University of Amsterdam
The Role of the CJEU’s General Principles of
Civil Law in the Quest for a European Civil
Code
Author: Inbar Ozer
11603046 Supervisor: Professor Chantal Mak
Academic Year: 2017-2018
Abstract
The Court of Justice of the European Union (CJEU), in five of its judgments in the years between 2007 and 2013, mentioned the ‘general principles of civil law’ (‘general principles’). The paper in hand researched to what extent these ‘general principles’, were inspired by the project that was aimed at improving the quality of the acquis in the area of contract law, namely the Draft Common Frame of Reference (DCFR). Since the vast majority of scholars saw the DCFR as a model of a European Civil Code (ECC), the goal of this examination was to establish the degree of activism of the CJEU regarding the further harmonization of EPL, in the context of realizing the notion of a ECC. The paper drew two different conclusions, on the basis of the data that was researched, on what can be expected from the CJEU’s future judgments, in the context of engaging in the building of the EPL system, in case another wave of readiness towards a ECC will surface. The first conclusion is that the ‘general
principles’, to a certain extent, may have been inspired by the DCFR, and thus, the CJEU engaged in this manner with the ECC movement. Nevertheless, in this reading, the Court’s engagement was extremely careful and indirect. The second possible conclusion is that there was no connection between the ‘general principles’ and the DCFR, and that the CJEU never meant to take an active role in advancing the ECC movement. After analyzing the references of the DCFR in the AG-opinions, the author found that while the AG’s frequently mentioned and engaged with the provisions of the DCFR, the Court never referred to it in its judgments. Hence, the author opines that the second conclusion is likely to be more correct. It can be asserted from both of the conclusions, however, that if the ECC movement will revive, a high degree of activism by the CJEU, on this matter, is not expected.
Table of Contents
INTRODUCTION...5
1. UNDERSTANDING EUROPEAN PRIVATE LAW AND THE NEED FOR HARMONIZATION...8
1.1 THE SOURCESOF EUROPEAN PRIVATE LAW...8
1.2 THE NEEDFOR COHERENCE...10
1.3 INTERIM CONCLUSION...13
2. THE PROMISING BEGINNING AND THE QUICK ENDING OF THE ECC MOVEMENT...14
2.1 THE DCFR: A CODE IN DISGUISE...14
2.2 THE POLITICAL RESISTANCEANDTHE ENDOFTHE ECC MOVEMENT...16
2.3 INTERIM CONCLUSION...18
3. THE (DIS)CONNECTION BETWEEN THE DCFR AND THE GENERAL PRINCIPLES OF CIVIL LAW...19
3.1 THE CJEU’S JUDGMENTSONTHE GENERAL PRINCIPLESOF CIVIL LAW...20
3.2 THE ROLEOFTHE PRINCIPLESTHATWERE DISCOVEREDBYTHE CJEU...28
3.3 INTERIM CONCLUSION...29
3.4 THE DCFR INTHE ADVOCATE GENERAL OPINIONS...29
3.5 INTERIM CONCLUSION...34
4. A VIEW TOWARDS THE FUTURE: THE CJEU’S JUDGMENTS IN THE CONTEXT OF A EUROPEAN CIVIL CODE...35
CONCLUSION...39
List of Abbreviations
AG- Advocate General
CESL- Common European Sales Law
CJEU/the Court- The Court of Justice of the European Union DCFR- Draft Common Frame of Reference
ECC- European Civil Code EPL- European private law EU- European Union
‘General principles’- general principles of civil law MS- Member States
TFEU- The Treaty on the Functioning of the European Union
Introduction
In 2007, fifty years after the memorable words, “... of an ever closer union among the peoples of Europe”,1 were signed at the Palazzo dei Conservatori, the quest for harmonization of European private law (EPL) had reached its peak. The main event signaling the peak of harmonization in this year was the presentation of the interim outline edition of the Draft Common Frame of Reference (DCFR) to the Commission, and its publication three months after.2 The DCFR was nicknamed by scholars as the ‘hidden code’,3 because to this day, it is considered as the closest version to a
European Civil Code (ECC).4 The quest for a ECC, however, came to a quick ending when the Commission in 2014 signaled the political reluctance towards the ambitious project of drafting a ECC, when it withdrew the Common European Sales Law (CESL) proposal.
The second notable event concerning the harmonization of EPL in 2007, was the recognition of the ‘general principles of civil law’ (‘general principles’) by the European Court of Justice (CJEU), in its famous Société thermale judgment.5 Since then, the Court mentioned the ‘general principles’ in four other judgments. The fact that the CJEU has never elaborated on what the phrase means, or the source that it refers to, has raised thoughts and debates in the scholarly sphere. For instance, Hesselink and Basedow, amongst their other reflections on the topic, have
contemplated whether the source of inspiration of the ‘general principles’ was the DCFR.6 Generally, and reasonably, scholars thought that the phrase symbolized a new direction in the CJEU’s judgments regarding EPL. For example, Hesselink has maintained that, “[t]he recent category of general principles of civil law seems to 1 Treaty establishing the European Economic Community (Treaty of Rome).
2 House of Lords, ‘European Contract Law: the Draft Common Frame of Reference: Report with Evidence’ (2009) HL Paper 95, para 2.
3 Hugh Collins, The European Civil Code: The Way Forward (Cambridge University Press 2008), 63.
4 Jan M. Smits, ‘The Draft-Common Frame of Reference for a European Private Law: Fit For Purpose?’ [2008] Maastricht Journal of European and Comparative Law 145, 145.
5 Case C-277/05 Société thermale d’Eugénie-les-Bains v Ministère de l’Économie, des Finances et de
l’Industrie ECLI:EU:C:2007:440, para 10.
6 Martijn Hesselink, ‘The General Principles of Civil Law: Their Nature, Roles and Legitimacy’ in Dotora Leczykiewicz and Stephen Weatherill (eds) The Involvement of EU Law in Private Law
Relationships (Hart Publishing 2013), 176-177; see also Jurgen Basedow, ‘The Court of Justice and
Private Law: Vacillations, General Principles and the Architecture of the European Judiciary’ [2010] European Review of Private Law 443, 464-465.
represent a potentially important shift in the Court’s reasoning in relation to EU private law”.7 Nevertheless, the ‘potential shift’ was never realized. Since 2013, the CJEU has not mentioned the ‘general principles’ anymore.
Interestingly, the incorporation of the ‘general principles’ began at the same year that the quest for a ECC reached its peak, and ended roughly at the same time when the Commission clarified that a ECC would be undesirable. Hence, it begs the question, was there a correlation between the two events? Furthermore, if such a correlation did exist, it is intriguing to ponder what it could mean for the CJEU’s approach in case law towards the notion of a ECC. After five years since the ‘general principles’ have been omitted from the CJEU’s judgments, it is appropriate to re-examine the issue and research whether, as Weatherill suspected, the DCFR was the source of inspiration for the ‘general principles’.8 Accordingly, the paper will answer the following main question:
(1) To what extent does the CJEU’s case law on the ‘general principles’ provide a contribution to, and engagement with, the further harmonization of EPL in the context of realizing the notion of a ECC?
In order to answer the main question, the two following sub-questions will also be analyzed:
(2) How should the phrase, ‘general principles of civil law’, be understood in light of the debate on a ECC? In particular, to what extent was the CJEU’s case law on the ‘general principles’ inspired by the model of a ECC presented in the DCFR?
