9 Common Frame of Reference
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12269/07
COM(07) 447
| Second Commission Progress Report on the Common Frame of Reference
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| Legal base | — |
| Department | Ministry of Justice
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| Basis of consideration | Minister's letter of 28 February 2009
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| Previous Committee Report | HC 41-xxxvi (2006-07), chapter 13 (24 October 2007)
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| To be discussed in Council | n/a
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| Committee's assessment | Legally and politically important
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| Committee's decision | Cleared (decision reported on 24 October 2007).
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Background
9.1 The Common Frame of Reference ("CFR") project explores
ways of studying private law throughout the EU either as means
to providing a so-called 'tool-box' for the drafting and interpretation
of legislation or as a way of harmonising private law throughout
the EU, mainly in the area of contract law. The project can be
traced back to the early 1980s when the Commission on European
Contract Law (also referred to as the "Lando Commission")
was set up and received funding from the Legal Services of the
European Commission. This group published the Principles of European
Contract Law ("PECL"), a set of general contract law
rules in three parts, between 1995 and 2003.[40]
The PECL were based on comparative and evaluative studies of the
contract laws of the EU Member States and of other national and
international contract law systems.
9.2 In 1998 another group of academics was established,
the Study Group on a European Civil Code ("Study Group").
This group set out to draft the Principles of European Law ('PEL').
It employed the same comparative methodology as the Lando Commission,
but the scope of the PEL was designed to be much broader than
that of the PECL. Apart from rules for the general law of contract,
the PEL were also supposed to cover the law relating to specific
types of contracts (sales, leases etc), extra-contractual obligations
(tort, unjustified enrichment, negotiorum gestio) and fundamental
issues regarding the law on assets other than immoveable assets
(transfer of title, security for credit etc.). The results have
been published in eight volumes since 2006[41]
and work on the PEL is scheduled to be completed in 2009.
9.3 In February 2003 and October 2004, the European
Commission published two further documents promoting improvements
in the coherence of the EC consumer acquis and outlining
the elaboration of a Common Frame of Reference ("CFR").[42]
In May 2005 the "Joint Network on European Private Law"
(also called "CoPECL Network of Excellence") was established,
following the grant of substantial funding by the European Commission
under the Sixth Framework Programme for research and technological
development. The Joint Network undertook to deliver a draft proposal
for a CFR by 2007. It comprises several universities, institutions
and other organizations from all over Europe.
9.4 The "Interim Outline Edition" of the
Draft Common Frame of Reference ("DCFR") was published
in December 2007 and is the result of the work of two of the academic
groups that are members of the Joint Network. The final version
of the DCFR is currently scheduled for publication in March 2009.
The purpose of the DCFR
9.5 There remains uncertainty about the ultimate
purposes of the final CFR. The project was originally initiated
by a group of academics but it has been funded partly by the European
Commission and was recently endorsed by the European Parliament.
The European Commission in particular never clarified its approach
to the possible uses of the project. On the one hand, the CFR
is meant to be a "toolbox" for the revision and the
improvement of the consumer law acquis, setting forth the
general principles of contract law, establishing a common legal
terminology and providing some model rules. On the other hand,
the CFR might also serve as a blueprint for a future European
contract law that could be enacted in the form of an "Optional
Instrument", an additional contract law regime that would
be placed at the disposal of the parties. The tension between
these twin aims has never been resolved by the Commission or by
the authors of the DCFR.
9.6 In scope and content the interim version of the
DCFR, as published in 2007, clearly goes beyond a "toolbox"
for a revision of the acquis, and could serve as the basis
for a blueprint of a draft European Civil Code in the area of
patrimonial law. Such a Code, however, is not currently advocated
by any of the European Institutions or by any Member State, and
so does not appear to be a realistic political option.
9.7 Nor does it seem at present as if the CFR will
take the form of an instrument harmonizing in Europe the whole
field of contract law. The Commission in particular appears to
have retracted from its earlier more ambitious position.[43]
The Commission's more modest recent position appears to be shared
by the Council of Ministers. It defined its position on four fundamental
aspects of the CFR at the meeting of the Justice and Home Affairs
Council of 18 April 2008:[44]
a) Purpose of the Common Frame of Reference:
a tool for better lawmaking targeted at Community lawmakers;
b) Content of the Common Frame of Reference:
a set of definitions, general principles and model rules in the
field of contract law to be derived from a variety of sources;
c) Scope of the Common Frame of Reference: general
contract law including consumer contract law; and
d) Legal effect of the Common Frame of Reference:
a set of non-binding guidelines to be used by lawmakers at Community
level on a voluntary basis as a common source of inspiration or
reference in the lawmaking process.
