The Involvement of EU Law in Private Law Relationships 9781472566447, 9781849463300

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Preface The planning of a conference and the subsequent preparation of a book involves many moments of introspection: ‘it’ll be worth it in the end’ is a commonly held sense, often expressed through gritted teeth as the latest snag crashes into view. But the bright moments and lively exchanges easily outweigh the tricky corners met in preparing and executing the project. Now, however, is the moment when it really is all worth it in the end—the publication of a book which captures the rich and exciting diversity of perspectives that were the subject of discussion on a blissfully sunny couple of days in Oxford in September 2011. At that conference we wanted to enquire into the nature and purpose of the involvement of European Union law in private law relationships, under an assumption that this is an under-explored topic. We did so enquire; this book proves it. And the topic is in consequence now more fully explored, but by no means exhausted. We hope and believe that we have uncovered and examined a number of intriguing questions and challenging themes, and that in offering fresh perspectives we have helped to provoke further scholarly research. All our speakers and contributors deserve our warm thanks, also for expeditiously converting their presentations into the final texts contained in this volume. Binesh Hass helped in the editing of the papers, and we thank him. Jenny Dix, the Administrator of the Institute of European and Comparative Law, was, as ever, a pillar of strength in the organisation of the event and provided indispensable support: thank you! Stefan Vogenauer, Director of the IECL, was supportive from start to finish both in matters of intellectual ambition and at a more practical level. We are very grateful to the British Academy, which provided a conference support grant which went some considerable way to meeting our costs, and also to the Oxford Law Faculty and the IECL itself. We are proud and privileged that this book appears in a prestigious series that does so much to convey and confirm the high standing of the IECL as a source of intellectual energy. And in that vein we thank too Hart Publishing, who are partners in this success. DL, SW

List of Contributors Daniela Caruso is Professor of Law at Boston University, where she teaches US contract law, EU law and disability law. She has an LLB from Bari and an LLM from Harvard, as well as a doctorate in comparative law from the University of Florence. She is also a member of the Advisory Council of the Institute for Global Law and Policy at Harvard Law School. Monica Claes is Professor of European and Comparative Constitutional Law at Maastricht University. Her research focuses on the consequences of European integration for national constitutions, Europe’s constitutional heritage, and convergence and divergence in constitutional law. She is the author of The National Courts’ Mandate in the European Constitution (Oxford, Hart Publishing, 2006).  Since 2008 she heads the European and National Constitutional Law Project ‘EuNaCon’, funded by the European Research Council. Hugh Collins is Professor of English Law at the London School of Economics and Political Science, Department of Law. Previously he was a Fellow of Brasenose College, University of Oxford. He is a Fellow of the British Academy and serves as General Editor of the Modern Law Review. He is co-founder of the European Review of Contract Law and acts as co-editor of its articles. Recent publications include A European Civil Code: The Way Forward (Cambridge, Cambridge University Press, 2008) and Networks as Connected Contracts (edited by Gunther Teubner, Oxford, Hart Publishing, 2011). Gareth Davies is Professor of European Law at VU University Amsterdam. He is one of the authors of Chalmers, Davies and Monti, European Union Law (Cambridge, Cambridge University Press, 2010). His research concerns primarily the division of powers between the EU and Member States, particularly in the context of economic integration. He has written on the internal market, subsidiarity, the preliminary reference procedure, and the balancing of interests in economic law. Michael Dougan is Dean of Law and Professor of European Law at the University of Liverpool. He researches and publishes primarily in the fields of EU constitutional law, the law of the Single Market, and EU citizenship and welfare law. He is the author of National Remedies before the Court of Justice (Oxford, Hart Publishing, 2004) and co-author of Wyatt and Dashwood’s EU Law (Oxford, Hart Publishing, 2011). He holds a Jean Monnet Chair in EU Law. Mark Freedland has until recently been a Tutorial Fellow of St John’s College and Professor of Employment Law in the University of Oxford. He is now continuing his research and writing as an Emeritus Research Fellow of St John’s and

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a Senior Research Fellow of the Oxford Institute of European and Comparative Law, and also holds an Honorary Professorship in the Faculty of Laws of University College London. He specialises in employment law and public law and has written extensively on the contract of employment and other forms of personal work relations. He is a Fellow of the British Academy and a bencher of Gray’s Inn. Martijn W Hesselink is Professor of European Private Law and Director of the Centre for the Study of European Contract Law at the University of Amsterdam. He studied law at the Universities of Amsterdam and Panthéon-Assas (Paris II) and obtained his doctorate at the University of Utrecht. He is an editor of the European Review of Contract Law and a member of the European Commission’s expert group on European contract law. He is also a deputy justice at the Court of Appeal in Amsterdam. Angus Johnston is CUF Lecturer in Law, and Fellow and Praelector in Law at University College in the University of Oxford. He is the author of Markesinis & Deakin’s Tort Law (with Simon Deakin and Basil Markesinis, Oxford, Oxford University Press, 2012), An Introduction to Competition Law (with Piet Jan Slot, Oxford, Hart Publishing, 2006), The German Law of Contract: A Comparative Treatise (with Basil Markesinis and Hannes Unberath, Oxford, Hart Publishing, 2006), and EU Energy Law (with Guy Block, Oxford, Oxford University Press, 2012). Dorota Leczykiewicz is Leverhulme Trust Early Career Fellow in the Faculty of Law of the University of Oxford. She also holds a Research Fellowship in the Oxford Institute of European and Comparative Law and a Fellowship by Special Election in Trinity College.  She has a DPhil from the University of Oxford in comparative judicial reasoning. Her publications include articles on the law of remedies, codification of EU private law, effective judicial protection and EU fundamental rights. Vanessa Mak is an Associate Professor of Private Law at Tilburg University. Prior to her appointment in Tilburg she held positions of a postdoctoral researcher at the Max Planck Institute for Comparative and International Private Law in Hamburg, and of a Lecturer in Law at Oriel College, Oxford. She obtained a doctorate from the University of Oxford for a thesis on  Performance-oriented Remedies in European Sale of Goods Law (published by Hart Publishing, 2009). Her research focuses on the interplay between private law and regulation in the EU, with a specialisation in European consumer law. Okeoghene Odudu is Herchel Smith Senior Lecturer and British Academy MidCareer Fellow in the Faculty of Law of the University of Cambridge and Fellow in Law at Emmanuel College. His interests lie in the area of competition law, in particular, the enforceability of competition law and the relationship between the substantive rules and procedures for enforcement. He served as Deputy Director

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of the Cambridge Centre for European Legal Studies in years 2006–10 and has been co-editor of the Cambridge Yearbook of European Legal Studies since 2008. Norbert Reich is Professor Emeritus at the University of Bremen. He has been a visiting professor in the Faculty of Law, University of Tartu, Estonia, and Fernand Braudel Senior Fellow at the European University Institute in Florence. He is the author of Europäisches Verbraucherrecht (with Hans Micklitz, BadenBaden, Nomos, 2003), Understanding EU Law (Antwerp/Oxford, Intersentia, 2005), Understanding EU Consumer Law (with Hans Micklitz and Peter Rott, Antwerp/Oxford, Intersentia, 2012). Peter Rott is Associate Professor in European Private Law at the University of Copenhagen. He obtained his doctorate from the University of Erlangen with a thesis on international patent law. His previous posts include a lectureship at the University of Sheffield and an associate professorship at the University of Bremen. Amongst others, he co-authored Understanding EU Consumer Law (with Hans Micklitz and Norbert Reich, Antwerp/Oxford, Intersentia, 2009 and 2012). Christian Twigg-Flesner is Professor of Commercial Law and Head of the Law School at the University of Hull. He is also an Academic Fellow of the Inner Temple. His recent research work has concentrated on the EU Contract Law project and the modernisation of domestic and EU consumer law. His publications include A Cross-Border-Only Regulation for Consumer Transactions in the EU (Springer, New York, 2012), The Europeanisation of Contract Law (Routledge-Cavendish, London, 2008) and EC Consumer Law Compendium (with Hans Schulte-Nölke and Martin Ebers, Munich, Sellier, 2008). Stephen Weatherill is the Jacques Delors Professor of European Law. He serves as Deputy Director for European Law in the Oxford Institute of European and Comparative Law, and is a Fellow of Somerville College. He is the author of Cases and Materials on EU Law (Oxford University Press, 2012), EU Consumer Law and Policy (Cheltenham, Edward Elgar, 2005) and Law and Integration in the European Union (Oxford University Press, 1995) and co-author of Consumer Protection Law (with Geraint Howells, Aldershot, Ashgate Publishing, 2005) and European Economic Law (with Hans Micklitz, Aldershot, Ashgate Publishing, 1997). Simon Whittaker is Fellow and Tutor in Law at St John’s College and Professor of European Comparative Law at the University of Oxford. He has written widely on the English law of contract and tort and on comparative law and EU law topics within the same areas, including Liability for Products: English Law, French Law and European Harmonization (Oxford University Press, 2006), Good Faith in European Contract Law (with Reinhard Zimmermann, Cambridge University Press, 2000), Principles of French Law (with John Bell and Sophie Boyron, Oxford University Press, 2008). He has been an editor of Chitty on Contracts since 1989.

Table of Cases EU court cases are presented first, in descending order of hierarchy by court and, in the case of the Court of Justice, in two orders – one alphabetical by case name and one chronological by case number. The limited number of General Court/CFI cases are presented chronologically. National cases follow, ordered alphabetically by jurisdiction, except for France (chronological order) and Germany (descending order of hierarchy by court, subordered chronologically).

European Union Court of Justice Alphabetical order Aannemersbedrijf PK Kraaijeveld BV ea v Gedeputeerde Staten van ZuidHolland, Case C-72/95 [1996] ECR I-5403. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73, 208 Accardo v Commune di Torino, Case C-227/09, Judgment of 21 October 2010 . . . . .235 Adeneler v Ellinikos Organismos Galaktos (ELOG), Case C-212/04 [2006] ECR I-6057 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 185, 196 Advocaten voor de Wereld VZW v Leden van de Ministerraad, Case C-303/05 [2007] ECR I-3633 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .205 Albany International v Stichting Bedriffspensioenfonds Textielindustrie, Case C-67/96 [1999] ECR I-5751 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Allonby v Accrington & Rossendale College & Ors, Case C-256/01 [2004] ECR I-873 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286 Amministrazione delle Finanze dello Stato v Societa San Giorgio SpA, Case 199/82 [1983] ECR 3595 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192–3, 213–14 Amministrazione dell’Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl, Case C-2/08 [2009] ECR I-7501 . . . . . . . . . . . . . . . 215–16 Andersen v Region Syddanmark, Case C-499/08, Judgment of 12 October 2010 . . . . .83 Angelidaki v Organismos Nomarkhiaki Aftodiikisi Rethimnis, Joined Cases C-378/07 to C-380/07 [2009] ECR I-3071 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234 Angonese v Cassa di Risparmio di Bolzano SpA, Case C-281/98 [2000] ECR I-4131 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 58, 66, 72, 85, 207–8, 215, 359 Antonio Muñoz y Cia SA and Superior Fruiticola SA v Frumar Ltd and Redbridge Produce Marketing Ltd, Case C-253/00 [2002] ECR I-7289 . . . . . . . . . .210 Apple and Pear Development Council v Lewis, Case 222/82 [1983] ECR 4083 . . . . . .209 Arcor, Joined Cases C-152/07 to C-154/07 [2008] ECR I-5959 . . . . . . . . . . . . . . . . . . . .73 Association belge des Consommateurs Test-Achats ASBL, Yann van Vugt, Charles Basselier v Conseil des ministres, Case C-236/09, Judgment of 1 March 2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264–8, 275 Asturcom Telecomunicaciones SL v Rodriguez Nogueira, Case C-40/08 [2009] ECR I-9579 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92, 119–20, 123, 171, 179, 183, 188, 216, 294, 308

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Audiolux SA v Groupe Bruxelles Lambert SA (GBL), Case C-101/08 [2009] ECR I-9823 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81–2, 143, 149–50, 154–5, 157–8, 167, 179, 204–5, 255 Avello v Etat Belge, Case C-148/02 [2003] ECR I-11613 . . . . . . . . . . . . . . . . . . . . . 68, 261 Bagnasco v Banca Popolare di Novara, Joined Cases C-215/96 and C-216/96 [1999] ECR I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .406 Bartsch v Bosch and Siemens (BSH) Altersfürsorge, Case C-427/06 [2008] ECR I-7245 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 79–80, 258 Baumbast and R v Secretary of State for the Home Department, Case C-413/99 [2002] ECR I-7091 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 Baustahlgewebe v Commission, Case C-185/95 P [1998] ECR I-8417. . . . . . . . . . . . . . .75 Bayer AG v Süllhofer, Case 65/86 [1988] ECR 5249 . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 62 Becker v Finanzamt Münster-Innenstadt, Case 8/81 [1982] ECR 53 . . . . . . . . . . . . . . .208 Belgische Radio en Televisie v SV SABAM (BRT v SABAM), Case 127/73 [1974] ECR 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72, 395 Bellamy and English Shop, Case C-123/00 [2001] ECR I-2795 . . . . . . . . . . . . . . . . . . . .58 Bergaderm and Goupil v Commission, Case C-352/98 P [2000] ECR I-5291 . . . . . . .217 Berlusconi, Adelchi, Dell’Utri, Joined Cases C-387/02, C-391/02, and C-403/02 [2005] ECR I-3565 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189, 205 Bickel and Franz, Case C-274/96 [1998] ECR I-7637 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Blanco Pérez, Joined Cases C-570/07 and C-571/07 [2010] ECR I-4629. . . . . . . . . . . . .75 Booker Aquaculture, Joined Cases C-20/00 and C-64/00 [2003] ECR I-7411 . . . . . . . .75 Bozzetti v Invernizzi, Case 179/84 [1985] ECR 2301 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Brasserie de Haecht v Oscar Wilkin and Marie Janssen, Case 48/72 [1973] ECR 77 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .412 Brasserie du Pêcheur v Germany and R v Secretary of State for Transport, ex parte Factortame Ltd, Joined Cases C-46/93 and C-48/93 [1996] ECR I-1029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 215, 217, 374 Brauerei A Bilger Söhne GmbH v Jehle and Jehle, Case 43/69 [1970] ECR 127 . . . . .406 Brinkmann Tabakfabriken GmbH v Skatteministeriet, Case C-319/96 [1998] ECR I-05255 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Budeinvcircjovický Budvar v Anheuser-Busch, Case C-482/09, Judgment of 22 September 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .384 Bulicke v Deutsche Büro Service GmbH, Case C-246/09, Judgment of 8 July 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205, 213 Caballero v Fondo de Garantia Salarial, Case C-442/00 [2002] ECR I-11915 . . . . . . . .77 Carp Snc di L Molen e V Corsi v Ecorad Srl, Case C-80/06 [2007] ECR I-4473 . . . . .72 Carpenter v Secretary of State for the Home Department, Case C-60/00 [2002] ECR I-6279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Casteels v British Airways, Case C-379/09, Judgment of 10 March 2011 . . . . . . . . . . . .11 Centros Ltd v Erhvervs-og Selskabsstyreisen, Case C-212/97 [1999] ECR I-1459 . . . . .55 Centrosteel Srl v Adipol GmbH, Case C-456/98 [2000] ECR I-6007 . . . . . . . . . . . . . . .211 Centrum voor gelijkheid van kansen en voor racismebestrijding (CGKR) v Firma Feryn NV, Case C-54/07 [2008] ECR I-5187 . . . . . . . . . . . . . . . . . . . 271–2, 275 Chartered Institute of Patent Attorneys v Registrar of Trade Marks, Case C-307/10, Judgment of 19 June 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .384

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Christelle Deliège v Ligue francophone de judo et disciplines associées ASBL, Ligue belge de judo ASBL, Union européenne de judo, Joined Cases C-51/96 and C-191/97 [2000] ECR I-2549 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .207 CIA Security International SA v Signalson SA and Securitel Sprl, Case C-194/94 [1996] ECR I-2201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17–21, 27, 73, 210 Cipolla v Fazari and Macrino, Case C-94/04 [2006] ECR I-11421. . . . . . . . . . . . . . . . . .55 Claro v Centro Movil Milenium SL, Case C-168/05 [2006] ECR I-10421 . . . . 119–20, 171, 179, 183, 188, 294, 308 Club-Tour, Viagens e Turismo SA v Alberto Carlos Lobo Gonçalves Garrido, Case C-400/00 [2002] ECR I-4051 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .376 Codorniú SA v Council of the European Union, Case C-309/89 [1994] ECR I-1853 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253 Cofidis SA v Fredout, Case C-473/00 [2002] ECR I-10875 . . . . . .92, 118–19, 183, 192–4 Coleman v Attridge Law and Steve Law, Case C-303/06 [2008] ECR I-5603 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .276 Colim v Biggs, Case C-33/97 [1999] ECR I-3175 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Comet BV v Produktschap voor Siergewassen, Case 45/76 [1976] ECR 2043 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 191, 361 Commission v Spain, Case C-195/02 [2004] ECR I-785 . . . . . . . . . . . . . . . . . . . . . . . . .148 Commission v Austria, Case C-209/04 [2006] ECR I-2755 . . . . . . . . . . . . . . . . . . . . . . . .22 Commission v France, Case 167/73 [1974] ECR 359 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Commission v France, Case C-304/02 [2005] ECR I-6263 . . . . . . . . . . . . . . . . . . . . . . .193 Commission v France (‘Spanish strawberries’), Case C-265/95 [1997] ECR I-6959 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 66 Commission v Germany, Case C-59/89 [1991] ECR I-2607 . . . . . . . . . . . . . . . . . . . . . .321 Commission v Ireland, Case 249/81 [1982] ECR 4005. . . . . . . . . . . . . . . . . . . . . . . . . . .209 Commission v Ireland, Case C-494/01 [2005] ECR I-3331 . . . . . . . . . . . . . . . . . . . . . . .193 Commission v Ireland (Dundalk Council), Case 45/87 [1988] ECR 4929 . . . . . . . . . . .65 Commission v Italy, Case 104/86 [1988] ECR 1799 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184 Commission v Italy, Case 363/85 [1987] ECR 1733 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .321 Competition Authority v Beef Industry Development Society Ltd and Barry Brothers (Carrigmore) Meats Ltd, Case C-209/07 [2008] ECR I-8637 . . . . . . . . . .407 Coote v Granada Hospitality Ltd, Case C-185/97 [1998] ECR I-5199 . . . . . . . . . . . . . .213 Costa v ENEL, Case 6/64 [1964] ECR 585 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395 Courage v Crehan, Case C-453/99 [2001] ECR I-6297 . . . . . . . . . . . . . . . . . . . . 25, 76, 143, 148, 153, 161, 184, 186–7, 203–4, 212, 362–3, 398–9 Crailsheimer Volksbank eG v Klaus Conrads, Frank Schulzke and Petra Schulzke-Lösche, Joachim Nitschke, Case C-229/04 [2005] ECR I-9273 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184, 186, 202, 362 Dansk Supermarked v Imerco, Case 58/80 [1981] ECR 181 . . . . . . . . . . . . . . . . . . . . . . .65 Danske Slagterier v Germany, Case C-445/06 [2009] ECR I-2119 . . . . . . . . . . . . . . . . .213 DEB Deutsche Energiehandels- und Beratungsgesellschaft mbH v Bundesrepublik Deutschland, Case C-279/09, Judgment of 22 December 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154, 206, 213, 254 Defrenne v Sabena, Case 43/75 [1976] ECR 455 . . . . . . . . . 44, 64, 72, 208, 257, 311, 359 Defrenne v Sabena, Case 149/77 [1978] ECR 1365 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257 Demirel v Stadt Schwabisch Gmund, Case 12/86 [1987] ECR 3719 . . . . . . . . . . . . . . . .75 Deutscher Apothekerverband, Case C-322/01 [2003] ECR I-14887 . . . . . . . . . . . . . . . . .73

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D’Hoop v Office National de lémploi, Case C-224/98 [2002] ECR I-6191 . . . . . . . . . . .68 Dillenkofer, Erdmann, Schulte, Heuer, and Knor v Germany, Joined Cases C-178-179/94, C-188-190/94 [1996] ECR I-1531. . . . . . . . . . . . . . . . . . . . . . . . . . . . .217 Dominguez v CICOA, Case C-282/10, Judgment of 24 January 2012 . . . . . 33, 38, 44, 82 Draehmpaehl v Urania Immobilienservice OHG, Case C-180/95 [1997] ECR I-2195 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203 Du Pont de Nemours Italiana v Unita Sanitaria Locale No.2 di Carrara, Case C-21/88 [1990] ECR I-889 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Duijnstee v Goderbauer, Case 288/82 [1983] ECR 3663 . . . . . . . . . . . . . . . . . . . . . . . . .110 Dynamic Medien Vertriebs GmbH v Avides Media A, Case C-244/06 [2008] ECR I-505 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 221 Dzodzi v Belgium, Joined Cases C-297/88 and C-197/89 [1990] ECR I-3763 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378 E Friz GmbH v Carsten von der Heyden, Case C-215/08, Judgment of 15 April 2010 . . . . . . . . . . . . . . . . . . . . . 133, 137–40, 142–3, 145, 159–60, 170, 176, 202, 216 Earl de Kerlast v Union regionale de cooperatives agricoles (Unicopa) and Cooperative du Trieux, Case C-15/95 [1997] ECR I-1961 . . . . . . . . . . . . . . . . .253 Eco Swiss China Time Ltd v Benetton International NV, Case C-126/97 [1999] ECR I-3055 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 119 Effer SpA v Kantner, Case 38/81 [1982] ECR 825 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112 El Corte Ingles SA v Blazquez Rivero, Case C-192/94 [1996] ECR I-1281 . . . . . . . 16, 33 Elisabeth Johanna Pacifica Dekker v Stichting Vormingscentrum voor Jong Volwassenen (VJV-Centrum) Plus, Case C-177/88 [1990] ECR I-3941 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203, 215, 361 Enderby v Frenchay Health Authority, Case C-127/92 [1993] ECR I-5535 . . . . . . . . . .240 ERT v DEP, Case C-260/89 [1991] ECR I-2925. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75–6 Estée Lauder Cosmetics GmbH v Lancaster Group GmbH, Case C-220/98 [2000] ECR I-0117 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .340 Établissements Consten SàRL and Grundig-Verkaufs-GmbH v Commission, Joined Cases 56/64 and 58/64 [1966] ECR 299 . . . . . . . . . . . . . . . . . . . . . 302, 406, 408 Evans v Secretary of State for the Environment, Transport and the Regions and Motors Insurers’ Bureau, Case C-63/01 [2003] ECR I-14447 . . . . . . . . . . 215–16 Faccini Dori v Recreb Sri, Case C-91/92 [1994] ECR I-3325 . . . . . . . . 16, 74, 185–6, 210 Familiapress v H Baur Verlag, Case C-368/95 [1997] ECR I-3689 . . . . . . . . . . . . . . . 75–6 FENIN v Commission, Case C-205/03 P [2006] ECR I-6295 . . . . . . . . . . . . . . . . . . . . . .60 Ferlini v Centre hospitalier de Luxembourg, Case C-411/98 [2000] ECR I-8081 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 58, 63–4 FII Group Litigation (Test Claimants) v Commissioners of Inland Revenue, Case C-446/04 [2006] I-11753 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Firma Foto-Frost v Hauptzollamt Lübeck-Ost, Case 314/85 [1987] ECR 4199 . . . . . .381 Fonderie Officine Meccaniche Tacconi SpA v Heinrich Wagner Sinto Maschinenfabrik GmbH, Case C-334/00 [2002] ECR I-7357 . . . . . . . . . . . . . . . . . .176 Foster v British Gas, Case C-188/89 [1990] ECR I-3313 . . . . . . . . . . . . . . . . . . . . . . . . .359 Francovich and Bonifaci v Italy, Joined Cases 6/90 and 9/90 [1991] ECR I-5357 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24–5, 82, 166, 206, 214–15, 217, 219, 373–4 Fratelli Graffione SNC v Ditta Fransa, Case C-313/94 [1996] ECR I-6039. . . . . . . . . .340

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Freiburger Kommunalbauten GMbH Baugesellschaft & Co KG v Hofstetter, Case C-237/02 [2004] ECR I-3403 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118, 340 Fuchs, Joined Cases C-159-160/10, Judgment of 21 July 2011 . . . . . . . . . . . . . . . . . . . . .83 Fuß v Stadt Halle, Case C-429/09, Judgment of 25 November 2010 . . . . . . . . . . . . . . .206 Gebhard v Consiglio dell’Ordine degli Awocati e Procuratori di milano, Case C-55/94 [1995] ECR I-4165 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Georgiev, Joined Cases C-250/09 and C-268/09, Judgment of 18 November 2010 . . . .83 Germany v Parliament and Council, Case C-380/03 [2006] ECR-I11573 . . . . . . . . . . .322 Germany v Parliament and Council (‘Tobacco Advertising’), Case C-376/98 [2000] ECR I-8419 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Glöckner v Landreis Sudwetpfalz, Case C-475/99 [2001] ECR I-8089 . . . . . . . . . . . . . . .60 Grant v South-West Trains, Case C-249/96 [1998] ECR I-621 . . . . . . . . . . . . . . . . . . . .258 Grifoni v European Atomic Energy Community, Case C-308/87 [1994] ECR I-341 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273 Grimaldi v Fonds des maladies professionelles, Case C-322/88 [1989] ECR 4407. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367 Groener v Minister for Education and the City of Dublin Vocational Educational Committee, Case C-379/87 [1989] ECR 3967 . . . . . . . . . . . . . . . . . . . . .85 Grundig Italiana SpA v Ministero delle Finanze, Case C-255/00 [2002] ECR I-8003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191–2 Grunkin and Paul, Case C-353/06 [2008] ECR I-7639. . . . . . . . . . . . . . . . . . . . . . . . . . .261 Guérin automobiles v Commission, Case C-282/95 P [1997] ECR I-1503 . . . . . . . . . .395 Gueye, Joined Cases C-483/09 and C-1/10, Judgment of 15 September 2011 . . . 80, 320 Gut Springenheide and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt, Case C-210/96 [1998] ECR I-4657 . . . . . . . . . . . . . . . . . . . . 337, 339–40, 349 Gysbrechts v Santurel Inter BVBA, Case C-205/07 [2008] ECR I-9947 . . . . . . . . . . . . .202 Haim v Kassenzahnärztliche Vereinigung Nordrhein, Case C-424/97 [2000] ECR I-5123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Hamilton v Volksbank Filder eG, Case C-412/06 [2008] ECR I-2383 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133–7, 140, 142–3, 145, 147,159–60, 168, 170, 176, 216 Handels- og Kontorfunktionµrernes Forbund I Danmark v Dansk Arbeitsgiverforening for Danfoss, Case 109/88 [1989] ECR 3199 . . . . . . . . . . . . . . .182 Handelsgesellschaft Heinrich Heine GmbH v Verbraucherzentrale NordrheinWestfalen eV, Case C-511/08, Judgment of 15 April 2010 . . . . . . . . . . . . . . . . . . . . .202 Haug-Adrion v Frankfurter Versicherungs-AG, Case 251/83 [1984] ECR I-4277 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 63–5 Heemskerk BV and Firma Schaap v Productschap Vee en Vlees, Case C-455/06 [2008] ECR I-8763 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116 Heininger and Heininger v Bayerische Hypo- und Vereinsbank AG, Case C-481/99 [2001] ECR I-9945 . . . . . . . . . . . . . . . . . . . . . 186, 190, 194, 196–7, 362 Hennigs, Joined Cases C-297-298/10, Judgment of 8 September 2011 . . . . . . . . . . . . . .74 Her Majesty’s Customs and Excise v Gerhart Schindler and Jörg Schindler, Case C-275/92 [1994] ECR I-1039 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Hoffmann-La Roche & Co AG v Centrafarm Vertriebsgesellschaft Pharmazeutischer Erzeugnisse mbH, Case 102/77 [1978] ECR 1139 . . . . . . . . . . . .209 Honyvem Informazioni Commerciali Srl v Mariella De Zotti, Case C-456/04 [2006] ECR I-02879 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381, 389

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Hotel Scandic Gåsabäck AB v Riksskatteverket, Case C-412/03 [2005] ECR I-743 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .205 Hütter, David v Technische Universitat Graz, Case C-88/08 [2009] ECR I-5325 . . . . . .83 i-21 and Arcor v Germany, Joined Cases C-392/04 and C-422/04 [2006] ECR I-8559 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Iannelli & Volpi v Meroni, Case 74/76 [1977] ECR 557 . . . . . . . . . . . . . . . . . . . . . . . . . .72 ICI v Commission, Case 48/69 [1972] ECR 619 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385 Impact v MAFF and Others, Case C-268/06 [2008] ECR I-2483 (Ireland) . . . . . 86, 213 IN.CO.GE.’90, Joined Cases C-10-22/97 [1998] ECR I-6307 . . . . . . . . . . . . . . . . . . . . . . .86 Inter-Environnement Wallonie ASBL v Regione Wallone, Case C-129/96 [1997] ECR I-7411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Intercontainer Interfrigo SC (ICF) v Balkenende Oosthuizen BV and MIC Operations BV ECR, Case C-133/08 [2009] I-09687. . . . . . . . . . . . . . . . . . . . . . . . . .149 International Chemical Corporation v Amministrazione delle Finanze dello Stato, Case 66/80 [1981] ECR 1191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381 International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti, Case C-438/05 [2007] ECR I-10779 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10–13, 15, 25, 50–4, 57, 61–3, 76–7, 81, 152–3, 207–8, 215, 221, 310–11 Internationale Handelsgesellschaft mbH v Einfuhr- und Vorratsstelle für Getreide und Futtermittel, Case 11/70 [1970] ECR 1125 . . . . . . . . . . . . . . . . . . . . . .178 Istituto Chemioterapico Italiano SpA and Commercial Solvents Corporation v Commission, Joined Cases 6/73 and 7/73 [1974] ECR 223 . . . . . . . . . . . . . . . . . .400 Jégo-Quéré & Cie SA v Commission, Case C-263/02 P [2004] ECR I-3425 . . . . . . . .213 Johannes Martinus Lemmens, Case C-226/97 [1998] ECR I-3711 . . . . . . . . . . . . . . 18–19 Johnston v Chief Constable of the Royal Ulster Constabulary, Case 222/84 [1986] ECR 1651. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 204 Juuri v Fazer Amica Oy, Case C-396/07 [2008] ECR I-8883 . . . . . . . . . . . . . . . . . . . . . .183 Kapferer v Schlank & Schick GmbH, Case C-234/04 [2006] ECR I- 2585 . . . . . . . . . .111 Karlsson, Case C-292/97 [2000] ECR I-2737 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Keck, Case C-267/91 [1993] ECR I-6097 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 KHS AG v Schulte, Case C-214/10, Judgment of 22 November 2011 . . . . . . . . . . . . . . .83 Köbler v Austria, Case C-224/01 [2003] ECR I-10239 . . . . . . . . . . . . . . . . 25, 86, 215, 217 Kofoed v Skatteministeriet, Case C-321/05 [2007] ECR I-5795 . . . . . . . . . . . . . . . . . . .210 Konle v Austria, Case C-302/97 [1999] ECR I-3099 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Konstantinidis v Stadt Altensteig-Standesamt, Case C-168/01 [1993] ECR I-1191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .261 Konsumentombusmannen (KO) v Gourmet International, Case C-405/98 [2001] ECR I-1795 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Kremzow v Austria, Case C-299/95 [1997] ECR I-2629 . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Kücükdeveci v Swedex GmbH & Co KG, Case C-555/07 [2010] ECR I-365 . . 23, 50, 78–81, 83, 86, 141–2, 150, 162, 258, 260 Kühne & Heitz NV v Productschap voor Pluimvee en Eieren, Case C-453/00 [2004] ECR I-837 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195, 395 Lady & Kid v Skatteministeriet, Case C-398/09, Judgment of 6 September 2011 . . . .364 Lageder, Joined Cases C-31/91 to C-44/91 [1993] ECR I-1761 . . . . . . . . . . . . . . . . . . . . .75 Lämmerzahl GmbH v Freie Hansestadt Bremen, Case C-241/06 [2007] ECR I-8415 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185

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Landeshaupstadt Kiel v Jaeger, Case C-151/02 [2003] ECR I-8389 . . . . . . . . . 246–9, 251 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Case C-341/05 [2007] ECR I-11767 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 25, 61, 152, 207, 215, 221, 237, 310 Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA, Case C-412/93 [1995] ECR I-179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Lehtonen and Castors Canada Dry Namur-Braine ASBL v Fédé-ration Royale Belge des sociétés de basket-ball ASBL (FRBSB), Case C-176/96 [2000] ECR I-2681 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Leitner v TUI Deutschland GmbH Co KG, Case C-168/00 [2002] ECR I-2631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163, 273, 362 Leur-Bloem v Inspecteur der Belastingdienst/Onder-nemingen Amsterdam 2, Case C-28/95 [1997] ECR I-4161 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378, 383 Levez v TH Jennings (Harlow Pools) Ltd, Case C-326/96 [1998] ECR I-7835 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184, 192–3, 212–13 Lindqvist, Case C-101/01 [2003] ECR I-12971 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 77 Luciano Arcaro, Case C-168/95 [1996] ECR I-4705 . . . . . . . . . . . . . . . . . . . . 189, 205, 210 Manfredi v Lloyd Adriatico Assicurazioni SpA, Joined Cases C-295/04 to 298/04 [2006] ECR-I 6619 . . . . . . . . . . . . . . . . . . . . . . 154, 160, 165, 184, 203, 215, 363–4, 399, 412 Mangold v Rüdiger Helm, Case C-144/04 [2005] ECR I-9981 . . . . . 13, 22–4, 27, 50, 59, 78–9, 81,83, 141–2, 150, 154, 162, 173, 179, 234, 255, 257–60 Marks & Spencer plc v Commissioners of Customs & Excise, Case C-62/00 [2002] ECR I-6325 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Marleasing SA v La Comercial Internacional de Alimentacion SA, Case C-106/89 [1990] ECR I-4135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74, 211 Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching), Case 152/84 [1986] ECR 723 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 73, 210 Marshall v Southampton and South West Hampshire Area Health Authority, Case C-271/91 [1993] ECR I-4367 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 203, 361–2 Martín v EDP Editores SL, Case C-227/08 [2009] ECR I-11939 . . . . . . . . . . . 124–6, 188 Mauri v Ministero delle Guistizia, Case C-250/03 [2005] ECR I-1267 . . . . . . . . . . . . .370 Meca-Medina and Majcen v Commission, Case C-519/04 P [2006] ECR I-6991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14–15, 63 Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG v ‘Österreich’Zeitungsverlag GmbH, Case C-540/08, Judgment of 9 November 2010 . . . . . . . . .334 Messner v Firma Stefan Kruger, Case C-489/07 [2009] ECR I-7315 . . . .133, 136–8, 140, 142–3, 145–7, 150, 155, 159–60, 168, 170, 184, 187, 189, 202, 216 Metallgesellschaft Ltd v Commissioners of Inland Revenue and HM Attorney General, Joined Cases C-397/98 and C-410/98 [2001] ECR I-1727 . . . . . . . . . . . . .215 Ministero dell’Industria, del Commercio e dell’Artigianato v Lucchini SpA, Case C-119/05 [2007] ECR I-6199 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Ministre du Budget et al v Accor, Case C-310/09, Judgment of 15 September 2011. .364 Mono Car Styling SA v Dervis Odemis, Case C-12/08 [2009] ECR I-6653 . . . . . . . . .213

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Musique Diffusion Française v Commission (Pioneer), Joined Cases C-100103/80 [1983] ECR 1825 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 N v Inspecteur van de Belasingdienst Oost/kantoor Almelo, Case C-470/04 [2006] ECR I-7409 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 191 National Council on Ageing (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform, Case C-388/07 [2009] ECR I-1569 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 NCC Construction Danmark A/S v Skatteministeriet, Case C-174/08 [2009] ECR I-10567 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 156–8, 204 Nemzeti Fogyasztóvédelmi Hatóság v Invitel Távközlési Zrt, Case C-472/10, Judgment of 26 April 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 Netherlands v Parliament and Council, Case C-377/98 [2001] ECR I-7079 . . . . . . . . . .75 Neukirchinger v Bezirkshauptmannschaft Grieskirchen, Case C-382/08, Judgment of 25 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Nuova Agricast Srl v The Commission, Case C-67/09 P, Judgment of 14 October 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration, Case 26/62 [1963] ECR 1 . . . . . . . . .207 NV Nederlandse Spoorwegen v Staatssecretaris van Financien, Case 126/78 [1979] ECR 2041 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Océano Grupo Editorial SA v Murciano Quintero, Joined Cases C-240/98 to C-244/98 [2000] ECR I-4941 . . . . . . . . . . . . . . . . 92, 114, 116–26, 128–9, 171, 188, 211 Oelmühle Hamburg AG and Jb Schmidt Söhne GmbH & Co KG v Bundesanstalt für Landwirtschaft und Ernährung, Case C-298/96 [1998] ECR I-4767 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195 Office national des pensions (ONP) v Gioconda Camarotto and Giuseppina Vignone, Joined Cases C-52/99 and C-53/99 [2001] ECR I-1395 . . . . . . . . . . . . . . .183 Officer van Justitie v Kolpinghuis Nijmegen BV, Case 80/86 [1987] ECR 3969 . . . . . .205 Omega Spielhallen- und Automatenaufstellungs-GmbH v Oberbürgermeisterin der Bundesstadt Bonn, Case C-36/02 [2004] ECR I-9609 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221 Oosthoek’s Uitgeversmaatschappij, Case 286/81 [1982] ECR 4575 . . . . . . . . . . . . . . . . .359 Openbaar Ministerie v Van Tiggele, Case 82/77 [1978] ECR 25 . . . . . . . . . . . . . . . . . . . .55 Orfanopoulos, Joined Cases C-482/01 and C-493/01 [2004] ECR I-5257 . . . . . . . . . . . .75 Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs- unde Zeitschriftenverlag GmbH & Co KG, Case C-7/97 [1998] ECR I-7791 . . . . . . . . . .370 Österreichische Unilever GmbH v Smithkline Beecham Markenartikel GmbH, Case C-77/97 [1999] ECR I-431 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210 Pafitis and others v Trapeza Kentrikis Ellados AE, Case C-441/93 [1996] ECR I-1347 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210 Palacios de la Villa v Cortefiel Servicios SA, Case C-411/05 [2007] ECR I-8531 . . . . .258 Palmisani v Istituto nazionale della previdenza sociale (INPS), Case C-261/95 [1997] ECR I-4025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 188, 362 Pannon GSM Zrt v Erzsébet Sustikné Györfi, Case C-243/08 [2009] ECR I-4713 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,121, 125, 183, 188, 309 Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG, Case C-458/03 [2005] ECR I-8585 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