(3) Should another wave of readiness towards a ECC surface, what can be expected from the CJEU’s future judgments in the context of engaging in the building of the EPL system, in light of the CJEU’s earlier approach?
Although the author favors the idea of developing a ECC, the goal of the paper is not to advocate for it. Rather, the core of the research is to analyze past decisions of the 7 Hesselink (n6), 180.
8 Stephen Weatherill, ‘The principles of civil law as a basis for interpreting legislative acquis’ [2010] European Review of Contract Law 74, 81.
CJEU, in order to be able to predict the Court’s behaviour in case the movement for a ECC in the EU will revive. Hence, this historically oriented paper should interest not only the supporters of a ECC, but also those who oppose it, or those who have a neutral stance.
Chapter one will discuss what is EPL, and why it has been argued in the first place that harmonization in this field is required. Chapter two will explain why the DCFR was not simply an interpretive toolbox as it was meant to be, but rather a civil code in disguise. Subsequently, this chapter will note the political resistance that emerged as a result of the project. In chapter three, the five judgments, in which the ‘general principles’ were incorporated, will be analysed. Moreover, the paper will discuss the Advocate General (AG) opinions in which references to the DCFR were made. In chapter four, with the help of the replies to the main question and the second sub-question, it will be possible to answer the third sub-question. Based on the data analyzed, it will be possible to have a view towards the future, and assume what sort of behaviour can possibly be expected from the CJEU in its future judgments, in case another wave of readiness towards a ECC will rise again.
1. Understanding European Private Law and the Need for
Harmonization
In this chapter, it will firstly be explained what are the sources of EPL, as they are the root of the problematic nature of the acquis. Additionally, the differences between the private law rules of the MS, and their effects on the internal market will be discussed. Accordingly, it will be possible to understand why the notion of a ECC is still relevant to this day, and why the quest for it has begun in the first place.
1.1 The Sources of European Private Law
The Commission, in its 2003 ‘Action Plan for More European Contract Law’, officially advocated for the development of the DCFR in order to improve the contract law acquis.9 The root cause of the Commission’s desire to reform the EPL
rules10 was the EPL’s fragmented sources that led to a lack of coherence. Generally, the EU has no competence to govern the legal relationships
between individuals in the MS.11 Accordingly, before the 1980’s, the private law rules of the MS were regulated only on the national level. Since 1985, however, the EU, in order to improve the efficiency of the internal market, and achieving a higher level of consumer protection,12 has enacted certain directives which do affect the private law rules of the MS to a certain extent. Some of these famous directives are: the
Consumer Rights Directive (replacing the Doorstep Selling Directive and the Distance Selling Directive), Package Travel Directive, Unfair Contract Terms Directive, Timeshare Directive, and the Consumer Sales Directive. In addition, the EU has enacted regulations, such as the Air Passenger Regulation 2014, which affect private parties due to their direct and horizontal effect.
The EU has further affected the private law rules of the MS through the process of building the internal market via negative harmonization. Negative harmonization is the CJEU’s judgments in which national rules were found to be 9 Commission’s Action Plan, A More Coherent European Contract Law [2003] OJ C 63/01, para 59.
10 There can be two meanings to the term ‘European private law’: (1) The different private law systems of the MS (2) The different European pieces of legislation which affect the legal relationships of private individuals in the MS. The research in hand refers only to the latter meaning.
11 Consolidated version of the Treaty on European Union [2012] OJ C 326/01 13, art 5(2);
consolidated version of the Treaty on the Functioning of the European Union [2012] C 326/01 47, arts 3-6.
incompatible with EU law, and therefore could no longer be validly employed. Thus, private parties may be indirectly affected by EU law, when national rules which would otherwise be applicable, are being set aside. For example, in the Casis de Dijon judgment, the CJEU held that the West German legislation, which required fruit liqueurs to contain a minimum of 25% of alcohol, was a quantitative restriction that had equivalent effect, and thus breaching Article 34 of the Treaty on the Functioning of the European Union (TFEU). Accordingly, the German rule had to be annulled. The CJEU established in this judgment the principle of ‘mutual recognition’, whereby any product lawfully manufactured and marketed in any MS should be accepted by other MS. As a consequence, the German supermarket company, Rewe-Zentral AG, was allowed to import the French Casis de Dijon wine.13
Additionally, the CJEU has acknowledged that the free movements of services, establishment, workers, and even in some instances, the free movement of goods, can have direct horizontal effect.14 It means that individuals can invoke these rights against other individuals who infringe them. Consequently, the infringing acts may be deemed as void, and give rise to compensations. For example, in Viking Line, the CJEU has established that the freedom of establishment could be invoked in horizontal relationships.15
Another way in which the EU affects private parties is by prohibiting them from engaging in anti-competitive agreements. Article 101 TFEU establishes that cartel agreements between private parties are automatically void.
Finally, when MS apply EU law, they must adhere to the provisions of the Charter of Fundamental Rights of the EU (the Charter). Again, in certain cases, it may indirectly affect private parties’ relations. For example, in the Alemo Herron case, the
13 Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein ECLI:EU:C:1979:42.
14 For establishment see Case 438/05 International Transport Workers’ Federation and Finnish
Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti ECLI:EU:C:2007:772; for services see
C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska
Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet
ECLI:EU:C:2007:809; for workers see Case C-281/98 Roman Angonese v Cassa di Risparmio di
Bolzano SpA ECLI:EU:C:2000:296; for goods see Case C-171/11 Fra.bo SpA v Deutsche Vereinigung des Gas- und Wasserfaches eV (DVGW) — Technisch-Wissenschaftlicher Verein
ECLI:EU:C:2012:453.
15 In Viking Line, the CJEU held that the boycott of the Finnish Seamen’s Union and the International Transport Workers’ Federation against Viking Line, or their striking against the
reflagging of Viking Line’s ship and its registration it in Estonia, could hinder Viking Line’s freedom of establishment if they are not justified and in proportion. See Viking Line case (n14).
right of private parties to freedom of contract was constitutionalised by the CJEU, as it held that this right is included in Article 16 of the Charter.16
In short, the sources of EPL are the Four Freedoms (horizontal and indirect effect), competition law, indirect horizontal effect of the Charter, and secondary EU law. As it can be observed, in contrast to traditional private law systems, EPL is not derived from one code, but rather from different sources which have no correlation to one another. Consequently, the EPL system is fragmented and not coherent. In the following section, the paper will demonstrate the problems that result from this lack of coherence.
1.2 The Need for Coherence
After reviewing the sources of EPL, it can be seen that the EPL’s goal, in contrast to the private law systems of the MS, is not to establish justice between individuals, but rather it forms a part of the bigger goal of the EU, namely the building of the effective internal market. Thus, EPL is not concerned with general rules of contract law, but rather it is directed towards national measures obstructing cross-border trade. The EU directives are pointilistic in the sense that they concern only specific topics, such as consumer protection, which deem to be important for the development of the internal market. For this reason, it is of no surprise that Collins defined them as,
“...archipelago of small islands in the wide seas of national private law systems.”17 These characteristics of the acquis created a fragmented system, where EU rules offer an incomplete system of legislation.18 For example, EU law offers protective rules for consumers, but it does not determine the remedies for violating them. A concrete illustration is the Package Travel Directive, which confers rights to consumers in cases of cancelled or disappointing holidays by setting a minimum standard for the providers. However, when the provisions are breached, it is for the domestic system to determine the measures of compensation.19 Another issue emerges 16 As a consequence of the constitutionalisation of the right, employees were not entitled to pay increases, on the ground that it would infringe Parkwood Leisur's right to freedom of contract enshrined in Article 16 of the Charter. See Case C-426/11 Mark Alemo-Herron and Others v
Parkwood Leisure Ltd ECLI:EU:C:2013:521.