The structure of the DCFR
9.8 The DCFR is divided into ten Books. Very broadly
speaking, its basic structure follows that of the main Continental
civil codes, which are divided into a first general part and a
second part which contains the specific provisions. Book I contains
a small number of "General Provisions" on the scope
of application and the interpretation of the DCFR. It also provides
some definitions and refers to the long list of definitions in
Annex I to the DCFR. Books II and III contain those rules that
will mostly be relevant for the CFR. They deal with general rules
of contract law (e.g. formation and breach), but also with rules
that are relevant for other kinds of obligations (e.g. set-off
and limitation periods). Books IV-X deal with the law relating
to specific types of contracts, negotiorum gestio, tort,
unjust enrichment, ownership in movables, proprietary security
rights and trusts. The 'Interim Online Edition' does not yet contain
the last three Books and still has gaps in the Book on specific
contracts.
9.9 When we cleared the Commission's second progress
report on the CFR project in October 2007, we requested that the
Minister keep the Committee informed of relevant further developments.
Following publication of the interim DCFR the Government commissioned
a report from Professor Simon Whittaker of Oxford University to
provide a critical assessment of the content and possible roles
of the DCFR. The Parliamentary Under-Secretary of State at the
Ministry of Justice (Lord Bach) wrote on 10 December 2008, attaching
a copy of Professor Whittaker's report in its entirety.
9.10 Professor Whittaker's report focuses on the
usefulness of the DCFR as a means for improving the content and
quality of EC legislation, and tries to assess its likely effect
on the development of 'European contract law' and to explain how
such a development would relate to and affect English contract
law. Amongst the report's observations the following may be mentioned:
- The coverage of the subject-matter
of the DCFR is very broad and goes well beyond the topics necessary
to regulate contracts in general and consumer contracts.
- The DCFR does not appear to be consistent in
its use of the term "principle", nor in its approach
to how "principles" relate to rules.
- The DCFR was not designed and is not suitable
to be used as either a "tool-box" or an "optional
instrument" because of its complexity and interpretative
uncertainty.
- As a compromise between different legal traditions
and systems the DCFR necessarily deviates from English contract
law in a number of respects. These include the English doctrine
of conversation and the parole evidence rules for which the DCFR
contains no equivalent provisions, the relatively broad scope
in the DCFR of the doctrine of mistake and for the conferral of
contractual rights on third parties, the general availability
of the remedy of specific performance, and the broad scope of
the principle of "good faith and fair dealing" throughout
the DCFR.
9.11 Although we cleared the document some time ago,
we decided that the contents of the Report merited a further full
report to the House and to ask the Minister to clarify the Government's
position in relation to a number of issues raised by the Professor's
study.
The Minister's Letter
9.12 The Minister has now written again and in his
letter of 28 February 2009 replies to the Committee's questions
as follows:
"At the European Scrutiny Committee meeting
on 28 January, a number of questions were raised on the Common
Frame of Reference. I shall attempt to respond to these. The Committee
has asked whether the Government agrees with Professor Whittaker's
assessment that the DCFR is more suitable as a basis for the codification
of private law throughout the EU than as a toolbox for legislators
and courts. The Government agrees that the DCFR resembles a code
for private law but we have always made it clear that we do not
endorse the development of a European code of contract law. The
DCFR is exceedingly complex and inflexible and, as Professor Whittaker's
analysis highlights, its coverage goes beyond the mere regulation
of general and consumer contract, the latter of which has, in
essence, been the basis of the CFR project. Although it contains
some matters that could be significant between contracting parties,
it also contains other matters that bear no direct relationship
to contracts or contract law. Professor Whittaker's analysis endorses
the Government's view that the DCFR is not suitable as a toolbox
for EC legislators. The CFR, or political CFR, yet to be created
by the Commission, will hopefully take a very different form and
be more akin to the toolbox approach sought from it.