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Parliament v Council, Case C-540/03 [2006] ECR I-5769 . . . . . . . . . . . . . . . . . . . 254, 390 Patrice Di Pinto, Case C-361/89 [1991] ECR I-1189 . . . . . . . . . . . . . . . . . . . . . . . . . . . .189 Pensionsversicherungsanstalt v Kleist, Case C-356/09, Judgment of 18 November 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Peter v Hauptzollamt Regensburg, Case C-290/91 [1993] ECR I-2981 . . . . . . . . . . . . .196 Peterbroeck, Van Campenhout & Cie SCS v Belgian State, Case C-312/93 [1995] ECR I-4599 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116, 214, 216 Petersen v Berufungsausschuss fur Zahnarzte fur den Bezirk Westfalen-Lippe, Case C-341/08, Judgment of 12 January 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV, Joined Cases C-397 to C-403/01 [2004] ECR I-8835 . . . . . . . . . . . . . . . . . 74, 156, 210–11, 239, 251 Pretore di Salò v X, Case 14/86 [1987] ECR 2545 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210 Prigge v Lufthansa, Case C-447/09, Judgment of 13 September 2011 . . . . . . . . . . 74, 258 Procureur du Roi v Dassonville, Case 8/74 [1974] ECR 837 . . . . . . . . . . . . 11, 56, 62, 337 Productores de Música de España (Promusicae) v Telefonica de Espana SAU, Case C-275/06 [2008] ECR I-271 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213, 254 Pronuptia de Paris GmbH v Pronuptia de Paris Irmgard Schillgalis, Case 161/84 [1986] ECR 353 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände, Case C-404/06 [2008] ECR I-2685 . . . . . . . . . . . . . . . . . . . . .197 R ex parte Synthon BV v Licensing Authority of the Department of Health, Case C-452/06 [2008] ECR I-7681 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 R on the application of Delena Wells v Secretary of State for Transport, Local Government and the Regions, Case C-201/02 [2004] ECR I-723. . . . 16–17, 20–1, 73, 210 R v HM Treasury, ex parte British Telecommunications, Case C-392/93 [1996] ECR I-1631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 217 R v MAFF ex parte Bostock, Case C-2/92 [1994] ECR I-955 . . . . . . . . . . . . . . . . . . . . . .75 R v MAFF ex parte Hedley Lomas (Ireland) Ltd, Case C-5/94 [1996] ECR I-6297 . .217 R v Secretary of State for Health ex parte British American Tobacco (Investment) Ltd and others, Case C-491/01 [2002] ECR I-11543 . . . . . . . . . . . . . .322 R v Secretary of State for Social Security ex parte Sutton, Case C-66/95 [1997] ECR I-2163 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 R v Secretary of State for Transport, ex parte Factortame Ltd, Case C-213/89 [1990] ECR I-2433 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214 Raccanelli v Max-Planck-Gesellschaft zur Förderung der Wissenschaften, Case C-94/07 [2008] ECR I-5939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 66, 261 Rampion v Franfinance SA, K par K SAS, Case C-429/05 [2007] ECR I-8017 123–4, 126, 188 Ravil, Case C-469/00 [2003] ECR I-5053 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Real Madrid Football Club and Others v Unibet and Others, Case C-584/08, Order of 24 March 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Rechberger v Austria, Case C-140/97 [1999] ECR I-3499 . . . . . . . . . . . . . . . . . . . . . . . .215 Recheio Cash & Carry SA v Fazenda Pública/Registro Nacional de Pessoas Colectivas, Case C-30/02 [2004] ECR I-6051 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191 Rewe-Handelsgesellschaft Nord mbH v Hauptzollamt Kiel, Case 158/80 [1981] ECR 1805. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .361

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Rewe-Zentrale AG v Bundesmonopolverwaltung für Branntwein (‘Cassis de Dijon’), Case 120/78 [1979] ECR 649 . . . . . . . . . . .56, 69, 72, 334, 336–7 Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaft skammer für das Saarland, Case 33/76 [1976] ECR 1989 . 92, 182, 191, 212–13, 361 Reyners, Case 2/74 [1974] ECR 631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Rinke v Ärztekammer Hamburg, Case C-25/02 [2003] ECR I-8349 . . . . . . . . . . . . . . .257 Robinson-Steele v RD Retail Services Ltd, Joined Cases C-131/04 and C-257/04 [2006] ECR I-2531 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .245 Roca Álvarez, v Sesa Start Espana ETT SA, Case C-104/09, Judgment of 30 September 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Römer v Freie und Hansestadt Hamburg, Case C-147/08, Judgment of 10 May 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 79–80, 260 Roquette Frères SA v Direction des services fiscaux du Pas-de-Calais, Case C-88/99 [2000] ECR I-10465 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195 Rosenbladt v Oellerking Gebaudereinigungses mbH, Case C-45/09 [2010] ECR I-9391 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Rottmann, v Freistaat Bayern, Case C-135/08, Judgment of 2 March 2010 . . . . . . . . . .68 Royal Pharmaceutical Society, Joined Cases C-266/87 and C-267/87 [1989] ECR 1295 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Ruckdeschel, Joined Cases 117/76 and 16/77 [1977] ECR 1753 . . . . . . . . . . . . . . . . . . .253 Rüffert v Land Niedersachsen, Case C-346/06 [2008] ECR I-1989 . . . . . . . . . . . . . . . .310 Runevic-Vardyn and Wardyn, Case C-391/09, Judgment of 12 May 2011 . . . . . . . . . . .76 SA Brasserie De Haecht v Consorts Wilkin-Janssen, Case 23/67 [1967] ECR 407. . . .406 Santex SpA v Unità Socio Sanitaria Locale n 42 di Pavia, and Sca Mölnlycke SpA, Artsana SpA and Fater SpA, Case C-327/00 [2003] ECR I-1877 . . . . . . 185, 214 Sapod Audic v Eco-Emballages, Case C-159/00 [2002] ECR I-5031 . . . . . . . . .11, 54, 62, 73, 209 Schmidberger, Internationale Transporte und Planzüge v Austria, Case C-112/00 [2003] ECR I-5659 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11–12, 56, 75, 221 Schulte & Schulte v Deutsche Bausparkasse Badenia AG, Case C-350/03 [2005] ECR I-9215 . . . . . . . . . . . . . . . . . . . . . 139, 184–5, 196, 202, 362 Schutzverband gegen unlauteren Wettbewerb v TK-Heimdienst Sass GmbH, Case C-254/98 [2000] ECR I-151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .369 Semen v Deutsche Tamoil GmbH, Case C-348/07 [2009] ECR I-2341 . . . . . . . . . . . . .163 Servizi Ausiliari Dottori Commercialisti Srl v Calafiori, Case C-451/03 [2006] ECR I-2941 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370 Shervill v Press Alliance SA, Case C-68/92 [1995] ECR I-415 . . . . . . . . . . . . . . . . . . . .112 Sindicato de Medicos de Asistencia Publica (Simap) v Conselleria de Sanidad y Consumo de la Generalidad Valenciana, Case C-303/98 [2000] ECR I-7963 . . .246 Sociedade de Exportacoa de Materias Ltd v Subdirector-Geral das Alfandegas, Case C-446/93 [1996] ECR I-73 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Societé Arcelor Atlantique et Lorraine and Others v Premier Ministre, Ministre de l’Écologie et du Développement, Case C-127/07 [2008] ECR I-9835 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253 Société Comateb v Directeur général des douanes et droits indirects, Joined Cases C-192/95 to C-218/95 [1997] ECR I-615. . . . . . . . . . . . . . . . . . . . . . . .214 Société de Vente de Ciments et Bétons v Kerpen and Kerpen, Case 319/82 [1983] ECR 4173. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .410

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Société Technique Minière (LTM) v Maschinenbau Ulm GmbH (MBU), Case 56/65 [1966] ECR 235 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407, 410, 412 Société thermale d’Eugénie-les-Bains v Ministère de l’Économie, des Finances et de l’Industrie, Case C-277/05 [2007] ECR I-6415 . . . . . . . . . . . . 6, 133–5, 137, 140, 142–5, 156, 159, 170, 255 Sorge v Poste Italiane SpA, Case C-98/09, Judgment of 24 June 2010 . . . . . . . . . . . . .234 SPUC v Grogan, Case C-159/90 [1991] ECR I-4685 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Standesamt Stadt Niebüll, Case C-96/04 [2006] I-3561 . . . . . . . . . . . . . . . . . . . . . . . . . .261 Steenhorst-Neerings Bestuur van de Bedrijfsvereniging voor Detailhandel, Case C-338/91 [1993] ECR I-5475 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 Steffensen, Case C-276/01 [2003] ECR I-3735 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Sturgeon v Condor Flugdienst GmbH, Joined Cases C-402/07 and C-432/07 [2009] ECR I-10923 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151 Swedish Match AB, Swedish Match UK Ltd v Secretary of State for Health, Case C-210/03 [2004] ECR I-11983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Tele2 Telecommunication GmbH v Telecom-Control-Kommission, Case C-426/05 [2008] ECR I-685 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .216 Texaco and Olieselskabet Danmark, Joined Cases C-114/95 and C-115/95 [1997] ECR I-4263 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .212 Traghetti del Mediterraneo SpA in liquidation v Italy, Case C-173/03 [2006] ECR I-5177 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215, 217 Travel Vac SL v Manuel José Antelm Sanchis, Case C-423/97 [1999] ECR I-2195 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Trojani v Centre Public D’Aide Sociale de Bruxelles, Case C-456/02 [2004] ECR I-7573 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Tyrolean Airways Tiroler Luftfahrt Gesellschaft mbH v Betriebsrat Bord der Tyrolean Airways Tiroler Luftfahrt Gesellschaft mbH, Case C-132/11, Judgment of 7 June 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Uecker and Jacquet, Joined Cases C-64/96 and C-65/96 [1997] ECR I-3171 . . . . . . . . .68 Unibet (London) Ltd and Unibet (International) Ltd v Justitiekanslern, Case C-432/05 [2007] ECR I-2271 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191, 205, 213 Unilever Italia SpA v Central Food SpA, Case C-443/98 [2000] ECR I-7535 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17–21, 73, 210 Unión de Pequeños Agricultores v Council of the European Union, Case C-50/00 P [2002] ECR I-6677 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Union Nationale des Entraîneurs et Cadres Techniques Professionnels du Football (Unectef) v Georges Heylens, Case 222/86 [1987] ECR 4097 . . . . . 204, 213 Union Royal Belge des Sociétés de Football Association (URBSFA) v Jean-Marc Bosman, Case C-415/93 [1995] ECR I-4921 . . . . . . . . . . . . 44, 56, 63, 152, 207–8, 215 Uniplex (UK) Ltd v NHS Business Services Authority, Case C-406/08 [2010] ECR I-817 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370 Van der Weerd, Maatschap Van der Bijl, JW Schoonhoven v Minister van Landbouw, Natuur en Voedselkwaliteit, Joined Cases C-222/05 to C-225/05 [2007] ECR I-4233 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116, 184, 205, 216 van Schijndel and van Veen v Stichting Pensioenfonds voor

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Fysiotherapeuten, Joined Cases C-430/93 and C-431/93 [1995] ECR I-4705 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91, 114, 116, 118, 120–1, 123–5, 128–9, 182, 216 Vassallo v Azienda Ospedaliera Ospedale San Martino di Genova e Cliniche Universitarie Convenzionate, Case C-180/04 [2006] ECR I-7254 . . . . . . . . . . . . . . . .33 Vassilakis v Dimos Kerkyras, Case C-364/07 [2008] ECR I-90 . . . . . . . . . . . . . . . . . . . .185 VB Pénzügyi Lízing Zrt. v Ferenc Schneider, Case C-137/08, Judgment of 9 November 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 119, 121–3, 171 Verband Sozialer Wettbewerb eV v Clinique Laboratoires SNC et Estée Lauder Cosmetics GmbH, Case C-315/92 [1994] ERC I-317 . . . . . . . . . 72, 338 Verein gegen Unwesen in Handel and Gewerbe Köln eV v Mars GmbH, Case C-470/93 [1995] ECR I-1923 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .337 Vereniging Van Cementhandelaren v Commission, Case 8/72 [1972] ECR 977 . . . . . .406 Verholen v Sociale Verzekeringsbank Amsterdam, Joined Cases C-87/90 to C-89/90 [1991] ECR 3757 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .208 Viho Europe BV v Commission, Case C-73/95 P [1996] ECR I-5436 . . . . . . . . . . . . . .385 Virgin Pontin v T-Comalux SA, Case C-63/08 [2009] ECR I-10467 . . . . . . . . . . . . . . .216 Visciano v INPS, Case C-69/08 [2009] ECR I-6741 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Vlaamse Reisbureaus v ASBL Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten, Case 311/85 [1987] ECR 3801 . . . . . . . . . . . . . 54, 62 von Colson and Kamann v Land Nordrhein-Westfalen, Case 14/83 [1984] ECR 1891. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 184–5, 191, 203, 211, 215, 219, 272–3, 361, 373, 386 Voß v Land Berlin, Case C-300/06 [2007] ECR I-10573 . . . . . . . . . . . . . . . . . . . . . . . . . .86 VTB-VAB and Galatea, Joined Cases C-261/07 and 299/07 [2009] ECR I-2949 . . . . .359 Wachauf v Bundesamt für Ernährung, Case 5/88 [1989] ECR I-2609 . . . . . . . . . . 75, 254 Walrave and Koch v Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española Ciclismo, Case 36/74 [1974] ECR 1405 . . . . . . . . . . . . . . . . . . . . 10, 27, 44, 63–4, 67, 207–8, 215 Webb, Case 279/80 [1981] ECR 3305 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Wilhem v Bundeskartellamt, Case 14/68 [1969] ECR 1 . . . . . . . . . . . . . . . . . . . . . . . . . .395 Williams v British Airways plc, Case C-155/10, Judgment of 15 September 2011 . . . . .83 Willy Kempter AG v Hauptzollamt Hamburg-Jonas, Case C-2/06 [2008] ECR I-411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195, 205 Wolf v StadtFrankfurt am Main, Case C-229/08, Judgment of 12 January 2010 . . . . . .83 Wouters, Savelbergh, Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten, Case C-309/99 [2002] ECR I-1577 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 63, 207 X v Commission, Case C-404/92 P [1994] ECR I-4737 . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Zambrano v Office National de L’emploi (ONEM), Case C-34/09, Judgment of 8 March 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Zentrale zur Bekämpfung unlauteren Wettbewerbs v Plus Wahrenhandelsgesellschaft, Case C-304/08 [2010] ECR I-217 . . . . . . . . . . . . . . . . . .359

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Court of Justice Case number order Case 26/62 NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration [1963] ECR 1 . . . . . . . . . . . . .207 Case 6/64 Costa v ENEL [1964] ECR 585 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395 Joined Cases 56/64 and 58/64 Établissements Consten SàRL and GrundigVerkaufs-GmbH v Commission [1966] ECR 299 . . . . . . . . . . . . . . . . . . . 302, 406, 408 Case 56/65 Société Technique Minière (LTM) v Maschinenbau Ulm GmbH (MBU) [1966] ECR 235 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407, 410, 412 Case 23/67 SA Brasserie De Haecht v Consorts Wilkin-Janssen [1967] ECR 407 . . . .406 Case 14/68 Walt Wilhem v Bundeskartellamt [1969] ECR 1 . . . . . . . . . . . . . . . . . . . . . .395 Case 43/69 Brauerei A Bilger Söhne GmbH v Jehle and Jehle [1970] ECR 127 . . . . .406 Case 48/69 ICI v Commission [1972] ECR 619 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385 Case 11/70 Internationale Handelsgesellschaft mbH v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1970] ECR 1125 . . . . . . . . . . . . . . . . . .178 Case 8/72 Vereniging Van Cementhandelaren v Commission [1972] ECR 977 . . . . . .406 Case 48/72 Brasserie de Haecht v Oscar Wilkin and Marie Janssen [1973] ECR 77 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .412 Joined Cases 6/73 and 7/73 Istituto Chemioterapico Italiano SpA and Commercial Solvents Corporation v Commission [1974] ECR 223 . . . . . . . . . . . . .400 Case 127/73 Belgische Radio en Televisie v SV SABAM (BRT v SABAM) [1974] ECR 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72, 395 Case 167/73 Commission v France [1974] ECR 359 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Case 2/74 Reyners [1974] ECR 631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837 . . . . . . . . . . . . 11, 56, 62, 337 Case 36/74 BNO Walrave and LJN Koch v Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española Ciclismo [1974] ECR 1405 . . . . . . . . . . . . . . 10, 27, 44, 63–4, 67, 207–8, 215 Case 43/75 Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena [1976] ECR 455 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44, 64, 72, 208, 257, 311, 359 Case 33/76 Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaft skammer für das Saarland [1976] ECR 1989 . . . . . . . . . . . . . . . . . . . . . . . .92, 182, 191, 212–13, 361 Case 45/76 Comet BV v Produktschap voor Siergewassen [1976] ECR 2043 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 191, 361 Case 74/76 Iannelli & Volpi v Meroni [1977] ECR 557 . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Joined Cases 117/76 and 16/77 Ruckdeschel [1977] ECR 1753 . . . . . . . . . . . . . . . . . . .253 Case 82/77 Openbaar Ministerie v Van Tiggele [1978] ECR 25 . . . . . . . . . . . . . . . . . . . .55 Case 102/77 Hoffmann-La Roche & Co AG v Centrafarm Vertriebsgesellschaft Pharmazeutischer Erzeugnisse mbH [1978] ECR 1139 . . . . . . . . . . . . . . . . . . . . . . . .209 Case 149/77 Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena [1978] ECR 1365 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .257 Case 120/78 Rewe-Zentrale AG v Bundesmonopolverwaltung für Branntwein [1979] ECR 649 (‘Cassis de Dijon’) . . . . . . . . . . . . .56, 69, 72, 334, 336–7

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Case 126/78 NV Nederlandse Spoorwegen v Staatssecretaris van Financien [1979] ECR 2041. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Case 58/80 Dansk Supermarked v Imerco [1981] ECR 181 . . . . . . . . . . . . . . . . . . . . . . .65 Case 66/80 International Chemical Corporation v Amministrazione delle Finanze dello Stato [1981] ECR 1191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381 Joined Cases C-100-103/80 Musique Diffusion Française v Commission (Pioneer) [1983] ECR 1825 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 Case 158/80 Rewe-Handelsgesellschaft Nord mbH v Hauptzollamt Kiel [1981] ECR 1805. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .361 Case 279/80 Criminal proceedings against Webb [1981] ECR 3305. . . . . . . . . . . . . . . . .55 Case 8/81 Ursula Becker v Finanzamt Münster-Innenstadt [1982] ECR 53 . . . . . . . . .208 Case 38/81 Effer SpA v Kantner [1982] ECR 825 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112 Case 249/81 Commission v Ireland [1982] ECR 4005 . . . . . . . . . . . . . . . . . . . . . . . . . . .209 Case 286/81 Criminal proceedings against Oosthoek’s Uitgeversmaatschappij [1982] ECR 4575. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359 Case 199/82 Amministrazione delle Finanze dello Stato v Societa San Giorgio SpA [1983] ECR 3595 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192–3, 213–14 Case 222/82 Apple and Pear Development Council v Lewis [1983] ECR 4083 . . . . . .209 Case 288/82 Duijnstee v Goderbauer [1983] ECR 3663. . . . . . . . . . . . . . . . . . . . . . . . . .110 Case 319/82 Société de Vente de Ciments et Bétons v Kerpen and Kerpen [1983] ECR 4173. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .410 Case 14/83 Sabine von Colson and Elisabeth Kamann v Land Nordrhein Westfalen [1984] ECR 1891 . . . . . . . . . . . . . 182, 184–5, 191, 203, 211, 215, 219, 272–3, 361, 373, 386 Case 251/83 Haug-Adrion v Frankfurter Versicherungs-AG [1984] ECR I-4277 54, 63–5 Case 152/84 MH Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) [1986] ECR 723. . . . . . . . . . . . . . . . . . . . 16, 73, 210 Case 161/84 Pronuptia de Paris GmbH v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 Case 179/84 Bozzetti v Invernizzi [1985] ECR 2301 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Case 222/84 Marguerite Johnston v Chief Constable of the Royal Ulster Constabulary [1986] ECR 1651 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 204 Case 311/85 Vlaamse Reisbureaus v ASBL Sociale Dienst van de Plaatselijke en Gewestelijke Overheidsdiensten [1987] ECR 3801 . . . . . . . . . . . . . . . . . . . . . . 54, 62 Case 314/85 Firma Foto-Frost v Hauptzollamt Lübeck-Ost [1987] ECR 4199 . . . . . . .381 Case 363/85 Commission v Italy [1987] ECR 1733 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .321 Case 12/86 Demirel v Stadt Schwabisch Gmund [1987] ECR 3719 . . . . . . . . . . . . . . . . .75 Case 14/86 Pretore di Salò v X [1987] ECR 2545 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210 Case 65/86 Bayer AG v Süllhofer [1988] ECR 5249 . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 62 Case 80/86 Officer van Justitie v Kolpinghuis Nijmegen BV [1987] ECR 3969 . . . . . .205 Case 104/86 Commission v Italy [1988] ECR 1799 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184 Case 222/86 Union Nationale des Entraîneurs et Cadres Techniques Professionnels du Football (Unectef) v Georges Heylens [1987] ECR 4097. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204, 213 Case 45/87 Commission v Ireland (Dundalk Council) [1988] ECR 4929 . . . . . . . . . . . .65 Joined Cases C-266 and C-267/87 Royal Pharmaceutical Society [1989] ECR 1295 . . .63 Case C-308/87 Grifoni v European Atomic Energy Community [1994] ECR I-341 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273

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Case C-379/87 Groener v Minister for Education and the City of Dublin Vocational Educational Committee [1989] ECR 3967 . . . . . . . . . . . . . . . . . . . . . . . . .85 Case 5/88 Wachauf v Bundesamt für Ernährung [1989] ECR I-2609 . . . . . . . . . . 75, 254 Case C-21/88 Du Pont de Nemours Italiana v Unita Sanitaria Locale No.2 di Carrara [1990] ECR I-889 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Case 109/88 Handels- og Kontorfunktionµrernes Forbund I Danmark v Dansk Arbeitsgiverforening for Danfoss [1989] ECR 3199 . . . . . . . . . . . . . . . . . . . .182 Case C-177/88 Elisabeth Johanna Pacifica Dekker v Stichting Vormingscentrum voor Jong Volwassenen (VJV-Centrum) Plus [1990] ECR I-3941 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203, 215, 361 Joined Cases C-297/88 and C-197/89 Dzodzi v Belgium [1990] ECR I-3763 . . . . . . .378 Case C-322/88 Grimaldi v Fonds des maladies professionelles [1989] ECR 4407 . . . .367 Case C-59/89 Commission v Germany [1991] ECR I-2607. . . . . . . . . . . . . . . . . . . . . . .321 Case C-106/89 Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECR I-4135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74, 211 Case C-188/89 Foster v British Gas [1990] ECR I-3313 . . . . . . . . . . . . . . . . . . . . . . . . .359 Case C-213/89 R v Secretary of State for Transport, ex parte Factortame Ltd [1990] ECR I-2433 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214 Case C-260/89 ERT v DEP [1991] ECR I-2925 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75–6 Case C-309/89 Codorniú SA v Council of the European Union [1994] ECR I-1853 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .253 Case C-361/89 Criminal proceedings against Patrice Di Pinto [1991] ECR I-1189 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189 Joined Cases 6/90 and 9/90 Francovich and Bonifaci v Italy [1991] ECR I-5357 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24–5, 82, 166, 206, 214–15, 217, 219, 373–4 Joined Cases C-87/90 to C-89/90 A Verholen v Sociale Verzekeringsbank Amsterdam [1991] ECR 3757 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .208 Case C-159/90 SPUC v Grogan [1991] ECR I-4685 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Joined Cases C-31/91 to C-44/91 Lageder [1993] ECR I-1761 . . . . . . . . . . . . . . . . . . . . .75 Case C-267/91 Criminal proceedings against Keck [1993] ECR I-6097. . . . . . . . . . . . . .62 Case C-271/91 M Helen Marshall v Southampton and South West Hampshire Area Health Authority [1993] ECR I-4367 . . . . . . . . . . . . . 182, 203, 361–2 Case C-290/91 Johannes Peter v Hauptzollamt Regensburg [1993] ECR I-2981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196 Case C-338/91 Steenhorst-Neerings Bestuur van de Bedrijfsvereniging voor Detailhandel [1993] ECR I-5475 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 Case C-2/92 R v MAFF ex parte Bostock [1994] ECR I-955 . . . . . . . . . . . . . . . . . . . . . .75 Case C-68/92 Shervill v Press Alliance SA [1995] ECR I-415 . . . . . . . . . . . . . . . . . . . . .112 Case C-91/92 Paola Faccini Dori v Recreb Sri [1994] ECR I-3325 . . . 16, 74, 185–6, 210 Case C-127/92 Enderby v Frenchay Health Authority [1993] ECR I-5535 . . . . . . . . . .240 Case C-275/92 Her Majesty’s Customs and Excise v Gerhart Schindler and Jörg Schindler [1994] ECR I-1039 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Case C-315/92 Verband Sozialer Wettbewerb eV v Clinique Laboratoires SNC et Estée Lauder Cosmetics GmbH [1994] ERC I-317 . . . . . . . . . . . . . . . . . . . . . 72, 338 Case C-404/92 P X v Commission [1994] ECR I-4737 . . . . . . . . . . . . . . . . . . . . . . . . . . .75

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Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur v Germany and R v Secretary of State for Transport, ex parte Factortame Ltd [1996] ECR I-1029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 215, 217, 374 Case C-312/93 Peterbroeck, Van Campenhout & Cie SCS v Belgian State [1995] ECR I-4599 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116, 214, 216 Case C-392/93 R v HM Treasury, ex parte British Telecommunications [1996] ECR I-1631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 217 Case C-412/93 Leclerc-Siplec v TF1 Publicite SA and M6 Publicite SA [1995] ECR I-179 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Case C-415/93 Union Royal Belge des Sociétés de Football Association (URBSFA) v Jean-Marc Bosman [1995] ECR I-4921 . . . . . . . . . . . . . . 44, 56, 63, 152, 207–8, 215 Joined Cases C-430/93 and C-431/93 Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 114, 116, 118, 120–1, 123–5, 128–9, 182, 216 Case C-441/93 Panagis Pafitis v Trapeza Kentrikis Ellados AE [1996] ECR I-1347 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210 Case C-446/93 Sociedade de Exportacoa de Materias Ltd v Subdirector-Geral das Alfandegas [1996] ECR I-73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Case C-470/93 Verein gegen Unwesen in Handel and Gewerbe Köln eV v Mars GmbH [1995] ECR I-1923 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .337 Case C-5/94 R v MAFF ex parte Hedley Lomas (Ireland) Ltd [1996] ECR I-6297 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217 Case C-55/94 Gebhard v Consiglio dell’Ordine degli Awocati e Procuratori di milano [1995] ECR I-4165 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Joined Cases C-178-179/94, C-188-190/94 Erich Dillenkofer, Christian Erdmann, Hans-Jürgen Schulte, Anke Heuer, Werner, Ursula and Trosten Knor v Germany [1996] ECR I-1531. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217 Case C-192/94 El Corte Ingles SA v Blazquez Rivero [1996] ECR I-1281 . . . . . . . 16, 33 Case C-194/94 CIA Security International SA v Signalson SA and Securitel Sprl [1996] ECR I-2201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17–21, 27, 73, 210 Case C-313/94 Fratelli Graffione SNC v Ditta Fransa [1996] ECR I-6039 . . . . . . . . . .340 Case C-15/95 Earl de Kerlast v Union regionale de cooperatives agricoles (Unicopa) and Cooperative du Trieux [1997] ECR I-1961 . . . . . . . . . . . . . . . . . . . .253 Case C-28/95 Leur-Bloem v Inspecteur der Belastingdienst/Onder-nemingen Amsterdam 2 [1997] ECR I-4161 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378, 383 Case C-66/95 R v Secretary of State for Social Security ex parte Sutton [1997] ECR I-2163 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 Case C-72/95 Aannemersbedrijf PK Kraaijeveld BV ea v Gedeputeerde Staten van Zuid-Holland [1996] ECR I-5403 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73, 208 Case C-73/95 P Viho Europe BV v Commission [1996] ECR I-5436 . . . . . . . . . . . . . .385 Joined Cases C-114/95 and C-115/95 Texaco and Olieselskabet . . . . . . . . . . . . . . . . . . .212 Case C-168/95 Criminal Proceedings against Luciano Arcaro [1996] ECR I-4705 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189, 205, 210 Case C-180/95 Nils Draehmpaehl v Urania Immobilienservice OHG [1997] ECR I-2195 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203 Case C-185/95 P Baustahlgewebe v Commission [1998] ECR I-8417 . . . . . . . . . . . . . . .75

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Joined Cases C-192/95 to C-218/95 Société Comateb v Directeur général des douanes et droits indirects [1997] ECR I-615 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214 Case C-261/95 Rosalba Palmisani v Istituto nazionale della previdenza sociale (INPS) [1997] ECR I-4025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 188, 362 Case C-265/95 Commission v France (‘Spanish strawberries’) [1997] ECR I-6959 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 66 Case C-282/95 P Guérin automobiles v Commission [1997] ECR I-1503 . . . . . . . . . .395 Case C-299/95 Kremzow v Austria [1997] ECR I-2629 . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Case C-368/95 Familiapress v H Baur Verlag [1997] ECR I-3689 . . . . . . . . . . . . . . . 75–6 Joined Cases C-51/96 and C-191/97 Christelle Deliège v Ligue francophone de judo et disciplines associées ASBL, Ligue belge de judo ASBL, Union européenne de judo [2000] ECR I-2549 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .207 Joined Cases C-64/96 and C-65/96 Uecker and Jacquet [1997] ECR I-3171 . . . . . . . . .68 Case C-67/96 Albany International v Stichting Bedriffspensioenfonds Textielindustrie [1999] ECR I-5751 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Case C-129/96 Inter-Environnement Wallonie ASBL v Regione Wallone [1997] ECR I-7411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Case C-176/96 Jyri Lehtonen and Castors Canada Dry Namur-Braine ASBL v Fédération Royale Belge des sociétés de basket-ball ASBL (FRBSB) [2000] ECR I-2681 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Case C-210/96 Gut Springenheide and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt [1998] ECR I-4657 . . . . . . . . . . . . . . . . . . . . . . . . 337, 339–40, 349 Joined Cases C-215/96 and C-216/96 Carlo Bagnasco v Banca Popolare di Novara [1999] ECR I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .406 Case C-249/96 Lisa Jacqueline Grant v South-West Trains [1998] ECR I-621 . . . . . . .258 Case C-274/96 Criminal proceedings against Bickel and Franz [1998] ECR I-7637 . . .68 Case C-298/96 Oelmühle Hamburg AG and Jb Schmidt Söhne GmbH & Co KG v Bundesanstalt für Landwirtschaft und Ernährung [1998] ECR I-4767 . . . . .195 Case C-319/96 Brinkmann Tabakfabriken GmbH v Skatteministeriet [1998] ECR I-05255 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Case C-326/96 BS Levez v TH Jennings (Harlow Pools) Ltd [1998] ECR I-7835 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184, 192–3, 212–13 Case C-7/97 Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs- unde Zeitschriftenverlag GmbH & Co KG [1998] ECR I-7791 . . . . . . . . . . . . . . . . . . . . . .370 Joined Cases C-10-22/97 IN.CO.GE.’90 [1998] ECR I-6307 . . . . . . . . . . . . . . . . . . . . . . .86 Case C-33/97 Colim v Biggs [1999] ECR I-3175. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Case C-77/97 Österreichische Unilever GmbH v Smithkline Beecham Markenartikel GmbH [1999] ECR I-431 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210 Case C-126/97 Eco Swiss China Time Ltd v Benetton International NV [1999] ECR I-3055 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 119 Case C-140/97 Walter Rechberger v Austria [1999] ECR I-3499 . . . . . . . . . . . . . . . . . .215 Case C-185/97 Belinda Jane Coote v Granada Hospitality Ltd [1998] ECR I-5199 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Case C-212/97 Centros Ltd v Erhvervs-og Selskabsstyreisen [1999] ECR I-1459. . . . . .55 Case C-226/97 Criminal proceedings against Johannes Martinus Lemmens [1998] ECR I-3711 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18–19 Case C-292/97 Karlsson [2000] ECR I-2737 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Case C-302/97 Klaus Konle v Austria [1999] ECR I-3099 . . . . . . . . . . . . . . . . . . . . . . . .215

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Case C-423/97 Travel Vac SL v Manuel José Antelm Sanchis [1999] ECR I-2195 . . . .202 Case C-424/97 Salomone Haim v Kassenzahnärztliche Vereinigung Nordrhein [2000] ECR I-5123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Case C-220/98 Estée Lauder Cosmetics GmbH v Lancaster Group GmbH [2000] ECR I-0117 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .340 Case C-224/98 D’Hoop v Office National de lémploi [2002] ECR I-6191 . . . . . . . . . . .68 Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial SA v Murciano Quintero [2000] ECR I-4941. . . . . . . . . . . . . . . . . . . . . . . . . . . . 92, 114, 116–26, 128–9, 171, 188, 211 Case C-254/98 Schutzverband gegen unlauteren Wettbewerb v TK-Heimdienst Sass GmbH [2000] ECR I-151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .369 Case C-281/98 Angonese v Cassa di Risparmio di Bolzano SpA [2000] ECR I-4131 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 58, 66, 72, 85, 207–8, 215, 359 Case C-303/98 Sindicato de Medicos de Asistencia Publica (Simap) v Conselleria de Sanidad y Consumo de la Generalidad Valenciana [2000] ECR I-7963 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .246 Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291 . . . . . . .217 Case C-376/98 Germany v Parliament and Council (‘Tobacco Advertising’) [2000] ECR I-8419 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Case C-377/98 Netherlands v Parliament and Council [2001] ECR I-7079 . . . . . . . . . .75 Joined Cases C-397/98 and C-410/98 Metallgesellschaft Ltd v Commissioners of Inland Revenue and HM Attorney General [2001] ECR I-1727 . . . . . . . . . . . . .215 Case C-405/98 Konsumentombusmannen (KO) v Gourmet International [2001] ECR I-1795 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Case C-411/98 Ferlini v Centre hospitalier de Luxembourg [2000] ECR I-8081 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 58, 63–4 Case C-443/98 Unilever Italia SpA v Central Food SpA [2000] ECR I-7535 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17–21, 73, 210 Case C-456/98 Centrosteel Srl v Adipol GmbH [2000] ECR I-6007 . . . . . . . . . . . . . . .211 Joined Cases C-52/99 and C-53/99 Office national des pensions (ONP) v Gioconda Camarotto and Giuseppina Vignone [2001] ECR I-1395 . . . . . . . . . . . . .183 Case C-88/99 Roquette Frères SA v Direction des services fiscaux du Pas-deCalais [2000] ECR I-10465 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195 Case C-309/99 JCJ Wouters, JW Savelbergh, Price Waterhouse Belastingadviseurs BV v Algemene Raad van de NederlandseOrde van Advocaten [2002] ECR I-1577 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 63, 207 Case C-413/99 Baumbast and R v Secretary of State for the Home Department [2002] ECR I-7091 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 Case C-453/99 Courage v Crehan [2001] ECR I-6297 . . . . . . . . . . . . . . . . . . . . . 25, 76, 143, 148, 153, 161, 184, 186–7, 203–4, 212, 362–3, 398–9 Case C-475/99 Glöckner v Landreis Sudwetpfalz [2001] ECR I-8089 . . . . . . . . . . . . . . .60 Case C-481/99 Georg Heininger and Helga Heininger v Bayerische Hypo- und Vereinsbank AG [2001] ECR I-9945 . . . . . . . . . . . . . . . . . . . .186, 190, 194, 196–7, 362 Joined Cases C-20/00 and C-64/00 Booker Aquaculture [2003] ECR I-7411 . . . . . . . . .75 Case C-50/00 P Unión de Pequeños Agricultores v Council of the European Union [2002] ECR I-6677 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213