17 Collins (n3), 41.
18 Jan M. Smits, ‘The Complexity of Transnational Law: Coherence and Fragmentation of Private’ [2010] 14.3 Electronic Journal of Comparative Law http://www.ejcl.org accessed 2 March 2018, 4.
19 Directive 2015/2302 of the European Parliament and of the Council on package travel and linked travel arrangements, amending Regulation (EC) No 2006/2004 and Directive 2011/83/EU of the European Parliament and of the Council and repealing Council 2015 Directive 90/314/EEC [2015] OJ L 326/1 (package travel Directive), arts 2(3), 14(1).
from the fact that certain directives, such as the Unfair Terms Directive, are minimum harmonization directives. Consequently, they are not implemented equally in the MS, and they do not provide answers to difficult questions, such as, how to achieve a fair balance between consumer protection and freedom of contract.20
The Commission, in its 2003 ‘Action Plan for More European Contract Law’, has shown concerns regarding both the quality of the acquis and the differences between the private laws of the MS. With regard to the acquis, the Commission held that the differences between the pieces of EU legislation have lead to instances where several Community acts can be applicable to the same commercial situation.21
Additionally, abstract terms, such as, ‘damages’, ‘contract’, and ‘fraudulent use’, are included in the directives, but the directives do not always define what they mean. In certain cases, one term can be defined in one directive, but not in the others. For instance, ‘damage’ is defined in the Product Liability Directive, while it is not defined in the Package Travel Directive. The Commission continued and maintained that it seems as if each abstract term is interpreted in the light of the directive in which it is enshrined. It can lead to confusion and uncertainty where the terms are implemented in national law with different meanings depending on the directive.22 The abstract terms also leave MS wide discretion on how to interpret them. This can result in one EU term, having different meanings in different MS. There is a danger that directives could be implemented differently in similar cases. But vagueness is not the only issue; complexity is increased further in cases where national legislatures wrongly insist on maintaining their national legislation in parallel to the implemented provisions of the directive. It can result in legal uncertainty, for instance, when there is coexistence of two laws on unfair contract terms.23 Moreover, Smits for example, held that the unity of the national legal system is affected by the way in which EU law is interpreted. EU law requires the use of teleological interpretation when interpreting legislation. In certain circumstances, it contradicts the interpretative methods of national judges, who may interpret domestic legislation in accordance with its history and the system of national law as a whole.24 Thus, it can clearly be seen how EPL is pointillistic, fragmented, and possesses a regulatory logic. The current state of affairs points that 20 Collins (n3), 46.
21 Commission’s 2003 Action Plan (n9), paras 16-17.
22 ibid, paras 19-21.
23 ibid, para 23.
the national private laws of the MS have become more complex as they are governed under two, completely different legal systems with different goals.25
On the national level, the Commission maintained that the fact that the MS have different private law systems hinders the effectiveness of the internal market. It argued that the differences in the private law rules increase transaction costs. For example, parties usually must take local (but foreign for the party) legal advice to ensure validity of documents, or how to draft a binding contract.26 Another concern is the divergence on the application of standard contract terms, because in some MS a mere reference to the terms is sufficient, whereas in others they must be attached to the contract or signed separately.27 Moreover, there are considerable differences regarding which contractual terms should be considered as inadmissible by the courts.28 The differences in clauses limiting liability are also problematic, as certain features of MS are not recognizable in others. For instance, the mandatory
impossibility under Czech law of restricting contractual liability for future damages.29 The rules concerning security rights over movables also differ considerably from MS to MS. Some MS, for instance, do not recognize certain security rights existing in other MS, which creates a great risk for operators in the market.30
In the responses to the Commissions’ ‘Action Plan’ by the MS’ governments, businesses, consumer organizations, legal practitioners and academic lawyers, it was mentioned that the current situation is not optimal, to say the least. The concerned responses regarded not only the problems and difficulties that result from the differences between the private law rules of the MS, but they regarded also the problematic situation of the fragmented acquis intervening in the national legal systems.31 It was clearly observed that the quality of the acquis must be improved. Since 2003, besides the Consumers Rights Directive that further harmonized certain EU rules, not much has changed, and the acquis, to this day, is still fragmented.
25 ibid, 5.
26 Action Plan (n9), para 34.
27 ibid, para 36.
28 ibid, para 37.
29 ibid, para 39.
30 ibid, paras 41-45.
1.3 Interim Conclusion
The current problematic state of affairs of EPL, and the major differences between the private law rules of the MS, are still in tact. Hence, it is not difficult to grasp why it is argued that harmonization in the field of private law is needed, nor it is difficult to imagine why many scholars were pondering over, and desiring for, a ECC. At the end of 2007, the realization of such a code seemed to be closer than ever, when the interim outline edition of the DCFR was presented to the Commission, and when the CJEU mentioned the ‘general principles’ for the first time. Nevertheless, the movement towards a ECC ended rather quickly, and the ‘general principles’ were not mentioned anymore by the CJEU. The following chapters will focus on the DCFR, the ‘general principles’, and on the question of whether there was a connection between them, in order to examine whether the CJEU was indirectly involved in the ECC movement.
2. The Promising Beginning and the Quick Ending of the
ECC Movement
In this chapter, the characteristics of the DCFR will be explained in order to
understand why it was considered as a draft of ECC.32 Afterwards, it will be explained why the withdrawal of the CESL-proposal signaled the end of the ECC movement. It is important to understand the history of the ECC movement, because if it could be proved that the CJEU indirectly referred to the DCFR via the ‘general principles’, and accordingly stopped mentioning those, as a consequence of the CESL’s withdrawal, it might be plausible to draw a conclusion that the Court has indirectly engaged with the ECC movement.
2.1 The DCFR: a Code in Disguise
The Commissions’ intention with the initiation of the DCFR project was to improve the quality and consistency of the acquis in the area of contract law.33 Nonetheless, the Commission explicitly mentioned that it had no intention to propose a ECC.34 But if this was the stance of the Commission, the body who delegated the mandate for drafting the DCFR, why then Vogenauer, for example, held that the DCFR, “... is clearly meant to be a blueprint of a European Civil Code in the area of patrimonial law”?35 In order to answer this question, and understand why also many other scholars as Vogenauer saw the DCFR as the first draft of a ECC,36 it is necessary to examine the content of the project and its characteristics.
In 2003, the Commission faced a dilemma. On the one hand, it was clear that grounding all the sector specific EU rules in general rules of contract law would enhance the coherence and consistency of the acquis. On the other hand, such a 32 The paper in hand, when discussing the term ‘civil code’, refers to a systematic set of private law rules that govern the legal relationships between individuals in a certain civil law system.
33 Communication From the Commission to the European Parliament and the Council: European Contract Law and the revision of the acquis: the way forward [2004] COM 651, para 2.1.
34 ibid, para 2.3.