"The Committee has also asked whether the Government
favours narrowing the scope of the CFR to serve as the basis for
recasting the Community acquis in specific areas of law such as
EC Consumer law. To respond to this question, the CFR (or political
CFR) needs first to be distinguished from the DCFR. The UK, like
the majority of other Member States, considers that any political
CFR should be a non-binding toolbox. The European Commission is
considering which parts of the DCFR will be useful in forming
the political CFR. The Commission has, however, given an assurance
that it will be consulting widely on what should be included.
"The Council has of course previously considered
the purpose, content and scope of the CFR and reached some general
conclusions in 2008. These relate to the:
"Purpose of the CFR: the Council has agreed
that this should be a tool for better lawmaking targeted at Community
lawmakers.
"Content of the CFR: the CFR should consist
of three linked elements: definitions, general principles and
model rules forming an inter-related whole to be derived from
a variety of sources not just the academic DCFR. The content of
the CFR should fully respect national legal traditions.
- Scope of the CFR: the CFR should
include general contract law, including consumer contract law,
with the possibility of including further special contracts later.
- The legal effect of the CFR: the CFR should be
a set of non-binding guidelines to be used by lawmakers at Community
level on a voluntary basis as a common source of inspiration or
reference in the lawmaking process. The Council and the European
Parliament should be involved in the process of creating the CFR.
"Given the proposed scope of the political CFR
set by the Council, it is reasonable to assume that those parts
of the DCFR that are predominantly about contract law, will be
the first on the Commission's list of useful subjects. However,
the DCFR is a complex and tightly-knit document. It will be difficult
to extract those parts wanted and find a coherent text that will
provide appropriate guidelines to legislators. There will be a
considerable amount of work to do to turn a putative private law
code, that is the DCFR, into a toolbox or set of non-binding guidelines
for legislators.
"The Committee has asked for my (the Government's)
views on the legal basis for a harmonising instrument of limited
scope, in particular whether Article 95 of the EC Treaty would
be the most appropriate legal base and that following the Tobacco
Advertising case that any legislation on this basis would have
to contribute to eliminating obstacles to free movement, or to
removing appreciable distortions of competitions.
"The Government's expectation is that the political
CFR will not be a measure that will require legality in terms
of a formal Treaty basis, although it remains the Government's
intention to keep this under review. We anticipate that the CFR
may take the form of an inter-Institutional agreement but precisely
what form this will be is not yet clear. This type of "soft
law" agreement, however, normally involves the consensus
of the Council, Commission and the European Parliament and has
been devised as an informal means of improving law making within
the Community."
Conclusion
9.13 We thank the Minister for his detailed reply
to the our questions in relation to Professor Whittaker's report.
We note the Government's consistent opposition to the development
of a European code of contract law and to any foreseeable EU legislation
which could give full legal effect to the Common Frame of Reference.
9.14 We ask the Minister to keep us informed of
all further developments, in particular in the event that the
Government should decide to review or rethink its present position
concerning the appropriate function and legal status of the Common
Frame of Reference, but have no further questions at this stage.
40 O Lando and H Beale (eds), Principles of European
Contract Law: Parts I and II, Combined and Revised. Prepared by
the European Commission on Contract Law (2000); O Lando et al
(eds), Principles of European Contract Law: Part III (2003). A
full version of the PECL is available at http://frontpage.cbs.dk/law/commission_on_european_contract_law/
Back
41
See, for example, Principles of Europan Law: Commercial Agency,
Franchise and Distribution Contracts (PEL CAFDC), prepared by
M Hesselink et al (2006); Principles of European Law: Sales (PEL
S), prepared by E Hondius et al (2008). Back
42
European Commission, Communication to the European Parliament
and the Council - A more coherent European Contract Law: An Action
Plan, COM(2003) 68, OJ 2003 C 63/1; European Commission, Communication
to the European Parliament and the Council - European Contract
Law and the revision of the acquis: the way forward, COM(2004)
651 final. Back
43
See the statements of Commissioner M Kuneva in the European Parliament
debate of 1 September 2008. Back
44
Council of the European Union, Press Release: 2863rd Council meeting,
Justice and Home Affairs, Luxembourg, 18 April 2008, 8379/08 (Presse
96), p 18. Back
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