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BackA public hearing at the Legal Affairs Committee has started the consultation on a common European Sales Law in the European Parliament. The Commission proposal has been criticised and rejected by a broad majority both by consumer and business organisations. A significant deterioration of the level of consumer protection and a high degree of legal uncertainty are major concerns. AK EUROPA has already commented accordingly - see the link at the end of the article. However, the first hearing of the European Parliament was overshadowed by the invitation policy of the competent MEPs: invited business and consumer representatives only included supporters of the controversial proposal.
It would have definitely been of great interest, in particular at the start of the discussion on the European Sales Law proposal by the Commission, to get an overview of the reactions of consumer and business organisations of all EU countries. However, instead of inviting the European umbrella organisations, which would have been best qualified to reflect the mood of all national members, the MEPs picked in particular those national organisations, which are decidedly in favour of the Commission’ proposal. This approach gives particular cause for concern as especially a broad majority of consumers’ associations and representatives of small and medium-sized enterprises (SMEs) is opposed to the proposal concerning a common European Sales Law. For example, with regard to the European Consumers' Organisation BEUC, only one single member (of overall 42 consumer protection organisations), i.e. the Luxembourg’s consumer protection group, is in favour of the proposal by EU Commissioner Viviane Reding. As luck would have it, it was exactly their representative who was invited to the hearing. Almost the same applies to the SME representative who was invited to the hearing. And again, business was also represented by an ardent supporter of the European Sales Law proposal. However, it has to be regarded as positive that the Luxembourg consumer representative withdrew his participation shortly before the hearing started. The reaction of the European Parliament: instead of inviting a representative of BEUC or another national consumer protection organisation, MEPs dispensed with a contribution from the consumer side.
The first part of the hearing initially focussed on lectures given by representatives of the scientific side. According to Prof. David Hertzell and Prof. Hector McQueen, due to the time and effort that was required to familiarize oneself with the European Sales Law, it would only be relevant for traders who provided their services in several countries. Such trading could practically take place only via the Internet; hence, the decisive question would be to which extent the European Sales Law would be suitable to promote online trading in Europe. Given its current form, this was not the case for several reasons; the regulation was too long, too complicated and some issues were all over the place. Apart from that, it would not be possible to limit the European Sales Law to cross-border trading, as traders did not want to apply different legal systems according to whether they were trading at home or abroad. After all, in practice many relevant regulations would remain at national level and continue to act as a brake for the internal market. Hence, they would recommend a short and clear regulation for online trading.
Prof. Stefan Leible of the University of Bayreuth does not share this opinion. Establishing a second contract law regime in form of a European Sales Law would definitely be practicable and compatible with the existing Rome I Regulation. The European Sales Law could be agreed when private international law would lead to the law of the Member State. Application problems could only arise in case of contracts concluded with consumers in third countries, where the mandatory law of this third country would have to apply. With regard to the geographical scope, Prof. Leible came out in favour of being able to apply the European Sales Law also to domestic transactions
.
Prof. Carlo Castronovo was critical of the definitions. The European Sales Law would include the same issues as Directive 2011/83/EU on consumer rights, but focus on a different orientation. Various definitions for example for consumers, entrepreneurs or traders would also lead to problems in different languages. Hence, more precise definitions had to be provided or required.
In the second part, future users of the European Sales Law were asked to provide their position on the Commission proposal. As already mentioned above, no representative from the consumer side had been invited.
Tina Sommer, the Chairman for international affairs of the “Federation of Small Businesses” from Great Britain, very much welcomed the Commission proposal. SMEs would currently have problems with national regulations. Concerning cross-border activities, things would be difficult if one had to go to court in another EU country, as this was also associated with significant costs. Today, it would be easier and cheaper for a company to deliver goods twice rather than go to court. In particular in respect of eCommerce, a common sales law would bring advantages. The Commission proposal was easy to understand and to apply, said Sommer. However, the opinion of the British SME representative is in contrast to the umbrella group European Association of Craft, Small and Medium-sized Enterprises UEAPME, which rates the Commission text as extremely complex and fraught with many legal uncertainties and therefore rejects it.
The German representative of the “Union of Groups of Independent Retailers of Europe” Marc Zgaga expressly welcomed the Commission proposal. Even though full harmonisation would have been the best solution, the optional variant would come a close second, as it would reduce transaction costs. However, Zgaga did not hold back with clear criticism: he would regard the integration of cross-border reservation of proprietary rights as extremely important, which could be applied both insolvency-proof and unbureaucratically. The conclusion of the Commission that the ROME I Regulation could not be applied is controversial, and therefore clarity is required. The text would contain a large number of vague legal terms. According to Zgaga it has to be clarified as to how these legal terms are to be treated at national level.
Marc Frilet, Attorney, criticised the legislative proposal. Although a common framework of reference was to be welcomed, it was necessary to carry out more detailed studies beforehand to know where exactly the obstacles were. In his opinion, the present text would pose problems for businesses, for example in connection with planning and building laws, engineering and the banking sector. Apart from that, it would be difficult for a proposal to combine transactions between traders as well as transactions between traders and consumers. The European Lawyers Association even regards the legislative proposal as significantly negative and criticises it because of the associated legal uncertainty it would create. In addition, 186 Articles were such a vast number that it would even be difficult for lawyers to interpret them. Frilet asks whether optional instruments would be at all necessary.