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Case C-60/00 Carpenter v Secretary of State for the Home Department [2002] ECR I-6279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Case C-62/00 Marks & Spencer plc v Commissioners of Customs & Excise [2002] ECR I-6325 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Case C-112/00 Eugen Schmidberger, Internationale Transporte und Planzüge v Austria [2003] ECR I-5659 . . . . . . . . . . . . . . . . . . . . . . . . 11–12, 56, 75, 221 Case C-123/00 Criminal proceedings against Bellamy and English Shop [2001] ECR I-2795 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Case C-159/00 Sapod Audic v Eco-Emballages [2002] ECR I-5031 . . .11, 54, 62, 73, 209 Case C-168/00 Simone Leitner v TUI Deutschland GmbH Co KG [2002] ECR I-2631 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163, 273, 362 Case C-253/00 Antonio Muñoz y Cia SA and Superior Fruiticola SA v Frumar Ltd and Redbridge Produce Marketing Ltd [2002] ECR I-7289 . . . . . . . . .210 Case C-255/00 Grundig Italiana SpA v Ministero delle Finanze [2002] ECR I-8003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191–2 Case C-327/00 Santex SpA v Unità Socio Sanitaria Locale n 42 di Pavia, and Sca Mölnlycke SpA, Artsana SpA and Fater SpA [2003] ECR I-1877 . . . . . . 185, 214 Case C-334/00 Fonderie Officine Meccaniche Tacconi SpA v Heinrich Wagner Sinto Maschinenfabrik GmbH [2002] ECR I-7357 . . . . . . . . . . . . . . . . . . . . . . . . . . .176 Case C-400/00 Club-Tour, Viagens e Turismo SA v Alberto Carlos Lobo Gonçalves Garrido [2002] ECR I-4051 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .376 Case C-442/00 Caballero v Fondo de Garantia Salarial [2002] ECR I-11915 . . . . . . . . .77 Case C-453/00 Kühne & Heitz NV v Productschap voor Pluimvee en Eieren [2004] ECR I-837 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195, 395 Case C-469/00 Ravil [2003] ECR I-5053 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Case C-473/00 Cofidis SA v Fredout [2002] ECR I-10875 . . . . . . . . . . . . . . . . 92, 118–19, 183, 192–4 Case C-63/01 Samuel Sidney Evans v Secretary of State for the Environment, Transport and the Regions and Motors Insurers’ Bureau [2003] ECR I-14447 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215–16 Case C-101/01 Criminal proceedings against Lindqvist [2003] ECR I-12971 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 77 Case C-168/01 Konstantinidis v Stadt Altensteig-Standesamt [1993] ECR I-1191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .261 Case C-224/01 Köbler v Austria [2003] ECR I-10239 . . . . . . . . . . . . . . . . 25, 86, 215, 217 Case C-256/01 Allonby v Accrington & Rossendale College & Ors [2004] ECR I-873 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286 Case C-276/01 Steffensen [2003] ECR I-3735 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Case C-322/01 Deutscher Apothekerverband [2003] ECR I-14887 . . . . . . . . . . . . . . . . .73 Joined Cases C-397 to C-403/01 Bernhard Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV [2004] ECR I-8835 . . . . . . . . . . . . . . . . . . .74, 156, 210–11, 239, 251 Joined Cases C-482/01 and C-493/01 Orfanopoulos [2004] ECR I-5257 . . . . . . . . . . . .75 Case C-491/01 R v Secretary of State for Health ex parte British American Tobacco (Investment) Ltd [2002] ECR I-11543 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Case C-494/01 Commission v Ireland [2005] ECR I-3331 . . . . . . . . . . . . . . . . . . . . . . .193 Case C-25/02 Katharina Rinke v Ärztekammer Hamburg [2003] ECR I-8349. . . . . . .257

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Case C-30/02 Recheio Cash & Carry SA v Fazenda Pública/Registro Nacional de Pessoas Colectivas [2004] ECR I-6051 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191 Case C-36/02 Omega Spielhallen- und Automatenaufstellungs-GmbH v Oberbürgermeisterin der Bundesstadt Bonn [2004] ECR I-9609 . . . . . . . . . . . . . . .221 Case C-148/02 Garcia Avello v Etat Belge [2003] ECR I-11613 . . . . . . . . . . . . . . . 68, 261 Case C-151/02 Landeshaupstadt Kiel v Jaeger [2003] ECR I-8389 . . . . . . . . . . 246–9, 251 Case C-195/02 Commission v Spain [2004] ECR I-785 . . . . . . . . . . . . . . . . . . . . . . . . . .148 Case C-201/02 R on the application of Delena Wells v Secretary of State for Transport, Local Government and the Regions [2004] ECR I-723 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16–17, 20–1, 73, 210 Case C-237/02 Freiburger Kommunalbauten GMbH Baugesellschaft & Co KG v Hofstetter [2004] ECR I-3403 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118, 340 Case C-263/02 P Jégo-Quéré & Cie SA v Commission [2004] ECR I-3425 . . . . . . . . .213 Case C-304/02 Commission v France [2005] ECR I-6263 . . . . . . . . . . . . . . . . . . . . . . . .193 Joined Cases C-387/02, C-391/02, and C-403/02 Silvio Berlusconi, Sergio Adelchi, Marcello Dell’Utri [2005] ECR I-3565 . . . . . . . . . . . . . . . . . . . . . . . . . 189, 205 Case C-456/02 Trojani v Centre Public D’Aide Sociale de Bruxelles [2004] ECR I-7573 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Case C-173/03 Traghetti del Mediterraneo SpA in liquidation v Italy [2006] ECR I-5177 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215, 217 Case C-205/03 P FENIN v Commission [2006] ECR I-6295 . . . . . . . . . . . . . . . . . . . . . .60 Case C-210/03 Swedish Match AB, Swedish Match UK Ltd v Secretary of State for Health [2004] ECR I-11983 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Case C-250/03 Mauri v Ministero delle Guistizia [2005] ECR I-1267 . . . . . . . . . . . . . .370 Case C-350/03 Elisabeth Schulte, Wolfgang Schulte v Deutsche Bausparkasse Badenia AG [2005] ECR I-9215 . . . . . . . . . . . 139, 184–5, 196, 202, 362 Case C-380/03 Germany v Parliament and Council [2006] ECR-I11573 . . . . . . . . . . .322 Case C-412/03 Hotel Scandic Gåsabäck AB v Riksskatteverket [2005] ECR I-743 . . .205 Case C-451/03 Servizi Ausiliari Dottori Commercialisti Srl v Calafiori [2006] ECR I-2941 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370 Case C-458/03 Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG [2005] ECR I-8585 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Case C-540/03 Parliament v Council [2006] ECR I-5769 . . . . . . . . . . . . . . . . . . . 254, 390 Case C-94/04 Cipolla v Fazari and Macrino [2006] ECR I-11421 . . . . . . . . . . . . . . . . . .55 Case C-96/04 Criminal proceedings against Standesamt Stadt Niebüll [2006] I-3561 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .261 Joined Cases C-131/04 and C-257/04 CD Robinson-Steele v RD Retail Services Ltd [2006] ECR I-2531 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .245 Case C-144/04 Werner Mangold v Rüdiger Helm [2005] ECR I-9981 . . . . . . . 13, 22–4, 27, 50, 59, 78–9, 81, 83, 141–2, 150, 154, 162, 173, 179, 234, 255, 257–60 Case C-180/04 Vassallo v Azienda Ospedaliera Ospedale San Martino di Genova e Cliniche Universitarie Convenzionate [2006] ECR I-7254 . . . . . . . . . . . . .33 Case C-209/04 Commission v Austria [2006] ECR I-2755 . . . . . . . . . . . . . . . . . . . . . . . .22 Case C-212/04 Konstantinos Adeneler v Ellinikos Organismos Galaktos (ELOG) [2006] ECR I-6057 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 185, 196 Case C-229/04 Crailsheimer Volksbank eG v Klaus Conrads, Frank Schulzke and Petra Schulzke-Lösche, Joachim Nitschke [2005] ECR I-9273 . 184, 186, 202, 362 Case C-234/04 Kapferer v Schlank & Schick GmbH [2006] ECR I- 2585 . . . . . . . . . .111

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Joined Cases C-295/04 to 298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] ECR-I 6619 . .154, 160, 165, 184, 203, 215, 363–4, 399, 412 Joined Cases C-392/04 and C-422/04 i-21 and Arcor v Germany [2006] ECR I-8559 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213 Case C-446/04 Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue [2006] I-11753 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Case C-456/04 Honyvem Informazioni Commerciali Srl v Mariella De Zotti [2006] ECR I-02879 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381, 389 Case C-470/04 N v Inspecteur van de Belasingdienst Oost/kantoor Almelo [2006] ECR I-7409 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 191 Case C-519/04 P Meca-Medina and Majcen v Commission [2006] ECR I-6991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14–15, 63 Case C-119/05 Ministero dell’Industria, del Commercio e dell’Artigianato v Lucchini SpA [2007] ECR I-6199 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215 Case C-168/05 Mostaza Claro v Centro Movil Milenium SL [2006] ECR I-10421 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119–20, 171, 179, 183, 188, 294, 308 Joined Cases C-222/05 to C-225/05 J Van der Weerd, Maatschap Van der Bijl, JW Schoonhoven v Minister van Landbouw, Natuur en Voedselkwaliteit [2007] ECR I-4233 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116, 184, 205, 216 Case C-277/05 Société thermale d’Eugénie-les-Bains v Ministère de l’Économie, des Finances et de l’Industrie [2007] ECR I-6415 . . . 6, 133–5, 137, 140, 142–5, 156, 159, 170, 255 Case C-303/05 Advocaten voor de Wereld VZW v Leden van de Ministerraad [2007] ECR I-3633 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .205 Case C-321/05 Hans Markus Kofoed v Skatteministeriet [2007] ECR I-5795 . . . . . . .210 Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet [2007] ECR I-11767 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 25, 61, 152, 207, 215, 221, 237, 310 Case C-411/05 Palacios de la Villa v Cortefiel Servicios SA [2007] ECR I-8531 . . . . .258 Case C-426/05 Tele2 Telecommunication GmbH v Telecom-ControlKommission [2008] ECR I-685. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .216 Case C-429/05 Max Rampion, Marie-Jeanne Rampion, née Godard v Franfinance SA, K par K SAS [2007] ECR I-8017 . . . . . . . . . . . . . . . . . 123–4, 126, 188 Case C-432/05 Unibet (London) Ltd and Unibet (International) Ltd v Justitiekanslern [2007] ECR I-2271 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191, 205, 213 Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-10779 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10–13, 15, 25, 50–4, 57, 61–3, 76–7, 81, 152–3, 207–8, 215, 221, 310–11 Case C-2/06 Willy Kempter AG v Hauptzollamt Hamburg-Jonas [2008] ECR I-411 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195, 205 Case C-80/06 Carp Snc di L Molen e V Corsi v Ecorad Srl [2007] ECR I-4473 . . . . . .72 Case C-241/06 Lämmerzahl GmbH v Freie Hansestadt Bremen [2007] ECR I-8415 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185 Case C-244/06 Dynamic Medien Vertriebs GmbH v Avides Media A [2008] ECR I-505 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76, 221

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Case C-268/06 Impact v MAFF and Others [2008] ECR I-2483 (Ireland) . . . . . . 86, 213 Case C-275/06 Productores de Música de España (Promusicae) v Telefonica de Espana SAU [2008] ECR I-271 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213, 254 Case C-300/06 Ursula Voß v Land Berlin [2007] ECR I-10573 (Germany) . . . . . . . . . .86 Case C-303/06 S Coleman v Attridge Law and Steve Law [2008] ECR I-5603 . . . . . .276 Case C-346/06 Rüffert v Land Niedersachsen [2008] ECR I-1989 . . . . . . . . . . . . . . . . .310 Case C-353/06 Stefan Grunkin and Dorothee Regina Paul [2008] ECR I-7639 . . . . . .261 Case C-404/06 Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände [2008] ECR I-2685 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 Case C-412/06 Hamilton v Volksbank Filder eG [2008] ECR I-2383 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133–7, 140, 142–3, 145, 147, 159–60, 168, 170, 176, 216 Case C-427/06 B Bartsch v Bosch and Siemens (BSH) Altersfürsorge [2008] ECR I-7245 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 79–80, 258 Case C-445/06 Danske Slagterier v Germany [2009] ECR I-2119 . . . . . . . . . . . . . . . . .213 Case C-452/06 R ex parte Synthon BV v Licensing Authority of the Department of Health [2008] ECR I-7681 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Case C-455/06 Heemskerk BV and Firma Schaap v Productschap Vee en Vlees [2008] ECR I-8763 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116 Case C-54/07 Centrum voor gelijkheid van kansen en voor racismebestrijding (CGKR) v Firma Feryn NV [2008] ECR I-5187 . . . . . . . . . . . . . . . . . . . . . . 271–2, 275 Case C-94/07 Raccanelli v Max-Planck-Gesellschaft zur Förderung der Wissenschaften [2008] ECR I-5939 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 66, 261 Case C-127/07 Societé Arcelor Atlantique et Lorraine and Others v Premier Ministre, Ministre de l’Écologie et du Developpement [2008] ECR I-9835 . . . . . .253 Joined Cases C-152/07 to C-154/07 Arcor [2008] ECR I-5959 . . . . . . . . . . . . . . . . . . . . .73 Case C-205/07 Lodewijk Gysbrechts v Santurel Inter BVBA [2008] ECR I-9947 . . . .202 Case C-209/07 The Competition Authority v Beef Industry Development Society Ltd and Barry Brothers (Carrigmore) Meats Ltd [2008] ECR I-8637 . . . .407 Joined Cases C-261/07 and 299/07 VTB-VAB and Galatea [2009] ECR I-2949 . . . . . .359 Case C-348/07 Turgay Semen v Deutsche Tamoil GmbH, [2009] ECR I-2341 . . . . . .163 Case C-364/07 Spyridon Vassilakis v Dimos Kerkyras [2008] ECR I-90 . . . . . . . . . . . .185 Joined Cases C-378/07 to C-380/07 Angelidaki v Organismos Nomarkhiaki Aftodiikisi Rethimnis [2009] ECR I-3071 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234 Case C-388/07 National Council on Ageing (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform [2009] ECR I-1569 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Case C-396/07 Mirja Juuri v Fazer Amica Oy [2008] ECR I-8883 . . . . . . . . . . . . . . . . .183 Joined Cases C-402/07 and C-432/07 Sturgeon, Christopher Sturgeon, Gabriel Sturgeon and Alana Sturgeon v Condor Flugdienst GmbH [2009] ECR I-10923 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151 Case C-489/07 Messner v Firma Stefan Kruger [2009] ECR I-7315 . . . .133, 136–8, 140, 142–3, 145–7, 150, 155, 159–60, 168, 170, 184, 187, 189, 202, 216 Case C-555/07 Seda Kücükdeveci v Swedex GmbH & Co KG [2010] ECR I-365 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 50, 78–81, 83, 86, 141–2, 150, 162, 258, 260

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Joined Cases C-570/07 and C-571/07 Blanco Pérez [2010] ECR I-4629 . . . . . . . . . . . . .75 Case C-2/08 Amministrazione dell’Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl [2009] ECR I-7501 . . . . . . . . . . . . . 215–16 Case C-12/08 Mono Car Styling SA v Dervis Odemis [2009] ECR I-6653 . . . . . . . . . .213 Case C-40/08 Asturcom Telecomunicaciones SL v Rodriguez Nogueira [2009] ECR I-9579 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92, 119–20, 123, 171, 179, 183, 188, 216, 294, 308 Case C-63/08 Virgin Pontin v T-Comalux SA [2009] ECR I-10467. . . . . . . . . . . . . . . .216 Case C-69/08 Visciano v INPS [2009] ECR I-6741 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86 Case C-88/08 Hütter, David v Technische Universitat Graz [2009] ECR I-5325 . . . . . .83 Case C-101/08 Audiolux SA v Groupe Bruxelles Lambert SA (GBL) [2009] ECR I-9823 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81–2, 143, 149–50, 154–5, 157–8, 167, 179, 204–5, 255 Case C-133/08 Intercontainer Interfrigo SC (ICF) v Balkenende Oosthuizen BV and MIC Operations BV [2009] ECR I-09687 . . . . . . . . . . . . . . . . . . . . . . . . . . .149 Case C-135/08 Rottmann v Friestaat Bayern, Judgment of 2 March 2010 . . . . . . . . . . .68 Case C-137/08 VB Pénzügyi Lízing Zrt v Ferenc Schneider, Judgment of 9 November 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 119, 121–3, 171 Case C-147/08 Römer v Freie und Hansestadt Hamburg, Judgment of 10 May 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77, 79–80, 260 Case C-174/08 NCC Construction Danmark A/S v Skatteministeriet [2009] ECR I-10567 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 156–8, 204 Case C-215/08 E Friz GmbH v Carsten von der Heyden, Judgment of 15 April 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133, 137–40, 142–3, 145, 159–60, 170, 176, 202, 216 Case C-227/08 Martín Martín v EDP Editores SL [2009] ECR I-11939 . . . . . 124–6, 188 Case C-229/08 Wolf v StadtFrankfurt am Main, Judgment of 12 January 2010 . . . . . .83 Case C-243/08 Pannon GSM Zrt v Erzsébet Sustikné Györfi [2009] ECR I-4713 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119, 121, 125, 183, 188, 309 Case C-304/08 Zentrale zur Bekämpfung unlauteren Wettbewerbs v Plus Wahrenhandelsgesellschaft [2010] ECR I-217. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359 Case C-341/08 Petersen v Berufungsausschuss fur Zahnarzte fur den Bezirk Westfalen-Lippe, Judgment of 12 January 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Case C-382/08 Neukirchinger v Bezirkshauptmannschaft Grieskirchen, Judgment of 25 January 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Case C-406/08 Uniplex (UK) Ltd v NHS Business Services Authority [2010] ECR I-817 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370 Case C-499/08 Andersen v Region Syddanmark, Judgment of 12 October 2010 . . . . . .83 Case C-511/08 Handelsgesellschaft Heinrich Heine GmbH v Verbraucherzentrale Nordrhein-Westfalen eV, Judgment of 15 April 2010 . . . . . . .202 Case C-540/08 Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG v ‘Österreich’-Zeitungsverlag GmbH, Judgment of 9 November 2010. . . . . . . .334 Case C-584/08 Real Madrid Football Club v Unibet, Order of 24 March 2009 . . . . . .213 Joined Cases C-585/08 and C-144/09 Peter Pammer v Reederei Karl Schlüter GmBH & Co KG; Hotel Alpenhof GesmbH v Oliver Heller, Judgment of 7 December 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .320 Case C-34/09 Ruiz Zambrano v Office National de L’emploi (ONEM), Judgment of 8 March 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

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Case C-45/09 Rosenbladt v Oellerking Gebaudereinigungses mbH [2010] ECR I-9391 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Case C-67/09 P Nuova Agricast Srl v The Commission, Judgment of 14 October 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Case C-98/09 Sorge v Poste Italiane SpA, Judgment of 24 June 2010 . . . . . . . . . . . . . .234 Case C-104/09 Roca Álvarez, v Sesa Start Espana ETT SA, Judgment of 30 September 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Case C-227/09 Accardo v Commune di Torino, Judgment of 21 October 2010 . . . . .235 Case C-236/09 Association belge des Consommateurs Test-Achats ASBL, Yann van Vugt, Charles Basselier v Conseil des ministres, Judgment of 1 March 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264–8, 275 Case C-246/09 Susanne Bulicke v Deutsche Büro Service GmbH, Judgment of 8 July 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205, 213 Joined Cases C-250/09 and C-268/09 Georgiev, Judgment of 18 November 2010. . . . .83 Case C-279/09 DEB Deutsche Energiehandels- und Beratungsgesellschaft mbH v Bundesrepublik Deutschland, Judgment of 22 December 2010 . . . . . 154, 206, 213, 254 Case C-310/09 Ministre du Budget et al v Accor, Judgment of 15 September 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .364 Case C-356/09 Pensionsversicherungsanstalt v Kleist, Judgment of 18 November 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 Case C-379/09 Maurits Casteels v British Airways, Judgment of 10 March 2011 . . . . .11 Case C-391/09 Runevic-Vardyn and Wardyn, Judgment of 12 May 2011 . . . . . . . . . . . .76 Case C-398/09 Lady & Kid v Skatteministeriet, Judgment of 6 September 2011 . . . . .364 Case C-429/09 Günter Fuß v Stadt Halle, Judgment of 25 November 2010. . . . . . . . .206 Case C-447/09 R. Prigge v Lufthansa, Judgment of 13 September 2011 . . . . . . . . 74, 258 Case C-482/09 Budeinvcircjovický Budvar v Anheuser-Busch, Judgment of 22 September 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .384 Joined Cases C-483/09 and 1/10 Gueye, Judgment of 15 September 2011 . . . . . . . . . . .80 Case C-155/10 Williams v British Airways plc, Judgment of 15 September 2011 . . . . .83 Joined Cases C-159-160/10 Fuchs, Judgment of 21 July 2011 . . . . . . . . . . . . . . . . . . . . . .83 Case C-214/10 KHS AG v Schulte, Judgment of 22 November 2011 . . . . . . . . . . . . . . . .83 Case C-282/10 Maribel Dominguez v CICOA, Judgment of 24 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 38, 44, 82 Joined Cases C-297-298/10 Hennigs, Judgment of 8 September 2011 . . . . . . . . . . . . . . .74 Case C-307/10 Chartered Institute of Patent Attorneys v Registrar of Trade Marks, Judgment of 19 June 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .384 Case C-472/10 Nemzeti Fogyasztóvédelmi Hatóság v Invitel Távközlési Zrt, Judgment of 26 April 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 Case C-132/11 Tyrolean Airways Tiroler Luftfahrt Gesellschaft mbH v Betriebsrat Bord der Tyrolean Airways Tiroler Luftfahrt Gesellschaft mbH, pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

General Court/Court of First Instance Case T-30/89 Hilti v Commission [1991] ECR II-1439 . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Case T-51/89 Tetra Pak Rausing SA v Commission [1990] ECR II-309 . . . . . . . . . . . .395 Case T-83/91 Tetrapak International SA v Commission [1994] ECR II-755 . . . . . . . . .56

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Case T-59/92 Caronna v Commission [1993] ECR II-1129. . . . . . . . . . . . . . . . . . . . . . .273 Case T-102/92 Viho Europe v Commission [1995] ECR II-17 . . . . . . . . . . . . . . . . . . . .385 Case T-54/99 max.mobil Telekommunikations Service v Commission [2002] ECR II-313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .390 Case T-53/03 BPB plc v Commission [2008] ECR II-1333 . . . . . . . . . . . . . . . . . . . . . . .408 Case T-99/04 AC-Treuhand AG v Commission [2008] ECR II-1501 . . . . . . . . . . . . . . .408

National Cases France Civ, 17 July 1826, DP 1826 1 418; S 1827 1 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Civ Sect, 21 June 1948, l’affaire Patiño, JCP 1948 II 4422 . . . . . . . . . . . . . . . . . . . . . . . .104 Civ, 19 October 1959, l’arrêt Pelassa, D 1960, 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 Civ (1), 16 December 1986, Bull Civ I no 300, Rev crit DIP 1987, 401 . . . . . . . . . . . .104

Germany BVerfG, 15 January 1956, BVerfGE 7, 198; NJW 1958 (Lüth) . . . . . . . . . . . . . . . . . . . . .177 BVerfG, 30 June 2009, BVerfGE 123, 267 (Lisbon) . . . . . . . . . . . . . . . . . . . . 49, 161, 258–9 BVerfG, 6 July 2010, 2 BvR 2661/06 (Honeywell) . . . . . . . . . . . . . . . . . . . . . . . . . . 161, 259 BVerfG, 7 September 2011, 2 BvR 987/10 (Greek bail-out). . . . . . . . . . . . . . . . . . . . . . .161 BGH, 6 July 1993, XI ZR 12/93, BGHZ 123, 126, 129 . . . . . . . . . . . . . . . . . . . . . . . . . . .353 BGH, 25 September 1997, NJW 1998, 1321 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 BGH, 9 April 2002, Der Betrieb 2002, 1262 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186, 197 BGH, 9 April 2002, NJW 2002, 1881. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 BGH, 12 November 2002, NJW 2003, 424, 425 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186 BGH, 12 December 2005, NJW 2006, 497 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186 BGH, 14 February 2006, NJW 2006, 1340 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .186 BGH, 25 April 2006, Zeitschrift für Wirtschaftrecht (ZIP) 2006, 940 . . . . . . . . . . . . . .186 BGH, 29 November 2007, NJW 2008, 1067 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 BGH, 26 April 2008, NJW 2009, 427. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 BGH, 5 May 2008, II ZR 292/06 (Betriebs-Berater) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138 BGH, 26 November 2008, NJW 2009, 427 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 BGH, 3 November 2010, NJW 2011, 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .188 BGH, 22 March 2011, XI ZR 33/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348, 352–4 BAG, 9 September 2010, 2 AZR 714/08, Zeitschrift für Wirtschaftsrecht (ZIP) 2011, 444 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .259

Ireland Radio Telefis Eireann, the British Broadcasting Company and BBC Enterprises Limited and Independent Television Publications Limited v Magill TV Guide Limited (Magill) [1990] ECC 273 . . . . . . . . . . . . . . . . . . . . . . . . . .407

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Italy Credito Emiliano SpA v Pugliese, Cassazione No 19591/2004, Giust Civ Mass 2004, no 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 Faccini Dori, Tribunale di Roma, 17 October 1994, Contratti 1996, 13; Corte di Cassazione, 20 March 1996, Giustizia Civile 1996 I 2970 . . . . . . . . . . . . . . . . . . .186

Netherlands HR, 5 June 2009, LJN BH2811 (Levob) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348, 350 HR, 5 June 2009, LJN BH2815 (De Treek v Dexia) . . . . . . . . . . . . . . . . . 342, 348–50, 356 HR, 5 June 2009, LJN BH2822 (Aegon) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348–9

Sweden Case No A 268/04, Labour Court (Arbetsdomstolen) Judgment No 89/09 of 2 December 2009, Laval un Partneri Ltd v Svenska Bygggnadsarbetareförbundet .220

United Kingdom A v National Blood Authority [2001] EWHC 446 (QB), [2001] 3 All ER 289 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200, 391 A v Secretary of State for the Home Department [2005] 2 AC 68 (‘the Belmarsh case’). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369, 371 Adams v Cape Industries plc [1991] 1 All ER 929 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385 Ahmed v Secretary of State for the Home Department [2010] UKSC 2, [2010] 2 WLR 378 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .393 Air Canada v Secretary of State for Trade [1983] 2 AC 394 . . . . . . . . . . . . . . . . . . . . . . .93 Alfred McAlpine Construction v Panatown [2001] 1 AC 518 . . . . . . . . . . . . . . . . . . . . .391 Allen & Hanburys Limited v Generics (UK) Limited [1985] 1 CMLR 619 . . . . . . . . .396 Allsports Limited v Office of Fair Trading [2004] CAT 17 . . . . . . . . . . . . . . . . . . . . . . .409 B, Re [2008] UKHL 35 on appeal from [2008] EWCA Civ 282 . . . . . . . . . . . . . . . . . . .408 Bank of Scotland v Grimes [1985] 2 All ER 254 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Barclays Bank v O’Brien [1993] UKHL 6, [1994] 1 AC 180 . . . . . . . . . . . . . . . . . . . . . .352 Barnes v Black Horse Ltd [2011] EWHC 1416 (QB) . . . . . . . . . . . . . . . . . . . . . 348, 350–2 Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613 . . . . . . . . .410 Bigger (Deceased), Re [1977] Fam 203, [1977] 2 All ER 644 . . . . . . . . . . . . . . . . . . . . .360 Biotrading & Financing OY v Biohit Ltd [1998] FSR 109 . . . . . . . . . . . . . . . . . . . . . . . .400 Blyth v Birmingham Waterworks Company (1856) 11 Ex 781 . . . . . . . . . . . . . . . . . . . .335 Bols Distilleries BV (trading as Bols Royal Distilleries) v Superior Yacht Services Ltd [2007] 1 WLR 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112 Bolton v Stone [1951] AC 850 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200 Bookmakers Afternoon Greyhound Services Ltd v Amalgamated Racing Ltd [2008] EWHC 1978 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .408 British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd [1984] 3 CMLR 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404–5, 413

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British Leyland Motor Corporation Limited and Others v TI Silencers Limited [1980] 2 CMLR 332, [1981] FSR 213 . . . . . . . . . . . . . . . . 396, 398–400, 404–5 British Sky Broadcasting Group Ltd and Another v David Lyons [1995] FSR 357 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Buchanan & Co v Babco Shipping Ltd [1977] 3 All ER 1048 . . . . . . . . . . . . . . . . . . . .386 Bulmer v Bollinger SA [1974] Ch 401 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Byrne v Inntrepreneur [1998] All ER (D) 634. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410–11 Calor Gas Ltd v Express Fuels (Scotland) Ltd [2008] SLT 123 . . . . . . . . . . . . . . . . 414–15 Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547. . . . . . . . . . . . . . . . . . . . . . .112 Caparo Industries plc v Dickman [1990] UKHL 2, [1990] 2 AC 605 . . . . . . . . . . . . . .351 Celador Productions Ltd v Melville [2004] EWHC 2362 . . . . . . . . . . . . . . . . . . . . . . . . .403 Chemidus Wavin v TERI [1978] 3 CMLR 514 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .410 Chiron Corporation and Others v Murex Diagnostics Limited (No 9) [1995] FSR 318 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Chiron Corporation and Others v Organon Teknika Limited and Others [1992] 3 CMLR 813 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .398 Circuit Systems Ltd v Zuken-Redac (UK) Ltd [2001] EWCA Civ 482, [2001] BLR 253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Courage v Crehan [1999] UKCLR 110, [1999] ECC 455 . . . . . . . . . . . . . . .25–7, 76–7, 81, 362–3, 398–9 Crehan v Inntrepreneur Pub Company (CPC) [2003] EWHC 1510 . . . . . . 187, 398, 408 Danmark v Middlefart Havn and Others [1997] ECR I-4263. . . . . . . . . . . . . . . . 182, 213 David John Passmore v Morland [1999] 1 CMLR 1129 . . . . . . . . . . . . . . . . . . . . . 411–12 Days Medical Ltd v Pihsiang Machinery Co Ltd [2004] EWHC 44 (Comm), [2004] 1 All ER (Comm) 991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .379 DHN Food Distributors v Tower Hamlets London Borough [1976] 3 All ER 462 . . .385 Doncaster Pharmaceuticals Group Ltd v The Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403 Donoghue v Stevenson [1932] AC 562 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .351 Duracell International Inc v Ever Ready Ltd [1989] RPC 731 . . . . . . . . . . . . . 405–6, 408 EWS v E.ON UK [2007] EWHC 599 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 Football Association Premier League Ltd v QC Leisure [2008] EWHC 44 (Ch) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404–6, 408, 413 Four Marketing Ltd v Sarbeet Ghattaura [2005] EWHC 2087 . . . . . . . . . . . . . . . . . . . .405 Gibbs Mew Plc v Gemmell [1998] Eu LR 588 (CA) . . . . . . . . . . . . . . . . . . . . . . . . . . . .399 Goldsmith v Sperrings Ltd [1977] 1 WLR 478 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 Greatorex v Greatorex [2000] 1 WLR 1976 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .390 Greenalls Management Ltd v Smith; Walker Cain v McCaughey [1999] 2 EGLR 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 H (Minors) (Sexual Abuse: Standard of Proof), Re [1996] AC 563 . . . . . . . . . . . . . . . .409 Hagen v D & G Moretti SNC [1980] FSR 517 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398, 404 Hall v Brooklands Auto-Racing Club (1933) 1 KB 205 . . . . . . . . . . . . . . . . . . . . . 335, 339 Heathrow Airport Limited v Forte (UK) Ltd [1998] ECC 357; [1998] Eu LR 98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .396, 404, 406–7, 409 HJ Barlow (Deceased), Re [1933] P 184 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360 HMSO v Automobile Association [2001] ECC 272 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Hoecheong Products Co Ltd v Cargill Hong Kong Ltd [1995] 1 WLR 404 . . . . . . . . . .94 Holleran v Daniel Thwaites [1989] 2 CMLR 917 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411

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Holman v Johnson (1775) 1 Cowper 341. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Home Secretary v Rehman [2001] UKHL 47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .408 Hoover Plc v George Hulme (Sto) Ltd and George Hulme [1982] 3 CMLR 186 . . . .405 HP Bulmer Ltd v J Bollinger SA [1974] Ch 401 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Hutchinson 3G UK Limited v (1) O2 (UK) Limited; (2) Orange Personal Communications Services Limited; (3) T-mobile (UK) Limited; and (4) Vodafone Limited [2008] EWHC 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .398 Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396, 400–1, 404–5 Inntrepreneur Beer Supply Co Ltd v Langton [1999] EWCA Civ 1501. . . . . . . . . 410–11 Inntrepreneur Estates Limited v Boyes [1993] 2 Estates Gazette 112, 117 . . . . . . . . . .410 Inntrepreneur Pub Company (CPC) v Crehan [2006] UKHL 38 . . . . . . . . . . . . . 398, 408 Intel Corp v VIA Technologies Inc [2002] EWHC 1159 . . . . . . . . . . . . . . . . . . 396, 400–1, 404–5, 409 Intel Corporation v Via Technologies Inc, Via Technologies (Europe) Ltd and Realtime Distribution Ltd [2003] EWCA Civ 1905 . . . . . . . . . . . . . . . . . . . . . . 403, 405, 413, 415 Intel v Via Technologies (Europe) Limited and Realtime Distribution Limited [2003] EWCA Civ 1905 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .405 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433 . . . . .173 Intergraph Corporation and Another v Solid Systems CAD Services Limited [1995] ECC 53. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404–6 International Business Machines Corporation v Phoenix International (Computers) Ltd [1994] RPC 251 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .406 Jackson v Horizon Holidays [1975] 1 WLR 1468 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 Jarvis v Swan Tours [1973] QB 233. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 Jivraj v Hashwani [2010] EWCA Civ 712, [2011] UKSC 40 . . . . . . . . . . . . . . 279, 287–90 JJB Sports Plc v Office of Fair Trading [2004] CAT 17 . . . . . . . . . . . . . . . . . . . . . . . 408–9 Jones v Ricoh UK Ltd [2010] EWHC 1743 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .415 King v T Tunnock Ltd, 2000 SC 424. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381 Kiriri Cotton v Dewani [1960] AC 192. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .364 Langton v Hughes (1813) 1 M&S 593 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .363 Lansing Bagnall Limited and Others v Buccaneer Lift Parts Limited [1984] 1 CMLR 224 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396, 404, 415 Leigh & Sillivan Shipping v The Aliakmon Shipping Co (The Aliakmon) [1986] AC 785 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .391 Lloyd v Guibert (1865-66) LR 1 QB 129 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 Lonsdale v Howard & Hallam Ltd, Court of Appeal: [2006] EWCA Civ 63, [2006] 1 WLR 1281, [2006] ICR 584; House of Lords: [2007] UKHL 32, [2007] 1 WLR 2055 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365, 381, 389 McCable v Scottish Courage [2006] EWHC 538 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 McCartney v Oversel House Management [2006] ICR 510 . . . . . . . . . . . . . . . . . . . . . . .246 McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775 . . . . . . . . . . . . . . . . . . . . . . . .95 Magor and St Mellors Rural District Council v Newport Corporation [1952] AC 189 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385 Mirvahedy v Henley [2003] UKHL 16, [2003] 2 AC 491 . . . . . . . . . . . . . . . . . . . . . . . .387 Morelle Ltd v Wakeling [1955] 2 QB 389. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 MTV Europe v BMG Records (UK) Limited and Others [1995] 1 CMLR 437 . . . . . .398

