Friedrich-Wilhelms-University of Bonn (Dr. iur. ) Hengeler Mueller since 2007 • Partner since 2013