35 House of Lords (n2), para 21.
36 Micklitz, for example, when discussing the reluctance towards a European code, wrote the next quote: “...the predictable ‘failure’ of the European Civil Code project, called the Common Frame of Reference, which obviously does not have the support of the European Commission, the Council or the Member States.” See Hans-W. Micklitz, ‘Failure or Ideological Preconceptions – Thoughts on Two Grand Projects:The European Constitution and the European Civil Code’ (2010) EUI Working Papers, 1; see also Collins (n3), 77.
legislative measure would exceed the competence of the European legislature. Collins put it in short that in the EU, “... a code of contract law is both required and
prohibited”.37 Thus, the Commissions’ paradoxical solution was to draft a document, which in content and function would look like a traditional civil code, but nonetheless would not be a legally binding instrument. The Commission held that this document, namely the DCFR, will provide, “...clear definitions of legal terms, fundamental principles and coherent model rules of contract law...”.38
Four years later, in December 2007, the interim outline version of the DCFR was presented to the Commission. The Justice and Home Affairs Council of Ministers summarized its characteristics as follows: (a) it is a tool for better law-making
targeted at Community lawmakers (b) its content is composed of a set of definitions, general principles and model rules in the field of contract law (c) its scope is contract law including consumer contract law (d) and finally it sets non-binding guidelines to be used by lawmakers at Community level on a voluntary basis.39
The DCFR’s content is extremely wide. It covers general rules for obligations and contracts, and it regulates a wide range of specific contracts, such as: sales, services and leasing movables. Moreover, it covers tort law, benevolent intervention, unjustified enrichment, ownership rules, and security rights in movables and trusts. Hence, despite the Commissions’ emphasis that it did not wish to propose a ECC by initiating the work on the DCFR, the end result was a drat of a ECC. Brigita Lurger, one of the scholars who took part in the drafting of the DCFR, commented as follows on the outcome of the project: “[b]lack letter rules without comments cover more than 500 pages. The rules are as detailed as the rules you would find in a traditional
codification of civil law...”.40 Then she held that, “... such a comprehensive instrument of private law rules is not necessary merely to improve the consumer acquis”.41
Another aspect, which resembles the DCFR to a traditional code, is that it consists of principles of civil law.42 Although the term ‘principles’ is susceptible to 37 Collins (n3), 77.
38 The Commission (n33), para 2.1.1.
39 House of Lords (n2), para 16.
40 B. Lurger, ‘The Common France of Reference/Optional Code and the Various Understandings of Social Justice in Europe’, in T. Wilhelmsson, E. Paunio and A. Pohjolainen (eds), Private law and the
Many Cultures of Europe (Kluwer Law International 2007), 177, 180-181.
41 ibid.
42 Study Group on European Civil Code, Draft Common Frame of Reference (outline edition, sellier. european law publishers 2009), 9.
different interpretations,43 it is doubtless that it plays an important role in different traditional civil codes. Principles can be rules with more general nature, such as freedom of contract, or good faith. If a question of law cannot be answered merely via the other strict and specific provisions, a court will seek a principle, that through its general nature, will provide a solution that fits with the relevant legal material.44 Principles can also mean rules that do not have binding force, but exist in order to help the court to interpret other binding provisions.45 In both cases, the DCFR could be said to include principles.46
In conclusion, it is the deep and extensive content of the DCFR that gave the impression to the vast majority of scholars47 that it is a draft of a ECC. Is it reasonable to think then that the CJEU was also at the same opinion? If it will be found, while answering the second sub-question of this research, that the CJEU referred to the DCFR when it mentioned the ‘general principles’, could it mean then that the CJEU has cautiously engaged with the debate over a ECC? After analyzing the CJEU’s judgments in chapter three, it will be possible to answer these questions. But first, regard must also be taken to the end of the ECC movement.
2.2 The Political Resistance and the End of the ECC Movement
The DCFR was an academic draft with the objective of being an interpretive toolbox, and simultaneously, offering the EU legislature a legislative model for future
legislation. It was not intended to give the DCFR a binding force due to legitimacy issues. By creating a non-binding measure, the Commission avoided the EU
legislative process and the issue of competence. No agreement by the Parliament or Council was required, and accordingly, the two academic groups who drafted the DCFR, namely the Study Group and the Acquis Group, were able to draft it
peacefully behind closed doors. Consequently, the drafting process was far from the EU citizens and the members of governments.48 The two academic groups drafted rules, as above-mentioned, that went beyond consumer protection, and thus, they had no mandate to draft them in the first place. Hence, it is not difficult to see why this 43 ibid.
44 Hesselink (n6), 146.
45 DCFR (n42), 9.
46 ibid.
47 The vast majority of scholars out of those who commented on the DCFR.
project was far from being democratic. The story of the CESL-proposal, however, was to some extent different.
The CESL project, which was officially proposed by the Commission in 2011, was the first piece of legislation that was drafted on the basis of the DCFR. The Expert Group who drafted the CESL, for the main part of the regulation, chose to follow the DCFR rules, and accordingly, only in minor areas it deviated from the DCFR.49 The CESL-proposal, however, was meant to have different legal scope and functionality than the DCFR. The regulation could apply only to contracts for the sale of goods or for the supply of digital content that is downloaded from the Internet. It was meant to introduce a self-standing set of contract law rules that would serve as an optional choice of law that could be employed by individuals in cross-border
contracts. It means that parties may choose to apply, for cross-border contracts, the CESL’s separate set of rules instead of the domestic rules.50 Thus, the CESL, in contrast to the DCFR, was meant to have a binding force, and therefore, it must have gone through the EU legislative procedure.
The proposal met mixed reactions from the various EU bodies and the different parliaments of the MS. For example, the Committee on the Internal Market and Consumer Protection suggested that creating an optional instrument would complicate further the legal situation in the EU, increase legal uncertainty, and eventually be disadvantageous to consumers. On the other hand, in September 2013, The Legal Affairs Committee adopted its report that backed the proposal. In
particular, it supported its optional character, and the legal form of a regulation. Similarly, the Committee on Economic and Monetary Affairs supported the optional instrument.51 The Parliament also did not oppose to the proposed regulation, but it did, however, opted for limiting the scope of the CESL to distance contracts only. In the first reading of the Parliament’s plenary debate in 2014, although with many
amendments, the CESL-proposal was adopted by a large majority.52 Therefore, it was 49 Hugh Beale, ‘The Story of EU contract law – from 2001 to 2014’ in Christian Twigg-Flesner,
Research Handbook on EU Consumer and Contract Law (Edward Elgar Publishing 2016), 453.
50 Hugh Beale, ‘The CESL proposal: An Overview’ (2013) Juridica International 20, 22.
51 Klaus-Heiner Lehne and Luigi Berlinguer, ‘Legislative Train Schedule Connected Digital Single Market: European Common Sales Law (CESL)’ http://www.europarl.europa.eu/legislative-train/theme-connected-digital-single-market/file-common-european-sales-law accessed 9 April 2018.