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Murphy v Media Protection Services Ltd [2008] EWHC 1666 . . . . . . . . . . . . . . . . . . . .406 Nelson & Co Limited v Guna SpA [2011] EWHC 1202 . . . . . . . . . . . . . . 396, 404–5, 408 Nissan v Dupasquier [1996] 4 CMLR 778 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 North Western Salt Co Ltd v Electrolytic Alkali Ltd [1914] AC 462 . . . . . . . . . . . . . . . .97 Oakley Inc v Animal Ltd [2005] EWHC (Ch) 210, [2005] EWHC (Pat) 419, [2005] EWCA Civ 1191, [2006] Ch 337 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392–3 Office of Fair Trading v Abbey National [2009] UKSC 6, [2010] 1 AC 696 . . . . . . . .391 Office of Fair Trading v Ashbourne [2011] EWHC 1237 . . . . . . . . . . . . . . . . . . . 348, 350 Oracle America Inc (Formerly Sun Microsystems Inc) (Appellant) v M-Tech Data Limited (Respondent) [2010] EWCA Civ 997, [2012] UKSC 27 . . . . . . 397, 404 Overseas Tankship (UK) Ltd v The Miller Steamship Co (‘The Wagon Mound (No 2)’) [1967] 1 AC 617 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200 Page v Combined Shipping and Trading Co [1997] 3 All ER 656 . . . . . . . . . . . . . . . . .382 Pepper v Hart [1993] All ER 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .387 Philips Electronics NV v Ingman Limited [1998] 2 CMLR 839 . . . . . . 398, 401, 405, 413 Pirelli Cable Holding NV v Inland Revenue Commissioners [2006] UKHL 4, [2006] STC 548 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .387 Pitney Bowes Inc v Francotyp-Postalia GmbH [1991] FSR 72 . . . . . . . . . . . . . . . 413, 415 Provimi v Aventis Animal Nutrition [2003] EWHC 961, [2003] ECC 29 . . . . . . . . . . .385 Quantel Limited v Electronic Graphics Limited [1990] RPC 272 . . . . . . . . . . . . . . . . .401 R ex parte Cityhook Limited and Cityhook (Cornwall) Ltd v Office of Fair Trading [2009] EWHC 57 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .407 R (on the application of The Association of British Travel Agents Ltd) (ABTA) v Civil Aviation Authority (CAA), The Secretary of State for Trade and Industry [2006] EWHC 13 (QB (Admin)) [2006] ACD 49 . . . . . . . . . .377 R v International Stock Exchange ex parte Else [1993] 1 All ER 1042 . . . . . . . . . . . . .391 R v Minister for Agriculture, Fisheries and Food ex parte Portman Agrochemicals [1994] 3 CMLR 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .391 Ransburg-GEMA AG v Electrostatic Plant Systems Ltd [1989] 2 CMLR 712. . . . . . . .406 Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592 . . . . . . . . . .339 Rochefoucauld v Boustead [1897] 1 Ch 196 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44, [2002] 2 AC 773 . . . . . .352 Sadler v Imperial Life Assurance Co of Canada Ltd [1988] IRLR 388 . . . . . . . . . . . . .410 Salomon v Commissioners of Customs and Excise [1967] 2 QB 116 . . . . . . . . . . . . . .386 Sandvik AB v KR Pfiffner (UK) Ltd (No 2) [2000] FSR 17 . . . . . . . . . . . . . . . . . 404, 406 Sandvik Aktiebolag v K R Pfiffner (UK) Limited [2000] FSR 17 . . . . . . . . . . . . . 397, 405 Scott v Brown, Doering, McNab & Co [1892] 2 QB 724 . . . . . . . . . . . . . . . . . . . . 96, 364 Sel-Imperial Ltd v The British Standards Institution [2010] EWHC 854 . . . . . . . . . . .404 Shearson Lehman Hutton Inc v Maclaine Watson & Co Ltd [1989] 3 CMLR 429 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .409 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 . . . . . . . . . . . . . . . . . . . . . .339 Smalley v Crown Court, Warwick [1985] 1 All ER 769 . . . . . . . . . . . . . . . . . . . . . . . 386–7 Sportswear Company SpA, Four Marketing Ltd v Sarbeet Ghattaura [2005] EWHC 2087 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .405 Sportswear Spa v Stonestyle Ltd [2006] EWCA Civ 380 . . . . . . . . . . . . . . . . . . 401, 404–6 St Albans Court Ltd v Daldorch Estates Ltd, The Times 24 May 1999 . . . . . . . . . . . . . .95 Stergios Delimitis v Henniger Bräu [1991] ECR I-935, [1992] 5 CMLR 210 . . . . . . . .411 Sun Microsystems Inc v M-Tech Data Ltd [2009] EWHC 2992 . . . . . . . . . . . . . . . . . . .403

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Thetford Corporation v Fiamma SpA [1987] FSR 244 . . . . . . . . . . . . . . . . . . . . . . . . . .415 Tigana Ltd v Decoro Ltd [2003] Eu LR 189 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381 VAG France v Magne [1986] ECR 4071, [1988] 4 CMLR 98 . . . . . . . . . . . . . . . . . . . . .411 Wagamama v City Centre Restaurants [1995] FSR 713 . . . . . . . . . . . . . . . . . . . . . . . . . .390 Walker Cain v McCaughey [1999] 2 EGLR 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 Waterlow Directories Limited v Reed Information Services Ltd [1993] ECC 174 . . . .401 Woolfson v Strathclyde 1978 SLT 159 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385 WPP Holdings Italy Srl v Benatti [2007] EWCA Civ 263, [2007] 1 WLR 2316. . . . . .112 Yale Security Products Ltd v Newman [1990] FSR 320 . . . . . . . . . . . . . . . . . . . . . . . . . .403

United States AT&T Mobility LLC v Concepcion (2011) 131 SCt 1740 . . . . . . . . . . . . . . . . . . . 305, 309 Bell Atlantic Corporation et al v William Twombly (2007) 127 SCt 1955, 1967 . . . . .401 Broemmer v Abortion Services of Phoenix, 840 P2d 1013 (Ariz 1992) . . . . . . . . . . . .308 Credit Suisse Securities (USA) LLC, Fka Credit Suisse First Boston LLC v Glen Billing (2007) 127 SCt 2383… 402 Leegin v PSKS, Inc, (2006) 127 SCt 763 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .303 Lochner v New York, 198 US 45, 25 S Ct 539, 49 L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Ragone v Atlantic Video, 595 F3d 115 (2d Cir 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 Willliams v Walker-Thomas Furniture Co, 340 F 2d 445 (C A DC 1965) . . . . . . . . . .300

Table of Legislation European Union Primary Legislation Charter of Fundamental Rights . . . . . . . . . . . . . . . . . . . 38, 51, 71, 83, 141, 155, 179, 206, 233, 252, 254, 260, 265, 276, 389 Art 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256 Art 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .256 Art 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253–4, 256, 265, 273, 276 Art 21(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264 Art 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254, 256, 264–5, 268, 273, 276 Art 31(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .245 Art 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 Art 47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206, 213 Art 49(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .205 Art 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .254 Art 51(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .206 Art 52(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256, 268 Art 52(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 Art 52(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 EC Treaty (former) Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Art 3(1)(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157 Art 3(1)(t) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 Art 7(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .205 Art 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111, 114, 128, 191, 217 Art 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260 Art 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266, 268 Art 13(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264 Art 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .269 Art 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260 Art 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .336 Art 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .337 Art 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359 Art 43 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 12 Art 48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Art 61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 Art 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 Art 81 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363, 378–9 Art 81(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Art 85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 Art 141 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359 Art 153 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .323 Art 220 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163, 205

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Art 234 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217, 369 Art 249 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207, 217 Art 249(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191 Art 288(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273 EEC Treaty (former) Art 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Art 48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Art 52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360 Art 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Art 85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 302, 307 Art 85(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187 Art 85(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .187 Art 119 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 311 Art 189 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Maastricht Treaty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179, 322–3 see also EC Treaty (former); Treaty on European Union Single European Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Treaty of Amsterdam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 Treaty of Lisbon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49, 298, 390 see also Treaty on European Union; Treaty on the Functioning of the European Union Treaty of Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .315 Treaty of Rome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36–7, 109, 232, 311, 399 see also EEC Treaty (former) Treaty on European Union (TEU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151, 155 Art 1(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155 Art 3(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 Art 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66, 217 Art 4(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Art 4(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111, 114 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31, 323, 330 Art 5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 Art 5(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75, 83, 158, 206 Art 5(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .323 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179, 389 Art 6(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141, 179, 206 Art 6(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 Art 7(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84 Art 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163 Art 19(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84, 206, 213, 259 Treaty on the Functioning of the European Union (TFEU) . . . . 10, 12, 15, 72, 155, 187, 209, 286, 302, 322–3, 342, 358–9, 363, 400, 411 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 Art 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 Art 4(2)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .323 Art 4(2)(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .323

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Art 4(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128, 191 Art 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .269 Art 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 260 Art 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266, 268 Art 19(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264 Art 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260 Art 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .179 Art 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 Art 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11–12, 18, 21, 72, 74, 209, 336–7 Art 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Art 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209, 337 Art 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Art 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11, 72, 85, 230, 359 Art 45(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Art 49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10–11, 360 Art 54 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 149 Art 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 237 Art 67 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 Art 81 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106, 148 Art 81(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378 Art 101 . . . . . . . . . . . . . . . . . . . . . . . . . . 13–14, 72, 148, 153, 156, 160–2, 184, 203, 207 Art 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 Art 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363–4, 377–9, 395, 399, 405, 413 Art 101(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 378, 411, 415 Art 101(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395 Art 101(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399, 411, 415 Art 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 57, 72, 207, 377, 395, 405 Art 114 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170, 322, 329 Art 114(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142, 170, 322 Art 115 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .322 Arts 123–125 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Art 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226 Art 153 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226 Art 156 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .226 Art 157 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72, 208, 257, 286, 359 Art 157(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184 Art 169 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230, 323 Art 169(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142, 179 Art 169(2)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .323 Art 169(2)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .323 Art 267 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217, 369, 378, 381, 391 Art 272 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33, 149 Art 288 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 171, 184, 207, 217, 319 Art 288(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191 Art 340 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163, 273 Art 340(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162, 166

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Protocol No 4 on the Statute of the European System of Central Banks and of the European Central Bank Art 35(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

Secondary Legislation Brussels Convention of 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters . . . . . 101, 106, 109–11, 116, 118, 176 Decision 2010/707/EU on guidelines for the employment policies of the Member States [2010] OJ L308/46 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233 Directive 75/117/EEC on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women [1975] OJ L45/19 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .182 Directive 76/207/EEC on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L39/40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182, 215, 257, 361 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185, 373 Directive 77/388/EEC 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 1977 L145/1 (‘the Sixth Directive’) 156–7 Art 2(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Art 6(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Art 17(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157 Directive 83/189/EEC laying down a procedure for the provision of information in the field of technical standards and regulations [1983] OJ L109/8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Directive 85/374/EEC on the approximation of laws concerning liability for defective products [1985] OJ L210/29 . . . . . . . . . . . . . . . . . . . . . . 163, 199–201, 391 Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200 Directive 85/577/EEC to protect the consumer in respect of contracts negotiated away from business premises [1985] OJ L372/31 . . . . . . . . . . 125, 134, 186, 197, 318, 360, 362 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Art 5(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137 Directive 86/653/EEC on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17 . . . . . . 364, 381–2, 389–90 Directive 87/102/EEC for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1986] OJ L42/48 . . . . . . . . . . . . . . . . . . . 124, 318, 335, 343, 346, 348–9, 360 Art 5(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .349 Directive 89/48/EEC on a general system for the recognition of higher-

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education diplomas awarded on completion of professional education and training of at least three years’ duration [1988] OJ L19/16 . . . . . . . . . . . . .230 Directive 89/104/EEC to approximate the laws of the Member States relating to trade marks [1989] OJ L40/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .383 Directive 89/391/EEC on the introduction of measures to encourage improvements in the safety and health of workers at work [1989] OJ L183/1 Art 1(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 Directive 89/552/EEC on the coordination of certain provisions laid down by Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting activities [1989] OJ L298/23 . . . . . . . . . .360 Directive 89/665/EEC on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts [1989] OJ L395/33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370–3 Directive 90/314/EEC on package travel, package holidays and package tours [1990] OJ L158/59. . . . . . . . . . . . . . . . . . . . . . . . 163, 199, 201, 318, 360, 362, 376–7 Art 2(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .376 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201 Art 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .376 Directive 91/533/EEC on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L288/32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286 Directive 93/13/EEC on unfair terms in consumer contracts [1993] OJ L95/29. . . . . . . . . . . . . . . . . . . . . . . . . . .92, 117–18, 121–3, 125, 183, 292, 294–6, 318, 330, 360, 389, 391 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 Art 3(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173 Art 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117–19 Art 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117–19 Art 7(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183, 194 Ann . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117, 307, 313 Directive 93/104/EC concerning certain aspects of the organisation of working time [1993] OJ L307/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239, 243 Directive 94/47/EC on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis [1994] OJ L280/83 Art 5 202, 318, 360 Directive 96/71/EC concerning the posting of workers in the framework of the provision of services [1996] OJ L18/1. . . . . . . . . . . . . . . . . . . . . . . . . . . 237, 252 Recital 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237 Art 3(1) and (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237 Directive 97/7/EC on the protection of consumers in respect of distance contracts [1997] OJ L144/19 . . . . . . . . . . . . . . . . . . . . . . . 125, 136–7, 187, 318, 360 Art 4(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136, 202

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Directive 98/27/EC on injunctions for the protection of consumers’ interests [1998] OJ L166/51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360–1 Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations [1998] OJ L204/37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17–21, 27 Directive 98/48/EC amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulation 98/48/ EC [1998] OJ L217/18, extending this to services . . . . . . . . . .17 Directive 98/71/EC on the legal protection of designs [1998] OJ L289/28 . . . . . . . . . .392 Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12 . . . . . . . . . . . . . . 125, 164, 197, 199, 201, 318, 360–1, 374 Recital 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201, 374 Art 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .374 Art 7(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .291 Directive 1999/70/EC concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP [1999] OJ L175/43 . . . . . . . 78, 233 Directive 1999/94/EC relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars [1999] OJ L12/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164, 226 Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market [2000] OJ L178/16 360 Directive 2000/43/EC implementing the principle of equal treatment between persons irrespective of racial or ethnic origin [2000] OJ L180/22 . . . . . . . 59, 263 Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262 Art 2(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262 Art 3(1)(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262 Art 5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .262 Art 7(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .273 Art 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .272 Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation [2000] OJ L303/16 . . . . . . . . . . . . . . . . . . . . 22–3, 59, 77–9, 257–8, 260, 286, 289 Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .288 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .288 Art 3(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288–9 Art 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203 Directive 2002/22/EC on universal service and users’ rights relating to electronic communications, networks and services (‘Universal Services Directive’) [2002] OJ L108/51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270 Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector [2002] OJ L201/37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360 Directive 2002/65/EC concerning the distance marketing of consumer financial services [2002] OJ L271/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318, 360 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342 Art 11(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183

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Art 11(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183 Directive 2003/54/EC concerning common rules for the internal market in electricity [2003] OJ L176/32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270 Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading [2003] OJ L345/64 . . . . . 343–4, 356 Recital 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Recital 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Arts 5–8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Arts 10–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 15(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Directive 2003/88/EC concerning certain aspects of the organisation of working time [2003] OJ L299/9 . . . . . . . . . . . . . . . . . . . . . . . . .82, 228, 239, 241–51 Art 17(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244 Art 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244 Art 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .248 Art 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .234 Directive 2003/109/EC concerning the status of third-country nationals who are long-term residents [2004] OJ L16/44 Art 11(1)(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263 Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/114 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 Directive 2004/39/EC on markets in financial instruments [2004] OJ L145/1 . 334–5, 343–4, 346–7, 349–50, 352–3, 355–6 Recital 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 4(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .346 Art 4(1)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .346 Art 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347–8, 353 Art 19(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .347 Art 19(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 19(2)–(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .347 Art 19(2) and (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 19(2) and (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350 Art 19(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 19(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347, 356 Art 19(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .346 Ann I s B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .346 Directive 2004/48/EC on the enforcement of intellectual property rights [2004] OJ L195/16 Art 13(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Directive 2004/113/EC implementing the principle of equal treatment between men and women in the access to and supply of goods and services [2004] OJ L373/37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59–60, 199, 263, 267–8, 273 Art 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263, 268 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264 Art 5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266–7

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Art 5(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264–8 Art 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201 Art 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .264 Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market [2005] OJ L149/22 . . . . . . . 226–7, 291, 300, 318, 333, 340, 342–5, 350, 356, 359, 375–6, 383 Recital 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343–4 Recital 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342 Art 2(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .375 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 3(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344, 375 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342, 349 Art 5(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .375 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .345 Art 11(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .383 Ann I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .359 Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions (recast) [2006] OJ L177/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367 Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions (recast) [2006] OJ L177/201 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367 Directive 2006/54/EC on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L204/23. . . . . . . . . . . . . . 182, 361 Art 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373 Art 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373 Directive 2006/73EC implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive [2006] OJ L241/26. . . . . . . . . . . . . . . . . . . . . . . . .346 Directive 2006/123/EC on services in the internal market [2006] OJ L376/36. . . . . . .365 Recital 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .366 Art 1(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .366 Art 2(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .366 Art 4(2) and (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .366 Art 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365 Art 22(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365 Art 22(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365 Directive 2007/64/EC on payment services in the internal market [2007] OJ L319/1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270 Directive 2008/48/EC on credit agreements for consumers [2008] OJ L133/66 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124, 300, 318, 335, 360 Recital 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .343 Art 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202

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Directive 2008/95/EC to approximate the laws of the Member States relating to trade marks (Codified version) [2008] OJ L299/25 . . . . . . . . . . . . . . 383–4, 390 Recital 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .390 Art 4(1)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .390 Art 5(1)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .390 Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts Text with EEA relevance [2008] OJ L33/10 . . . . . . . . . . . . . . . . . . . . . .318 Directive 2009/22/EC on injunctions for the protection of consumers’ interests [2009] OJ L110/30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227 Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC [2009] OJ L211/55 . . . . . . . . . . .270 Directive 2009/136/EC amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services [2009] OJ L337/11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270 Directive 2011/7/EU n combating late payment in commercial transactions (recast) [2011] OJ L48/1 Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149 Directive 2011/83/EU on consumer rights [2011] OJ L304/64 . . . . . . 125, 140, 164, 170, 190, 199, 226, 298, 307, 315, 318–19, 323, 334 Recital 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140 Recital 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .180 Art 3(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140 Art 10(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136 Art 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Art 14(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202 Recommendation complementing Recommendations 2004/913/EC and 2005/162/EC as regards the regime for the remuneration of directors of listed companies C(2009) 3177 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367 Recommendation fostering an appropriate regime for the remuneration of directors of listed companies 2004/913/EC [2004] OJ L385/55 . . . . . . . . . . . . . .367 Recommendation on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes 98/257/EC [1998] OJ L115/31 .368 Recommendation on the principles for out-of-court bodies involved in the consensual resolution of consumer disputes 2001/310/EC [2001] OJ L109/56 .368 Recommendation on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board 2005/162/EC [2005] OJ L52/51 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .367 Regulation No 17 implementing Articles 85 and 86 of the Treaty [1962] OJ 13, implementing Articles 85 and 86 of the Treaty [1962] OJ 13 Art 4(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .399 Art 4(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .399 Art 9(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .399 Regulation (EEC) No 1612/68 on freedom of movement for workers within the Community [1968] OJ L257/2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59, 66, 85, 230

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Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons and their families moving within the Community [1971] OJ L149/2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230 Regulation (EEC) No 4087/88 on the application of Article 85(3) of the Treaty to categories of franchise agreements [1988] OJ L359/46 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 Regulation (EEC) No 1907/90 on certain marketing standards for eggs [1990] OJ L173/5 Art 10(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .337 Regulation (EC) No 40/94 on the Community trade mark [1993] OJ L11/1 . . . . . . .383 Regulation (EC) No 2790/99 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices [1999] OJ L336/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380, 411 Art 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303, 411 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .411 Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2000] OJ L12/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 97, 101, 104, 106–12, 118, 126, 128, 143, 148, 166, 176, 320 Recitals 1, 3 and 15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Recital 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109 Recital 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–8 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 5(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 5(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Arts 8–14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Arts 15–17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 16(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118, 126 Art 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 Arts 18–21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–8 Art 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–8 Art 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110 Arts 25–28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 Art 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110–11, 118 Art 26(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Art 26(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Art 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109, 111 Arts 27–30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 Art 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109, 111 Art 28(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109 Art 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Art 34(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Art 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Art 45(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108

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Regulation (EC) No 6/2002 on Community designs [2002] OJ L3/1 . . . . . . . . . . . . . .384 Regulation (EC) No 178/2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety [2002] OJ L31/1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 Regulation (EC) No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303–4, 378–80 Art 1(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395 Art 1(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Art 3(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378 Art 3(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303, 378–9 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395 Regulation (EC) No 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights [2004] OJ L46/1 . . . . . . . . . . . . . 151, 185, 359 Regulation (EC) No 772/2004 on the application of Article 81(3) of the Treaty to categories of technology transfer agreements [2004] OJ L123/11 . . .380 Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (‘Rome II’) [2007] OJ L199/40 . . . . . . . . . . . . . . . .91, 106, 112–13, 126 Art 30(1)(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Regulation (EC) No 1371/2007 on rail passengers’ rights and obligations [2007] OJ L315/14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185, 359 Regulation (EC) No 593/2008 on the law applicable to contractual obligations (‘Rome I’) [2008] OJ L177/6. . . . . . . . . . . . 91, 106, 112, 126, 143, 149, 166, 319–20, 326, 328 Recitals 23–36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126 Art 1(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Art 3(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113, 319 Art 3(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .320 Art 3(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .320 Art 4(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .320 Arts 5–8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126, 320 Art 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Regulation (EC) No 207/2009 on the Community trade mark (codified version) [2009] OJ L78/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383–4 Regulation (EU) No 267/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector [2012] OJ LL83/1 Recital 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Regulation (EU) No 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway [2010] OJ L334/1 . . . . . . . . . . . . . . . . . . . . . .185

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Regulation (EU) No 181/2011 concerning the rights of passengers in bus and coach transport [2011] OJ L55/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185 Regulation (EU) No 492/2011 on freedom of movement for workers within the Union [2011] OJ L141/1 Art 7(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Resolution of 25 May 2000 on a Community-wide network of national bodies for the extra-judicial settlement of consumer disputes [2000] OJ C155/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .368 Rome Convention of 1980 on the law applicable to contractual obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106, 113, 149 Art 1(2)(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 Art 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113

Preparatory Instruments Common European Sales Law (CESL) . . . . . . . . . 126, 156, 173, 175, 178, 201, 255, 292, 297, 307, 315, 325, 328, 389 Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .255 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175 Art 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178 Art 4(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178 Art 84 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297, 315 Art 84(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .307 Draft Common Frame of Reference (DCFR) . . . . . . . . . . . . . . . . . . 54, 172–3, 175–6, 178, 201, 256, 282–5, 290 Art I-1:102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178 Art III-1:103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174 Book VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201 Feasibility Study for a future instrument in European Contract Law . . . . . 173, 292, 315 Arts 7–9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175 Art 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174 Art 83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .315 Principles of European Contract Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135, 172–5, 283–4 Art 1:101(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .175 Art 1:201. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174

International Instruments Convention on the Contract for the International Carriage of Goods by Road 1956 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 European Convention on Human Rights (ECHR) . . . . . . . . . . . . . . . . . . . . . . . . . 141, 204 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204 Art 6(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .400 Art 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204 European Social Charter (Revised), 3 May 1996, ETS 163 . . . . . . . . . . . . . . . . . . . . . . .286

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Art 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286 ILO Discrimination (Employment and Occupation) Convention 1958 Art 1(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286 ILO Hours of Work (Commerce and Offices) Convention 1930 . . . . . . . . . . . . . . . . . .243 ILO Hours of Work (Industry) Convention 1919 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .243 ILO Migrant Workers (Supplementary Provisions) Convention 1975 Art 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .286 ILO Weekly Rest (Commerce and Offices) Convention 1957 . . . . . . . . . . . . . . . . . . . . .243 Statute of the International Court of Justice Art 38(1)(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174 Unidroit Principles of International Commercial Contracts . . . . . . . . . . . . . . . 148, 175–6 United Nations Convention on contracts for the international sale of goods (CISG Vienna Sales Convention) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144, 164, 225, 327 Art 1(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .327

National Legislation Belgium Trade Practices Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 France Code Civil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Art 1134 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153 Art 1590 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Code de justice administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89 Code de la consommation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Art L 114-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Code de procédure civile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89, 101–2 Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 Art 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 4(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 7(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Art 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 12(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Art 12(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Art 12(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Art 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Art 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Art 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Art 92(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 Code de procédure pénale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

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Germany Allgemeine Gleichbehandlungsgesetz (AGG – General Equal Treatment Law) of 14 August 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263 § 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .263 § 20(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .267 Bürgerliches Gesetzbuch (BGB - Civil Code). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353 § 242 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150, 353 § 439 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 § 622(2) para 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .259 § 651f(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .362 Gesetz über den Widerruf von Haustürgeschäften und ähnlichen Geschäften (Doorstep Selling Act) of 16 January 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197 Grundgesetz (Basic Law) Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161 § 23(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161 Wertpapierhandelsgesetz (WpHG – Securities Trading Act) . . . . . . . . . . . . . . . . . . . . . .354 § 31(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353 § 31(2)–(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353 Zivilprozessordnung (ZPO – Code of Civil Procedure) § 139 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 § 139(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 § 308(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 § 1031(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 Hungary Civil Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .383 Netherlands Besluit gedragstoezicht financiële ondernemingen (Bgfo) Art 86 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350 Civil Code Art 6:162. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .345 Art 6:193. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .345 Art 6:193b(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Wet op de arbeidsongeschiktheidsverzekering (WAO) Art 18(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .339 Wet op het financieel toezicht (Wft - Financial Supervision Act) Art 1:23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 1:76(6)(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 3:104(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 4:23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350 Art 4:24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350 Art 4:25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .350 Art 4:74(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 5:52(4)(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 4:60(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Art 5:32(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 Wet Werk en Inkomen naar Arbeidsvermogen (WIA) Art 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .339

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United Kingdom Arbitration Act 1996 s 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .289 s 91(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 Carriage of Goods by Road Act 1965 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995 (SI 1995/1054) . .377 Civil Procedure Rules (CPR). . . . . . . . . . . . . . . . . . . . . 89–90, 93, 95–6, 371, 401, 403, 408 Pt 1.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Pt 1.3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Pt 1.4(2)a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Pt 3.1(2)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .372 Pt 3.4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403 Pt 3.4(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Pt 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 Pt 6.33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 Pt 6.34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 Pt 16.2(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Pt 16.2(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Pt 24.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .403 Pt 52.3(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Pt 54.5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371–2 Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053, as amended by SI 1998/2868 ) r 17(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .365 Competition Act 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .377–8, 380, 408, 414 s 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .380 s 10(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .380 s 60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377–9, 385 s 60(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .379 Consumer Protection Act 2007 s 74(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .383 Customs and Excise Act 1952 s 85 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Enterprise Act 2002 s 188 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .409 ss 188–191 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .378 European Communities Act 1972 s 2(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .393 Financial Services and Markets Act 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344, 352 s 150 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344 s 150(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .345 Law of Property Act 1925 s 53 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Package Travel, Package Holidays and Package Tours Regulations 1992 (SI 1992/3288) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .377 r 2(1)(c)(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .377 Public Contracts Regulations 2006 (SI 2006/5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .370 r 47(7)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .371

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Public Trustee (Custodian Trustee) Rules 1975 (SI 1975/1189) . . . . . . . . . . . . . . . . . . .360 Public Trustee Rules 1912 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360 Art 30(1)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360 Registered Designs Regulations 2001 (SI 2001/3949) . . . . . . . . . . . . . . . . . . . . . . . . . . . .392 Statute of Frauds 1677 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .386 Unfair Arbitration Agreements (Specified Amounts) Order 1999/2167 Art 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .308 Unfair Contract Terms Act 1977 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .330 United Nations Act 1946 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .393 Working Time Regulations 1998 (SI 1998/1833) . . . . . . . . . . . . . . . . . . . . . . . . . . . 243, 245 United States Credit Card Accountability Responsibility and Disclosure Act of 2009 . . . . . . . . . . . . .300 FTC Credit Practices Rules §§ 444.1(i), 444.2(a)(4) (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .300 Restatement Second of Contracts s 211 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .306 Sherman Act Art I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .302 Uniform Commercial Code s 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .306 s 302 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294, 306

1 Private Law Relationships and EU Law DOROTA LECZYKIEWICZ AND STEPHEN WEATHERILL

I. Introduction Our objective in this volume is to examine, from different perspectives, the nature and purpose of the involvement of EU law in private law relationships. EU law is here understood as comprising both primary law and secondary legislation, taking account also of the often important and not always predictable interpretative interventions of the Court of Justice of the European Union. The contributors investigate, using different methods and approaches, how individuals become affected by the operation of EU law. The chapters taken together are designed to give the reader an understanding of the substantive scope within which EU law intervenes in private law relationships. The constitutional questions associated with the appropriateness of EU law’s involvement in private law relationships are also examined. The authors present different views on the question of whether the involvement of EU law needs to be specially justified or whether the EU can rely on the same justifications which have been used over time within national legal orders. These issues are addressed both at the level of general and specific EU law. At the general level selected chapters analyse the core concepts of EU law, such as the Internal Market and its freedoms, general principles of law, and EU law doctrines aimed at ensuring the effective application of EU secondary law. Other chapters, on the other hand, look at specific sectors of private law and analyse the methods and the consequences of the involvement of EU law on their terrain. They interrogate what values motivate intervention by EU law and what impact such intervention exerts beyond that clearly intended by EU lawmakers. In this way the authors enable us to appreciate the real impact of EU law on the conduct of individuals, their private law rights and obligations, their position vis-à-vis other market participants, and their civil and economic status. The intermediary of national law is often the primary vehicle through which the impact of EU law is effectuated, but what is of primary interest to the contributors to this volume is the ultimate effect on individuals and their legal relationships.

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A key element in this investigation is provided by the calculatedly ambiguous character of EU law itself. It is not ‘public law’ in the orthodox sense(s) understood at national level, nor is it private law. It is both and it is neither. In fact, EU law operates without any such anchor, which makes it fluid and which makes it at the same time unstable. EU law challenges and sometimes transforms orthodox categorisations within national legal orders. This may be virtue, this may be vice—part of the enquiry presented in this volume is directed at the extent to which EU law in its several guises discloses an adequate appreciation of and respect for the place of private autonomy in particular and private law in general.

II. ‘Private Law Relationships’ Private law relationships are a sub-category of legal relationships that are traditionally governed by the area of law referred to as ‘private law’. While the distinction between private and public law has been questioned both at the conceptual and at the normative level, it does form part of the legal traditions of the Member States (albeit to different degrees) to use the division into private and public law to separate the operation of certain fields of law. On the one hand, we have an area of the law which regulates relationships among individuals or non-public actors, who are conventionally believed to be in a position of equality, and which concerns activities unrelated to the exercise of public power. The negative definition of private law places a lot of emphasis on what is ‘public’. Definitions of the ‘public’ range from those focusing on the status of the actor (institutional) to those looking at the nature of the interest pursued (functional). An institutional understanding regards all law to which organs of the state are subjected as ‘public’, and most closely relates to the distinction used in EU legal scholarship between vertical and horizontal situations. The functional approach treats as ‘public’ those areas of law which are motivated solely or significantly by public interest, leaving the remaining legal rules to ‘private law’. This volume is not trying to shy away from the difficulty of defining ‘private law’. In fact, some of the contributions in the volume have elected directly or indirectly to question the possibility of making the distinction between ‘private’ and ‘public law’. For example, Monica Claes (Chapter 3) questions the usefulness of the private/public divide and replaces it with another distinction, that between vertical and horizontal relationships, regardless of their nature. On this account, she challenges the necessity to ask the question of what justifies the involvement of EU law into private law relationships, and instead asks about the negative reasons why the EU should not exert such influence. This leads her to conceive EU law’s involvement as a question of the role of public authority in general and the more specific question of EU competences. Norbert Reich as well (Chapter 11) inclines to the view that at least as far as EU law is concerned

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the distinction between private and public law is misguided. Values traditionally perceived as ‘constitutional’ should without hindrance penetrate relationships which have traditionally been regarded as ‘private’, such as those arising from and around consumer, employment and service contracts. The remaining authors are generally of the view that the distinction between private and public law should be preserved. For Michael Dougan (Chapter 5), the category of ‘public law’ is particularly important, because a ‘public law’ dimension to a horizontal case is what justifies the application of the general principles of EU law, which according to him are ‘public’ in nature. Thus, in order to avoid dissonance, cases in which the effect of the general principles of EU law should be allowed need to possess a public law element found in the public authority’s failure to fulfil its obligations under EU law. The fact that at the same time a case also has a ‘private law’ dimension—for example, because it concerns trade or employment—should not, according to Dougan, prevent the application of the general principles of EU law. However, cases without a public law dimension should be protected from the application of the general principles of EU (public) law. Much more protective of the independence of private law are Martijn Hesselink, Vanessa Mak and Mark Freedland. Hesselink’s approach (Chapter 7) is most strikingly separatist in that he believes not only that private law is a distinct category, but also that it possesses its own principles, now also recognised by the Court of Justice in the form of ‘general principles of civil law’. Mak and Freedland offer us a slightly different vision of private law. They seem to be of the opinion that both categories do and should interact. To facilitate the interaction Mak proposes the use of the concept of ‘average consumer’ as a reference point to which analysis of both public and private standards of protection should be directed (Chapter 15). Freedland, on the other hand, while accepting the conceptual distinction between private and public law, argues that the distinction should not lead to isolation of private law reasoning from social considerations (Chapter 12). One way of ensuring that private law is infused with social considerations is to expand their scope of application to areas of private law where such considerations find their natural habitat, such as employment law.

III. Private Autonomy and EU Law The explicit and implicit discussion of the private/public law divide in the volume’s chapters seems to entail that even for authors who would like to undermine the distinction, the separation of private law does admittedly perform a certain kind of epistemic function. Many contributors have pointed to the fact that what distinguishes ‘private law’, or what we need to identify in the ‘private law relationships’, is the role and place of private autonomy. Private autonomy is protected by law through the process of separating out certain spheres of

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human activity as ‘private’ and allowing those involved to structure relationships falling within these spheres independently from state intervention. In the economic context we can describe these spheres as areas ruled by market forces and economic power, rather than a regulatory framework. Manifestations of private autonomy in law are manifold. The most important are the freedom of contract and the absence of coercion. Freedom of contract can take an individualistic or a collective guise. The former is visible within areas covered by general ‘contract law’, while the latter manifests itself, for example, in employment law, where collective agreements, although regulatory in nature, are an expression of the participants’ autonomy to shape the content of their relationships. The normative justification for the protection of private autonomy probably lies in the fact that individuals whose stance is equal do not need to be looked after. They best know their preferences and are best equipped to determine the ways of protecting their interests. This also applies to situations of conflict. As shown by Simon Whittaker (Chapter 6), different legal systems have different views about the extent to which the court’s adjudication of disputes should shape the procedural relationship between private parties. The effect of EU law is on occasion to uproot these traditional roles of the court and to alter the relationship between the parties to litigation where the underlying private law relationship is not based on true or even approximate equality. A common illustration is supplied by consumer transactions, the regulation of which has been a long-standing preoccupation of the EU legislature and which has also generated much attention from the Court of Justice. Equally, even in situations of economic equality in a contractual relationship, there may arise procedural inequality stemming from the national distribution of the burden of proof, the standards of pleading, litigation costs and unevenness in practical implications. This latter issue is discussed by Okeoghene Odudu in Chapter 17. Odudu examines the use and effects of the so-called ‘Euro-defence’, a claim which attempts to nullify the contract on the basis of its incompatibility with EU competition law. Practical challenges in fighting off the defence make claimants settle unmeritorious claims or discourage them from bringing actions entirely, thereby reducing incentives to perform contracts. Thus, it is not surprising that English judges have taken an active role in resisting the overuse of the Eurodefence, and have employed both substantive and procedural tools to make the Euro-defence less powerful. This process is described by Odudu as ‘equilibration’. If private autonomy and presumed equality of parties is what characterises ‘private law relationships’, legal regulation of such relationships should in principle be orientated towards addressing restrictions on private autonomy and recreating balance between the parties in situations where the real position of the parties vis-à-vis each other differs from the projected one. This idea seems to explain why it is legitimate for the EU to intervene in private law relationships by means of horizontal applications of Internal Market freedoms, and is eloquently defended by Gareth Davies in his contribution to the volume (Chapter 4). Davies argues that restriction of liberty arising from application of Internal

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Market freedoms, in particular the prohibition of nationality discrimination, is justified in three-party situations, where acts of one party interfere with the contractual preferences of another, making it impossible or difficult for them to enter into a cross-border contract. In contrast, there is no reason for Internal Market freedoms to be enforceable against private actors who use discriminatory practices in their own contracts, where opposition to cross-border transactions and support for discriminatory treatment affects only their own contractual preferences.

IV. Social Goals and Private Autonomy States have probably never strictly observed the imperative that private law is private in the sense of being made by individuals for themselves, and that regulatory intervention should take place only where private autonomy is endangered. States intervene because markets fail, but also because they want to realise social goals or, on another view, promote an enriched version of individual liberty, which includes not only protection from coercion and freedom of choice but also access to opportunities. Equality before the law is not real equality of power, so sometimes law is used with a view to correcting social imbalances—although its capacity to do so effectively (or even at all) is by no means taken for granted. The EU has arguably always been seen as a type of public regulator, whose intervention is justifiable on the same grounds as state intervention. This aspect of EU private law is discussed in this volume by Norbert Reich, Daniela Caruso, Mark Freedland and Hugh Collins, who explore both equality-focused rationales and broader distributional claims of social justice. However, their views as to the relationship between the objectives of social justice and the protection of private autonomy are not uniform. Reich’s analysis presupposes that there is an inherent conflict between private autonomy and the promotion of equality (Chapter 11), while Collins gives the example of employment relationship, where EU law’s intervention executed in the name of social-dumping prevention leads to a displacement of standards of protection arrived at through negotiations between employers and employees and laid down in collective agreements (Chapter 10). Collins’ argument is particularly powerful when he shows that the use of soft law and collective bargaining would allow EU law to reconcile not only social justice concerns with private autonomy, but potentially also the former with the need to ensure competitiveness. Caruso (Chapter 12), on the other hand, focuses on EU consumer law, in particular on the regulatory instrument of black lists. She explains that on a perfunctory view the effect of black lists is to restrict contractual freedom, but in the long run their effect is likely to be the reverse— namely, an expansion of private autonomy. Caruso substantiates her argument by comparing black lists in EU consumer law with ‘hardcore restrictions’ in EU

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law governing anti-competitive vertical agreements, and explains how arguably excessive regulation may unleash deregulatory forces. While social goals are now explicitly among the goals of the EU, they continue to be non-exclusive to the EU in the sense that they are also shared with the Member States. The same cannot be said about private autonomy, the protection of which is not an explicit goal of EU law as set out in the Treaties. While, as Reich reminds us in his contribution, in Société thermale d’Eugénie-les-Bains1 the Court of Justice held that ‘the contracting parties are at liberty—subject to the mandatory rules of public policy—to define the terms of their legal relationships’, it is also the case, as argued by Stephen Weatherill (Chapter 2), that neither the Treaty nor the Court of Justice provide a ‘principled understanding of the legitimate claims of private parties to autonomy’. This led some academic commentators to conclude that EU private law is purely regulatory. It has not been founded on the idea of protecting private autonomy. Weatherill’s detailed analysis of different ways in which private law relationships become affected by EU law shows that there are inconsistencies in the Court’s approaches, such as the unequal binding force of different Internal Market freedoms on private parties and incompatible propositions about the horizontal effectiveness of Directives. These inconsistencies point strongly to the conclusion that the place of private autonomy in EU law is elusive, in particular where the principle of legal certainty, as employed by the Court, does not seem to guard it particularly effectively. The doctrine of EU law which bears the primary responsibility for undermining the force of private autonomy claims in EU law is that of ‘effectiveness’. Weatherill’s contribution explains how its application tends to make EU law spread into both contractual and non-contractual relationships in a largely incoherent manner and without an overarching justificatory foundation. This phenomenon is also explored by Peter Rott (Chapter 8). His contribution explains that the judicial use of the principle of effectiveness leads to a retrospective change in the position of private parties, and for this reason its use requires a particularly powerful justification. This can be effectively provided only by a narrow doctrine of abuse of (national) rights. If, however, as advocated by Rott, we restrict our analysis to the unexpected effects of the principle of effectiveness on liabilities and remedies, then the justification may be provided by the normative underpinning of the substantive obligations imposed by EU law on private parties.

