EDITORIAL

European Private International Law as a Transition Stage?⁽¹⁾

1. The fragmentation of European private (international) law
In a series of measures, the European Union recently unified large parts of private international law. Existing European private international law was also ‘recodified’ (for more information see http://www.europa.eu.int/comm/justice_home/unit/civil_en.htm). The result is an even more fragmented European private (international) law than already existed. In some areas conflict of laws rules have been unified, in other areas national conflict of laws rules still apply. In again other areas developments have gone further, and substantive private law has been harmonised. In such cases, private international law (both at the European level and at the national level) has lost its relevance.

What are the causes of this fragmented approach? First of all, questions of competence must be looked at. Whether a measure can be taken at the European level depends upon the European treaties: Do they confer legislative power upon the European institutions? The European treaties only transfer limited powers from the (sovereign) member states to the European institutions. Furthermore, the principles of subsidiarity and proportionality play an important role, as they contain general limits in regard to the powers of European institutions (see Article 5 EC, to be found through Eur-Lex, the portal to European Union law: http://www.europa.eu.int/eur-lex/en/index.html).

If legislative power at the European level exists, a choice will have to be made between different procedures. For private law harmonisation as such, the most relevant provisions can be found in articles 94 and 95 EC (concerning the establishment or functioning of the common market and the establishment and functioning of the internal market, respectively). Regarding private international law the most relevant article is 65 EC. The European Court of Justice made it clear that mere reference to the establishment and functioning of the internal market is not enough to justify the use of the article 95 procedure: substantive reasons have to be given. Reference can be made to the so-called ‘Tobacco cases’: Case C-376/98 (Federal Republic of Germany v European Parliament and Council of the European Union) and Case C-74/99 (The Queen v Secretary of State for Health and Others, ex parte Imperial Tobacco Ltd and Others), to be found through Eur-Lex (http://www.europa.eu.int/eur-lex/en/index.html). Although article 295 EC states that this ‘… Treaty shall in no way prejudice the rules in Member States governing the system of property ownership’, it has become clear from case law developed by the European Court of Justice that this does not mean that property law as such cannot be touched by European legislation. See, e.g., Case C-350/92, [1995] ECR I-1985 (Kingdom of Spain v Council of the European Union) and Case C-222/97, [1999] ECR I-1661 (Trummer and Mayer). The former case concerns the creation of a supplementary protection certificate for medicinal products, the latter case is about Austrian mortgage law and the law regarding land registry.

The two measures that are being used widely in the area of private law are the regulation and the directive. In the words of the Treaty establishing the European Community (article 249), ‘A regulation shall have general application. It shall be binding in its entirety and directly applicable in all member states. A directive shall be binding, as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of form and methods.’ Although it looks as if a directive leaves considerably more freedom to member states than a regulation, a recent case decided by the European Court of Justice made it clear that, at least in the area of consumer law, statutory implementation is required; standing national case law is not seen as adequate protection of consumers: Case C-144/99 (Commission of the European Communities v Kingdom of the Netherlands).

2. (Dis)advantages of fragmented unification
Fragmented unification of the law has advantages, but also disadvantages. An advantage of this piecemeal approach is that only those areas of national law are being harmonised which, according to at least a qualified majority of the member states, are in actual and recognised need of unification. It offers member states the option to develop European private law incrementally. ‘Europeanisation’ of private law only occurs in those areas where this is necessary for the functioning of the common or internal market. All other areas remain national (‘local’). This approach leaves member states as much freedom as possible to follow their own views and policies.

This incremental approach also has certain disadvantages. European legislative measures are the result of a political bargaining process. Consequently, the language of these measures may be imprecise, inconsistent or may show grave lacunae. Various questions will then arise. European regulations and directives have to be interpreted in a European-autonomous way. This means that national interpretation (by national courts or administrative authorities) of, e.g., regulations and directives is not decisive. Based on the European nature of the measure, a European interpretation has to be found, not dependent upon interpretation as adopted by (certain) member states. This also applies to problems resulting from gaps in, e.g., a directive. Are the gaps to be filled at a European level or are they to be filled at a national level? All these questions, at the end of the day, will have to be decided by the European Court of Justice in Luxemburg. This may take many years.

3. A European Civil Code to resolve fragmentation?
Given the disadvantages of creating small areas of European private law, it has been proposed that, perhaps, substantive parts of private law should be harmonised. This would create a framework for future European legislative measures, thus avoiding problems caused by imprecise or inconsistent wording. Possible gaps in specific measures could be filled from within the existing European private law. The inspiration for such a European Civil Code is found in the Principles of European Contract Law and the UNIDROIT Principles of International Commercial Contracts, both to be found at the Lex Mercatoria web site (http://www.jus.uio.no/lm/index.html).

Historically, this development from a customs union to a more complete union and from diversity of local law to unification of private law, can be seen in, e.g., Germany. There are, however, examples which show that economic integration does not, by necessity, need overall legal integration. Reference can be made to federal systems, such as the United States and Canada, and – even within the European Union – to the United Kingdom. Although Scotland was united with England in 1707, Scottish law preserved its distinct nature as a mixed legal system (see http://www.st-and.ac.uk/~scotparl/Union.htm). That Scottish law and English law are not converging can be seen in the Abolition of Feudal Tenure etc. (Scotland) Act 2000 (to be found at http://www.scotland.gov.uk/landreform/feudal.asp). In this Act, the recently re-established Scottish Parliament abolished the feudal system as the foundation of Scottish land law. As is well known, the feudal system of land tenure still is the historical basis for land law in England and other countries of the common law family.