The Legal Affairs Committee of the European Parliament would like to hold at least two further workshops on the European Sales Law before the summer break. One has to remain Argus-eyed to see whether the representatives of the European Parliament stick to their invitation policy, and/or whether they will follow a strategy where opponents of the European Sales Law proposal are only allowed to comment on ancillary aspects to prevent criticism from being voiced on the main part of the proposal. Why the European Commission and many representatives of the European Parliament are still supporting this European Sales Law proposal is by no means easy to understand. After all, a vast majority of EU consumer and business organisations fear that the legal text will mainly result in lower standards and legal uncertainties. In any case, it could be a long time until the negotiations in the European Parliament reach their conclusion - some estimates predict that the negotiations will not reach agreement until a first reading at the end of the legislative period in 2014. One can only hope that the EU policy-makers will use this long period to rethink their positions and to act in the interest of both consumers and businesses.
AK EUROPA-article: Strong criticism of the new Commission proposal on a common European Sales Law
The first part of the hearing initially focussed on lectures given by representatives of the scientific side. According to Prof. David Hertzell and Prof. Hector McQueen, due to the time and effort that was required to familiarize oneself with the European Sales Law, it would only be relevant for traders who provided their services in several countries. Such trading could practically take place only via the Internet; hence, the decisive question would be to which extent the European Sales Law would be suitable to promote online trading in Europe. Given its current form, this was not the case for several reasons; the regulation was too long, too complicated and some issues were all over the place. Apart from that, it would not be possible to limit the European Sales Law to cross-border trading, as traders did not want to apply different legal systems according to whether they were trading at home or abroad. After all, in practice many relevant regulations would remain at national level and continue to act as a brake for the internal market. Hence, they would recommend a short and clear regulation for online trading.
Prof. Stefan Leible of the University of Bayreuth does not share this opinion. Establishing a second contract law regime in form of a European Sales Law would definitely be practicable and compatible with the existing Rome I Regulation. The European Sales Law could be agreed when private international law would lead to the law of the Member State. Application problems could only arise in case of contracts concluded with consumers in third countries, where the mandatory law of this third country would have to apply. With regard to the geographical scope, Prof. Leible came out in favour of being able to apply the European Sales Law also to domestic transactions
.
Prof. Carlo Castronovo was critical of the definitions. The European Sales Law would include the same issues as Directive 2011/83/EU on consumer rights, but focus on a different orientation. Various definitions for example for consumers, entrepreneurs or traders would also lead to problems in different languages. Hence, more precise definitions had to be provided or required.
In the second part, future users of the European Sales Law were asked to provide their position on the Commission proposal. As already mentioned above, no representative from the consumer side had been invited.
Tina Sommer, the Chairman for international affairs of the “Federation of Small Businesses” from Great Britain, very much welcomed the Commission proposal. SMEs would currently have problems with national regulations. Concerning cross-border activities, things would be difficult if one had to go to court in another EU country, as this was also associated with significant costs. Today, it would be easier and cheaper for a company to deliver goods twice rather than go to court. In particular in respect of eCommerce, a common sales law would bring advantages. The Commission proposal was easy to understand and to apply, said Sommer. However, the opinion of the British SME representative is in contrast to the umbrella group European Association of Craft, Small and Medium-sized Enterprises UEAPME, which rates the Commission text as extremely complex and fraught with many legal uncertainties and therefore rejects it.
The German representative of the “Union of Groups of Independent Retailers of Europe” Marc Zgaga expressly welcomed the Commission proposal. Even though full harmonisation would have been the best solution, the optional variant would come a close second, as it would reduce transaction costs. However, Zgaga did not hold back with clear criticism: he would regard the integration of cross-border reservation of proprietary rights as extremely important, which could be applied both insolvency-proof and unbureaucratically. The conclusion of the Commission that the ROME I Regulation could not be applied is controversial, and therefore clarity is required. The text would contain a large number of vague legal terms. According to Zgaga it has to be clarified as to how these legal terms are to be treated at national level.
Marc Frilet, Attorney, criticised the legislative proposal. Although a common framework of reference was to be welcomed, it was necessary to carry out more detailed studies beforehand to know where exactly the obstacles were. In his opinion, the present text would pose problems for businesses, for example in connection with planning and building laws, engineering and the banking sector. Apart from that, it would be difficult for a proposal to combine transactions between traders as well as transactions between traders and consumers. The European Lawyers Association even regards the legislative proposal as significantly negative and criticises it because of the associated legal uncertainty it would create. In addition, 186 Articles were such a vast number that it would even be difficult for lawyers to interpret them. Frilet asks whether optional instruments would be at all necessary.
The Legal Affairs Committee of the European Parliament would like to hold at least two further workshops on the European Sales Law before the summer break. One has to remain Argus-eyed to see whether the representatives of the European Parliament stick to their invitation policy, and/or whether they will follow a strategy where opponents of the European Sales Law proposal are only allowed to comment on ancillary aspects to prevent criticism from being voiced on the main part of the proposal. Why the European Commission and many representatives of the European Parliament are still supporting this European Sales Law proposal is by no means easy to understand. After all, a vast majority of EU consumer and business organisations fear that the legal text will mainly result in lower standards and legal uncertainties. In any case, it could be a long time until the negotiations in the European Parliament reach their conclusion - some estimates predict that the negotiations will not reach agreement until a first reading at the end of the legislative period in 2014. One can only hope that the EU policy-makers will use this long period to rethink their positions and to act in the interest of both consumers and businesses.
AK EUROPA-article: Strong criticism of the new Commission proposal on a common European Sales Law