Chapter 5: Process
The source of demand for a CFR
82. We have described the background to the CFR
in dealing with its history. At the political level, impetus was
supplied by the European Parliament (which continues to press
for progress and the devotion of resources to the project)[28],
by the Council (though we have commented on the ambiguous nature
of its input) and then above all by the European Commission. This
was not primarily an initiative from the Member States, although
Professor Vogenauer speculated that, had a CFR been available
in the period when the states of eastern Europe were in transition
to democratic market economies after 1989, it would have been
very attractive for at least some of those states (Q 24).
Professor Vogenauer noted that the results of the Commission's
consultations indicated no welling up of enthusiasm for a CFR
among business organisations, though he speculated that there
was more sympathy there than among the bodies representing the
legal professions.
Impact assessment
83. There is still little hard evidence on the
fundamental question whether and how far differences in substantive
law are a source of extensive problems which require addressing
at the European level or whether and how far a common framework
of contract law in the EU would bring net benefits, which would
justify the expenditure of time, effort and money in developing
it and the transactional costs for users of adaptation to a new
product. Any idea of general harmonisation of substantive law
can, we think, be put on one side: for reasons we have identified,
it is not going to happen. But, even in relation to the suggestion
that an optional instrument might be prepared, there appears to
be no real idea whether and how far this would be welcomed, worthwhile
and feasible. As we have said, an optional instrument would only
really be effective, if it were combined with a European instrument
giving it a validity, when adopted by contracting parties, which
would over-ride any otherwise applicable legislation in whatever
law would otherwise govern. We have not seen any research into
the extent to which this might create problems or indeed be acceptable.
84. Professor Vogenauer was unaware of any
cost-benefit analysis (Q 20). Jonathan Faull acknowledged
that no assessment had yet been made since he did not yet know
the "nature of the beast". The Commission would want
to consult stakeholders to ascertain what problems are caused
by the existence of different contract laws (QQ 147-148).
85. If any form of mandatory harmonisation
or optional instrument were to be proposed, an impact assessment
in respect of the proposals should be undertaken.
86. The development of a set of non-binding
guidelines, as suggested by the Council of Ministers on 18 April
2008, is a different matter. The issue here is probably not so
much whether there should be a conventional impact assessment,
but how far it is desirable and feasible to develop even non-binding
guidelines, on the basis of the present DCFR, in a manner which
would add appreciable value to the Principles of European Contract
Law (PECL), the existing DCFR and other material available to
law-makers, and justify the time and cost involved.
Consultation
87. The Commission's Communication of October
2004 noted that stakeholder participation in the process of preparing
a CFR was "essential" (see paragraph 11), but in the
event the process appears to have been problematic. Professor Vogenauer,
who was not himself involved, said that stakeholders were reported
to have been generally "rather frustrated" by the processes
for consultation. They received drafts at a late stage and the
meetings to discuss them were too short (Q 68). He also noted
that the consultation period between the production of the interim
DCFR in December 2007 and the final academic version a year later
was very short (Q 65)—though in his view the Commission
itself had tried to be transparent and had not sought to steer
the outcome of the research (Q 69).
88. Professor Whittaker noted the problem
encountered at the workshops (and the limited range of the workshops'
subject-matter) was "that many of the provisions of the DCFR
have not yet enjoyed the systematic input from legal practitioners
and, indeed, other jurists outside the two main groups of researchers".[29]
The Committee thinks that this is an important point in deciding
now how much further and how the CFR project may sensibly be pursued.
Jonathan Faull also noted that if the matter went further, the
Commission would consult in order to make this a "practical
exercise in the interests of the real stakeholders" (Q 152).
89. We stress the importance of focused and
effective consultation, by both the Commission and the Government,
if the Commission decides to pursue the CFR project.
A European law commission?
90. We asked Lord Bach and Jonathan Faull whether,
for a project of the size of the CFR, a European institution on
the lines of the Law Commissions of the United Kingdom might be
useful. Lord Bach thought the idea interesting but said the Government
had not formed a view on it (Q 113). Mr Faull acknowledged
that lessons on method should be learned from the CFR project
and the suggestion for a law commission would have to be considered
(Q 153).
91. We hope the Government and the Commission
will give further consideration to the idea of an EU law reform
body to promote the coherence of European Law.
Next steps
92. The academic research teams have, with the
publication of the outline edition of the DCFR, concluded the
work called for by the Commission's Action Plan. The initiative
now lies with the EU Institutions, in particular the Commission.
It is with no disrespect to the authors of the DCFR that we endorse
Jonathan Faull's statement that "we are not doing this for
professors … and we will only do it if it has a genuine positive
practical impact" for European businesses and citizens (Q 152).
93. The key message we took from Jonathan Faull's
evidence is that the Commission will not be rushed into decisions
on the next steps. As he put it, "We want to get this right
rather than hurry it" (Q 152). In any event, the appointment
of a new Commission and the European Parliamentary elections this
year would mean that key initial decisions may take longer than
normal (Q 155). Mr Faull pointed out that the Directorate
General for Justice, Freedom and Security which he leads only
recently took over responsibility for the CFR from the Directorate
General for Health and Consumers which had responsibility while
the CFR project was closely linked to work on consumer protection.