In regard to the European Civil Code, questions arise as to both form and substance. Answers to questions regarding form depend, at least in part, on the legal basis for an overall legislative measure such as a Civil Code. Such a legal basis has to be found in the European treaties. If no such basis exists, the only alternative for a binding European measure is a treaty between the member states, otherwise the form can only be of a non-binding nature. Possible models might then be ‘principles’ or – more formal in nature – a model law attached to a treaty to be concluded among the member states. If such a legal basis for a European Civil Code would exist, the choice would be between a directive and a regulation.

Whether or not the European Community can enact a European Civil Code is being debated. See, e.g., the responses to the Communication from the Commission to the Council and the European Parliament on European Contract Law (COM(2001) 398 final), to be found at http://www.europa.eu.int/comm/consumers/policy/developments/ contract_law/index_en.html. On several occasions the European Parliament made it very clear that it would favour the enactment of a code. This was reaffirmed in its resolution on approximation of civil and commercial law, in which the European Parliament expressed support for further initiatives by the European Commission leading to a European Civil Code (Minutes of 15/11/2001 (A5-0384/2001), European Parliament resolution on the approximation of civil and commercial law of the member states (COM(2001) 398 – C5-0471/2001 – 2001/2187 (COS)), to be found at http://www2.europarl.eu.int/omk/OM-Europarl?PROG=REPORT&L=EN&PUBREF=-//EP//TEXT+REPORT+A5-2001-0384+0+NOT+SGML+V0//EN). It is clear from this resolution and earlier European Parliament documents that, in its view, the following areas are considered to be in need of (overall) harmonisation: general contract law, the law on sales contracts, the law governing service contracts including financial services and insurance contracts, the law governing personal securities, the law governing non-contractual obligations (tort, law of restitution), the law governing the transfer of ownership of moveables, the law governing credit guarantees and the law on trusts. The European Parliament advocates the setting up of a European Legal Institute, in which policy-makers, administrative authorities, the judiciary and those responsible for applying the law co-operate on a scientific basis in drawing up principles of European private law. The idea, probably, is to create an institution comparable to the famous American Law Institute, which is responsible for, among other projects, the Restatements of the Law (see http://www.ali.org/). The European Parliament also asks for the creation of a European database of common legal terminology. A beginning has already been made through the creation of Eurodicautom (http://www.europa.eu.int/eurodicautom/login.jsp). It may also be mentioned here that, for more than 15 years, the Netherlands Comparative Law Association has a standing committee on the translation of Dutch legal terminology into English, French and German, to which recently Russian and Spanish were added. Members of this committee are professional legal translators and comparative lawyers. I have the pleasure to chair this committee. The results of the commission’s work are published in print. The next edition will also be made available electronically through the EJCL web site.

4. European private international law as a transitory stage?
What does this mean for the role of private international law, especially European private international law? Fragmentation of substantive law (in other words, legal diversity) inevitably leads to conflict of laws problems, which will then have to be resolved first. Given the differing national rules of private international law, it is clear that within the European Union the prevailing opinion now seems to be that at least this legal diversity should be resolved. The question which then arises is whether the unification of private international law should be maximum harmonisation of a particular area of the law or whether conflict of laws issues should be discarded completely by ending legal diversity as such. In that case, uniform private international law is no more than a stage in a more far-reaching unification process. It is my impression that the European Parliament feels that intra-community trade demands uniform, or at least harmonised, rules of substantive law. This would mean that private international law is, indeed, no more than transitory law.

One could wonder whether this is the right way. As I already indicated, the fragmentation of European private law has various causes. The European treaties only confer legislative power on the European institutions under certain conditions. A further limitation is found in the principles of subsidiarity and proportionality. Before a European legislative measure can be taken, it should be considered whether, on balance, harmonisation of the law is necessary. A further consideration should be whether the harmonisation of substantive law is required or whether the harmonisation of private international law suffices. It may very well be that resolving private international law issues is enough. In other words, a balanced approach is needed. As economic integration is a dynamic process, it may happen that the outcome of this balanced approach changes over time. This may lead to a different result. In that situation, the harmonisation of private international law may – looking at it with hindsight – have been a transitory stage towards the Europeanisation of substantive law. I would advocate this more pragmatic view of the harmonisation of private law. A different view would be too rigid. Legal integration is, just as much as economic integration, a dynamic process with varying outcomes, which may change over time. The unification of private international law may very well be the final stage in this process.

Sjef van Erp,
Editor-in-Chief

1. This editorial is a modified and expanded version of an introductory paper presented on 24 September 2001 in Budapest at a Netherlands-Hungarian conference on civil code revision in the light of the growing European private law.

New URL

From 1 January of this year, the EJCL has a new URL: http://www.ejcl.org. The reason for this change is that Tilburg University (which hosts our web site) is to change its (Dutch) name and, consequenly, its URL on 1 September 2002. Another reason is that as from 1 January 2002 the EJCL is sponsored by the law faculties of Maastricht, Tilburg and Utrecht. The Editorial Board is very grateful to these faculties for their support. The old URL will, however, remain active for some time.

Aim and scope

We also modified our aim and scope. In future, the EJCL will also publish articles regarding comparative legal aspects of information technology. As an electronic journal, we are in the middle of the rapid changes that information technology causes in our academic environment, with respect to both research and teaching. It therefore seems appropriate to accept articles in which these developments are discussed on a comparative basis.

This issue

This issue contains the fourth lecture in the series Ius Commune Lectures on European Private Law. It is entitled ‘Some Reflections on the Israeli Legal System’, by Aharon Barak.

From now on, we also offer the Newsletter European Private Law through a link (from our Archives page) to the web site of the law faculty of the Albert Ludwigs Universität in Freiburg (Germany). On the latter web site, you will also find links to previous newsletters.

We also publish various announcements of comparative law conferences. Please contact our assistant editor if you want your conference to be announced in the EJCL.

Sjef van Erp,
Editor-in-Chief