52 ibid; see also European Parliament, ‘Legislative Resolution of 26 February 2014 on the Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law (COM(2011)0635 – C7-0329/2011 – 2011/0284(COD)) (Ordinary legislative procedure: first reading)’ (2014) http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2014-0159+0+DOC+XML+V0//EN accessed 9 April 2018.
unexpected when already in December 2014, the CESL-proposal was placed by the Commission in the list of proposals to be modified or withdrawn. The Commission took this decision due to pressure coming from several MS to reject the project.53 These MS saw the CESL-proposal as another step towards a ECC, and they conservatively wished to hold their civil codes in tact as much as possible, and prevent any EU project that might put the relevancy of their codes in danger. Therefore, the withdrawal of the CESL-proposal, clearly and undoubtedly, signaled the political unwillingness for a general European contract law.54 Accordingly, the movement for a ECC has stopped since the Commission’s decision.
2.3 Interim Conclusion
As it can be observed, although the Commission had no intention to propose a code, the DCFR is a draft of a ECC. Hence, the presentation of its interim outline edition in 2007 signaled a peak-point in the quest for a ECC. Nevertheless, the quest came to a quick ending when the CESL-proposal was withdrawn in 2014, as a result of pressure coming from several MS who saw the proposal as another step towards a ECC.
In December 2013, the CJEU for the last time mentioned the ‘general principles’ in its Hirmann judgement. Thus, the two events, namely the stoppage of the mentioning of the ‘general principles’, and the stoppage of the movement for a ECC, happened roughly at the same period of time. Does this coincidence has a certain meaning? More specifically, does it reinforce the contention that the CJEU engaged in advancing the notion of a ECC, and stopped once the relevancy of the notion vanished after the CESL-proposal was withdrawn? After reviewing the history of the DCFR and the CESL, it is necessary to investigate the CJEU’s judgments on the ‘general principles’, and examine whether there was a correlation between them and the DCFR, and thus also with the ECC movement, in the years between 2007 and 2014.
53 The pressure to withdraw the proposal came from six MS, namely the UK, the Netherlands, Finland, Austria, Germany and France. Another possible reason for the withdrawal of the CESL-proposal is the large number of amendments that were suggested by the Parliament. These amendments affected the coherence of the original CESL-proposal, and accordingly, made it less attractive.
3. The (Dis)connection between the DCFR and the General
Principles of Civil Law
The CJEU, in five of its judgments in the years between 2007 and 2013, mentioned the ‘general principles’.55 The Court never explained what this phrase means,56 and as a consequence, scholars had difficulties—and different opinions—with finding its interpretation, or its sources. The DCFR, in contrast with the ‘general principles’, was never mentioned in the CJEU’s judgments. It was, however, mentioned in certain AG-opinions. More precisely, there are six AG-opinions in which explicit references to DCFR were made, and 15 more AG-opinions where the DCFR was referred to via the footnotes of the opinions. In this chapter, the paper will discuss the judgments of the ‘general principles’, and the AG-opinions in which the DCFR was explicitly
mentioned, in order to examine whether it is plausible to assume that the CJEU’s case laws on the ‘general principles’ were inspired by the DCFR. If that is the case, and considering that the DCFR was a draft of a ECC, could it mean then that the CJEU indirectly engaged with the discussion over a ECC? Moreover, what can be learned from the fact that the Court did not explicitly mention the DCFR, while the AGs have explicitly engaged with its provisions? Could it mean that the CJEU took a careful approach in its engagement with the notion of a ECC? Or could it even mean that the ‘general principles’ were not related to the DCFR, and that the CJEU did not engage at all with the ECC movement?
In the following section, in order the examine whether there was a connection between the DCFR and the ‘general principles’, the judgments of the CJEU on the ‘general principles’ will be analyzed in a chronologic order, starting from Société thermale in 2007. Subsequently, the paper will regard the role of the principles that were discovered by the CJEU. Afterwards, the paper will consider the opinions of the AGs, where the DCFR has been explicitly mentioned.57
55 In Messner, the CJEU mentioned the ‘principles of civil law’, and not the ‘general principles of civil law’. See Case C-489/07 Pia Messner v Firma Stefan Krüger ECLI:EU:C:2009:502, para 26.
56 Weatherill (n8), 84.
57 For the purpose of this research, only the parts of the judgments and the AG-opinions that relate to the ‘general principles’, or to the DCFR, will be discussed and analysed.
3.1 The CJEU’s Judgments on the General Principles of Civil Law
Société thermale d’Eugénie-les-Bains
The Société thermale case concerned the interpretation of a tax law directive.58 The French court asked the CJEU whether a deposit payment by a client to a hotelier, can be regarded as the consideration for the supply of a reservation service by the hotelier, which is subject to VAT, or as fixed compensation for cancellation, which is not subject to VAT.59 The CJEU answered that deposit payment has no direct connection with the supply of any service for consideration and, as such, is not subject to that tax. The Court held that the obligations for the client to pay, and for the hotelier to provide services, arise from the contract, and not from the payment of the deposit.60
In justifying its decision, the CJEU mentioned the ‘general principles’, and held that:
In accordance with the general principles of civil law, each contracting party is bound to honour the terms of its contract and to perform its obligations thereunder. The obligation to fulfil the contract does not therefore arise from the conclusion, specifically for that purpose, of another agreement. Nor does the obligation of full contractual performance depend on the possibility that otherwise compensation or a penalty for delay may be due, or on the lodging of security or a deposit: that obligation arises from the contract itself.61
As it was already mentioned, it is not clear to which principles the Court was referring to when it mentioned the ‘general principles’. Hesselink held that it could seem like that the CJEU was referring to a ECC, had there been one. But in the absence of such a code, Hesselink concluded that the CJEU referred to unknown and unwritten principles, in order to interpret secondary EU law.62 Weatherill, on the other hand, was of the opinion that the DCFR created a space for discussing general principles of private law in the EU, and that the CJEU was contributing to the shaping of such general principles via its mentioning of the ‘general principles’. Hence, he saw the idea of the DCFR, as a potential source of inspiration for the CJEU when it mentioned the ‘general principles’.63 Weatherill suspected that perhaps the CJEU was trying to 58 Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment [1977] OJ L145/1, arts 2(1), 6(1).
59 Société thermale (n5), para 16.
60 ibid, paras 24, 37.
61 ibid, para 24.
62 Hesselink (n6), 133-134.
enhance the influence of the DCFR by using it to interpret EU law. In that context, he referred to the CJEU’s incorporation of the Charter of Fundamental Rights in its judgments, prior to the Charter’s entry into force in December 2009.64
Hamilton
The Hamilton case concerned the interpretation of Article 5(1) of the Doorstep Selling Directive, which provides a right of withdrawal for consumers in distance selling contracts. The CJEU decided in this case that a national legislature may limit the right of cancellation laid down in Article 5(1), to a period of maximum one month from the time at which the contracting parties have performed in full their obligations, and where the consumer has been given a defective notice concerning the exercise of that right.65 The CJEU mentioned the ‘general principles’ in its line of argumentation in the following paragraph as follows:
Similarly, the provision which governs the exercise of the right of cancellation – namely, Article 5(1) of the doorstep selling directive – provides, inter alia, that ‘[t]he consumer shall have the right to renounce the effects of his undertaking’. The use in that provision of the term ‘undertaking’ indicates, as Volksbank argued at the hearing before the Court, that the right of cancellation may be exercised as long as the consumer is not bound, at the time that the right is exercised, by any undertaking under the cancelled contract. That logic flows from one of the general principles of civil law, namely that full performance of a contract results, as a general rule, from discharge of the mutual obligations under the contract or from termination of that contract.66
Thus, the Court determined that under one of the ‘general principles’, full performance of a contract is achieved when there is a discharge of the mutual obligations under the contract, or when the contract is terminated.