V. EU Law and National Private Law If it is the case that private autonomy is a gaping black hole in the conceptual structure of EU law, while it is recognised and protected in one form or another 1

Case C-277/05 Société thermale d’Eugénie-les-Bains [2007] ECR I-6415, para 28.

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by national law, it comes as no surprise that arguments against the intervention of EU law into national private laws are really arguments for the protection of private autonomy. This idea seems to underlie some of the observations made by Hesselink, who sees ‘general principles of civil law’ originating in national systems of private law as mechanisms for protecting private interest, presumably by protecting contractual freedom. Collins, on the other hand, argues for renationalisation of employment law to guarantee greater scope for private regulation. Another approach is to include the perspective of private autonomy in EU law itself. Dorota Leczykiewicz (Chapter 9) looks at the role of private autonomy in guiding the construction of liability rules affecting a private party in EU law. She links the protection against coercion by public power with certain constitutional values, such as the principle of legality, separation of powers and the principle of conferral, and explains why there is a particular danger of their violation in the context of the EU law of private party liability, which is most likely to develop judicially rather than legislatively. Appropriate conditions of liability could arguably safeguard the legality of the coercive interference of EU law, but tension would still exist with the other constitutional principles under investigation in Leczykiewicz’s contribution. The question which remains relates to the appropriateness of the judicial creation of remedial rules, a concern which is mentioned also by Weatherill and Claes in terms of EU law’s more general involvement in private law relationships. Protection of private autonomy is still waiting to become an openly articulated goal of EU law. For the time being its locus continues to be national law. Yet, the EU does not merely take over the goals of the Member States in order to pursue them at the pan-European level. The EU has goals of its own which are specific to it, such as the creation of the Internal Market. Davies’ contribution has shown that this goal, when linked with promoting contractual freedom, could easily serve as a justification for EU law’s involvement. Removing obstacles to free movement, seen independently, is a powerful objective that cuts across areas of (national) law which are often motivated by different rationales. This is one arena in which EU law seems oblivious to carefully nurtured divisions between public and private law at the national level. Christian Twigg-Flesner (Chapter 14) examines the establishment and functioning of the Internal Market as a justification for EU law’s regulation of consumer transactions. He sees much persuasive force in the view that the Internal Market rationale does not justify the EU to regulate all consumer transactions, both cross-border and domestic. To justify the involvement of EU law in purely domestic transactions another rationale would have to be provided, such as consumer protection. Yet, the EU’s authority to regulate in the name of consumer protection is harder to justify given the constraints imposed by the principle of subsidiarity and the need to advance evidence that consumers are not adequately protected by the laws of the Member States. In consequence, Twigg-Flesner argues that EU consumer law should be rolled back and that it should apply primarily to transactions concluded online or at a distance.

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VI. Beyond the Scope of EU Law The EU undoubtedly faces problems of legitimacy where it deliberately interferes with private law relationships. This remonstration applies to the rules of the Treaty and to the provisions of secondary legislation—and to the bold interpretative choices made by the Court too. Yet the impact of EU law may be felt beyond the area over which EU law itself claims authority; its doctrines may be used beyond the scope of intended situations. Angus Johnston and Okeoghene Odudu explore such situations. As mentioned above, Odudu focuses on situations in which private parties exploit rules of EU law to achieve changes in their contractual obligations which go beyond those explicitly envisaged by EU law. The effect of EU law is exerted because of economic reality, the fact that litigation is costly, standards of pleading flexible and judicial assessments unpredictable. The involvement of EU law in such situations, as Odudu shows, undermines incentives for contract performance—a result which clearly conflicts with EU law’s objective to ensure the proper functioning of the market. The method employed by the English judiciary to curb such excesses serves the ends not only of national but also of EU law. Johnston focuses on a different type of consequence of EU law—one that is not the deliberate product of EU institutions (Chapter 16). This concerns situations where EU law interacts with national structures and ‘spills over’ into areas falling beyond its scope. Johnston very carefully maps these spillover effects of EU law, and distinguishes them from other types of EU law’s involvement, which are perhaps indirect and less premeditated, but should still be seen as ‘intended’ consequences of EU law. Johnston also points out that on the whole it is incorrect to view spillover effects as illegitimate and conceptualise them as instances of competence creep. Such effects are often demanded by national constitutional principles, such as that of equal treatment or coherence in the application of policies, and for this reason derive their legitimacy from national law. What emerges from the discussion offered in the individual contributions of this volume is that EU law’s tendency to operate as a restriction of private autonomy is as yet unsystematic and the policy objectives which are apt to legitimise the EU’s involvement both coincide and diverge from those traditionally used by states to justify such interference. As long as individual freedom remains the main idea behind areas governed by ‘private law’—and even this is far from uncontested—the EU will have to explain not only why it, rather than the Member States, should act, but also why the issue requires intervention at all. The same arguments which EU law has used to undo national regulatory constraints should bind and guide EU institutions.

2 The Elusive Character of Private Autonomy in EU Law STEPHEN WEATHERILL

I. Introduction An inquiry into the questions of whether EU law does and should show respect for private autonomy entails (at least) two distinct elements. First, it invites general consideration of the normative claim for private autonomy from the law, and, second, it asks whether there is something special about this inquiry in the context of EU law. My principal concern in this contribution is to set out the context in which some of these questions are properly addressed and to make at least some contribution to showing how and why a consistent pattern is elusive. In particular, my argument is that EU law generally has a structural tendency to spread, as a result of the want of effective restraining mechanisms built into the Treaties themselves, and spread into the private sphere is one manifestation of that broader trend. What is missing is consistent appreciation of the implications of, and indeed the very fact of, that spread. For the purposes of this inquiry I select five phenomena which reveal something about the impact of EU law on private law relationships: (1) the impact of the fundamental freedoms on private parties; (2) the limited scope of application of competition law to private agreements; (3) the impact of EU secondary legislation (most obviously Directives) on private parties; (4) the impact of general principles of EU law, including but not only fundamental rights, on private parties; and (5) the liability of individuals to pay compensation for loss caused when they act in violation of EU law. In some circumstances anxiety to protect private autonomy is (directly or indirectly) visible, in others not at all. I draw from this the conclusion that EU law, in particular the case law of the Court of Justice, contains anxieties about the possible damaging effect that it may exert on private autonomy, but that they are unsystematically expressed.

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II. The Impact of the Fundamental Freedoms on Private Parties All the provisions of the Treaty on the Functioning of the European Union that deal with free movement apply to the acts of public authorities. By contrast, only some provisions apply directly to private parties, albeit that the precise scope appears not to have remained static. Never has the Court attempted to explain this lack of convergence. This is the first piece of evidence in support of my claim that EU law lacks a clear and consistent understanding of the demands of private autonomy. In Walrave and Koch, the Court was faced with the governing rules of an international sports federation—doubtless a powerful body, but not a public authority. It concluded that the prohibition of discrimination based on nationality pursuant to (what were then) Articles 7, 48, and 59 EEC ‘does not only apply to the action of public authorities but extends likewise to rules of any other nature aimed at regulating in a collective manner gainful employment and the provision of services’.1 It supplied two principal reasons for this finding. First, because the Treaty objective of tackling obstacles to inter-State trade would be ‘compromised if the abolition of barriers of national origin could be neutralized by obstacles resulting from the exercise of their legal autonomy by associations or organizations which do not come under public law’;2 and second, given the diversity between Member States on the scope of and relationship between public regulation and private agreements, limiting the Treaty provisions ‘to acts of a public authority would risk creating inequality in their application’.3 This is perfectly logical. Both arguments—which one may readily label an ‘effectiveness’ rationale and an ‘equality’ rationale, respectively—have force. The Court has also in this way subjected trade unions to obligations imposed by the Treaty rules on free movement. In Viking Line it stated that Article  43 EC (now Article 49 TFEU) is to be interpreted as meaning that, in principle, collective action initiated by a trade union or a group of trade unions against an undertaking in order to induce that undertaking to enter into a collective agreement, the terms of which are liable to deter it from exercising freedom of establishment, is not excluded from the scope of that article.4

Collective labour action must therefore comply with standards of justification recognised by EU law insofar as its exercise obstructs cross-border corporate mobility. This approach is highly controversial, for the Court’s criteria governing justification seem peculiarly insensitive to the legitimate demands of trade 1

Case 36/74 Walrave and Koch [1974] ECR 1405, para 17. Ibid, para 18. Ibid, para 19. 4 Case C-438/05 Viking Line [2007] ECR I-10779, para 55; Case C-341/05 Laval [2007] ECR I-11767, para 98. 2 3

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unions and have therefore attracted criticism for the deterrent effect of EU free movement law on the exercise of political and social freedoms.5 For present purposes, however, it suffices to locate the ruling in Viking Line in the orthodox line of case law which targets (what are now) Articles  45, 49 and 56 TFEU not only at the actions of public authorities but also ‘rules of any other nature aimed at regulating in a collective manner gainful employment, self-employment and the provision of services’.6 The Court has gone further. In Angonese it ruled that ‘the prohibition of discrimination on grounds of nationality laid down in Article 48 of the Treaty [now Article 39 TFEU] must be regarded as applying to private persons as well’, and it did not confine this to a case where collective action was taken by private parties.7 This appears to mean that action by a private employer may be controlled under the Treaty provisions on free movement.8 EU law spreads: free movement law digs deep into the private sector. But not all of free movement law. Article 34 TFEU has never been interpreted to apply to private parties. The free movement of goods is, it seems, different. In Schmidberger v Austria, therefore, which involved private parties obstructing the passage of goods through the Brenner Pass in protest at the environmental damage done by such traffic, the Court found that Article 34 TFEU was in principle apt to form the basis for review of the Austrian authorities’ failure to intervene to suppress the protests—but Article 34 TFEU would not apply directly to the private parties themselves.9 In Sapod Audic the Court insisted that an obligation arising out of a private contract cannot be regarded as a barrier to trade for the purposes of (what is now) Article 34 TFEU ‘since it was not imposed by a Member State but agreed between individuals’10—and for support it reached as far back as the free movement classic, Dassonville, in which it had confined the reach of the law governing the free movement of goods to trading rules ‘enacted by Member States’.11 Private practices that interfere with cross-border trade in goods have always been treated as the province of the Treaty rules on competition law, in contrast to private practices affecting people, which are assessed from the perspective of both competition law and free movement law. This is very hard to understand. One could readily accept that the law is 5 Cf eg L Azoulai, ‘The Court of Justice and the Social Market Economy: The Emergence of an Ideal and the Conditions for its Realisation’ (2008) 45 Common Market Law Review 1335; C Barnard, ‘Fifty Years of Avoiding Social Dumping? The EU’s Economic and Not So Economic Constitution’ in M Dougan and S Currie (eds), Fifty Years of the European Treaties: Looking Back and Thinking Forward (Oxford, Hart Publishing, 2009); A Davies, ‘One Step Forward, Two Steps back? The Viking and Laval Cases in the ECJ’ (2008) 37 Industrial Law Journal 126; C Joerges and F Rödl, ‘Informal Politics, Formalised Law and the “Social Deficit” of European Integration: Reflections after the Judgments of the ECJ in Viking and Laval’ (2009) 15 European Law Journal 1. 6 Case C-438/05 Viking Line (n 4) para 33. 7 Case C-281/98 Angonese [2000] ECR I-4139, para 36. 8 See eg Case C-94/07 Andrea Raccanelli [2008] ECR I-5939, esp para 45; Case C-379/09 Maurits Casteels v British Airways, Judgment of 10 March 2011. 9 Case C-112/00 Schmidberger v Austria [2003] ECR I-5659. 10 Case C-159/00 Sapod Audic [2002] ECR I-5031, para 74. 11 Case 8/74 Dassonville [1974] ECR 837, para 5.

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coherent if all the freedoms were to enjoy the same personal scope, whether that be a complete embrace of private parties, application to private parties where they act collectively, or a complete immunity for private parties. Choosing which model would involve some sort of assessment of the strength of the Court’s predilection for the ‘effectiveness’ and ‘equality’ rationales on the one hand, and EU law’s respect for private autonomy on the other. But the current system, whereby some freedoms have a broader personal scope than others, is very hard to justify—and, moreover, the Court has never made a serious attempt to justify it. The ‘effectiveness’ and the ‘equality’ rationales seem in principle capable of application with no less force to the free movement of goods than they do to the free movement of persons, yet the Court, without elucidation, makes a distinction between the freedoms. The shaping of the free movement rules has been a preoccupation of the Court over many years, and it has not left the law static. Perhaps in this matter the law is on the verge of change. In Viking Line the Court observed that It follows that Article  43 EC must be interpreted as meaning that, in circumstances such as those in the main proceedings, it may be relied on by a private undertaking against a trade union or an association of trade unions.  This interpretation is also supported by the case-law on the Treaty provisions on the free movement of goods, from which it is apparent that restrictions may be the result of actions by individuals or groups of such individuals rather than caused by the State (see Case C-265/95 Commission v France [1997] ECR I-6959, paragraph 30, and Schmidberger, paragraphs 57 and 62).12

This is a frankly shameless rewriting of Schmidberger. Cited paragraph 57 of that judgment does not focus on restrictions on individuals but rather states that Article 34 TFEU applies ‘where a Member State abstains from adopting the measures required in order to deal with obstacles to the free movement of goods which are not caused by the State’; while cited paragraph 62 is admittedly more in point, for it refers to ‘restrictions on the effective exercise of a fundamental freedom enshrined in the Treaty, such as the free movement of goods, which result from actions taken by individuals’, but then focuses on the obligations of public authorities in the Member States ‘to take adequate steps to ensure that freedom in the Member State concerned’. The seamless link found in Viking Line between the case law on the free movement of companies and the case law on the free movement of goods is therefore misleading. But the very fact that the Court chooses to make that link may count as plausible evidence that it is ready, when next pressed, to abandon resistance to the application of Article 34 TFEU to private parties, at least where collective action of the type taken in Viking Line (and in Schmidberger) is at stake. One may moreover envisage that the non-discrimination rule of Article 18 TFEU may be used to embed obliga-

12

Ibid, paras 61–62.

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tions on private parties who contravene the free movement of goods. Elegant attempts have been made by scholars in precisely this vein.13 That is for the future. For the present purposes the argument is more modest. The problem here is that one could readily accept a logic that applied all the freedoms to the private sector or one that refused to apply any of the freedoms to the private sector. It is much harder to discern a logic that applies some but not all the freedoms to the private sector—and if there is any such applicable logic, the Court has ostentatiously avoided providing it. It is not to be discounted that there might be such logic. There might be reasons to interpret the personal scope of the Treaty provisions on the free movement of persons more broadly than those governing the free movement of goods. People, as beneficiaries of EU law, should perhaps enjoy more generous treatment than goods. On the other hand, this immediately runs up against counterarguments rooted in the autonomy of the people against whom such rights would be asserted. This might in turn conjure up a judicial task of such fiendish complexity that veering clear of the application of the free movement provisions to private parties might seem astute and attractive. The problem, however, is that none of this type of discussion appears to inform the Court’s approach, not even in a rudimentary sense. The Court eagerly seized on the ‘effectiveness’ and the ‘equality’ rationales in applying some Treaty provisions on free movement to private parties—certainly acting collectively, less confidently where unilateral action is at stake—while it has a long-standing reticence, perhaps today becoming softer, to allow the enforcement of the Treaty provisions on the free movement of goods against private parties. This is likely an expression of anxiety to protect a zone of private autonomy from incursion by EU law, but identification of any such principled approach is defeated by the ragged edges of this area of the law. Respect for private autonomy lurks—but it is poorly articulated.

III. The Limited Scope of Application of Competition Law to Private Agreements The provisions of the Treaty dealing with competition law apply directly to private parties. Of course! As the Court has explained, Article 101 TFEU serves as ‘a fundamental provision which is essential for the accomplishment of the tasks entrusted to the Community and, in particular, for the functioning of the internal market’.14 And although Articles 101 and 102 are designed to ensure 13 See eg D Wyatt, ‘Horizontal Effect of Fundamental Freedoms and the Right to Equality after Viking and Mangold, and the Implications for Community Competence’ (2008) 4 Croatian Yearbook of European Law and Policy 1; M Karayigit, ‘The Horizontal Effect of the Free Movement Provisions’ (2011) 18 Maastricht Journal of European and Comparative Law 303. See also P Oliver (ed), Oliver on Free Movement of Goods in the European Union, 5th edn (Oxford, Hart Publishing, 2010) 67–78. 14 Case C-126/97 Eco Swiss China Time Ltd v Benetton International NV [1999] ECR I-3055.

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supervision of a wide range of anti-competitive practices that may harm the functioning of the internal market, among the most pernicious such controlled practices are those which tend to reinforce the fragmentation of the market along national lines. In this sense the Treaty’s competition rules supplement the free movement rules by preventing private parties from maintaining or erecting the type of barrier to inter-State trade which public authorities are forbidden from sustaining. So, under an orthodox understanding, the competition rules assert an intrusion into private autonomy in the cause of protecting a well-functioning internal market. Yet even here private autonomy emerges as a value that deserves some degree of protection. Albany International betrays a certain reticence to allow private practices to be fully exposed to control exercised by EU competition law.15 The Court was asked by a Dutch court whether a request by management and labour to make affiliation to a sectoral pension fund compulsory constituted an ‘agreement’ between undertakings within the meaning of what is now Article 101 TFEU. This has great significance, for if the answer is yes, then collective bargaining, a foundation stone of much workplace practice in Europe, would be subjected to scrutiny as potentially anti-competitive. But the answer was no. The Court refused to interpret the competition rules in isolation from other parts of the Treaty. It pointed out that under Article 3 EC (as it provided at the time) establishing a system ensuring that competition in the internal market is not distorted was listed as an activity alongside development of a policy in the social sphere. So although certain restrictions of competition are inherent in collective agreements between organisations representing employers and workers, the social policy objectives pursued by such agreements would be seriously undermined were management and labour subject to Article 101 when seeking jointly to adopt measures to improve conditions of work and employment. And so: It therefore follows from an interpretation of the provisions of the Treaty as a whole which is both effective and consistent that agreements concluded in the context of collective negotiations between management and labour in pursuit of such objectives must, by virtue of their nature and purpose, be regarded as falling outside the scope’ of Article 101.16

Accordingly, this particular type of exercise of private autonomy was released from the grip of EU competition law. It is an approach that has purchase elsewhere too. Wouters concerned rules of the Dutch bar prohibiting multi-disciplinary partnerships between advocates and accountants.17 The Court examined the contribution of such rules, plainly restrictive of competition, to the administration of justice in determining whether they violated Article 81(1) EC, now Article 101(1) TFEU. And in Meca-Medina and Majcen v Commission it insisted on the need for assessment of the overall 15

Case C-67/96 Albany International [1997] ECR I-5751. Ibid, para 60. 17 Case C-309/99 JCJ Wouters, JW Savelbergh, Price Waterhouse Belastingadviseurs BV v AlgemeneRaad van de NederlandseOrde van Advocaten [2002] ECR I-1577. 16

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context in which an agreement is struck or produces its effects.18 ‘It has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives … and are proportionate to them’: in casu, this meant that given the general objective of the challenged rules was to combat doping in order for competitive sport to be conducted on a fair basis, and that given the effect of penalties on athletes’ freedom of action was inherent in the anti-doping rules, they did not constitute a restriction of competition incompatible with the Treaty. It is illuminating that this approach is widely regarded as ad hoc and unsatisfying in its reasoning.19 For some competition lawyers there is a danger that competition law will be distorted, its provisions used to achieve objectives that are not part of a properly structured competition law. For others this is precisely the attraction of the Court’s approach. In any event, there is a lack of clarity and predictability in understanding exactly when and how matters that are not explicitly written into the Treaty competition rules shall come to affect the interpretation and application of those rules. But rooted within the Court’s contextual inquiry is an ill-formed but unavoidable sense that preservation of private autonomy is in some circumstances a virtue of which EU competition law shall take account. In Viking Line the Court was invited to apply this reasoning which marries competition law to social policy, thereby softening the cutting-edge of the former, also to the case of free movement law.20 It declined. One—formal and not at all sophisticated—reason centred on the simple assertion that the Treaty rules on competition and the Treaty provisions on free movement apply in different circumstances. A second, more substantive but still under-articulated, reason held that ‘it cannot be considered that it is inherent in the very exercise of trade union rights and the right to take collective action that those fundamental freedoms will be prejudiced to a certain degree’.21 So whereas Albany International reveals a readiness to curtail the application of Article 101, the Court finds extension of that protection of private autonomy to be indigestible when pleaded in the context of Article 49 TFEU.

IV. The Impact of EU Secondary Legislation (Most Obviously Directives) on Private Parties Properly implemented Directives of course affect private parties who are subject to implementing legislation at national level, and indeed Directives are the most 18

Case C-519/04 P Meca-Medina and Majcenv Commission [2006] ECR I-6991. For a summary, see eg D Chalmers, G Davies and G Monti, European Union Law (Cambridge, Cambridge University Press, 2010) 967–71. More broadly, C Townley, Article 81 EC and Public Policy (Oxford, Hart Publishing, 2009). 20 Case C-438/05 Viking Line (n 4). 21 Ibid, para 52. 19

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important means through which the EU fleshes out the substantive scope of its labour law, consumer law, environmental law, and so on. But Directives may also affect private parties directly, even in the absence of proper implementation. Yet, as observed above in connection with the scope of free movement law, here too there is a division between private parties and public authorities, and here too there is a sense of incoherence and elusive normative underpinning. That Directives are incapable of horizontal direct effect seems to make a clear demarcation between private parties (who cannot be directly subject to obligations imposed by Directives) and public authorities (who frequently are so subject, once the deadline for implementation has passed). And yet that clear demarcation is eroded by the Court’s readiness to use the devices of indirect and incidental direct effect to provide that Directives may indeed prejudice the position of private parties. In some judgments the Court is attentive to the implications for legal certainty, in others it is wholly insouciant. This is where it is hard to identify a clear understanding of the proper worth of private autonomy. In Marshall the Court relied on what was then Article 189 EEC and is now, in amended form, Article 288 TFEU. This makes Directives binding on Member States (only).22 So a Directive may not be relied upon against an individual before a national court, whereas it may be invoked against a public authority. The Court was pressed to reconsider its rejection of the horizontal direct effect of Directives but in Paola Faccini Dori it emphatically confirmed that refusal. It declined to take that step because that ‘would be to recognize a power in the Community to enact obligations for individuals with immediate effect, whereas it has competence to do so only where it is empowered to adopt regulations’.23 And the Court has remained faithful to its refusal to accept Directives capable of horizontal direct effect ever since.24 In Wells it explained this by reference to ‘the principle of legal certainty [which] prevents directives from creating obligations for individuals. For them, the provisions of a directive can only create rights’.25 However, in Wells the Court stated that ‘mere adverse repercussions on the rights of third parties, even if the repercussions are certain, do not justify preventing an individual from invoking the provisions of a directive against the Member State concerned’.26 So in the case itself, Wells, a private individual, complained that a quarry was being developed by a private mining company under an authorisation issued by the relevant public authority which, pursuant to applicable EU environmental protection legislation, should not have been issued. It was held that the national court was entitled to require the withdrawal of the authorisation—even though this would prejudice a third party, the private mining company. This would not be a case of horizontal direct effect, for the Directive did not impose an obligation on the mining company. Instead it would 22

Case 152/84 Marshall [1986] ECR 723. Case C-91/92 Paola Faccini Dori [1994] ECR I-3325, para 24. Eg Case C-192/94 Blazquez Rivero [1996] ECR I-1281. 25 Case C-201/02 Wells [2004] ECR I-723, para 56, citing but in fact enlarging upon Marshall. 26 Ibid, para 57.

23 24

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involve adverse repercussions for the mining company—an ‘incidental’ effect consequent on application of the Directive in the proceedings between Wells and the public authority—and this is permitted as a matter of EU law, even if the legal certainty of the third party, the mining company, is prejudiced. And this extends even to accepting that such ‘adverse repercussions’ may be felt in a breach of contract case involving two private parties: this is the effect of the Court’s ruling in Unilever Italia SpA v Central Food SpA.27 So whatever happened to legal certainty? This notion of ‘incidental direct effect’ of Directives deserves examination for what it reveals about the Court’s inconsistent anxiety to preserve private autonomy in the matter of the application of Directives in national legal proceedings. The most vivid case law has been generated by the so-called ‘Notification Directive’. This obliges Member States to give advance notice to the Commission and to other Member States of plans to introduce new product specifications and technical regulations. It is an ‘early warning system’, allowing the Commission to intervene, should it so choose, to forestall the introduction of barriers to inter-State trade in preference to resorting to ex post facto intervention. Prevention, in short, is better than cure.28 The regime, now consolidated in Directive 98/34, which was itself amended by Directive 98/48,29 is on the face of it solely concerned with the relationship between the notifying Member State, the Commission and other Member States. It says nothing about any implications of failure to abide by the requirements set out in the Directive in national legal proceedings. However, the Court stepped in. It has ruled that mishandling of the obligations imposed by the Directive should rob the draft technical regulation of enforceability in proceedings before national courts of the defaulting Member State inasmuch as the application of those draft technical regulations hinders the use or marketing of non-conforming products. In the pioneering judgment in CIA Security International SA v Signalson SA and Securitel Sprl30 this approach deprived the national measure of enforceability in proceedings before national courts involving third parties. A trader was unable to rely on Belgian law to secure a court order against another trader dealing in products (burglar alarms) that were not in conformity with a Belgian technical regulation that had not been notified to the Commission in accordance with the Directive. The Belgian courts were required to disapply the Belgian technical specification without any question of its compatibility with Article 34 27

Case C-443/98 Unilever Italia SpA v Central Food SpA [2000] ECR I-7535. See eg R Munoz, ‘The Development of the Ex-ante Control Mechanism Regarding Implementation of the Internal Market’ in T Tridimas and P Nebbia (eds), European Union Law for the 21st Century—Rethinking the New Legal Order, vol 2 (Oxford, Hart Publishing, 2005) 103. 29 Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations [1998] OJ L204/37; Directive of 20 July 1998 amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulation 98/48/ EC [1998] OJ L217/18, extending this to services, respectively. 30 Case C-194/94 CIA Security International SA v Signalson SA and Securitel Sprl [1996] ECR I-2201. 28

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TFEU being at stake: procedural default in the shape of non-compliance with the early warning system by the Belgian public authorities was enough. Subsequently, in Johannes Martinus Lemmens,31 the Court ruled that a conviction for driving while drunk could not be challenged on the ingenious basis that the equipment for recording the level of intoxication was designed according to standards that had not been duly communicated to the Commission. Here there was no hindrance to the use or marketing of non-conforming products as a result of the application of the national measures, so they did not fall to be treated as unenforceable. So far, so good. In devising this notion of ‘incidental’ direct effect, where a Directive imposing obligations on a Member State has an incidental effect in national legal proceedings by ‘blocking’ the effect of measures to which is attached procedural delinquency by the Member State, the Court was thereby granting the Commission significant support in its quest to achieve effective ‘market management’ under the notification Directive. The penalty of unenforceability before national courts induces Member States to stick to the promise made in the Directive to co-operate with the Commission, and thereby to allow the Commission the chance to make the ex ante review system for technical regulations work effectively. On this ‘effectiveness’ rationale the Court in its ruling in CIA Security was explicit: The effectiveness of Community control will be that much greater if the directive is interpreted as meaning that breach of the obligation to notify constitutes a substantial procedural defect such as to render the technical regulations in question inapplicable to individuals.32

But in my view the Court took a wrong turning in the next key case in this sequence. It is Unilever Italia SpA v Central Food SpA.33 Unilever applies the reasoning pioneered by CIA Security and finessed in Lemmens in proceedings involving a contract between private parties; and the Court’s scrupulous concern to shelter private parties from the horizontal application of Directives, inter alia out of concern for legal certainty, vanishes in such a case of ‘incidental’ direct effect. Unilever had supplied Central Food with a quantity of virgin olive oil. Central Food rejected the goods on the basis that they were not labelled in accordance with a relevant Italian law. This law had been notified to the Commission but Italy had not observed the Directive’s standstill obligation. Unilever submitted that the law should not be applied and sued Central Food for the price of the goods. The Court pointed out that were the Italian rules applied, they would have had the effect of hindering trade in a product not complying with the rules. The Court acknowledged that its own case law denies that a Directive can of itself impose obligations on an individual, but flatly stated that that case law 31

Case C-226/97 Johannes Martinus Lemmens [1998] ECR I-3711. Ibid, para 48. 33 Case C-443/98 Unilever Italia (n 27). 32

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does not apply where violation of the obligations arising under the Directive renders a national measure inapplicable. The Court asserted that the Directive ‘does not in any way define the substantive scope of the legal rule on the basis of which the national court must decide the case before it. It creates neither rights nor obligations for individuals’.34 So, it seems, Central Food would have to accept the goods. The Court is correct in Unilever to point out that were the Italian rules applied, they would have had the effect of hindering trade in a product not complying with the rules. This repeats the core of the Court’s reasoning in Lemmens, which was evidently directed at identifying precisely when the Directive bites in national proceedings. The striking element of the ruling in Unilever is the Court’s readiness to adopt this reasoning even in a case where the impact of the unenforceability of the State measure was felt directly in a contractual dispute between private parties. The Court makes light of this novelty. It observes that in CIA Security it has already held State default under the Directive to be capable of impinging on a dispute between private parties. But this underestimates the differences between the cases. There was no contract in CIA Security. In fact, the Belgian law at stake was a form of quasi-regulatory power, placing in private hands the possibility of taking court action to secure the withdrawal from the market of a product not in conformity with the Belgian law (which had not been notified). In many States this type of power would be exercised by a public body. In Belgium it so happened that a private party performed this function. The Court’s brisk assumption that the factual background of CIA Security was materially similar to that which arose in Unilever because both cases involved a pair of private litigants is not persuasive and it seems that the Court has embraced the application of the notification Directive in a contractual dispute between private parties without fully considering the size of the leap it is making beyond existing case law.35 It has, I think, undermined private autonomy and legal certainty without fully appreciating the novelty involved. The argument that Unilever is not at all a natural follow-up to CIA Security is strengthened when one appreciates that the Court’s reasoning in Unilever places no weight on the enhancement of ‘the effectiveness of Community control’ which the Court in CIA Security had lauded as a consequence of finding the technical rule to be unenforceable. And in Unilever concern for promoting ‘effectiveness’ goes missing because allowing the procedural delinquency of the Italian public authorities to have implications in a private contractual dispute makes precisely no contribution to the effective management of the system of advance notification mandated by the Directive. It does not hurt the State at all. I am, however, not arguing that the Court has in a formal sense done damage to its long-standing refusal to embrace the horizontal direct effect of Directives. If one adopts the view that EU law rejects the possibility that an unimplemented 34

Ibid, para 51. And I criticise it in this vein in S Weatherill, ‘Breach of Directives and Breach of Contract’ (2001) 26 European Law Review 177. 35

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Directive may itself be relied on to impose an obligation on a private party, but that it accepts the possibility that an unimplemented Directive may have the effect of setting aside a rule of national law on which a private party wished to rely, then one has thereby found a rational basis for classifying the case law. This would arguably mean that Unilever should indeed be decided in the same way as CIA Security (and indeed Wells too), for what is at stake is not using an EU Directive as a source of obligations imposed on an individual, but rather using an EU Directive to set aside a provision under national law which provides an individual with some form of legal protection. These are different phenomena— EU law rejects the former but accepts the latter. And after all, the notification Directive did not impose an obligation on Central Food. The contract imposed the obligation. At this level the Court is therefore perfectly justified in treating Unilever as analogous to CIA Security, and as distinct from the case law in which it refuses to attribute horizontal direct effect to Directives.36 For all the formal purity of this analysis, there are, however, in my view, good reasons for drawing the line in a different place, and for embracing CIA Security as a correct decision but taking the view that Unilever should have been treated as a case where an EU Directive did not have an impact on the private litigation involved. That is, I submit that the fact pattern in Unilever, while not one of ‘horizontal direct effect’, raises the same type of concerns and should generate the same outcome—that is, the exclusion of the Directive from national legal proceedings. The powerful arguments which persuade me are connected with the preservation of legal and commercial certainty, and they are set out with vigour and clarity in the Opinion of Advocate General Jacobs in Unilever. It is regrettable that the Court chose not to accept his view; but it is even more regrettable that it chose not even to address his concerns. Put another way, there may well be perfectly good reasons for concluding that traders should not be able to hide behind a cloak knitted from the fabric of legal certainty and that they should instead check carefully for relevant points of EU law that may affect their position, but it is unsatisfying to see such tensions between competing notions of legal certainty and the effective application of EU law left wholly out of judicial consideration. In his Opinion in Unilever Advocate General Jacobs took the view that the Court in CIA Security cannot have intended that the sanction of unenforceability should apply in all types of proceedings between individuals. And he fixed on two important arguments of principle. His analysis is sufficiently in point to deserve extended quotation.

36 See, making exactly this case (which is convincing on its own terms), V Skouris, ‘Effet utile versus Legal Certainty: The Case Law of the Court of Justice on the Direct Effect of Directives’ (2006) 17 European Business Law Review 241. For broader reflection on the competing visions revealed of the relationship between EU and national law, see M Dougan, ‘When Worlds Collide! Competing Visions of the Relationship between Direct Effect and Supremacy’ (2007) 44 Common Market Law Review 931.

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That is, first, because such effects would be difficult to justify in the light of the principle of legal certainty. For the day-to-day conduct of trade, technical regulations which apply to the sale of goods must be clearly and readily identifiable as enforceable or as unenforceable. Although the present dispute concerns a relatively small quantity of bottled olive oil of a value which may not affect the finances of either Unilever or Central Food to any drastic extent, it is easy to imagine an exactly comparable case involving highly perishable goods and sums of money which represent the difference between prosperity and ruin for one or other of the parties concerned. In order to avoid difficulties in his contractual relations, an individual trader would have to be aware of the existence of Directive 83/189, to know the judgment in CIA Security, to identify a technical regulation as such, and to establish with certainty whether or not the Member State in question had complied with all the procedural requirements of the directive. The last element in particular might prove to be extremely difficult because of the lack of publicity of the procedure under the directive. There is no obligation on the Commission to publish the fact that a Member State has notified or failed to notify a given draft technical regulation. In respect of the standstill periods under Article 9 of the directive, there is no way for individuals to know that other Member States have triggered the six-month standstill period by delivering detailed opinions to the Commission. Similarly, the Commission is also not required to publish the fact that it has informed a Member State of intended or pending Community legislation. The second problem is possible injustice. If failure to notify were to render a technical regulation unenforceable in private proceedings an individual would lose a case in which such a regulation was in issue, not because of his own failure to comply with an obligation deriving from Community law, but because of a Member State’s behaviour. The economic survival of a firm might be threatened merely for the sake of the effectiveness of a mechanism designed to control Member States’ regulatory activities. That would be so independently of whether the technical regulation in question constituted an obstacle to trade, a measure with neutral effects on trade, or even a rule furthering trade.  … The only redress for a trader in such a situation would be to bring ex post a hazardous and costly action for damages against a Member State. Nor is there any reason for the other party to the proceedings to profit, entirely fortuitously, from a Member State’s failure to comply with the directive. 37

Therefore, he urged, the technical regulation’s compatibility with Article 34 TFEU should be of relevance to the litigation, but not its mishandling by the Italian public authorities under the notification Directive. I am in sympathy with this argument. Anxiety to protect legal certainty has a clear connection with the normative case in favour of private autonomy, which finds an expression in the Court’s refusal to accept that Directives are capable of horizontal direct effect. Indeed, in Wells, the Court, as mentioned above, explicitly connected preservation of legal certainty with rejection of the horizontal direct effect of Directives. If legal certainty is a compelling reason to reject the horizontal direct effect of Directives, then even if the ‘incidental’ direct effect of Directive is in formal terms a distinct phenomenon—because it causes the 37 Opinion of Advocate General Jacobs in Case C-443/98 Unilever Italia [2000] ECR I-7535, paras 100–01.