The transfer of responsibility reflected a policy view that the
CFR should be addressed in the broader context of EU action in
the area of civil justice (Q 143) where justice ministers
had long held it belonged (Q 156).
94. Mr Faull explained that officials in
the Commission were reviewing all the work undertaken so far and
would develop proposals from the range of possibilities that have
been canvassed, for consideration initially by the Commissioner
responsible for justice matters, M. Barrot, and then by the College
of Commissioners. In the meantime, there would have to be "something
credible" in the Commission's proposal (expected to be published
in June 2009) for the EU's next five-year programme for justice
and home affairs to be agreed by the European Council (already
being referred to as the Stockholm Programme) (QQ 123, 155).
95. Having heard Jonathan Faull's evidence, we
are confident that the Commission does not and will not under-estimate
the nature and difficulty of the task facing it. Much effort and
no doubt a good deal of money have been invested in this project,
and there are still strong voices calling for radical progress.
Jonathan Faull's Directorate has, as he frankly put it, "inherited
a matter of enormous size and complexity" and has until now
only been able to put a few people to work on it, although they
plan to allocate more resources in due course as necessary (Q 130).
96. However, the nature and scale of the work
already undertaken adds, if anything, to the difficulty in carrying
matters forward. For the reasons we have identified, we consider
that even the first three Books of the DCFR could not directly
be adopted as a political CFR either by an inter-institutional
agreement or by the Commission alone. Even if they were to be
adopted only as a non-binding set of guidelines to be used on
a voluntary basis that would, in the real European world, invest
them with a role and weight which they could not and should not
bear. Nothing can or should stop the Commission or any other European
or national body referring to and gaining inspiration from the
DCFR in its present form.[30]
That is indeed one of the main values of such an academic exercise,
and one which the DCFR, with the forthcoming back-up discussion
and comparative law material, will on any view fulfil. We think
that there is an important question whether further work on a
political CFR should be a priority for the Commission or the Council.
97. If it is decided to proceed with the production
of a political CFR, with a view to adopting this on some formal
basis, the question needs to be faced, whether and if so how the
DCFR can be re-evaluated and converted into a workable and acceptable
political CFR. One could perhaps contemplate a renewed process
of academic work (such as Professors Eidenmüller, Faust and
others suggested in the article to which we have referred),[31]
this could be combined this time with a series of structured workshops
involving leading business and legal stakeholders; these exercises
would, we think, need to take place under the oversight of a Commission
chairman, who would control the scope of the project, identify
the nature of the decisions of principle to be taken and the order
in which they should be taken and ensure that individual articles
in the existing text were reviewed systematically and thoroughly.
But all this confirms the size and difficulty of any future task.
98. Of course, much depends upon what nature
of document the Commission might envisage distilling from the
present DCFR. But, if it were a full-scale revision of the existing
DCFR, with a view to creating, in effect, a draft code of contract
for use to guide any future legislation which the Commission might
at some future date decide to propose in the field of contract
law, this seems to us to be an unprecedented and extremely ambitious
task for the Commission to undertake.
99. We also express a doubt about whether it
is either wise or cost-effective for the Commission to attempt
to develop a draft code of contract, merely in order to have this
available as "voluntary" guidance in case the Commission
should at some future date decide to legislate in particular areas.
If such a draft is voluntary guidance only, the matter will always
have to be re-considered whenever the need for future legislation
is suggested. (We note in this connection the history of drafting
of the consumer protection proposals using the then draft of the
DCFR: see paragraph 67 above.)
100. That the DCFR is a full draft code means
that it contains areas where there are not, and are not likely
in the foreseeable future to be, significant European legislative
proposals. Without knowing or pre-judging what the Commission
may have in mind for the future or intending to limit the field
of inquiry, we believe that it would, for example, be worth analysing,
in particular, to what extent and in what respects, if any, such
proposals are likely in areas such as those covered by Book II,
Chapters 4 (Formation), 6 (Representation), 7 (Grounds of Invalidity),
8 (Interpretation), 9 sections 2 (Simulation) and 3 (Third party
rights); or Book III, Chapters 2 (Performance), 4 (Plurality),
5 (Change of parties), 6 (Set-off) and 7 (Prescription).
101. If the Commission were to conclude that
the matter should be taken forward then one way might be to identify
particular key areas that give difficulty under existing Community
law or are likely in the near future to require legislative intervention,
and to focus on these, rather than to attempt to restate in the
abstract at a European level the whole of the law of contract.
28 See the Report on European contract law and the
revision of the acquis: the way forward of the Committee on
Legal Affairs, 2 March 2006 (A6-0055/2006); and see Faull Q 146. Back
29
Op. Cit. p 33. Back
30
As is already happening in the Court of Justice-see footnote 27
above. Back
31
Footnote 22 above. Back
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