In the AG-opinion of Hamilton, the DCFR was mentioned, but in the context of the principle of limitation, or more specifically, the principle of ‘time-limit on the exercise of a right’.67 AG Maduro held that under the directive, MS should be able to
64 ibid, 81-82.
65 Case C-412/06 Annelore Hamilton v Volksbank Filder eG ECLI:EU:C:2008:215, para 51.
66 ibid, para 42.
set a time-limit to the right of cancellation of a contract.68 He argued that limitation on certain contractual rights—in Hamilton it was the time limitation for consumers’ right of cancellation—is, “... a principle common to the laws of the Member States”,69 which “... might well ultimately appear at Community level in the context of the creation of a common frame of reference for European contract law”.70 AG Maduro referred to the DCFR as a possible source for those principles who are common for the laws of the MS. Thus, in case the ‘general principles’ also refer to the principles that are common to the MS, then it might reinforce the contention that they were inspired by the DCFR. Nevertheless, the judgement of Court, in this case, gives the opposite impression. The CJEU reached to the same decision as AG-Maduro, namely that MS are allowed to set a time-limit to the right of cancellation of a contract. However, the Court did not explicitly refer to the DCFR, but merely mentioned the ‘general principles’. Interestingly, the CJEU, when mentioning the ‘general
principles’, has clearly referred to a different principle than the principle of limitation on contractual rights. Hence, it can be argued that in this case, the DCFR was not the source of the ‘general principles’, but that the Court has referred to another, unknown, source of law.
Messner
The Messner case concerned the interpretation of the Distance Selling Directive. In this case, a consumer wished to exercise her right of withdrawal after 11 months,71 and cancel her purchase of a second-hand computer. The defendant—the seller of the computer—claimed compensations for an eight-month use of the laptop by the claimant. The German court asked the CJEU, if under the provisions of the directive, a seller may claim compensations for the value of the use of goods acquired under a distance contract.72 The CJEU, replied as follows:
[t]he purpose of Directive 97/7 and, in particular, the prohibition laid down in the second sentence of Article 6(1) and Article 6(2) thereof do not preclude, in principle, a legal
provision of a Member State which requires a consumer to pay fair compensation in the case
68 ibid, para 34.
69 ibid, para 24.
70 ibid.
71 She could have done so because she did not receive an effective notice of her right of withdrawal.
where he has made use of the goods acquired under a distance contract in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment.73
In contrast with the other judgments on the ‘general principles’, the Court omitted the word ‘general’ from the ‘general principles of civil law’. Hesselink argued that the CJEU in this case, possibly referred to the principles of civil law of Germany.74 However, he refuted the possibility that the CJEU referred to the principles that are common to the laws of the MS, because some countries, for example the UK, do not recognise such principles.75 Nevertheless, as the principle of good faith is derived from civil law, and because all the judges in the Chamber in this case were from civil law jurisdictions, perhaps the Court referred to the principles which are common to the MS that have civil law jurisdictions. Another option could be that the CJEU tried to emphasize that at the EU level, the civil law and common law systems need to find a method of co-habitation.76
With regard to the DCFR, Hesselink did not mention it as a possible source for the ‘general principles’ when he discussed the case.77 If one will look into the AG-opinion of Messner, or rather into the provisions of the DCFR, he could understand why in this case, such an assumption is more difficult to establish. AG Trstenjak pointed in her opinion that under the DCFR, in cases where the consumer has not received an adequate notice of his right of withdrawal, the possibility of suppliers to receive compensations from consumers, is completely ruled out.78 Thus, the
provisions of the DCFR, and the CJEU’s decision in this case, mismatch each other. Additionally, the CJEU did not follow the decision of AG Trstenjak, which, similarly to the provisions of the DCFR, has concluded that:
Article 6(1) and (2) of Directive 97/7/EC... [i]s to be interpreted as precluding a provision of national law which generally provides that, in the case of a revocation by a consumer within
73 ibid, para 26.
74 This is because the case was referred to the CJEU by a German court.
75 Hesslink (n6), 136-137.
76 Weatherill (n8), 78-79.
77 Hesselink (n6), 136-137.
78 Case C-489/07 Pia Messner v Firma Stefan Krüger ECLI:EU:C:2009:98, para 94; see also DCFR (n42), art II 5:105(5). Note that AG Trstenjak refers to article II 5:105(4) of the interim outline edition of the DCFR. In the final edition, this article was modified to art II 5:105(5).
the revocation period, a seller may claim compensation for the use of the consumer goods delivered.79
There is resemblance, however, between the DCFR’s provisions, and the CJEU’s remark on the principle of good faith. Under article II 5:105(4)(b) of the DCFR, similarly to the Court’s decision, the withdrawing party is not liable, “for any destruction or loss of, or damage to, anything received under the contract, provided the withdrawing party used reasonable care to prevent such destruction, loss or damage”.80 Nevertheless, assuming that the Court took inspiration from this article is hard to establish, as the issue in Messner concerned the compensation for the use of the computer, and not for the damages that might have been caused to it by the consumer. One can argue that the CJEU perhaps did not follow the rule of the DCFR regarding non-compensation payments by consumers, but nevertheless referred to its principles of good faith and unjustified enrichment though its ‘principles of civil law’. Still, this assumption cannot be currently proven, and the fact that AG Trstenjak did not discuss those principles of the DCFR in her opinion, only reinforces the
contention that there was no relation in this case between the ‘general principles’ and the DCFR’s provisions.
E. Friz
The case concerned a consumer who signed a contract for entering into a closed-end real property fund as a partner, through a doorstep selling transaction. After 11 years, the consumer decided to terminate his participation in the partnership.81 The German court held that the consumer could claim the value of his interest at the date of his retirement from membership, but that he cannot claim his entire investment back.82 The German court asked the CJEU if this rule is compatible with Article 5(2) of the Doorstep Selling Directive. The CJEU, while engaging with the ‘general principles’, replied in the affirmative and held that:
79 Messner (n77), para 111.
80 DCFR (n42), art II 5:105 4(b).
81 If consumers are not informed over their right of renunciation under Article 5(1) of the Directive, they may invoke it at any time. See also Case C-215/08 E. Friz GmbH v Carsten von der Heyden ECLI:EU:C:2010:186, paras 38-39.
As the Bundesgerichtshof observed in its decision for reference, that rule is intended to ensure, in accordance with the general principles of civil law, a satisfactory balance and a fair division of the risks among the various interested parties.