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exclusion of national measures in proceedings before national courts, not the insertion of EU measures—it, too, should be rejected for fear of the damage done to legal certainty (as well illustrated by the fact pattern of Unilever itself: the invocation of the Directive completely reversed the outcome of the action for breach of contract). Or at least the Court needs to be more open on why legal certainty appears to carry varying degrees of weight when it comes into collision with the concern to secure the application of EU Directives in proceedings before national courts. Preservation of legal certainty is a general principle of the Union’s legal order, albeit certainly one that carries different weight in different contexts,38 but here it is being applied erratically. The Court’s consistent rejection of the very possibility that Directives may exert horizontal direct effect is understandable as a contribution to the protection of private autonomy. That anxiety to secure such protection appears to vanish in cases of ‘incidental’ direct effect strengthens the overall impression that private autonomy enjoys a mysteriously elusive status in EU law.

V. The Impact of General Principles of EU Law on Private Parties In June 2003, Werner Mangold, a 56-year-old man, entered into a contract to work for Rüdiger Helm, a lawyer. The contract provided that the employment relationship would start on 1 July 2003 and last until 28  February 2004. The reason for this fixed term was rooted in a statutory provision under German law intended to make it easier to conclude fixed-term contracts of employment with older workers (as defined). But was this lawful? Both a relevant Framework Agreement and Directive 2000/78 establishing a general framework for equal treatment in employment and occupation were, it was argued, apt to exclude such a rule that allowed a diminution in the protection of older persons in work when compared with other workers. The Arbeitsgericht München made a preliminary reference to the Court of Justice. Whatever the merits of Mangold’s contention that EU law prohibited in principle such treatment as discrimination based on age, he appeared to face formidable constitutional obstacles to successfully relying on EU law before the German Labour Court. When the contract was concluded in June 2003, the period prescribed for transposition of Directive 2000/78 into national law had not yet expired. Moreover, this was a private employer—wouldn’t Mr Mangold fall foul of the orthodoxy that a Directive is incapable of application ‘horizontally’? The core of the Court’s judgment in Mangold is initially concerned with 38 Eg Case C-469/00 Ravil [2003] ECR I-5053; Case C-209/04 Commission v Austria [2006] ECR I-2755; Case C-212/04 Adeneler [2006] ECR I-6057; Case C-67/09 P Nuova Agricast Srl judgment of 14 October 2010. On the principle’s multi-faceted nature, see T Tridimas, The General Principles of EC Law (Oxford, Oxford University Press, 2nd edn, 2006) ch 6.

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obligations imposed on a Member State during the period prescribed for transposition of a Directive. The Member States must refrain from taking any measures liable seriously to compromise the attainment of the result prescribed by the Directive.39An interesting point—but a relatively narrow one, albeit with some practical purchase in the circumstances in which Mr Mangold found himself. The Court then moved to a much more remarkable scale. It ruled that Directive 2000/78 ‘does not itself lay down the principle of equal treatment in the field of employment and occupation’.40 So what does? The Court found the source of the principle to lie ‘in various international instruments and in the constitutional traditions common to the Member States’,41 and from these seeds it extracted a general principle of law forbidding discrimination on grounds of age. The Mangold judgment has attracted an ocean of comment, much critical, some horrified.42 What are these fertile international instruments and common constitutional traditions which generated this general principle? The Court was not forthcoming: it chose not to name names, and credible suspects are not so easily rounded up. So the parentage of the Court’s newly minted general principle is mysterious. Furthermore, one may inquire how many more such general principles there might be out there, waiting to be found should suitable litigation provide an opportunity for their discovery. What is the scope of application of the principle in Mangold and (consequently) how far does the principle reach into national legal proceedings, and what precisely is expected of the national judiciary—a matter addressed but far from fully resolved by the follow-up judgment in Seda Kücükdeveci.43 For present purposes the short point is that the Court was extraordinarily insouciant about the fact that both parties to the litigation were private parties. The significance of the Court’s constitutional sleight of hand in Mangold was profound in practical terms. It meant that Mr Mangold, seeking to attack the German rules, could rely on this general principle of EU law that was applicable even in relationships between private parties, and in consequence he had no need to trouble himself with limitations of the constitutional reach of Directives. For he no longer needed to rely on the Directive! So the Court’s readiness to find general principles of EU law binding on private parties asks further questions about the coherence of this area of law, in particular its scrupulous rejection of the horizontal direct effect of Directives. Legal certainty is again imperilled. Again one must admit that this is not an instance of EU law providing a right enforceable against a private party—rather, it is an instance of EU law being used to exclude a national rule in the context of a private dispute. But, again, EU law’s invasion of contractual autonomy is troubling. If concern about preservation of private autonomy is at least part of the mix 39

First elaborated in Case C-129/96 Inter-Environnement Wallonie [1997] ECR I-7411. Ibid, para 74. 41 Ibid. 42 For a balanced assessment of the issues and the literature, see M Dougan, ‘In Defence of Mangold?’ in A Arnull, C Barnard, M Dougan and E Spaventa (eds), A Constitutional Order of States? Essays in EU Law in Honour of Alan Dashwood (Oxford, Hart Publishing, 2011) 219. 43 Case C-555/07 Seda Kücükdeveci [2010] ECR I-365. 40

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of motivations that have led the Court to rule out the horizontal direct effect of Directives, then that concern seems to vanish utterly in Mangold. Properly so, perhaps. There are intriguing and powerful arguments in favour of injecting standards protecting the individual from discriminatory treatment into the private sphere, not merely allowing such protection to reign in the public sphere. At national level and at EU level some truly fascinating descriptive and normative work has been directed at the case for and against the ‘constitutionalisation’ of private law.44 What is dismaying about Mangold is not so much that this scholarly literature is ignored in the judgment (one would not normally expect or even want a judgment to resemble a fully referenced academic paper), but rather the brief, superficial and wholly unreflective embrace of this general principle, and in particular its unexplained application in a private employment relationship.

VI. The Liability of Individuals to Pay Compensation for Loss Caused when They Act in Violation of EU Law The Court’s ruling in Francovich and Others v Italian State stands as one of its most constitutionally audacious.45 Ostentatiously citing the heroic cases—Van Gend en Loos, Costa v ENEL, Simmenthal, Factortame—it argued that ‘the principle whereby a State must be liable for loss and damage caused to individuals as a result of breaches of Community law for which the State can be held responsible is inherent in the system of the Treaty’.46 This is as strong an assertion as can be found in the Court’s case law of its determination to ‘constitutionalise’ EU law: to insist that EU law has important things to say about how, when and why national legal orders shall give effect to its requirements. The Court has subsequently expanded on the criteria that govern liability under this remedy mandated by EU law and provided by national courts. Famously it has declared that Community law confers a right to reparation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties.47

And, given the opportunity, it has provided guidance on what is at stake in 44 See eg C Mak, Fundamental Rights in European Contract Law. A Comparison of the Impact of Fundamental Rights on Contractual Relationships in Germany, the Netherlands, Italy and England (Alphen aan den Rijn, Kluwer Law International, 2008). 45 Joined cases C-6/90 and C-9/90 Francovich and Others v Italian State [1991] ECR I-5357. 46 Ibid, para 35. 47 Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheurv Germany and R v Secretary of State for Transport, ex parte Factortame Ltd [1996] ECR I-1029, para 51.

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determining whether the applicable criteria are met.48 Then in Köbler it added that it is in principle possible for a State to incur liability for an infringement of EU law by a decision of a national court adjudicating at last instance, albeit that this would arise only in the exceptional case where the court has manifestly infringed the applicable law.49 And in Courage v Crehan the Court decided it would not limit the scope of application of this principle to infractions by the public authorities of the Member States.50 The case concerned an alleged violation of the Treaty competition rules by a private party. But the Court did not hesitate to extend the remit of the principle it had crafted in Francovich. It ruled: The full effectiveness of Article [101] of the Treaty  … would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition. Indeed, the existence of such a right strengthens the working of the Community competition rules and discourages agreements or practices  … which are liable to restrict or distort competition.51

This is true. However, there are arguments that militate against extending the principle of liability into the private sphere, such as the need to avoid upsetting delicate balances struck over time and in the light of experience under national law governing compensatory remedies. None of these counter-arguments gain any recognition in the Court’s judgment. The shift from public authority to private party is accomplished with barely an acknowledgement. Here, then, is an instance where anxiety about respect for zones of private autonomy is completely missing. It is relevant, too, that an extension in EU law is in principle a matter for the Court in Luxembourg, but in practice may be driven by national courts. The Court’s controversial rulings in Viking Line and in Laval were mentioned above.52 In the former, the litigation, pursued before English courts, was settled out of court shortly after the Court’s ruling, but in the latter a successful claim was advanced before the Swedish courts for damages to compensate the company for violation of primary EU law. So the Swedish court found that breach of the Treaty provisions governing free movement may generate a responsibility imposed on private parties to pay compensation.53 This may be reckoned a logical extension of what the Court in Luxembourg decided in Courage v Crehan—but it certainly is an extension, and one that increases the fear that EU law operates as a significant deterrent against the exercise of rights to take industrial action. And it is moreover arguable that it extracts too much from a judgment, Courage 48 Eg Case C-452/06 ex parte Synthon BV [2008] ECR I-7681; Case C-392/93 R v HM Treasury, ex p British Telecommunications [1996] ECR I-1631; Case C-470/04 N [2006] ECR I-7409. 49 Case C-224/01 Köbler [2003] ECR I-10239. 50 Case C-453/99 Courage v Crehan [2001] ECR I-6297. 51 Ibid, paras 26–27. 52 Case C-438/05 Viking Line and Case C-341/05 Laval (n 4). 53 For comment, see U Bernitz and N Reich, Annotation (2011) 48 Common Market Law Review 603; B Rönnmar, ‘Laval Returns to Sweden’ (2010) 39 Industrial Law Journal 280.

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v Crehan, which is not drafted in a style apt for ‘generalisation’ of an EU principle of liability incurred by private parties but is instead carefully constructed around the particular context of competition law.54 Appeal to ‘effectiveness’ causes EU law to spread: Courage v Crehan offers a particularly powerful example. In this instance counter-arguments rooted in preservation of private autonomy and of the particularities of national liability rules carry no weight at all. The Court pushes EU law into matters pertaining to remedies available in disputes between private parties before national courts at the expense of both national autonomy and the neglected and even undermined role of the EU legislator.

VII. Conclusion This chapter does not aspire to provide an exhaustive mapping of the place of private autonomy in EU law. It does not even aspire to complete a much narrower project, to examine perceptions of and reliance upon private autonomy in the case law of the Court. Nor should it be read as a criticism of the Court for having failed to provide a coherent and consistent account in its rulings of exactly where and why respect for private autonomy fits within the structure of EU law. That job is simply unfeasible given the absence of any such coherent attempt in the Treaty itself to supply a principled understanding of the legitimate claims of private parties to autonomy and would, in any event, make demands that go beyond those reasonably made of the judicial function. What this chapter has tried to show is that a vision of the importance of private autonomy is elusive in EU law and in the case law of the Court in particular. Sometimes, in its own right or in the guise of concern to protect legal certainty, it is a driving concern; on other occasions it must bow to pursuit of other concerns, most prominently the ‘effectiveness’ of EU law, whereupon EU law tends to spread into the private sphere where it may cause unforeseen turbulence. Albany International allows that pursuit of social policy ends may be apt to curtail the intervention of competition law into collective agreements between management and labour; the law governing the free movement of goods has been developed under an understanding that the activities of private parties are excluded from its personal scope; and the refusal of the Court to treat Directives as capable of horizontal direct effect is based on both constitutional concerns about the scope of application of EU law in national legal proceedings and protection of legal certainty. These are instances in which private autonomy prevails. 54 See eg D Leczykiewicz, ‘Private Party Liability in EU Law: In Search of the General Regime’ (2009–10) 12 Cambridge Yearbook of European Legal Studies 257.

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But elsewhere ‘effectiveness’ dominates. It drives the application of EU free movement law into the private sphere. Walrave and Koch provides an early example of that impetus, and it has been sustained for over thirty years in the elaboration of free movement law—except in relation to the free movement of goods, although, as explained, even that may be about to change. Courage v Crehan is driven by concern to recruit private parties seeking damages to improve the effective application of the Treaty competition rules. CIA Security’s penalty of unenforceability before national courts is designed to induce Member States to act properly under the Notification Directive, thereby permitting the Commission effective oversight of planned regulatory interruption to cross-border trade, and Unilever has extended such intervention by EU law into private contractual disputes. The identification of a general principle of EU law which forbids age-based discrimination in Mangold is not explicitly driven by ‘effectiveness’, though the judgment does direct the national court to ensure that the relevant rules of EU law are fully effective in the litigation pursued before it. Mangold is, however, readily understood as a judgment that is concerned more to assert an extended scope of application of EU law than to preserve a zone of private autonomy. So to conclude the chapter where it began: some aspects of EU law appear to be influenced by the normative claim for private autonomy from the law, whereas others are much less impressed by such a claim and seem instead to reveal readiness to push wider and deeper the reach of EU law, particularly in the name of the especially important notion of ‘effectiveness’, which is vigorously pursued by the Court in its shaping of EU law.

3 The European Union, its Member States and their Citizens MONICA CLAES

I. Introduction The title of this chapter may seem to suggest that it does not entirely fit a volume on the involvement of EU law in private law relationships. Indeed, its terminology rather seems to address an audience of EU, constitutional or public lawyers, using their paradigms, concepts, assumptions, and beliefs about the respective role of the EU and of the Member States and the manner in which they relate to individuals as citizens. The relationship between the EU and its Member States is situated at the heart of the fields of European institutional law and of national constitutional law, the field that has more recently become known as ‘European constitutional law’.1 While the concept of ‘citizens’ does bring private individuals into the equation, it does so in their capacity of ‘citizens’, in other words, of individuals endowed with rights and obligations visà-vis public authorities (vertically), rather than as ‘private individuals’ or ‘parties’ entering into legal relationships among themselves (horizontally). Nevertheless, the focus will be on so-called ‘private law relationships’ between private individuals, and accordingly, on the area of law traditionally known as ‘private law’. At this stage, it is important to emphasise that the concept ‘private law’ in this chapter is used to denote that part of the law which is administered between citizen and citizen, or which is concerned with the definition, regulation, and enforcement of rights in cases where both the person in whom the right inheres and the person upon whom the obligation is incident are private individuals.2

The decisive criterion used to identify the field, therefore, is the object of the rules and norms, ie the type of relationships they seek to govern, rather than

1 On this concept, see also M Claes, ‘Constitutional Law’ in JM Smits, Encyclopaedia of Comparative Law (Cheltenham, Edward Elgar, 2012) 223. 2 HC Black, Black’s Law Dictionary, 2nd edn (New Jersey, The Lawbook Exchange Ltd, 1995) 941.

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on their source, public or private.3 To a large extent, and in the same way as any other field of law, these rules and norms are to a large extent made (or at the very least: allowed or indulged by public authority) and enforced by public authority, traditionally the State.4 This is the old ‘all law is public law’ argument, which negates any special status for private law per se. Other conceptions of the specificity of private law of course exist, conceiving of private law as law ‘made by private individuals’ and stressing the autonomy of private parties. These would see the role of the state restricted to that of an arbiter between private parties. Yet I will use the conception of private law which focuses on the object and addressees of private law, and sees private law as the area of the law made for private individuals, as ‘the law that governs the mutual rights and obligations of individuals, both natural and legal persons’,5 and which includes such grand areas of law as contract, tort and property law, as well as family law, consumer protection and sometimes also labour law. The crucial distinction between private law and the other traditional area of the law, public law (including constitutional, administrative and criminal law), is that it relates to horizontal relationships between individuals, while public law governs the vertical relationship between individuals on the one hand and the state on the other, as well as relationships among state authorities. This is admittedly a formalistic criterion, but it has the advantage of clarity. The main focus of attention of this contribution is on the involvement of EU law in ‘private law relationships’. As I will explain further on, I prefer to refer to these relationships as ‘horizontal relationships between private individuals’. The citizen referred to in the title will therefore have to make room for his private law alter ego, the ‘private individual’ or ‘private person’, including also legal persons, undertakings and companies. Towards the end of this chapter, I will bring the citizen and hence the public law perspective back into the picture. This volume enquires into the appropriateness at the constitutional level of the involvement of EU law in private law relationships and asks how this involvement can be normatively justified. In a slightly provocative way, I will turn the 3 On the definition of private law in the context of European private law and on private lawmaking in that context, see also H Muir-Watt and F Caffaggi, ‘The Making of European Private Law: Regulation and Governance Design’, European Governance Papers EUROGOV, No N-07-02 (2007); F Caffaggi, ‘Private Regulation in European Private Law’ in A Hartkamp, M Hesselink, E Hondius, C Mak, and E du Perron (eds), Towards a European Civil Code (Alphen aan den Rijn, Wolters Kluwer, 2011); F Caffaggi and H Muir Watt, Making European Private Law: Governance Design (Cheltenham, Edward Elgar, 2008). 4 Today, of course, the law no longer derives exclusively from the state. Private law relationships too may be governed directly by other public sources of law such as the EU. The point I am making here relates to the public/private divide, rather than to the idea of ‘private law beyond the state’ or ‘private law in a post-national constellation’. See eg R Michaels and N Jansen, ‘Private Law Beyond the State? Europeanization, Globalization, Privatization’ (2006) 54 American Journal of Comparative Law 843; M Zürn, ‘The State in the Post-national Constellation—Societal Denationalization and Multi-level Governance’, Arena Working Paper No 35/1999; N Jansen and R Michaels, Beyond the State: Rethinking Private Law (Tübingen, Mohr Siebeck, 2008); Cafaggi and Muir-Watt, above n 3. 5 C Twigg-Flesner, ‘Introduction: Key Features of European Union Private Law’ in C TwiggFlesner, European Union Private Law (Cambridge University Press, 2009) 1.

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question around: why should EU law not be involved in private law relationships? Why would the EU need additional justification to be so, in a way that states and national law presumably do not? In other words: is there anything in the essence of the EU and EU law to prevent its involvement in relationships between private parties? And conversely, is there something in the essence of private law that would preclude as a matter of principle the involvement of the EU in the matters governed by it? In legal terms, the question of the appropriateness of EU law action is first and foremost one of competence and jurisdiction of the EU and, hence, of the division of competences between the EU and its Member States. The short answer would be, then, that if a legal basis for EU action is available in the Treaties, the involvement of EU law is ‘appropriate’ or legally justified, if the requirements of subsidiarity and proportionality are also complied with, as laid down in Article 5 TEU. Whether these conditions are fulfilled will have to be established each time the EU acts, but there seems to be no a priori legal reason why such EU legislation should not concern ‘private law relationships’ as well. Nevertheless, the debate among private lawyers is often not framed in terms of competence of the EU, and the suggestion is frequently made that there is something in the nature of private law that objects to the direct involvement of EU law as a matter of principle. In other words, the resistance against the involvement of EU law in private law relationships goes much deeper than the mere question of competence (including the principles of subsidiarity and proportionality). The aims of this chapter are twofold. First, it seeks to understand and explain resistance among private lawyers to the involvement of the EU in ‘private law relations’. Second, an attempt is made to rephrase the central question of the appropriateness of this EU involvement in constitutional terms, which relate, ultimately, to who does what in a polity and in society, how and within which limits. The purpose of such a reformulation is to allow for a straightforward answer to the question of the legal appropriateness of EU involvement in ‘private law relationships’.6 The central claim of the chapter is that the core of the question concerning the involvement of EU law in private law relationships is situated at a crossroads of a number of different phenomena: (1) the Europeanisation of national law; (2) the constitutionalisation of private law (also known as the expansion of fundamental rights in horizontal relationships); and (3) the changing public/private divide and the concurring trends of the deregulating and reregulating state. Each of these phenomena is concerned first and foremost with the changing role of the state in modern-day society and each challenges core features of classic private law. While the first trend is concerned with the EU specifically, the other two occur both at the national and the European level, but not always in the same way. This in itself may cause unease. It is precisely the synchronicity of these 6 To be sure, the fact that the EU has competence to legislate in an area or to intervene in private law relationships is not conclusive on the desirability of such intervention.

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three phenomena in the field traditionally occupied by national private law and by private lawyers that causes confusion, concern and resistance against the involvement of EU law in relationships among individuals. If the central issue of EU law involvement in ‘private law relationships’ is approached from the angle of the question of the division of power between the EU and its Member States, and the role of the political and the judicial branches of government, it becomes apparent that one of the main reasons for concern is the manner in which the Court of Justice has recently interfered in private law relationships. In doing so, the Court of Justice not only restricts the Member States when governing private law relationships, it interferes in a manner that seems more intrusive of private autonomy than state intervention has traditionally been. The chapter will proceed as follows. In the first section, each of the three phenomena challenging classic private law will briefly be discussed: the Europeanisation of private law; the constitutionalisation of private law; and the changing public/private divide. The second section changes the lens through which the core question of EU involvement is addressed to that of the division of competences between the EU and its Member States and between court and political branches. The final section discusses the core question of the appropriateness and legitimacy of the involvement of the EU in private law relationships. Before embarking on the discussion, however, I will begin with a quibble on the main theme of the present volume, which speaks of ‘the involvement of EU law in private law relationships’. The reference to ‘private law relationships’ suggests a clear distinction between ‘private law’ and other areas of law. The focus on ‘private law’, however, may not be very convincing. It may lead to confusion and comes with the danger of bias or tunnel vision. I see three main reasons against the qualification of the question as one of ‘private law’, and against recourse to the division between private law and public law in this context. First, the division between private law and other fields of law in general is artificial and in a sense arbitrary. ‘Fields of law’ are artefacts, created by lawyers themselves (especially in universities) and do not correspond to a pre-existing reality. Even though it may be deeply engrained in the minds of lawyers, and while it may be part of legal education, the insistence on the ‘autonomy’ and separateness of private law is not convincing. The division between private law and public law is different in different legal systems and traditions, and there is therefore no fixed, let alone European-wide, meaning of ‘private law’.7 This is a well-known theme in comparative law, which demonstrates that in the context of the EU, which necessarily deals with at least 27 domestic legal systems, the divide is tricky at least. Moreover, the focus on fields of law tends to narrow our critical thinking about the substantive questions we are addressing. Of course, the particular settings and traditional areas raise questions of their own, which may hardly ever or almost never arise in other fields of law. Yet this should 7 On the concept of ‘private law’ in comparative law see among others Michaels and Jansen (n  4).

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not distract from the substance of the question raised, in this case, whether it is appropriate and normatively justified for the EU to be involved in (horizontal) relationships between private individuals. To refer to these relationships as ‘private law relationships’ introduces a bias against the involvement of EU law in them. Second, while the EU Treaties do sometimes make reference to the idea of ‘private law’8 and ‘public law’,9 the public law/private law divide is not part of the grammar of EU law. Instead, when relationships between private parties are concerned, the reference will usually be to ‘horizontal’ relations, such as in the context of ‘horizontal direct effect’.10 While this is admittedly only one element of the traditional distinction between private law and public law, and therefore may not be sufficiently sophisticated to analyse the divide in all its aspects, it is the basic grammar of EU law.11 To be sure, this is not to say that EU law negates the public/private divide itself. The concepts of ‘public authority’, ‘private party’, ‘public interest’, ‘public policy’ and ‘private sector’ all belong to the vocabulary of EU law. In addition, the public/private divide is very much present also in the context of EU law, and in turn may affect the national divide. Yet the division between private law and public law as separate fields of law, which are in principle autonomous, necessarily follow their own logic and relate differently to EU law as a matter of principle, is not. Third, and put in a normative way, it does not seem useful and desirable to cling to the traditional division between public and private law, at least not as 8 Art 54 TFEU in the chapter on the right of establishment makes a reference to private law (and public law) when defining ‘companies or firms’ for the purpose of the freedom of establishment: ‘companies or firms’ means companies or firms constituted under civil or commercial law, including co-operative societies, and other legal persons governed by public or private law, save for those which are non-profit-making’. The term ‘private law’ does not seek to distinguish specific companies. On the contrary, the reference to ‘governed by private or public law’ intends to include all types. Art 272 TFEU equally mentions ‘private law’ together with public law, in order to indicate that the Court of Justice of the EU has jurisdiction to give judgment pursuant to any arbitration clause contained in a contract concluded by or on behalf of the Union, whether that contract be governed by public or private law. Art 35.4 of Protocol No 4 On the Statute of the European System of Central Banks and of the European Central Bank states that the Court ‘shall have jurisdiction to give judgment pursuant to any arbitration clause contained in a contract concluded by or on behalf of the ECB, whether that contract be governed by public or private law’. In no other provision of the Treaties is the term ‘private law’ used. And in fact, in all cases in which it is used, it is used to stress that the public law/private law divide made under national law is irrelevant in the context of the Treaties. 9 Arts 123–25 TFEU refer to ‘public authorities, other bodies governed by public law, or public undertakings of Member States’. 10 The terminology of ‘horizontal direct effect’ is shorthand for the situation in which an individual invokes a provision of EU law (and not its implementation in national law) against another individual, ie in a horizontal relationship. The Court of Justice of the EU usually paraphrases and only occasionally uses the shorthand terminology: see eg Case C-192/94 El Corte Ingles [1996] ECR I-1296. Nevertheless, it is standard terminology in Opinions of AG (see Case C-282/10 Maribel Dominguez, Judgment of 24 January 2012), submissions by parties before the Court of Justice (see Case C-180/04 Vassallo [2006] ECR I-7254) and references from national courts (see Case C-132/11 Tyrolean Airways Tiroler Luftfahrt Gesellschaft mbH v Betriebsrat Bord der Tyrolean Airways Tiroler Luftfahrt Gesellschaft mbH, pending) as well as in legal writing, see eg M de Mol, ‘The Novel Approach of the CJEU on the Horizontal Direct Effect of the EU Principle of Non-discrimination: (Unbridled) Expansionism of EU Law?’ (2011) 18 Maastricht Journal 109. 11 A similar idea is conveyed in Cafaggi and Muir-Watt (n 3) 2.

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a matter of principle. Public and private law have much more in common than the insistence on their separateness suggests.12 Both public and private law are ultimately concerned with controlling the exercise of power, whether by public authorities, private bodies or persons, and both aim to protect certain vital interests of private persons as well as the general interest; moreover, similar values and principles of justice underpin both public and private law, such as human dignity, equality and the rule of law.13 Private law and public law, therefore, are not as different as is sometimes suggested. To be sure, the legal techniques may be different, the concepts often diverge and similar notions receive different labels, and the perspective and emphasis is often different.14 The run-of-the-mill case of private law will be concerned with private interests in the private sphere, and public law is typically concerned with public interest in the public sphere. But at the end of the day, they are often concerned with the same aspects of the human condition and its attendant relations. In the context of this chapter, I will accordingly speak about ‘horizontal relationships’ or ‘relationships between individuals’ rather than ‘private law relationships’.

II. Three Challenges in the Classical Field of Private Law A. The Europeanisation of Law One of the main themes of the past decades in all classic areas of the law has been the increased impact of European law on national law, both substantively and 12 This is very nicely illustrated and convincingly argued in D Oliver, Common Values and the Public–Private Divide (London, Butterworths, 1999) ch 1. 13 To be sure, this is not generally accepted. Some private lawyers will argue that the essence of the distinction between private law and public law is that private persons do not need to pursue public interests: they are autonomous and can make their own choices. The behaviour of individuals in the private sphere in principle rests on free choice. In order to be able to make that point, these commentators will focus on contract, tort and property and leave out family law, which is characterised by a high level of public policy considerations: see eg JM Smits, ‘Private Law and Fundamental Rights: A Sceptical View’ in T Barkhuysen and SD Lindenbergh (eds), Constitutionalisation of Private Law (Leiden, Martinus Nijhoff, 2006) 11. To me, this is a sliding scale, rather than a strict distinction between separate spheres. More importantly, the fact that private law is generally less concerned with the general interest and public policy, does not mean that as a matter of principle, public values should never play a role in private law. 14 In addition, and importantly, the worlds of private lawyers and public lawyers are separate. These are separate legal fields, each with their own chairs, societies, journals, traditions, etc. Each of these national legal fields is Europeanising and transnationalising, but not necessarily at the same speed and in the same way. See eg DM Trubek, Y Dezalay, R Buchanan and JR Davis, ‘Global Restructuring and the Law: Studies of the Internationalisation of Legal Fields and the Creation of Transnational Arenas’ (1994) 44 Case Western Reserve Law Review 407; B De Witte and A Vauchez (eds), The European Legal Field (Oxford, Hart Publishing, 2012 forthcoming).

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procedurally.15 The ‘Europeanisation’ of the law and national legal orders refers to the much-debated phenomenon that more and more often, national law finds its origins in EU law. The EU imposes obligations on Member States to adapt national legislation and legal practices, thus restricting the margins for national law to develop independently. European law is ‘downloaded’ into national law. To quote the famous words of Lord Denning, ‘when we come to matters with a European element, the Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back.’16 The process of Europeanisation, however, goes beyond cases in which the EU imposes a legal obligation on the Member States to adapt national law.17 In a much broader sense, especially in political and social science literature, it is taken to include a process involving the construction, diffusion and institutionalisation of formal and informal rules, procedures, policy paradigms, styles, ‘ways of doing things’, and shared beliefs and norms which are first defined and consolidated in the EU policy process, and then incorporated into the logic of domestic (national and subnational) discourse, political structures and public choices.18 In addition, Europeanisation includes complex processes of horizontal adaptation, mimicking, emulation, benchmarking, spontaneous convergence as well as processes whereby decidedly non-European subjects adopt a number of European (read: shared) features. In the same way as EU law has ‘invaded’ the areas of administrative, criminal law, environmental law and constitutional law, it has also affected the part of the law which is traditionally referred to as private law, the law that regulates the relations between private individuals. Alluding to the well-known phrase of Koen Lenaerts that ‘[t]here simply is no nucleus of sovereignty that the Member States can invoke, as such, against the Community’, a statement which remains contested to this day,19 it does seem fair to say that there is simply no area of national law today that has remained unaffected by the EU. 15 See eg F Snyder (ed), The Europeanisation of Law: The Legal Effects of European Integration (Oxford, Hart Publishing, 2000); JH Jans et al, Europeanisation of Public Law (Groningen, Europa Law Publishing, 2007); S Prechal et al, Europeanisation of the law: consequences for the Dutch judiciary, available at www.rechtspraak.nl/English/Publications/Documents/europeanisation-of-the-law. pdf; C Twigg-Flesner, Europeanisation of Contract Law. Current Controversies in Law (Cavendish, Routledge, 2008); JM Smits, ‘The Europeanisation of National Legal Systems: Some Consequences for Legal Thinking in Civil Law Countries’ in M Van Hoecke (ed), Epistemology and Methodology of Comparative Law (Oxford, Hart Publishing, 2004) 229; JAE Vervaele, ‘The Europeanisation of Criminal Law and the Criminal Law Dimension of European Integration’ in P Demaret, I Govaere and D Hanf (eds), European Legal Dynamics. 30 Years of European Legal Studies at the College of Europe (Brussels, PIE-Peter Lang, 2005) 277. 16 HP Bulmer Ltd v J Bollinger SA [1974] Ch 401, 418. Later he would say: ‘No longer is European law an incoming tide flowing up the estuaries of England. It is now like a tidal wave bringing down our sea walls and flowing inland over our fields and houses—to the dismay of all’: see Introduction to G Smith, The European Court of Justice: Judges or Policy Makers? (London, Bruges Group, 1990). 17 It is much more encompassing, therefore, than ‘harmonisation’, convergence and even uniformisation of national law. 18 CM Radaelli, ‘The Europeanization of Public Policy’ in K Featherstone and CM Radaelli (eds), The Politics of Europeanization (Oxford, Oxford University Press, 2003) 27. 19 Think, for instance, of the recent attempts of several constitutional courts to list essential state functions and their (re)discovery of the concept of sovereignty as a constitutional limit to European

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As a consequence of Europeanisation, new fields of expertise have seen the light of day within the traditional areas of law, with their own journals, experts and chairs: European constitutional law, European administrative law, European criminal law and so indeed European private law. These are, in fact, not complete and self-standing areas of law, but rather specialisations or special divisions within the traditional fields. There is also no classic area of national law that has not opposed this incoming tide of European law. European law and the broader process of Europeanisation are often considered to ‘infect’ or ‘mess up’ the coherence of the national system of law, to question existing approaches, and to not respect the existing legal techniques and mechanisms. Resistance to EU law is often due to the fact that it is considered as foreign law, imposed from ‘above’, from the outside or from Brussels. It is perceived as introducing ‘legal irritants’ in a previously coherent system of domestic law. Finally, it has not gone unnoticed that there is a form of competition between the classic scholars and those interested mainly in the element of Europeanisation within the field. It is often lamented that EU law was originally not intended to have any impact on relationships between individuals, and that the gradual and incremental intrusion of the EU in horizontal relationships is for that reason alone suspect and illegitimate. It can be agreed that at the time when the European treaties were originally drafted, international treaties were usually not meant to regulate relationships between private individuals. Much more than is the case today, treaties concerned first and foremost the relationship among states and other subjects of international law. Nevertheless, this does not make it impossible as a matter of principle that the European Treaties and the law deriving from them could and would affect the relationship between individuals among themselves. Nor does it seem very likely that it was rejected at the outset that the Treaties would affect relationships between private individuals. Indeed, the founding treaties themselves included provisions dealing directly with relationships between individuals, eg in the field of competition law (then Article 85 EEC) and equal pay for men and women (Article 119 EEC). While both provisions may not immediately concern the heart of private law (contract, tort and property), they do affect horizontal relationships. In addition, the core of the original treaties, namely the provisions on free movement, has an impact on horizontal relationships. It has been argued that the Treaty of Rome was exclusively public in inspiration and scope and that ‘[a]t least in principle, the four freedoms the Treaty was meant to ensure—namely, the free transborder movement of goods, services, people and capital—could be achieved without reference to the substance and structure of the civil codes’.20 While there may be some truth in integration. See J Murkens, ‘“We Want Our Identity Back”—The Revival of National Sovereignty in the German Federal Constitutional Court’s Decision of the Lisbon Treaty’ [2010] Public Law 530; M Wendel, ‘Lisbon Before the Courts: Comparative Perspectives’ (2011) 7 European Constitutional Law Review 96. 20 D Caruso, ‘The Missing View of the Cathedral: The Private Law Paradigm of European Legal Integration’ (1997) 3 European Law Journal 3, 9.

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this, in the sense that it may not have been obvious that EU law would invade deeply into the core of the traditional fields of private law such as contract, tort and property, it must have been clear from the very beginning that the basic rules on free movement would affect relations between private individuals, eg importers and exporters, competitors on the market, etc.21 Certainly, because of their nature as treaty provisions and their substance, prohibiting obstacles to the common market, the free movement provisions concerned subjects traditionally handled by executive bodies, such as import duties and licenses, and would routinely come within the public law field. And of course, in horizontal relationships this impact would be visible mostly in trans-border contracts, or in cases in which a foreign or cross-border element was present and which, prior to the creation of the Communities, would be governed by private international law. Yet it seems an exaggeration and therefore erroneous to state that the Treaty of Rome was ‘exclusively public in inspiration and scope’.22 The arguments against the Europeanisation of private law in particular23 are well rehearsed. They are mainly centred around four types of criticism.24 A first critique focuses on doctrinal discomfort and preoccupations: EU law upsets the perceived traditional coherence of domestic private law, as well as the legal doctrines, mechanisms and tools—its entire framework, as it were. A second set is similar to the argument opposing legal borrowing and transplants in comparative law, and relates to legal culture. Private law, then, is seen as an expression and affirmation of the national cultural heritage, of national traditions and even of the very identity of the nation state. Any challenge thereof from the outside is viewed with suspicion and considered a threat. The third critique has been voiced among others by Schmid, who argues that Europeanisation brings about a paradigmatic shift in the basic function of private law.25 Balancing the interests of the parties to a legal relationship in a fair and just way becomes superseded and displaced by the collective objectives of European integration. He speaks of the ‘instrumentalisation’ of private law, reflecting private 21 For an early acknowledgment of the impact of EU law on private law see W Hallstein, ‘Angleichung des Privat- und Prozessrechts in der Europäischen Wirtschaftsgemeinschaft’ [1964] Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ) 211. 22 Caruso (n 20) 9. 23 On the Europeanisation of private law see among many others L Miller, The Emergence of EU Contract Law: Exploring Europeanization (Oxford, Oxford University Press, 2011); R Brownsword, H-W Micklitz, L Niglia and S Weatherill, The Foundations of European Private Law (Oxford, Hart Publishing, 2011); C Twigg-Flesner, The Europeanisation of Contract law: Current Controversies in Law (London, Taylor & Francis, 2008); R Zimmermann, ‘Comparative Law and the Europeanization of Private Law’ in M Reimann and R Zimmermann (eds), The Oxford Handbook on Comparative Law (Oxford, Oxford University Press, 2008) 539; C Joerges, ‘The Challenges of Europeanization in the Realm of Private Law: A Plea for a New Legal Discipline’ (2004) 14 Duke Journal of Comparative and International Law 149; C Joerges, ‘On the Legitimacy of Europeanising Private Law: Considerations on a Justice-making Law for the EU Multi-level System’ (2003) 7 Electronic Journal of Comparative Law 3, available at www.ejcl.org/ejcl/73/art73-3.html. 24 See Caruso (n 20). 25 CU Schmid, ‘The Thesis of the Instrumentalisation of Private Law by the EU in a Nutshell’ in C Joerges and T Ralli (eds), European Constitutionalism without Private Law. Private Law without Democracy, Arena Report No 3/11, RECON Report No 14, 17, at 17–18.

