What? In October 2011, the European Commission published its proposed Regulation for a Common European Sales Law ("CESL"), an optional sales law to sit alongside the Member States' existing regimes.
So What? What CESL is, why it is needed and the criticism it has attracted is discussed below.
The CESL proposal follows the Commission's Green Paper of 2010 which set out a series of possible options for a European contract law regime and the feasibility study which was published in May 2011. In order for the Regulation to be adopted it will need to be approved by the European Parliament and the Council of Ministers, then published in the OJEU. It would then come into force 20 days after publication and it is proposed that it would apply six months after that.
What is it?
The CESL is an optional sales law which will sit alongside the Member States' existing national regimes and will only apply to a transaction if both parties voluntarily and expressly agree to it. It can be used for cross-border contracts where:
- at least one party is established in a Member State;
- the contract is for a B2C transaction or a B2B transaction where at least one party is an SME; and
- the contract is for the sale of goods or digital content. The CESL may also be used for contracts for services provided by the seller that are directly and closely related to the goods or digital content supplied (e.g. repair or installation), but not for contracts including any other elements.
Member States will have the choice of also making the CESL applicable to domestic contracts and/or B2B contracts where neither party is an SME.
The CESL will cover the life cycle of a contract and includes provisions on matters such as pre-contractual information to be provided to the buyer, contract formation, cancellation rights, delivery and payment obligations and remedies for breach.
Is it needed?
The Commission's rationale for the CESL is:
- The different sales laws in the 27 Member States make cross-border selling complicated and costly, especially for small businesses. Having one set of rules will facilitate cross-border transactions in all EU countries by providing certainty and reducing costs;
- Consumers will receive the same level of protection in all Member States which in turn will provide certainty and increase transparency and consumer confidence; and
- Consumers will have a better choice of products at lower prices because cross-border trade will be easier and so competition will be increased.
However, the CESL has been the subject of criticism by many commentators, including the following:
- The legal basis of the CESL is reliance on Article 114 TFEU which provides for harmonisation of national rules where it can be demonstrated that disparities in contract law have an actual effect on market integration and the proposed instrument would actually contribute to eliminating these. Doubt has been expressed as to whether this is the case and so there is the potential for challenge;
- The CESL will give rise to two parallel systems in each Member State and this will be costly and potentially difficult to manage;
- A body of case law to assist with interpretation of the CESL will need to be built up and there is concern that the courts of different Member States may interpret provisions differently, particularly where they contain unfamiliar concepts; and
- There is doubt as to whether consumers are really concerned with legal, rather than practical, issues when buying cross-border and so whether there would be much take up of the CESL in practice.
For more information you can access:
The European Commission's press release
The European Commission's communication to the Parliament and Council
The European Commission's FAQs
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