Specifically, first, such a rule offers the consumer cancelling his membership of a closed-end real property fund established in the form of a partnership the opportunity to recover his holding, while taking on a proportion of the risks inherent to any capital investment of the type at issue in the main proceedings. Secondly, it also enables the other partners or third party creditors, in circumstances such as those of the main proceedings, not to have to bear the financial consequences of the cancellation of that membership, which moreover occurred following the signature of a contract to which they were not party.83
The CJEU discussed the compatibility of a national German rule with the directive, and it mentioned that in accordance with the ‘general principles’, this rule intends to strike a fair balance between the risks of the interested parties. As Hesselink
commented, it is not clear whether the CJEU is referring to national principles, or to other European or universal principles of civil law. Hesselink did, however, leaned to think that in this case, the CJEU referred to the German principles of ‘defective accession to a partnership’.84 AG Trstenjak mentioned in her opinion that under these principles of German law, the exercise of the right of renunciation does not have the effect of restoring the status quo ante, and consequently, the consumer is not allowed to claim his investment back.85 Hence, Hesselink opined that the CJEU might have referred to the German ‘defection accession’ principles, when it held that the national rule was compatible with the ‘general principles’. Nonetheless, it raises the question, if the CJEU did refer to those German principles, why did it not mention it as AG Trstenjak did in her opinion?86
With regard to the DCFR, a certain resemblance with its provisions and the CJEU’s decision can be found in Article II 5:105. Under this article, “[a]ny payment made by the withdrawing party must be returned without undue delay, and in any case not later than 30 days after the withdrawal becomes effective”.87 AG Trstenjak
mentioned this article in order to support her argument that the consumer should not have the right to claim his entire investment back, but only the direct commission 83 ibid, paras 47-48.
84 Hesselink (n6), 138-139.
85 Case C-215/08 E. Friz GmbH v Carsten von der Heyden ECLI:EU:C:2009:522, para 18.
86 ibid.
payment that he paid for the trader who visited his house.88 Another reference to the DCFR in the opinion was made in the context of Article 3(2)(a)’s exception,89 which says that the directive shall not apply to immovable property. AG Trstenjak
strengthened the justification for this exception regarding immovable properties, by holding that also in the DCFR, a similar rule exists.90 The CJEU did not discuss the justification for this exception, nor did it engage with the DCFR or with the ‘general principles’. The Court simply held that the exception for immovable properties does not apply in this case.91 In contrast with Messner, this judgement seems to be in line with the provisions of the DCFR. Nevertheless, since the CJEU did not mention the DCFR, it is difficult to establish in this case that it was the source of inspiration for the ‘general principles’.
Hirmann
The Hirmann case concerned a private investor, Alfred Hirmann, who invested in Immofinanz AG, a stock company traded on the Austrian stock market. He asserted that he purchased the shares on the basis of Immofinanz’s prospectuses relating to the stock market at the time, and that these prospectuses, contained misleading
information that caused him an economic damage. Consequently, Hirmann claimed damages, reimbursement of the share price, and cancellation of the share-purchase agreement. The Austrian court, in its reference for a preliminary ruling, essentially asked the CJEU whether the allowance for a successful claim for damages,
reimbursement, and the cancellation of the share-purchase contract, due to false information by a stock company, is compatible with the Second Directive.92
In short, the CJEU replied that these rules are compatible with EU law.93 With regard to the ‘general principles’, they were mentioned in the context of the issue concerning the compatibility of the retroactive cancellation of the share purchase contract with Articles 12 and 13 of Directive 2009/101.94 The CJEU held that: 88 Friz (n84), para 69, see also footnote 62 of the opinion.
89 Article 3(2)(a) of the Doorstep Selling Directive.
90 Friz (n84), para 74; DCFR(n42), art II 5:201(2)(c).
91 Friz (n80), paras 31-34.
92 Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards in respect of the formation of public limited liability companies and the maintenance and alteration of their capital [1976] OJ L026/1, arts 12, 15, 16, 18, 19, 42.
93 Case C-174/12 Alfred Hirmann v Immofinanz AG ECLI:EU:C:2013:856, para 71.
Directive 85/577 did not preclude the national rule at issue in those proceedings since that rule, in accordance with the general principles of civil law, was intended to ensure a satisfactory balance and a fair division of the risks among the various interested parties.95
In the following paragraph of the judgment, the CJEU held that the situation was different in this case since, “... the cancellation of the contract for the purchase of shares is based solely on the irregular conduct of the issuing company which was the cause of harm to the purchaser.”96 Hence, the Court held that, “... there is no
justification for having recourse to the test of a satisfactory balance and a fair division of the risks among the various interested parties...”.97
Thus, the CJEU did not apply the risk-balancing test that is in accordance with the ‘general principles’, as it was mentioned in Friz. It did not apply the test because the circumstances of the case were different than those of Friz. As the CJEU
mentioned in Friz, the consumer’s renunciation of the contract was based not on the wrongful conduct of the other contracting party, as it was in Hirmann, but solely on the exercise of a right to renounce contracts that were signed during a visit by a trader at their home.98
An interesting point to consider is to think what if the facts in Hirmann were similar to the facts in Friz. Would the CJEU then apply its test of a satisfactory balance and fair division of the risks as it did in Friz, and examine if the Austrian rule is in accordance with the ‘general principles’? The answer seems to be in the
affirmative, as the CJEU held that the only reason why there was no need to apply the test in Hirmann, was because the facts of the case were different. If the answer is positive, it is more probable that the sources of the ‘general principles’ in Friz and Hirmann were European principles, and not the German principles of ‘defective accession to a partnership’. It is logical to argue this point because the Hirmann case, as mentioned earlier, was referred to the CJEU by an Austrian court. Hence, it is more probable that the CJEU will compare Austrian legislation to European principles, and not German principles. It is unclear, however, if the DCFR was the source of these 95 ibid, para 61.
96 ibid, para 62.
97 ibid.
98 ibid, para 60; Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises [1985] OJ L372/31, art 5(1).
principles, even if it could be established that they were European sources. Therefore, it is still undetermined what was the source of the ‘general principles’ in this case.
3.2 The Role of the Principles that were Discovered by the CJEU
Although the paper in section 2.1 already explained the term ‘principles’, and their function in a legal system, regard must be taken to the specific principles that were discovered in the five judgments on the ‘general principles’ and their roles. As it was mentioned in section 2.1, principles play a role in interpreting strict provisions, supplementing gaps in the law, and as a tool for assessing the legality of legislative act.99 Shortly summarized, the CJEU in Société thermale referred to the principle that contracts must be performed. In Messner, the principles of good faith and unjustified enrichment were also declared as principles of civil law. These three principles, from these two judgments, can also be found in the DCFR. Similarly to the role of the principles in the DCFR, the role of the principles that were discovered in these judgments, was to interpret secondary EU legislation.
In Hamilton, the CJEU discovered the principle that full performance of a contract is achieved when there is a discharge of the mutual obligations under the contract, or when the contract is terminated. In Firz and Hirmaan, the Court discovered the principle of ensuring satisfactory balance and a fair division of the risks among the various interested parties. Similarly to the role of the principles in the DCFR, which are also aimed at giving a guideline to the CJEU and national courts in their judgments regarding EU law, the principle in Hirmaan and Friz was employed in order to assess whether a national rule was valid and compatible with EU law. Nevertheless, the principles discovered in Hamilton Friz and Hirmaan, are not explicitly found in the DCFR. Therefore, it might be true that the Court was to a certain extent active in developing general principles of EU law, but it is difficult to establish that the DCFR was the sole source of these principles. Perhaps, as
Weatherill suspected, the notion of the DCFR was the source of inspiration for the CJEU to develop the ‘general principles’, and not necessarily its specific provisions.100
99 Arthur Hartkamp, ‘The General Principles of EU Law and Private Law’ [2011] RabelsZ 241, 242.
3.3 Interim Conclusion
After analyzing the judgments of the ‘general principles’, it is still not possible to conclude definitely what was the alignment of the Court’s approach with the DCFR. The AG-opinion in Hamilton, and the Sociéte thermale judgement, may raise the suspicion that the DCFR was a potential source of the ‘general principles’. Moreover, the fact that the CJEU stopped mentioning the ‘general principles’ roughly at the same time when the movement for a ECC ended, reinforces this contention.