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law’s submission to such European policy objectives. Alongside the central objective of establishing the European internal market, these objectives include, most importantly, the protection of consumers, workers, small- and medium-sized enterprises, the industry, the environment, as well as non-discrimination policy.26 And while instrumentalisation of private law exists also in a national context, excessive instrumentalisation, so Schmid’s core thesis goes, occurs more often at the European level than at national level. Finally, the explanation offered by Daniela Caruso is more subtle: the deep discomfort with the Europeanisation of private law derives from the fact that European pressure shakes the presumption of the neutrality of private law and drives home to the Member States just how much of their sovereignty is at stake in surrendering national control of private law. While this is much more hidden than in the case of public law, private law always involves policy choices. The balance struck may be different, the responsibility for striking the balance may lie elsewhere, and the mechanisms and tools for doing so may be changed. Harmonisation of private law ‘is pressuring national law-makers to rethink aloud, in politically accountable parliamentary arenas, the underlying goals of their private law doctrines. It is this pressure, more than anything else, which Member States are resisting’.27

B. The Constitutionalisation of Private Law The constitutionalisation debate refers, among private lawyers, to the intrusion of (constitutional) fundamental rights in horizontal relationships.28 In public law circles, this same debate is known as the horizontal application of human rights, the third party effect of human rights, or the Drittwirkung of fundamental rights.29 Whatever the qualification, there seems to be general agreement 26 CU Schmid, Die Instrumentalisierung des Privatrechts durch die Europäische Union (BadenBaden, Nomos, 2010), see also the papers of the colloquium devoted to Schmid’s Habilitation thesis: C Joerges and T Ralli (eds), European Constitutionalism without Private Law; Private Law without Democracy (Oslo, Arena, 2011). 27 Caruso (n 20) 29. 28 I would like to point out here that the use of the concept ‘constitutionalisation’ is therefore fundamentally different from the way it is used in EU law and European constitutional law, where ‘constitutionalisation’ refers to the injection of constitutional values or the values of constitutionalism into EU law, leading to the transformation of the EU from a more classic international organisation into a polity governed under the rule of law, which is bound by the same values of constitutionalism as its Member States. The concept has also been used to denote the (failed) process of the adopting a Constitution for Europe in formal terms, or, in a more metaphorical way, the incorporation of rules into primacy EU law (the Treaties and the Charter). In the latter sense, ‘constitutionalisation’ in fact stands for ‘treatisation’. Finally, and changing the perspective to national constitutions, ‘constitutionalisation’ may refer to the incorporation of EU law into national constitutions. 29 For comparative analyses, see the Opinion of AG Trstenjak in Case C-282/10 Dominguez, above n 10. See also T Barkhuysen and S Lindenbergh (eds), Constitutionalisation of Private Law (Leiden, Brill, 2006); D Oliver and J Fedtke (eds), Human Rights and the Private Sphere—A Comparative Study (London, Routledge-Cavendish, 2006); A Sajó and R Uitz (eds), The Constitution in Private Relations—Expanding Constitutionalism (Utrecht, Eleven International Publishing, 2005); M Tushnet, ‘The Issue of State Action/Horizontal Effect in Comparative Constitutional Law’ (2003)

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that the pedigree of fundamental rights is vertical relationships between the state and private individuals. Fundamental rights in their original meaning and purest sense set limits on the actions of public authorities and grant individuals claims first and foremost to non-interference by public authority in order to have their liberty protected or, more recently, to positive action on the part of the state. They are part of the core of the concept of constitutionalism and limited government, and hence fall squarely in the domain of public law (occupied by public lawyers). Nevertheless, a broader understanding of fundamental rights recognises that in a time of globalisation and increase of private power, fundamental rights would be of limited relevance if they were only binding on states.30 Fundamental rights are then considered to affect entire spheres of life, including the sphere of private individuals among themselves. Besides subjective rights protecting against public power, fundamental rights are also objective elements of the constitution according to which entire spheres of life are constrained.31 Among private lawyers critical of the constitutionalisation of private law, three arguments are generally raised against what is seen as the intrusion of fundamental rights in horizontal relationships between private parties.32 First, it is claimed that private law does not need fundamental rights, since it ‘already defines the values of a just society among private persons’.33 Since existing private law is already to a very large extent an expression of the values behind fundamental rights, one should apply private law and not fundamental rights. Reference to fundamental rights most of the time does not offer anything extra.34 Under an argument of subsidiarity, therefore, fundamental rights should only be resorted to when it is impossible to decide the case on the basis of private law. The second argument critiques the vagueness of fundamental rights and their inaptness for judicial decision-making. Fundamental rights are said not to give the courts the necessary guidance, and thus to create legal uncertainty.35 The third argument, finally, clings to the autonomy of private individuals and 1 International Journal of Constitutional Law 79; SW Gardbaum, ‘The “Horizontal Effect” of Constitutional Rights’ (2003) 102 Michigan Law Review 387. See also M Kumm, ‘Who Is Afraid of the Total Constitution? Constitutional Rights as Principles and the Constitutionalization of Private Law’ (2006) 7 German Law Journal 341. 30 So eg D Schiek, ‘Fundamental Rights Jurisprudence between Member States’ Prerogatives and Citizens’ Autonomy’ in H Micklitz and B De Witte (eds), The European Court of Justice and the Autonomy of the Member States (Cambridge, Intersentia, 2012) 219. 31 On the horizontal effect of fundamental rights in the context of European integration, see O  Gerstenberg, ‘Private Law and the New European Constitutional Settlement’ (2004) 10 European Law Journal 766. 32 It should be stressed that others see this development more positively as an enrichment of private law. 33 Smits (n 13) 5. 34 Ibid, 9; see also O Cherednychenko, ‘Subordinating Contract Law to Fundamental Rights: Towards a Major Breakthrough or Towards Walking in Circles?’ in S Grundmann (ed), Constitutional Values and European Contract Law (The Hague, Kluwer Law International, 2008) 35; O Cherednychenko, Fundamental Rights, Contract Law and the Protection of the Weaker Party: A Comparative Analysis of the Constitutionalisation of Contract Law, with Emphasis on Risky Financial Transactions (doctoral thesis, 2007). 35 Smits (n 13) 15.

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claims that they do not need to pursue the public interest and can make their own choices about what they consider to be just. To hold that private parties are bound by fundamental rights would be a violation of the principle of private autonomy. Private parties are, as a matter of principle, not bound by fundamental rights and are free to pursue their private interests without having to act in the public interest. If they want, they can contract away their fundamental rights.36 None of these arguments is particularly compelling in my view. First, it is not a given that private law should always lead to ‘good’ or ‘just’ results. While the argument from subsidiarity may be correct in holding that conflicts between private individuals should typically be decided on the basis of private law, it is not conclusive as to when and why constitutional rights may come into play in certain instances. Secondly, general private law, including codes, often has recourse to general principles, such as ‘public order’, ‘public morals’, ‘reasonableness’ or ‘good faith’. These general principles have in common with fundamental rights their vagueness and the fact that they are fleshed out in practice by the courts on a case-by-case basis. As with fundamental rights, the understanding of the extent to which courts can interfere in horizontal relationships on the basis of such general principles may change over time and from one system to another. Finally, while the third argument may be true in principle—that fundamental rights originally and primarily protect individuals from interferences by the state—it is not conclusive on the role of the state in horizontal relationships. Fundamental rights and public policy may empower or sometimes even oblige the state to intervene in such relationships in order to protect the rights of one of the parties against the other or to protect the general interest. This idea is translated, for instance, in the old rule, laid down in many codes, that a contract is void if it violates good morals. The core of the issue in my view lies elsewhere, namely in the legal mechanisms and techniques used to achieve protection of fundamental rights and the interests which they seek to protect. Fundamental rights traditionally protect individuals from interference by public authority. Yet these fundamental rights concern interests that may also warrant protection in relations between individuals. Any public authority is precluded from infringing human dignity, for instance, but these same interests may also warrant protection in private spheres. State interference with privacy obviously concerns fundamental rights, and the same interests warrant protection from interference by private parties. In cases where such interference would prevent individuals from achieving ‘the good life’, in a way similar to impediments imposed by the state, the state may act in order to allow these individuals to protect their interests. Moreover, in some cases it is considered desirable and warranted for the state to prevent individuals from interfering with the fundamental rights of others. Accordingly, fundamental rights may impose positive obligations on the state to protect certain interests of its citizens, and they may require or allow the state to do so also in horizontal 36

Ibid, 17.

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relationships. While fundamental rights may traditionally concern the vertical relationship between citizens and the state or some other public authority, they may thus also affect horizontal relationships between private individuals. Ultimately, the core of the issue turns on the question of whether it is considered legitimate, appropriate and desirable for the state to intervene in horizontal relationships and safeguard certain interests of one or both parties, which in vertical relationships are protected as fundamental rights. At the end of the day, therefore, the question relates to the role of the state in society. The concrete mechanisms, legal vehicles and doctrines through which relationships between private individuals are affected by constitutional rights are numerous and varied. Moreover, the classification of these mechanisms and doctrines changes from one discipline to the other, and even within each discipline there is no agreement.37 In addition, there is no common European approach to the role of fundamental rights in horizontal relationships.38 Usually, public intervention to protect fundamental rights in horizontal relationships takes the form of legislation, which effectively extends the protection offered by constitutional rights—drafted originally for vertical relationships—to horizontal relations. There is no agreement on whether conceptually we are still dealing with fundamental (constitutional) rights in their true sense, or whether these laws rather transform fundamental rights into ‘normal’ (legislative) rights and interests. It is submitted that such legislative intervention extending the reach of constitutional protection fundamentally transforms the nature of the fundamental right. A case in point is equal treatment legislation, which extends the right to equal treatment to horizontal relationships. An individual who infringes the right to equal treatment of another person violates the legislative act, not his or her fundamental right. The legislation thus transforms the qualification of the rights concerned: they are no longer, technically speaking, fundamental rights. This is not an academic discussion, but concerns a deeply constitutional question concerning the role of the state in society and the manner in which the state can and may intervene in relationships between private individuals. This fundamental rights legislation, however, is not controversial in itself, and it is tailored specifically to the horizontality of the relationship it intends to regulate.39 More complicated is the situation where no legislation exists and where an interest that in a vertical relation would be considered a fundamental right is not explicitly protected in legislation. In the vertical setting, therefore, the courts could, in the absence of legislation, intervene to protect the individual’s fundamental rights contained in the constitution (or in international treaties). Do courts have jurisdiction to do the same in horizontal relations? Is it appropriate and legitimate for them to give effect to constitutional and conventional 37 For analyses in constitutional/public law, see Oliver and Fedtke (n 29); Sajó and Uitz (n 29); Tushnet (n 29); Gardbaum (n 29). Analyses in private law can be found in Smits (n 13) 9. 38 C Busch and H Schulte-Nölke, EU Compendium—Fundamental Rights and Private Law (München, Sellier, 2011). 39 See de Mol (n 10).

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fundamental rights, thus imposing the obligation on private parties to respect the rights of others? The question has come up in many Member States, and in most systems the answer is not unequivocal. Often times, the horizontal effect of fundamental rights is accepted only indirectly, as in the German notion of Drittwirkung. The idea is that the values underlying fundamental rights permeate the entire legal order and hence indirectly via the interpretation of open-ended norms (of private law) they may impact on private relationships. Another type of indirect effect of fundamental rights in horizontal relationships between private parties can be produced when the court reviews the legislation that governs that relationship in the light of constitutional fundamental rights. The effect of such review may be that the legal relationship between the private individuals is affected, but the court is concerned with the constitutionality of the legislation in the light of the constitutional rights of one of the parties and does not directly review the constitutionality of the conduct of the parties or, say, a contract between private parties.40 The effect of the constitution on the relationship between private actors is thus indirect.41 Direct horizontal effect of private law relationships, whereby the court in the absence of statutory authority uses fundamental right to intervene directly in horizontal relations, eg to review contract provisions, is even more controversial. Such direct horizontal effect is generally considered less problematic when there is clearly a weaker party in the relationship, such as in labour law cases. Here the same rationale applies as in the case of the ‘normal’ vertical operation of fundamental rights: the individual needs protection against the powerful state, which can abuse its power to the detriment of the individual. Nevertheless, the argument often goes that if it is considered desirable that the interests or rights of individuals which are protected as fundamental rights against the state should also be protected against other individuals, and hence that an obligation be imposed on those individuals to respect the right of others, it is for the legislature to intervene, and to extend the protection offered by fundamental rights to 40 H Cheadle, ‘Third Party Effect in the South African Constitution’ in A Sajó and R Uitz (eds), The Constitution In Private Relations. Expanding Constitutionalism (Utrecht, Eleven International Publishing, 2005) 55; C Saunders, ‘Constitutional Rights and the Common Law’ in A Sajó and R Uitz (eds), The Constitution In Private Relations. Expanding Constitutionalism (Utrecht, Eleven International Publishing, 2005) 58–59. 41 It is important to note that the use of the direct/indirect bifurcation among private lawyers does not coincide with the use of that bifurcation in EU law. In EU law the distinction between direct and indirect effect relates to whether EU law is applied as such qua EU law (direct), or through national law which is interpreted in conformity with EU law (indirect). It is, therefore, concerned with the directness of the impact of EU law provision. Private lawyers apply the same terminology to EU law impact on horizontal relationships, whereby direct horizontal effect involves the immediate impact of EU law on private legal relations, eg the terms of a contract, while indirect horizontal effect relates to the effect on that relationship via the interpretation of open-ended norms or the setting aside of conflicting legislation. This latter type of effect in the context of EU law is considered a variation of direct effect. Private lawyers, however, measure the effect of EU law on the private legal relationship itself, rather than on the national law governing these relationships. See also de Mol (n 10) 111; MW Hesselink, ‘The General Principles of Civil Law: Their Nature, Role and Legitimacy’ in this volume, who distinguishes between the effect on private relations (direct) and the effect on private law (indirect).

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horizontal situations. In other words, constitutional fundamental rights should not operate qua fundamental rights in relationships between private actors, and courts should therefore not have recourse to constitutional rights, for instance to review the legality of a contract. In any case, the tone of the debate, especially among private lawyers, is that this type of constitutionalisation of private law is inappropriate and amounts somewhat to the ‘colonisation’ of private law by public law (or public lawyers?). At the very least, it causes unease: should the courts interfere in essentially private relationships which are based on private autonomy? Does not the state in this type of situation overstep its limits and does it not threaten the private sphere of individuals and the autonomy of private law?42 It is against this background of the debate on the application of fundamental rights in horizontal relations that the recent decisions of the Court of Justice of the EU in a number of cases must be assessed.

C. The Changing Public/Private Divide and the De-regulating and Re-regulating State In order to understand the world around us better, we arrange it in boxes that serve to categorise and hence to simplify reality. The public/private distinction is one of those categorisations and is used in many disciplines, both in law and beyond. With the public/private distinction I mean the distinction between what is considered to be part of the public sphere or realm on the one hand, and the private (the individual, the home, the household) on the other. ‘The public’ represents the collective, the common good, the public interest, whereas ‘the private’ represents the individual and individuals who acts or act in a selfinterested way. For some, the public/private divide coincides with the classic division between public law and private law. It is submitted here that the better view is that both divisions do not coincide. Private law is also concerned with the public interest, while public law is also concerned with the private sphere. The difference between this view and that in which the public/private divide is considered to coincide with that between public law and private law is that the latter focuses on the identity of the parties in the case (public authority involved), whereas the focus here is on the nature of the interests involved and the functions performed (public interest and function of a public nature).43 Yet, what belongs to the private sphere and what is part of the public sphere is not 42 The ‘autonomy of private law’ remains a problematic notion. ‘Private law’ is an artefact made by lawyers. While the starting point may be that private parties are autonomous and free to make their own choices in relationships among themselves, even the strongest proponents of the autonomy will admit that there is room and even a need for public regulation of private relationships. In some cases, the state can impose restrictions the freedom of private individuals among themselves. After all, neither society nor the market is equal and just, and some private and public interests are considered to deserve protection, against both public and private actors. On the ‘autonomy of private law’, see eg Jansen and Michaels (n 4) 873. 43 See also Oliver (n 12) ch 1.

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given once and for all, but has always been, and will always remain, essentially contested. It ultimately depends on ideology and political preferences, on the prevailing conception of the role of state in society and in economic life and of the role of private actors and the market in the provision of public goods. Furthermore, these choices and preferences change over time and across polities.44 Moreover, distinctions between what is public and private may be struck differently at the EU level, and the public/private divide appears in a different guise at the EU level.45 Under the old paradigm, the public sphere was the area for the state to regulate, while the private sphere was the domain of private autonomy, free from state or public intervention. To some, for instance, the freedom of contract is still almost sacred and should even be considered a fundamental right so that any limitation thereof or interference with will be considered a violation of the private sphere and requires justification. However, ever since Lochner the sharp distinction between public and private has come under attack.46 Others do not consider contractual freedom a fundamental right or freedom, but rather a prerogative that is essentially limited by the rights (fundamental and otherwise) of others as well as collective interests and concerns of public policy. Under this conception there is, in other words, no such thing as a fundamental freedom of contract. Underlying this discussion are, again, ideological preferences and concep44 I therefore do not entirely agree with the statement made by AG Tretsnjak in which she claims that ‘the traditional ‘public/private’ juxtaposition is no longer appropriate in a modern State’. And she continues ‘It is indeed possible to conceive of cases in which protection of fundamental rights vis-à-vis private bodies would appear every bit as essential as against public authorities, so that failure to afford protection of fundamental rights would be tantamount to a breach of fundamental rights’ (Opinion of AG Trstenjak of 8 September 2011 in Case C-282/10 Maribel Dominguez (n 10)). However, the latter, to me, seems like a mere consequence of a changing conception of the public/ private divide, and of what should be considered ‘public’ and what should be ‘private’. The focus here is on the very rationale of the divide and of the mere existence of fundamental rights and general principles in the vertical relationship between the individual and public authority, namely that the individual deserves protection against the powerful state. In this light, the application of general principles, fundamental rights and EU law in horizontal relations, where it has been accepted, applied in cases where one was the weaker party, such as in labour law (Case 43/75 Defrenne [1976] ECR 455), consumer protection, and professional organisations (Case 36/74 Walrave and Koch [1974] ECR 1405; Case C-415/93 Bosman [1995] ECR I-4921). This goes to show that rather than a clear-cut division between private and public combined with no third party effect and full third party effect, it is more appropriate to speak of a sliding scale. 45 On the public/private divide in EU law see among many others C Semmelmann, ‘The Public– Private Divide in European Union Law’ in U Neergaard and R Nielsen (eds), European Legal Method(s) in a Multilayered Legal Order v Multi-level Governance: Different Theoretical and Methodological Approaches to the Study of EU Law (Djof, 2012, forthcoming); O Odudu, ‘The Public/ Private Distinction in EU Internal Market Law’ (2010) 46 Revue trimestrielle de droit européen 826; L Azoulai, ‘Sur un sens de la distinction public/privé dans le droit de l’Union européenne’ (2010) Revue trimestrielle de droit européen 842; N Reich, ‘The Public/Private Divide in European Law’ in H-W Micklitz and F Caffaggi (eds), European Private Law after the Common Frame of Reference (Leiden, Edward Elgar, 2010) 56; W Sauter and H Schepel, State and Market in European Union Law—The Public and Private Spheres of the Internal Market before the EU Courts (Cambridge, Cambridge University Press, 2009). 46 Lochner v New York, 198 US 45, 25 S Ct 539, 49 L Ed 937 (1905).

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tions of the state (as an embodiment of society or as an institution separate from the society), the role of the state, the freedom of individuals, and, ultimately, of a just society.47 The public/private divide has fundamentally changed over the past decades and it has done so in different directions. There has been profound change too in the thinking about the consequences for the appropriateness of state intervention in these areas. First, while regulation used to be state regulation, governance is now no longer monopolised by the state and is often shared with private actors and with other forms of public authority beyond the state. Many forms of self-regulation and co-regulation have emerged in areas previously regulated by the state; and conversely, certain areas of what used to be considered part of the private sphere have been regulated, giving rise to the development of new areas of law, such as consumer protection. Finally, the directions in which the public/private divide changes in each Member State do not necessarily coincide with the manner in which the conception of the public/ private divide changes at the level of the EU.

D. Final Remarks It is the coincidence of these phenomena, which each taken on their own challenge the classic paradigms, that causes unease among private lawyers. The three phenomena just described, the Europeanisation and constitutionalisation of private law and the changing public/private divide, mutually reinforce one another and while they may each already be problematic in the context of national law, raising fundamental questions as to the role of the state in society, the stakes are heightened in a multi-level context. This is especially so in those cases where these relations do not at first sight come within the ‘traditional’ scope of EU law, ie when they do not contain a cross-border element. While the analysis thus far may help to understand the stakes of the debate as well as the reasons for resistance among private lawyers, it does not help to answer the central question in this volume, namely of the legitimacy and appropriateness of the involvement of EU law in horizontal relationships. In order to address the question, the focus will now be on the issue of competence as one element of such legitimacy.48 This can be called the formal element of legitimacy.49 47 Explored eg in M Hesselink, ‘Five political ideas of European Contract Law’ (2011) 7 European Review of Contract Law 295. 48 The concept of legitimacy is extremely rich and breaks down into several elements, eg legal, political and social legitimacy. In order to be legitimate, the exercise of public power must at the very least be intra vires. In the context of the EU this implies that, at the very least, the EU must not usurp powers that have not been attributed, and it must comply with the principles of subsidiarity and proportionality: it must not exercise the powers transferred in a manner which unnecessarily and disproportionately interferes with the powers of the Member States. Nevertheless, this does not guarantee social legitimacy and the acceptance of EU action more broadly, or its legitimacy among private lawyers. 49 For the concept of ‘formal’ legitimacy, see eg S Weatherill, ‘Competence and Legitimacy’ in C Barnard and O Odudu, The Outer Limits of European Union Law (Oxford, Hart Publishing, 2009) 17.

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III. Rephrasing the Question of the EU Involvement in Horizontal Relationships in Constitutional Terms An enquiry into the appropriateness and legitimacy of EU law involvement in horizontal relationships between private individuals raises a number of questions which are essentially constitutional in nature.50 The term ‘constitutional’ here qualifies the questions as belonging to the ‘who does what in the polity’. The following questions are crucial to assess formal legitimacy. First, is it legitimate for public authority to interfere with private behaviour in horizontal relationships or should this entirely be left to private autonomy? Second, if public intervention is warranted, what is the appropriate level or forum: national or European? And third, which branch of government can appropriately interfere in horizontal relations? In other words, is the governance of private relationship a matter for democratically legitimated bodies alone or can courts intervene on the basis of general principles? Since all three questions identified concern the delimitation of powers—between public authority and private autonomy, between the EU and its Member States, and between courts and political organs—all three can be considered constitutional in nature. The core theme of this volume, of the appropriateness and legitimacy of the involvement of EU law in private relationships, requires careful consideration of each of these questions. I will argue that at the end of the day the involvement of EU law in horizontal relationships is not problematic from a legal point of view or as a matter of principle. The most serious legitimacy concerns seem to arise in cases of direct involvement of the Court of Justice in horizontal relationships on the basis of general principles in the absence of EU legislation, thus imposing obligations on private individuals in a manner not provided for in the Treaties, and thus raising concerns both over the restriction of Member State and private autonomy and over the role of courts in regulating horizontal relationships. Especially in cases where such intervention does not coincide with national expectations about the role of public authority and courts in horizontal relationships, and the choices made are not socially accepted, concerns over legitimacy multiply. The appropriateness of the involvement of EU law in private relationships thus breaks up in three separate questions, which I will discuss consecutively. They are separate but related, and in the context of the EU they lead to a layering or multiplication of difficulties. Nevertheless, even in cases where EU intervention 50 In order to avoid misunderstandings, it should be emphasised that this is not to say that the discussion should belong to the field known as constitutional law and should be dealt with by constitutional lawyers exclusively rather than private lawyers and private law. It goes without saying that answering them will require reference to principles of private law as well. Moreover, the fact that the core theme can be rephrased in constitutional terms does not mean that there are no other valid and valuable perspectives.

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is formally allowed and legally justified, broader legitimacy concerns persist.51 These point to a much deeper challenge for the European Union, which is not specific to private law, but affects all Union action and indeed the Union itself: the disconnect between its legal and factual regulatory powers on the one hand, and persistence of the nation-state as the primary source of democratic and constitutional legitimacy on the other.52

A. The Appropriateness of Public Intervention in Horizontal Relations A first set of questions concerns the appropriateness of public intervention (whether by the EU or the state) in horizontal relationships. Is it legitimate for public authority to regulate private behaviour in horizontal relationships or should this be entirely left to private autonomy? The question relates to the public/private divide and arises in the state and European context alike. There does not seem to be an essential difference in this respect between the EU and the nation-states—the core of the question concerns the appropriateness of public intervention in the private sphere and the limits of private autonomy. This is a thorny question indeed and one that requires answering on a case-by-case basis, both in the EU and in nation-states.53 In the context of European private law, it transpires in much-heard claims of overregulation. Nevertheless, the legitimacy concerns which challenge all private law—understood as the body of rules emanating from public authority governing horizontal relationships, constraining private autonomy and superseding competing normative systems—multiply in the case of European private law. Where the state can still build on natural sources of legitimacy, this is much less the case for the EU.

B. Finding the Appropriate Level for Public Intervention: Member States or EU? The second set relates to the appropriate level of such public intervention, ie the question of whether public intervention, if necessary or appropriate, should come from the EU or the Member States. In legal terms, this is first and foremost a question of competence or the question of the correct legal basis: does the EU have competence to regulate particular private behaviour in relations with other individuals? And if it does have such competence, should it make use of that competence in accordance with the principles of subsidiarity and proportionality? The typical vehicle through which the EU interferes in horizontal relation51 For a very lucid discussion of the legitimacy concerns as a consequence of the system of division of competences, see Weatherill (n 48) 17. 52 For an excellent account from the perspective of a public lawyer, see P Lindseth, Power and Legitimacy. Reconciling Europe and the Nation-State (New York, Oxford University Press, 2010). 53 Schmid (n 25).

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ships is secondary legislation. There are several legal bases in the Treaties that empower the EU to adopt legislation to regulate private behaviour. Such legislative intervention will usually take the form of Directives, and private behaviour will not directly be affected by EU legislation itself, but by the implementing legislation. This is not to say, however, that the EU could, as a matter of principle, never impose obligations directly on individuals, or regulate private behaviour in horizontal relationships, or that there should be a legal reason why the EU legislation should never interfere in private relationships directly. Where the EU has competence to adopt regulations, these regulations can impose obligations directly on individuals and can regulate private behaviour in horizontal relationships. EU legislation which requires further intervention and implementation by European or national institutions impacts on individuals in horizontals settings indirectly. This is the case, for instance, for Directives: these do not as a matter of principle produce direct horizontal effect. A private party cannot invoke the rights which the Directive intends to create as against another private individual. National courts are not empowered by EU law to enforce the Directive in these cases by applying it to the facts of the case, but the Directive may impact on the horizontal relationship indirectly through conforming interpretations of national law. If there is a legal basis and the conditions of subsidiarity and proportionality are complied with, legislative intervention is legally justified under the Treaties. Whether it is considered appropriate politically or socially acceptable and legitimate in a broader sense is, of course, a wholly different question and answering it opens a completely different register. Yet it would seem that the legitimacy of European private law legislation in this respect relates more to the essential characteristics of the EU as a polity than to the nature of private law as governing horizontal relationships. Put differently, the legitimacy problems of all European law, including also European private law, are reflective of the larger problem of the EU’s legitimacy deficit that is rooted in the system and in the manner in which the EU operates, the general lack of enthusiasm for the European project, the real or perceived criticism of the liberal and anti-social nature of the EU, and the necessarily fragmented nature of EU legislation, limited to those areas in which the EU does have competence and where legislative intervention is necessary for the achievement of the internal market. All these aspects, which are not concerned with the nature or autonomy of private law or private actors, but with the situational logic and the reality of the European Union, affect the broader legitimacy of European private law. It seems appropriate to revisit at this juncture the concerns discussed in the first part of this chapter, ie the Europeanisation of private law. The reasons for unease identified in private law literature over this Europeanisation (the doctrinal discomfort, the argument from legal culture, the exposed lack of neutrality of private law, and the instrumentalisation of private law submitted to EU policy objectives) seem to mask a deeper unease about the European way

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of doing things and the distance between those making the policy choices (the European Commission, the European Parliament and the Member States acting jointly) and the private individuals whose autonomy in horizontal relations is limited and who often operate in a context which is otherwise purely national. In essence, this anxiety is about the legitimacy deficit of the EU and the EU’s containment of the autonomy of the Member States to make policy choices at the national level. It may well be stronger among private lawyers, who emphasise the autonomy of private individuals to make their own choices in the first place, and who view any intervention by public authority in that autonomy, whether national or European, as unwarranted. Similar concerns, though not immediately in the context of private law, have been voiced by the German Constitutional Court when it held that European integration on the basis of a Treaty union of sovereign states may, however, not lead to a situation in which there is not sufficient space left to the Member States for the political formation of the economic, cultural, and social living conditions. This applies in particular to areas which shape the citizens’ living conditions, in particular the private sphere of their own responsibility and of political and social security, protected by fundamental rights, as well as to political decisions that rely especially on cultural, historical and linguistic perceptions and which develop in public discourse in the party political and parliamentary sphere of public politics.54

While the German Constitutional Court did not address private law in so many words, the argument has been made that while at first sight it seems that private law does not belong to the identity of a state, ‘private law constitutes a major means for shaping the economic and the social living conditions’, and that it does not require a great stretch of the imagination to predict tensions between a broader national understanding of national identity and national statehood and a narrower European one. It could well become a kind of defence of last resort for Member States to reject the intrusion of EU law into their political and constitutional system.55

C. Can the Court of Justice of the EU Intervene in Horizontal Relations in the Absence of EU Legislation? The third constitutional question builds on the previous two: if public intervention is considered legitimate and appropriate, and there is a legal basis for such intervention in the Treaties, how should it be done, in other words, which organ can and may intervene in horizontal relationships, the courts or the legislature 54 Judgment of the Bundesverfassungsgericht of 30 June 2009 on the Treaty of Lisbon, BVerfG, 2 BvE 2/08, para 249. 55 H-W Micklitz, ‘German Constitutional Court (Bundesverfassungsgericht BVerfG) 2 be 2/08, 30.06.2009—Organstreit Proceedings between Members of the German Parliament and the Federal Government’ (2011) 7 European Review of Contract Law 528, 532.

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and on what grounds? Here the legitimacy concerns multiply. Some of the most heavily criticised recent judgments of the Court of Justice demonstrate this. In these cases, the Court has interfered in relationships between private individuals in horizontal settings in the absence of EU legislation, explicitly substituting or pre-empting such EU legislation and replacing policy choices made by the Member States. Such interventions limit not only private autonomy of the parties but also of the Member States. They are based on EU fundamental rights and EU general principles which the Court itself detects, develops, and construes, or on the internal market provisions laid down in the Treaties, the fundamental freedoms.56 The Court’s case law on the horizontal effect of general principles and fundamental freedoms has, for good reasons, been severely criticised not only in circles of private lawyers but across the board. It raises questions on all three sub-questions identified in this section and impacts on all three phenomena described in the opening section of this chapter. Cases in point are Mangold,57 Kücükdeveci58 and Viking.59 In Mangold and Kücükdeveci the Court recognised the principle of nondiscrimination on the grounds of age as a general principle of EU law and instructed the referring courts to use it as an autonomous ground for judicial review in a horizontal dispute between private parties and to set aside conflicting national law. The Court was sharply criticised: not only is it hard to argue that non-discrimination on grounds of age is indeed a common principle, but more importantly, the Court sought to achieve by way of the direct application of a general principle what EU legislation had not yet accomplished. The EU legislature had in the meantime adopted a directive but allowed the Member States time for implementation. The fact that the EU legislature is developing legislation to concretise and operationalise a general principle so that it can apply to horizontal cases does not end the life of the principle as a general principle—the principle, in other words, is not ‘extinguished’ by legislative intervention. Nor does legislative intervention imply that the courts can no longer have recourse to the principle in certain cases, eg to fill legislative lacunae, to review the validity of the legislation itself or as an aid to interpret the relevant legislation. However, there are limits to what courts can do with recourse to general principles, and in this case there are clear signs that the Court of Justice has overstepped the limits of the judicial function. The Court applied a judge-made general principle (a fundamental right) in a horizontal setting without solid reasoning and pre-empting legislation that was in place but was not yet in force. In effect, the Court restricted the autonomy of the EU and the national legislature, of the Member State at hand, and of one of the private party concerned, the employer, 56 See recently the magisterial critique by H Schepel, ‘Constitutionalising the Market, Marketising the Constitution, and to Tell the Difference: On the Horizontal Application of the Free Movement Provisions in EU Law’ (2012) 18 European Law Journal 177. 57 Case C-144/04 Mangold v Helm [2005] ECR I-9981. 58 Case C-555/07 Kücükdeveci [2010] ECR I-365. 59 Case C-438/05 Viking Line [2007] I-10779.

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and it did it on very thin normative grounds. To hold that national courts are bound to ensure respect for Charter rights and must accordingly review national legislation in the light thereof, thereby setting it aside in case of conflict, even in horizontal settings, negates the fact that in practice such an ‘indirect horizontal effect’ of the fundamental right contained in the Charter effectively amounts to making them binding on private individuals. In Viking the central question was whether the provisions on freedom of movement protect the rights of market participants, not just by limiting the powers of the authorities of the Member States, but also by limiting the autonomy of others.60 Advocate General Maduro addressed the question with reference to the law on the horizontal effect of constitutional rights, and suggested that that constitutional rules that are addressed to the Member State translate into legal rules applying between private parties, illustrating that ‘the government is the third party to every private suit and is so in the very form of the law and the judge who administers it’.61 He further opined that indirect horizontal effect may differ from direct horizontal effect in form but that there is no difference in substance. He then set out to define which market freedoms apply to the different types of private action. The Court of Justice held that Article 43 EC was capable of conferring rights on a private undertaking, which may be relied on against a trade union or an association of trade unions, thus applying it in a horizontal relation. One consequence of the judgment was that EU law effectively restricted the right to collective action despite the fact that the right to strike under the Treaties is explicitly retained as an exclusive competence of the Member States.

IV. Conclusion The involvement of the EU in private law affects the (real or perceived) coherence of national law and may change the substance and even the nature of private law. Policy choices may be different than if they had been made in a purely national context, or they would perhaps not have been made at all, as the choices would have been left to the autonomy of private actors. Yet the involvement of the EU in horizontal relationships in and of itself is not essentially legally flawed or formally legitimate. If there is a legal basis in the Treaties, and the conditions of proportionality and subsidiarity are complied with, legislative and regulatory intervention is legally justified. This does not necessarily imply, of course, that all such EU involvement is legitimate in a deeper political and social sense. The main problem is that the EU is not a complete polity but has only limited competences and a limited 60 61

Ibid, Opinion of AG Maduro, para 36. Ibid, 39.

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set of aims it is to attain, so that a bias in favour of those aims is inherent and unavoidable. Potentially, the competences of the EU are very wide and they allow for legislation that interferes deeply into horizontal relationships. Whether this is considered legitimate and desirable ultimately depends on whether we accept that the EU is more than an internal market and includes a community of values and that the EU is the appropriate forum to constrain private power and private autonomy. This raises profound and delicate questions as to whose citizens private individuals are (the EU’s or the Member State’s), what it means to be a citizen and whether citizenship has any meaning beyond the vertical relationship between the state and the individual, both at the EU and the national level. Moreover, the involvement of the EU in relationships among private individuals is constrained in terms of form and method, a point on which the Court of Justice should be especially cautious. By focusing on the effectiveness of EU law, the Court has in a number of recent high-profile cases overstepped the boundaries of its judicial function. The direct intervention of the Court of Justice in horizontal settings in a number of recent cases has been perceived as activist, affecting not only its own legitimacy but also the legitimacy of EU private law. The Court’s (perceived) activism may undermine the legitimacy of the EU as a whole and undercut public confidence in integration itself (see, for example, the particular impact of Court of Justice rulings on employment law in Nordic countries).62 Secondly, legitimacy problems can lead to compliance deficits and the reluctance of national institutions to comply with the Court’s rulings. If the Court fails to convince its audiences to accept its judgments, they may also refuse to participate in future cases, while the entire system is based on such co-operation. Finally, the effects of Court’s decisions can severely constrain the political freedom of civil society organisations and other private actors, who feel left out of the process of European law-making in politically sensitive areas (as illustrated by the response of the European Trade Union Confederation to the judgments of the Court in Viking and Laval).63 The Court would be well advised to show that it understands these concerns and that it is aware of the limits of its judicial function in the private sphere, both in the context of the EU and as it exists at the national level.

62 See eg M Rönnmar, ‘Laval Returns to Sweden: The Final Judgment of the Swedish Labour Court and Swedish Legislative Reforms’ (2010) 39 Industrial Law Journal 280–87; J Malmberg and T Sigeman, ‘Industrial Action and EU Economic Freedoms—The Autonomous Collective Bargaining Model Curtailed by the European Court of Justice’ (2008) 45 Common Market Law Review 1115. 63 European Trade Union Confederation, ETUC response to ECJ judgements Viking and Laval, Resolution adopted by the Executive Committee of the ETUC at its meeting of 4 March 2008 in Brussels, EC.179.