Nevertheless, it is more difficult to infer from Messner, Hamilton, Friz and Hirmann, that the CJEU, via the ‘general principles’, referred to the DCFR. But simultaneously, it is also difficult to argue that the Court referred to other possible sources. Perhaps, as Weatherill suspected, it was the notion of the DCFR, namely a set of general EU principles, that has inspired the Court to mention the ‘general principles’, and not its specific provisions.
The paper, in the following section, will analyze the opinions of the AGs, where the DCFR has been explicitly mentioned, in order to assume more precisely whether the DCFR could have been the source of inspiration for the ‘general principles’.
3.4 The DCFR in the Advocate General Opinions
The DCFR was explicitly mentioned in five different AG-opinions in the years between 2008 and 2009, and one more time in 2016. Additionally, the DCFR was referred to, only via footnotes, in 15 other opinions. The AG-opinions of Hamilton and Messner were already discussed in section 3.1. In this section, the other four AG-opinions, in which explicit references to the DCFR were made, but no ‘general principles’ were applied, will be analyzed. The goal of this examination is to see how the CJEU reacted to those explicit references in its judgments, in order to investigate further its approach towards a ECC.
Commission v Italy
The case was brought before the CJEU by the Commission, who lodged a complaint against Italy for breaching Article 6 of Regulation No 1552/89, which holds that MS are obliged to keep accounts for own resources with the Treasury or with the body appointed by them. Under Article 11 of the regulation, any delay in making the entries
in the account of own resources, gives rise to the payment of interest by the MS concerned, at the interest rate applicable to the entire period of delay. The
Commission held that Italy was late in making the entries, and therefore, must pay default interests.101
The DCFR was incorporated in the opinion of the judgement when AG Trstenjak replied to the question whether the MS, who had an obligation to enter the Community’s entitlement to own resources in the accounts, must pay default interest from the date on which that obligation arose until the date on which the presumption of a customs debt was rebutted. In arguing that Italy was not required to pay the default interests, AG Trstenjak held, amongst of her other considerations, that:
The secondary Community legislation applicable to default interest is based on the principle regarding the ancillary nature of interest. That principle is also recognised in the law of many Member States of the EU. The ancillary nature of interest also emerges from the documents of various groups of experts on the standardisation of European law and from instruments of international law. For example, Article III.-3:708(1) of the Draft Common Frame of
Reference provides that the debtor must pay default interest if he is late paying a specific sum of money.102
The CJEU, in arriving to same conclusion as AG Trstenjak, has directly commented, and agreed, with Trstenjak’s comment on the principle regarding the ancillary nature of interest. The Court held that, “...as the Advocate General remarked in point 90 of her Opinion – in most of the legal systems of the Member States, default interest is ancillary to the principal obligation.”103 As it can be observed, even though the CJEU had the chance to reinforce its argumentation line, as AG Trstenjak did, with the provisions of the DCFR, it did not do so. Furthermore, it did not refer to the ‘general principles’ and held, for example, that in accordance with those, default interest is ancillary to the principle obligation. It only mentioned that the principle regarding the ancillary nature of interest is recognised in most MS.
101 Case C-275/07 Commission of the European Communities v Italian Republic ECLI:EU:C:2008:334
paras 63-67.
102 ibid, para 90.
103 Case C-275/07 Commission of the European Communities v Italian Republic ECLI:EU:C:2009:169, para 98.
Renate Ilsinger
The case concerned an Austrian national, Ms Ilsinger, who received an envelop guaranteeing her a prize of 20,000 Euros from the defendant, a German mail
company. The German mail company refused to pay this award, because the applicant did not order goods from the company. By the refusal of the defendant to award the prize, Ms Ilsinger brought the case before the Austrian Court under Article 16 of Brussels I Regulation. The article holds that a consumer may bring proceedings against the other party to a contract either in the courts of the MS in which that party is domiciled, or in the courts for the place where the consumer is domiciled. The defendant claimed that the Austrian court had no jurisdiction because the regulation was not applicable, since there was no contract of valuable consideration between the company and the defendant, a presupposed condition by Articles 15 and 16 of the regulation. Hence, the question referred by the Austrian court was whether instances, where a consumer seeks an order requiring a mail-order company to award a prize apparently won by him, without the award of that prize depending on an order of goods, are contractual in terms of Article 15(1)(c) Brussels I Regulation. The regulation does not lay the down the conditions for concluding a contract, and
therefore, both the AG, and the CJEU, had to discuss the conditions for the conclusion of a contract under EU law. AG Trstenjak, amongst of her other considerations that concerned the conditions for concluding a contract under EU law, held that:
[i]t is apparent from an experts’ document entitled Draft Common Frame of Reference (‘the DCFR’), which may in the future be the starting point for a uniform system of European private law, that a contract is concluded if the parties intend to enter into a binding legal relationship or bring about some other legal effect and reach a sufficient agreement (Article II.-4:101). In the chapter on contracts, the DCFR also covers the offer (Article II.-4:201) and the acceptance of the offer (Article II.-4:204). According to Article II.-4:201(1), a proposal amounts to an offer if, first, it is intended to result in a contract if the other party accepts it and, secondly, it contains sufficiently definite terms to form a contract. According to Article II.-4:204(1), any form of statement or conduct by the offeree is an acceptance if it indicates assent to the offer.104
Thus, as it can be seen, AG Trstenjak engaged with the provisions of the DCFR in order to sustain her argumentation line in determining the instances of when a contract is concluded under EU law. The CJEU, on the other hand, did not engage with the provisions of the DCFR in its judgement, but only referred to its former judgments when it argued its points. Since AG Trstenjak already incorporated the DCFR’s provisions in her opinion, and since the case was published five months before the publication of the outline edition of the DCFR, the CJEU had a great opportunity to take an active role and contribute to the validation of the DCFR by engaging with its provisions in its line of reasoning. Nevertheless, the Court chose not to do so, and it safely avoided any risks of receiving criticism concerning power giving to a non-binding instrument.
Martín Martín
The Martín Martín case concerned Article 4 of the Doorstep Selling Directive, which holds that consumers have the right to be notified for their right of cancellation in distance contracts. The Spanish court asked the CJEU if under Article 4, a national court may raise of its own motion an infringement of that article, and declare that the contract is void, on the ground that the consumer was not informed about his right of cancellation. The directive, before being replaced by the Consumer Rights Directive, was a minimum harmonization directive. Thus, the MS had a margin of discretion on deciding upon the consequences of the infringement of Article 4. Under Spanish law, if Article 4 was breached, and consequently the consumer was not informed about his right of cancelation, that consumer could then cancel the contract by applying in its own motion for the cancelation of the contract. Hence, it is regarded as relative nullity. Amongst other of her considerations, AG Trstenjak discussed also the
difference between nullity and voidability, in order to determine whether the Spanish measure was protective enough towards consumers under Article 4 of the directive. In that context, she engaged with the DCFR’s provisions in order to support her point view, and held that:
It should also be mentioned that the nullity and voidability of contracts are dealt with in the document drawn up by experts and entitled Draft Common Frame of Reference (DCFR). Article II.-7:301 of that document states that a contract is void where (a) it infringes a principle recognised as fundamental in the laws of the Member States of the European Union,