4 Freedom of Contract and the Horizontal Effect of Free Movement Law GARETH DAVIES

I. Introduction If a party wishes to enter the market of a certain Member State, that is another way of saying that he or she wishes to conclude contracts with persons within that market. Sale and purchase of goods, services, labour or capital assets take place via contracts. Any restriction on free movement—understood to mean cross-border economic activity—is therefore a restriction on the formation of contracts between domestic and foreign economic actors. This way of looking at free movement law shines a distinctive light on what that law may and should mean. In most portrayals of free movement, including most judgments of the Court of Justice, there are two parties apparently involved: the would-be market entrant and the imposer of the restriction on movement. However, if we remember that market entry takes place via contracts, then we are reminded that a third party—the would-be domestic contracting partner— is always present, at least in the shadows. This more complete visualisation enables a more precise understanding of the scope of the law, and in particular of its application to private parties, conventionally referred to as its horizontal effect. This horizontal effect can take one of two distinct forms: either the party imposing the restriction can be one of the contracting parties, so that the free movement complaint is about the preferences expressed in a contract to which the free mover is, or would like to be, a party; or, the restricting party can be outside of the contract, so that the complaint is that a third party is interfering in the contractual relations of two others. These are analytically different and raise quite distinct legal, principled and economic issues. In fact, looking at the case law of the Court to date, it emerges that the two situations are treated quite differently. Where a party interferes in the contractual relations of others, the Court regards this as a restriction on free movement, contrary to the Treaty, and intervenes with gusto. Since Viking Line the Court does not appear to be influenced by the public or private nature of the

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alleged restricting party, but focuses exclusively on whether this party is actually restraining the contractual freedom of others.1 This latter fact is what engages the Treaty. By contrast, where a party is accused of restricting free movement purely as a result of terms or preferences expressed in its own contracts, the Court has always found this to be outside the scope of the Treaty’s free movement provisions.2 The only exceptions to this are where employment and state procurement are concerned, both of which may be argued to be special cases for reasons discussed further below.3 Horizontal effects may be far-reaching, therefore, in the sense that the Treaty may apply to all parties that restrict free movement. Outside of the exceptional fields, however, such a restriction on movement apparently only exists where a party intervenes in the contracts of others. The idea that horizontal effect might prevent individuals or companies from preferring local or domestic suppliers or customers, for example, is without any basis in the law. That is not to say that an argument cannot be made in favour of such an approach, but merely that, until now, no support for this has been expressed by the Court. This analysis offers us a picture of free movement law where contractual freedom, understood in terms of party autonomy, is central. Indeed, it will be argued in this chapter that all free movement case law to date can be understood in terms of the promotion and protection of party autonomy, even within the exceptional fields of employment and public procurement.4 This remarkable consistency suggests that one should be wary of expecting future cases to deviate from this path. The use of free movement law to directly constrain contractual preferences would be a departure from existing case law and not— as a reading of the more dramatic cases on horizontal effect might initially suggest—an extrapolation of it. This chapter tests how well freedom of contract fits with the case law of the Court on free movement and in particular on horizontal effect. The following section analyses the relationship between these ideas, how they might be expected to relate to each other, and what sort of judgments should result. The subsequent section looks at the existing case law in this light. A conclusion considers what role freedom of contract should play in thinking about the internal market.

1 Case C-438/05 Viking Line [2007] ECR I-10779. See generally J Krzeminska-Vamvaka, ‘Horizontal Effect of Fundamental Rights and Freedoms—Much Ado About Nothing? German, Polish and EU Theories Compared after Viking Line’, Jean Monnet Working Paper No 11/2009; A Dashwood, ‘Viking and Laval: Issues of Horizontal Direct Effect’ (2007–08) 10 Cambridge Yearbook of European Legal Studies 525. 2 Case 65/86 Süllhofer [1988] ECR 5249; Case C-159/00 Sapod Audic [2002] ECR I-5021; Case 311/85 Vlaamse Reisbureaus [1987] ECR 3801. Cf Case 251/83 Haug-Adrion [1984] ECR I-4277; Case C-411/98 Ferlini [2000] ECR I-8081. 3 See below, text to nn 18ff. 4 See S Grundmann, ‘Information, Party Autonomy and Economic Agents in European Contract Law’ (2002) 39 Common Market Law Review 269, 270. Cf J Rutgers, ‘The European Economic Constitution, Freedom of Movement, and the DCFR’ (2009) 5 European Review of Contract Law 95.

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II. Freedom of Contract and Free Movement Situations Freedom of contract is understood in this chapter in terms of party autonomy, meaning the capacity of parties to enter into contracts with the parties that they choose, on the terms that they mutually agree, and without restrictions or pressures from others. This is the traditional approach to freedom of contract. Its advocacy is based on perceptions that this kind of individual freedom is economically efficient, politically beneficial for society, and that it even qualifies as a form of fundamental human right that deserves legal protection.5 The application of free movement law to state restrictions on free movement can easily be understood in terms of the promotion of freedom of contract. Any state measure which restricts market access or cross-border free movement, whichever term one prefers, can be described as a measure restricting the capacity of the out-of-state actor to contract with domestic actors. The measure, by whatever mechanism, constrains the contractual choices of those within its sphere of application. It may, for example, prohibit contracts for certain forms of service or make them conditional upon the possession of certain types of qualifications or certain legal forms.6 These are direct limitations on party autonomy. The measure may also act more indirectly, for example by imposing economic restraints, such as price control, which have the effect of making certain suppliers relatively more or less attractive to customers.7 The measure then has the effect of steering the preferences and contractual choices of market actors away from what they would have been without that measure, and so amounts to an intervention in the contracts of others. The restriction on autonomy here occurs not at the stage of contract formation, but at the stage of preference formation. However, the substantive outcome—contracts that are different from what they would have been without state intervention—is the same. This classical and most common application of free movement law is therefore well understood as the protection of party autonomy from the state. If it is not always so perceived by national private lawyers or the public, this is no doubt because state restrictions that primarily hinder cross-border contracts are often unfelt by most market actors. While it may be the case that without those restrictions many domestic actors would choose for out-of-state contractual partners, they are not aware that they would do so. The focus of most market actors and their lawyers is inevitably on the current state of the market and its current actors, not the market as it might be. New restrictions on autonomy 5 See eg Grundmann (n 4). Cf A Colombi Ciacchi, ‘Party Autonomy as a Fundamental Right in the European Union’ (2010) 6 European Review of Contract Law 303. 6 Case C-275/92 Her Majesty’s Customs and Excise v Gerhart Schindler and Jörg Schindler [1994] ECR I-1039; Case C-212/97 Centros [1999] ECR I-1459; Case 279/80 Webb [1981] ECR 3305; Case 2/74 Reyners [1974] ECR 631. 7 Case 82/77 Van Tiggele [1978] ECR 25; Case C-94/04 Cipolla [2006] ECR I-11421.

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may be protested but long-established ones may have become an accepted part of the normative landscape.8 Precisely as a result of their regulatory success— they will have excluded non-conforming actors from the market—there may be little lobby left to object to them, or at least little lobby with a significant domestic voice. That is not to say that the only victims of such measures are out-of-state actors. The domestic parties that would have contracted with those actors, or would have contracted on different terms, experience a symmetrical loss of welfare.9 They are condemned to paying more, or receiving goods and services less adapted to their preferences. The relatively abstract and hypothetical nature of their loss of welfare, however, often gives it little political weight in comparison to the measurable gains experienced by domestic suppliers, who, thanks to restrictions on free movement, win the contracts that would otherwise have gone to foreigners. The application of free movement law to private party interventions in the contracts of others is analytically similar. If the primary good that free movement law aims to protect is freedom of contract, then this provides no particular reason to make a principled distinction between private and public restrictions on that freedom. The legal character of the restricting party may be relevant at the stage of justification since the state, for example, may be able to make arguments about the public good more persuasively, while private parties may be able to pose their own freedom of action as a good to be balanced against free movement.10 However, these are arguments about the final outcome of the case, not the initial question of whether free movement is restricted. If that is a factual question about party autonomy, then the Treaty should address private restrictions as well. Of course, in practice there will be fewer situations in which a private party is able to hinder the formation of contracts between two other parties. However, where that capacity exists, a party-autonomy-based view of free movement law suggests that it should be subject to Treaty regulation. The problematic situation, however, is where a private party acts in a way that excludes or disadvantages certain out-of-state actors but does so by means of its own contracts—by either refusing to contract with such actors or by doing so only on less advantageous terms. Examples might include a preference for local or national business suppliers, demands for locally or nationally produced products, banks that refuse mortgages on foreign properties, companies that disadvantage foreign shareholders, the use of contracts in which payment in 8 G Davies, ‘Is Mutual Recognition an Alternative to Harmonization? Lessons on Trade and Tolerance of Diversity from the EU’ in L Bartels and F Ortino (eds), Regional Trade Agreements and the WTO Legal System (New York City, Oxford University Press, 2007) 265, 269. 9 DH Regan, ‘An Outsider’s View of Dassonville and Cassis de Dijon: On Interpretation and Policy’ in M Poiares Maduro and L Azoulai (eds), The Past and Future of EU Law (Oxford, Hart Publishing, 2010) 465. 10 Case C-415/93 Union Royal Belge des Sociétés de Football Association (URBSFA) v Bosman [1995] ECR I-4921; Case C-112/00 Schmidberger v Austria [2003] ECR I-5659; Case T-30/89 Hilti [1991] ECR II-1439; Case T-83/91 Tetrapak II [1994] ECR II-755.

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advance is demanded from out-of-state purchasers, or business practices in which mutual recognition is not accepted and out-of-state suppliers are required to prove conformity with local specifications or accepted practices. These situations do not involve a third party interfering in the contract of two others, but a difference of views between two actual or potential contracting parties where one party expresses preferences that the law would describe as directly or indirectly discriminatory. A conventional effects-based approach to free movement law struggles with such a situation. It may be tempting to suggest that the Treaty should simply prohibit nationality discrimination in contractual behaviour. This is not impossible to reconcile with the Treaty text. Nationality discrimination will have a certain exclusionary effect, denying certain parties the opportunity to obtain contracts, and so could be seen as a restriction on free movement. However, the idea that every discriminatory contractual act should be prohibited is problematic to the point of being implausible. Should or can the Treaty prohibit an individual consumer’s choice for French cheese or a German car? Not only would this be regarded as an offensive limitation of personal autonomy, but it is unlikely that it was ever the intention of the Treaty writers, and is an unconvincing reading of the Treaty articles in context. Such a rule would no longer be a serious attempt to interpret written law, and would be merely abstract policymaking of a particularly undemocratic and illegitimate kind. It is clear that if discriminatory contractual behaviour is to be caught by the Treaty, this must be confined to certain more limited contexts. The obvious approach is then to consider some kind of de minimis threshold and only to apply the prohibition to actors or contracts possessing a certain market power, size or importance.11 This resonates with the idea that has been suggested in the past that barriers to free movement should be prohibited where they are ‘substantial’.12 One way of looking at this is in terms of market power. If a party is large or dominant enough, then access to its contracts may be seen as a non-trivial part of access to the market as a whole. Just as in competition law, major actors may be subject to particular obligations of objectivity and openness.13 However, free movement has always been looked at by the Court as an individual right, with the primary question being whether a particular individual is having that right restricted rather than in market-wide terms. Where an individual has been able to show that their movement is obstructed, the Court has never rejected the application of free movement law on the basis that the measure does not have a significant impact on other market actors or on the market as a whole. Bellamy, Trojani and Angonese are examples of cases the primary importance of which 11 Cf the ‘reasonableness’ criterion for horizontal effect suggested by AG Poiares Maduro in Case C-438/05 Viking Line (n 1) para 48. 12 S Weatherill, ‘After Keck: Some Thoughts on How to Clarify the Clarification’ (1996) 33 Common Market Law Review 885; AG Jacob’s opinion in Case C-412/93 Leclerc-Siplec [1995] ECR I-179. 13 Art 102 TFEU.

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was probably for the individual litigants and perhaps a few other individuals.14 Indeed, where employment is concerned, an individual may often find that exclusion from a particular job or employer has a very serious effect on their personal capacity to obtain a job in the Member State without it being the case that the employer is dominant in a market-wide competition law sense. The individual orientation of free movement law would therefore suggest that any de minimis threshold for horizontal effect should focus either on the consequences for the specific individual in question or on the relationship between the two potential contracting parties and considerations of inequality in bargaining power rather than the position of the dominant party in the wider market. One could argue for a test in which contracting parties are subject to a non-discrimination obligation when contracting or negotiating with parties that are significantly weaker.15 Any of these approaches would raise serious problems of evidence and justiciability.16 Deciding when sufficient market power or inequality of bargaining power are present could be a challenge for courts, inevitably leading to arbitrary and unpredictable results with great variation between courts and jurisdictions. This could be reduced by adopting competition-law type approaches to measuring power, but at the price of making the law slow, expensive and over-complex.17 More seriously, any cut-off point would be a normative challenge and a distortion of the market: if party A is subject to free movement law when contracting with B but not with C, then they will certainly seek every excuse to do business with C. If party D is big enough to be subject to the non-discrimination rule, while party E is not, then this could affect competitive positions, and would raise principled objections. How are parties to know in advance what the situation is? When can we just order some local goods without worrying, and when do we have to go through the tender and contract procedures to see if something might be indirectly discriminatory? And why can party F rely on non-discrimination to challenge contractual clauses, while party G, who is just a little larger, cannot? It is thus not unimaginable to apply free movement law to contractual preferences on the basis of an impact or significance test, but it is messy, normatively rather weakly founded, and would do neither the effectiveness nor the status of the law much good. Is there another way? An alternative approach is to look at the character of the contracting party or contract. Some types of contractual relations might be more justifiably subject to a non-discrimination rule than others because of the interests or parties involved. The state, employers, and those offering goods and services to the public are obvious examples of parties upon whom it is quite conventional to impose non-discrimination obligations of various sorts.18 These parties have a 14 Case C-123/00 Bellamy [2001] ECR I-2795; Case C-456/02 Trojani [2004] ECR I-7573; Case C-281/98 Angonese [2000] ECR I-4139. 15 See Case C-411/98 Ferlini (n 2). 16 See G Davies, Nationality Discrimination in the European Internal Market (The Hague, Kluwer Law International, 2003) 96–104. 17 Ibid. 18 Eg Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004

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particular social role, their actions have a particular importance for the dignity of individuals, and as a result they bear particular legal responsibilities. One way of presenting this is to say that such parties have a reduced, or non-existent, right to freedom of contract. In the case of the state, such freedom would not normally be attributed to it. Freedom of contract is primarily a private right and a right to be free from state intervention. The state itself may act as it wishes within the law but this would not be described in contractual freedom terms. In the case of employers or public suppliers of goods and services, these would be regarded by traditional private law as private contracting parties enjoying a right to freedom of contract. However, no rights are absolute and it is a near-universal practice to impose some kinds of restraints on the prejudices that such parties are entitled to express in their contractual relations. This may vary between national legal systems, but within EU law it can be noted that Article 45 expressly prohibits discrimination on grounds of nationality on the free movement of workers, the only free movement Treaty article to contain such a rule.19 The prohibition, moreover, has been embodied in secondary legislation since the early days of the European Economic Community.20 Regarding suppliers of goods and services, the position is less clear, but a recent directive has prohibited discrimination on the basis of sex.21 The idea that such supply is not entirely at the whim of the supplier but can be subjected to normative equality constraints has been formally accepted by the EU. Following a Mangold-type form of reasoning, one might suggest that for such legislation to be possible, it must be the case that a general principle of equality applies to such persons and actions.22 The specific directives are merely expressions of this idea. In that case, one can plausibly argue for further extensions of the equality principle, for example to discrimination on grounds of nationality. Indeed, this is a stronger argument than reactions to Mangold sometimes suggest. Selective prohibitions on discrimination raise their own normative problems—if the disadvantaging of minorities or weaker groups is unacceptable, then how can it be acceptable to prevent that happening to just some of those groups, while tolerating it with regard to others? The mechanics of legislation and adjudication provide a temporary answer: not all problems can be solved immediately. If non-discrimination law is to be normatively coherent, however, then each extension of a non-discrimination ban into a new area must be seen on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/114; Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L303/16; Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin [2000] OJ L180/22; Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services [2004] OJ L373/37. 19

Art 45(2) TFEU. Regulation 1612/68 on free movement of workers [1968] OJ spec ed L257/2. 21 Directive 2004/113 (n 18). 22 Case C-144/04 Mangold [2005] ECR I-9981. 20

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as founded on the applicability of a wider equality principle that will gradually be developed within that field. The constraints on this are practical ones—eg what is immediately justiciable and which mechanisms need to be created—rather than principled ones. Selective protection is necessarily abhorrent to equality law. The directive prohibiting sex discrimination within the supply of goods and services provides a coherent basis for a claim that such suppliers should also not discriminate on grounds of nationality, and that a wide equality norm must be considered already to apply to them.23 The relationship between freedom of contract and free movement is therefore more nuanced than at first appears. In general, where a contracting party discriminates on grounds of nationality, the law is faced with a choice between respecting their party autonomy on the one hand and preventing nationality discrimination on the other. Taking sides is unavoidable. If freedom of contract is the primary goal of free movement law, then this would suggest that the Treaty should not prevent private discriminatory contractual behaviour. If, however, freedom of contract is not an absolute right, then it may also be that it does not cover all contracts or all contracting parties and preferences: when the law deals with rights it always has a choice between a broad inclusion and a wide spectrum of derogations or a narrower initial scope and fewer derogations. Neither technique is a  priori superior to the other and neither approach can take complete precedence since each taken to its extreme becomes ridiculous. It is a question of the right balance in each context. There may thus be certain preferences in certain circumstances that can be coherently excluded from a legal concept of freedom of contract. These could include discriminatory preferences by states and employers because of the special nature of these parties and the particular interests involved.24 In that case, freedom of contract provides no reason not to intervene and prevent the discrimination. Indeed, since such discrimination makes it harder for certain out-of-state parties to access and conclude (at least some) contracts within the jurisdiction, those preferences can be seen as a restriction on freedom of contract, which should be restrained. A more precise analysis can be made by focusing not just on the character of the actors involved, but on the nature of each type of act. As is often the case in economic law, a market actor may act in one role at one moment and in another role at another.25 When an employer engages in discrimination in employment practices, one may separate their acts out into two sorts. Insofar as their advertisements, procedures and contracts express preferences for a certain kind of employee with certain skills and abilities, they are expressing legitimate prefer23

Directive 2004/113 (n 18). Krzeminska-Vamvaka (n 1) 144. See also M Kumm, ‘Who’s Afraid of the Total Constitution? Constitutional Rights as Principles and the Constitutionalization of Private Law’ (2006) 7 German Law Journal 342; M de Mol, ‘The Novel Approach of the CJEU on the Horizontal Direct Effect of the EU Principle of Non-Discrimination: (Unbridled) Expansionism of EU Law?’ (2011) 18 Maastricht Journal 109, 112. 25 Case C-205/03 P FENIN [2006] ECR I-6295; Opinion of the Advocate General in Case C-475/99 Glöckner [2001] ECR I-8089. 24

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ences that freedom of contract and free movement law should protect. The aim of free movement law here is to ensure that they can draw on the entire internal market to find the person who best meets those criteria. However, including discriminatory criteria or preferences within the process is not an expression of freedom of contract at all because such freedom has been denied to him by other prevailing norms and will not be acknowledged by the law. He is then acting as a ‘self-regulator’, imposing restrictions on his own capacity to contract. His prejudices are then restraining the meeting of minds and matching of preferences that would occur without such preferences. He is both the contracting party as well as the interfering third party. The situation is more like the first scenario of a party interfering with the contracts of others, and freedom of contract suggests that the discriminatory acts should be restrained by free movement law.

III. The Case Law on Horizontal Effect Any discussion of the case law on horizontal effect now inevitably gives a central place to the following remarkable statement in Viking Line, a case in which free movement law was applied to the actions of trade unions protesting against the use of foreign labour:26 57. … the Court would point out that it is clear from its case-law that the abolition, as between Member States, of obstacles to freedom of movement for persons and freedom to provide services would be compromised if the abolition of State barriers could be neutralised by obstacles resulting from the exercise, by associations or organisations not governed by public law, of their legal autonomy. … 64. It must be added that, contrary to the claims, in particular, of ITF, it does not follow from the case-law of the Court referred to in paragraph 57 of the present judgment that that interpretation applies only to quasi-public organisations or to associations exercising a regulatory task and having quasi-legislative powers.

It is this statement, more than all others, which suggests that horizontal effect encompasses any private actions restricting free movement. It also appears to set no principled limitations to the doctrine. As a consequence, it is easy to imagine that private contractual preferences are regulated by the Treaty. Viking Line, however, only applies free movement law to ‘obstacles’ to free movement created by private parties but does not tell us how such obstacles are to be defined. This is precisely the crucial point. Does an obstacle only arise when a third party intervenes to hinder contract formation between two other parties or is a discriminatory preference an obstacle in and of itself? 26 Case C-438/05 Viking Line (n 1). See also Case C-341/05 Laval v Svenska Byggnadsarbetareförbundet [2007] ECR I-11767.

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The Court has never provided us with a clear and explicit answer to this question. On the occasions when it has attempted to provide a general definition of a restriction on free movement, or an obstacle to free movement, it has done so in such dramatically wide and general terms that one could be forgiven for thinking that almost any act of any sort is caught within its remit. One may think here of Dassonville: ‘all trading rules enacted by Member States which are capable of hindering’; or Gebhard: ‘any measure which hinders or renders less attractive’.27 However, as Keck reminds us, when a definition becomes too open and imprecise it may not be as all-encompassing as it seems.28 Its very open-endedness deprives it of applicable meaning and gives it more the character of a piece of rhetoric than a thought-out definition. We learn from Keck, for example, that Dassonville, despite its broad wording, apparently does not cover selling arrangements. Viking Line, despite its open-ended formulation, may well not cover contractual preferences if the rest of the case law is any guide. For what is striking is that—outside of state purchasing and employment, discussed below29—all cases of horizontal effect to date have concerned third party intervention. There is not a single case in which free movement law has been clearly applied to a private contracting party to restrain their contractual preferences, and in each case where this has been attempted, the Court has rejected it as a matter of principle. Thus, the parties in Sapod Audic, Süllhofer and Vlaamse Reisbureaus all complained about the terms of contracts to which they were, or wished to be, a party, claiming that these terms violated free movement law.30 In Süllhofer and Vlaamse Reisbureaus the Court rejected the application of free movement law, reasoning that the agreements between private individuals were governed by competition law, and not free movement. This is not a very satisfying or complete argument—it is rather casual on the important and difficult issue of whether competition and free movement could or should sometimes address the same actions—but it does reject, as a matter of principle, the application of free movement to private contractual preferences.31 More fully, in Sapod Audic, the Court said that ‘[the] obligation arises out of a private contract between the parties to the main proceedings. Such a contractual provision cannot be regarded as a barrier to trade for the purposes of Article [34] of the Treaty since it was not imposed by a Member State but agreed between individuals.’32 The issue would appear to be decided: private 27

Case 8/74 Dassonville [1974] ECR 837; Case C-55/94 Gebhard [1995] ECR I-4165. Case C-267/91 Keck [1993] ECR I-6097. 29 See below, text to nn 43ff. 30 Case 65/86 Süllhofer [1988] ECR 5249; Case C-159/00 Sapod Audic (n 2); Case 311/85 Vlaamse Reisbureaus [1987] ECR 3801. 31 See Opinion of AG Poiares Maduro in Case C-438/05 Viking Line (n 1). P Pescatore, ‘Public and Private Aspects of European Community Law’ (1987) 10 Fordham International Law Journal 373, 378–79; J Baquero Cruz, ‘Free Movement and Private Autonomy’ (1999) 24 European Law Review 603–20. 32 Case C-159/00 Sapod Audic (n 2) para 74. 28

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contractual preferences are not regulated by free movement law. This is not what Viking Line means. The contrary argument is founded on two other cases, Ferlini and HaugAdrion.33 In both of these a discriminatory contractual term was apparently found to fall within the free movement articles of the Treaty. However, this impression becomes in both cases less forceful the more closely the facts and judgments are examined. Neither is really about true horizontal effect at all. Ferlini was concerned with the imposition of discriminatory fees for healthcare by a consortium of healthcare providers in Luxembourg which essentially amounted to the entire Luxembourg healthcare system. The case is really an example of a private regulator, with a public role, akin to Walrave or Bosman or the Royal Pharmaceutical Society or Wouters.34 About this situation there is no controversy. When a private party has regulatory power, it is subject to free movement law.35 This is justified either because the party is taking over a public role and so will be subject to public obligations—eg the Royal Pharmaceutical Society situation—or because it is, state approval or not, a de facto regulator and thus may be reasonably subject to the obligations imposed on other regulators. Neither situation raises a new question of principle; they both concern private parties exerting third party power. The contracts in question in Ferlini were an expression of that collective regulatory power, and the distinctiveness of the case is that the same body was both co-regulator and contractor.36 However, given the former function, the attribution of state-like responsibilities to it and the diminution of its freedom of contract is not novel. The healthcare body ceased to contract as a purely private party because it was both a regulator and exercised a public function. The illegality of the contractual term is then best understood as flowing from the quasi-regulatory role of the contracting healthcare party rather than from any restraint of private contractual preferences as such. Its contractual policy was also an act of regulation. The Court in Ferlini held: According to the case-law of the Court, the first paragraph of Article [18] of the Treaty also applies in cases where a group or organisation such as the EHL exercises a certain power over individuals and is in a position to impose on them conditions which adversely affect the exercise of the fundamental freedoms guaranteed under the Treaty. 37

33

Case C-411/98 Ferlini (n 2); Case 251/83 Haug-Adrion (n 2). Case C-36/74 Walrave & Koch [1974] ECR 1405; Case C-415/93 Bosman (n 10); Joined cases 266 and 267/87 Royal Pharmaceutical Society [1989] ECR 1295; Case C-309/99 Wouters [2002] ECR I-0157. 35 Ibid. See also Case C-176/96 Jyri Lehtonen and Castors Canada Dry Namur-Braine ASBL v Fédération Royale Belge des sociétés de basket-ball ASBL (FRBSB) [2000] ECR I-2681; Case C-519/04 P Meca Medina and Majcen v Commission [2006] ECR I-6991; J Baquero Cruz, ‘Free Movement and Private Autonomy’ (1999) 24 European Law Review 603. 36 See P Oliver and W-H Roth, ‘The Internal Market and the Four Freedoms’ (2004) 41 Common Market Law Review 407, 422. 37 Case C-411/98 Ferlini (n 2) para 50. 34

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The precise extent of the rule here is ambiguous, and Ferlini certainly provides some support for the idea that the correct test for horizontal application of free movement is either market power or inequality of bargaining power. The force of this is, however, mitigated by the facts that it is the only case in which this has been said, that the concept of a ‘certain power’ does not recur elsewhere in the case law, and that on the facts the case clearly concerns a private regulatory situation.38 The cases which the Court cited in support of itself were Walrave and Bosman, both private regulator cases and, somewhat confusingly, Defrenne, which is about social policy, albeit the horizontal effect thereof.39 The judgments in both Walrave and Bosman confine themselves, contrary to what the Court says in Ferlini, to the claim that the Treaty applies to collective regulation of an area of economic activity. A ‘certain power’ is clearly a weaker test than this. However, Ferlini has not been followed on this point. Haug-Adrion is a similarly messy case.40 A discriminatory clause in a motor insurance contract was in issue and the apparent importance of the case for horizontal effect arises from the following statement by the Court: 23. The answer to the question put by the national court must therefore be that the refusal of a no-claims bonus to insured persons resident in another member state who own a vehicle registered under customs plates is not contrary to any provision of Community law, in so far as that refusal is based solely on objective actuarial criteria applied in a non-discriminatory manner.

While the clause was permitted, the Court appears to assume that it falls within the Treaty and must respect the prohibition of nationality discrimination notwithstanding that the contract was between private parties. The paragraph quoted does not, however, follow from the ones preceding it, which addressed a different and far less controversial issue, ie whether the laws in force in the Member State in question contravened the Treaty. The entire case, the initial complaint and the arguments by the Advocate General, had all been addressed as an issue of whether a Member State, when regulating motor insurance, was entitled to permit discriminatory clauses. Had that State, by not explicitly banning such discrimination, failed to fulfil its own obligations? The Court answered this question: 20. It must be observed in that respect that the Court has consistently held that Article [35 TFEU] applies only to national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a member state and its export trade, in such a way as to provide a special advantage for national products or for the domestic market of the state concerned. 21. National rules such as those in question in the main proceedings do not fall within that category; they merely authorize insurance companies to take into account in their 38

See Oliver and Roth (n 36). Case 43/75 Defrenne [1976] ECR 455. 40 Case 251/83 Haug-Adrion (n 2). 39

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tariff conditions particular circumstances in which vehicles are used which increase or diminish the insurance risk, such as, for example, the use of vehicles registered under customs plates. 22. Quite apart from the fact that the enactment of such rules in a member state in no way prohibits insurers in that state from granting a bonus in respect of vehicles registered under customs plates, there is nothing to suggest that a tariff condition such as that at issue in the main proceedings, covered by such rules, gives any advantage whatever to national products or to the domestic market of the member state concerned.

All of this discussion is about the national rules, which the Court found to be quite reasonable since, while they regulated the way insurance contracts were to be formed, all the criteria that they authorised were objective and fair. We see at the end of paragraph 22 that the Court starts to lose its way and to talk about the contract as such, rather than the national rules, before suddenly plucking paragraph 23, quoted earlier, out of its hat. The dramatic force of such an unexpected conclusory non sequitur is not to be denied but its legal persuasiveness is somewhat less. Haug Adrion, it may be noted, is old and has not been followed. Finally, a word may be saved for Dansk Supermarked.41 Here the Court found that ‘it is impossible in any circumstances for agreements between individuals to derogate from the mandatory provisions of the Treaty on the free movement of goods’.42 That may seem to support a broad horizontal effect. However, the quotation begs all the important questions. Whether a contract derogates from the Treaty depends on what obligations the Treaty imposes on those individuals, which is precisely what is unclear. The case actually concerned a situation where two parties were attempting to rely on a contract they had concluded to exclude a third party from the national market. It is an uncontroversial case of third party interference. It was not contractual preferences as such that the Court was regulating but the use of a contract to prevent other parties from contracting—a typical intellectual property situation. Dansk Supermarked adds nothing to the law on horizontal effect. The only really clear and convincing cases where free movement law has been applied to contractual preferences as such, in restraint of party autonomy rather than in the cause of its protection, are where public procurement and employment are concerned. It is a long-established rule that the state has an obligation not to discriminate in its contracts, and that this is at least partly based on the law of free movement.43 It was suggested above that there is nothing very surprising about this since the state does not contract as a private party and there is no reason to award it the same freedom as such a party.44 This is even more the case in the light of the Treaty’s duty of loyalty, which while somewhat 41

Case 58/80 Dansk Supermarked [1981] ECR 181. Ibid, para 17. Case 45/87 Commission v Ireland (Dundalk Council) [1988] ECR 4929; Case C-21/88 Du Pont de Nemours [1990] ECR I-889; Case C-458/03 Parking Brixen [2005] ECR I-8585. 44 See above, text to nn 18ff. 42 43

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ambiguous in its consequences, supports the idea that states should act in the non-discriminatory spirit of the Union.45 Employment is more interesting. Reasons were given above on why within an internal market based on freedom of contract it could nevertheless be justified to restrain the contractual freedom of employers. The Court’s finding in Angonese that free movement law prohibits discrimination in all aspects of employment law need not be seen as showing a lack of commitment to freedom of contract.46 In fact, what is more surprising is the lack of similar examples. Angonese has been followed only once, in Raccanelli.47 All other employment cases have been dealt with by secondary legislation, which is quite explicit in regulating the substance of the employment contract. The oddity of Angonese and Raccanelli was that while they were clearly within the spirit and goal of secondary legislation—ie to prevent nationality discrimination in employment—they fell just outside the letter of that law because of the specific facts involved. In fact, even this is not clearly the case in Raccanelli, which could probably have been dealt with entirely on the basis of Regulation 1612/68. However, the cases can be understood just as plausibly as attempts to ensure consistency between secondary and primary law, and as interventions to remedy incoherence resulting from gaps in legislation—a controversial, but not unusual judicial activity—as being principled interpretations of primary law.

IV. Conclusion There are various concepts and principles that have been proposed as the basis for unifying theories of the internal market. Should it be about remedying discrimination, creating equality or ensuring market access? The idea that the Treaty articles fundamentally serve to protect freedom of contract, as traditionally understood by private lawyers, is an addition to this repertoire that shines its own distinctive light on questions of free movement law. Its more complete picture of the parties and interests involved has something to contribute to an analysis of the economics and politics of free movement as well as to issues of justification, all of which are beyond the scope of this chapter. For the topic under examination here, the particular value of this notion is that it provides a way of looking at horizontal effect that fits the case law tidily and, moreover, provides a fuller explanation of its scope than a mere focus on freedom of movement does. It offers a theoretical framework that explains why horizontal effect has gone so far in some ways, extending to all kinds of organisations and persons, whatever their character and role, while being so limited 45

Art 4 TEU. See Case C-265/95 Commission v France (‘Spanish strawberries’) [1997] ECR I-6959. Case C-281/98 Angonese (n 14). 47 Case C-94/07 Raccanelli v Max-Planck-Gesellschaft zur Förderung der Wissenschaften [2008] ECR I-5939. 46

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in others, never interfering in private contractual preferences, however important or obnoxious the contract or its terms may be. Third party interference in the contracts of others is prohibited while the expression of one’s own contractual preferences is not. The only apparent deviations from this are where state purchasing and employment are concerned, and these can be explained by noting that the state is not traditionally seen as enjoying freedom of contract, while employers have had this freedom significantly limited by the widespread legal entrenchment of prevailing social equality norms. Where freedom of contract is no longer acknowledged, the way is cleared for free movement law to move in. This is not just a model of free movement law, in the sense of a theory that explains past cases and could predict future ones. It also offers a rationale and justification. It is often said that free movement law has been far-reaching, intrusive and disruptive, and the Court is prepared to use it in powerful ways to remove barriers. It is, then, perhaps a little counterintuitive that it should have avoided addressing private discriminatory preferences. The usual motivation offered by the Court for its actions is effectiveness, and private discriminatory preferences can certainly limit integration, cross-border trade and the freedoms of others.48 There are numerous examples of private business practices that significantly impact on cross-border economic activity. Insuring or mortgaging foreign property, purchasing foreign cars or engaging in cross-border mobile telephony are services that are not offered at all, or only on punitive terms, by most providers. However, the use of economic policy, in particular of an internal market, as the central mechanism of European integration implies a certain faith in the transformative effect of markets. It makes no sense to proceed in this way unless one thinks that individual freedom of choice has the consequence of causing peoples to come together and overcome discriminatory prejudices. Protecting freedom of contract, even where that amounts to protecting a private right to discriminate, is consistent with this view. The assumption must be that private discrimination will ultimately wither away in the face of the personal and economic advantages of openness: choices between co-national suppliers or better suppliers will challenge prejudices and lead to mentality changes. To impose a non-discrimination rule on private contracts would be to achieve a short-term gain in integration and cross-border trade—and perhaps not even that given the difficulties of enforcement—at the expense of profounder and more rooted social unification. If we are going to use the market, we have to have a little faith in it. Of course, there is no need to go to naïve or fundamentalist extremes in this view and to abhor all individual restraints as a matter of principle. Just as employment raises such powerful and immediate issues of individual dignity and quality of life that a brute force to achieving equality is justified, there may 48 Case C-36/74 Walrave & Koch (n 34); see also E Herlin-Karnell, The Constitutional Dimension of European Criminal Law (Oxford, Hart Publishing, 2012) on effectiveness as a motor for the expansion of EU law.

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be other moments where the longer-term developmental benefits of individual freedom do not justify the short-term costs. However, thinking of freedom of contract as a value and right in itself, which the internal market aims to use in the European social cause, highlights that there will always be a trade-off, and that the legal toleration of private discrimination is not incoherent or paradoxical, or a shortcoming in the law, but the result of a consistent policy aimed at integration and mentality change. This is not to say that freedom of contract should be the only way of looking at free movement law. Its strength and its weakness is that it focuses precisely on the specific and distinctive activity at the heart of economic activity—the conclusion of contracts. This is what distinguishes cross-border economic activity from mere cross-border movement. The strength of that focus is that it identifies more precisely what is at stake when economic movement is unjustifiably restrained, and highlights the particular losses incurred, ie the loss of a contract and the decrease in total economic welfare. In some particular contexts, such as trade in goods and services, the treating of movement as the ‘interest’ in issue borders on the obscure, and presentation of the law in terms of ‘fundamental freedoms’ provides little explanatory force or information about what is actually going on. On the other hand, the language of freedom and movement highlights the importance of the law for human development and quality of life and, moreover, its social and integrationist purpose, about which freedom of contract has little to say. Too heavy an emphasis on the internal market as an area of contractual freedom risks masking its more-than-economic goals. However, as Union citizenship emerges as an important rights-bearer, and the Court’s early protests that it was not intended to extend the scope of EU law are increasingly marginalised, it may be that this is the more appropriate venue for these wider considerations.49 In an increasing number of cases, citizenship and economic activities are bound up and the Court has not been averse to noting that a worker or service provider is also a citizen with the corresponding rights of equality and participation.50 There may be, at least in many situations, explanatory value in separating the economic and the social, looking at the specifically economic aspects of the law—the traditional free movement articles—in primarily contractual terms, while considering the wider European and human issues at stake under the umbrella of citizenship. It must be finally noted that this chapter has been about the interpretation of the Treaty articles on free movement by the Court of Justice. That is but a small and perhaps decreasing part of the legal framework of the internal market, many areas of which are mostly regulated by secondary legislation. The suggestion that the Court is guided—albeit probably unknowingly—by an adherence to freedom

49 See Joined Cases C-64/96 and 65/96 Uecker and Jacquet [1997] ECR I-3171; Case C-34/09 Ruiz Zambrano, Judgment of 8 March 2011; Case C-135/08 Rottmann, Judgment of 2 March 2010. 50 Case C-148/02 Garcia Avello [2003] ECR I-11613; Case C-224/98 D’Hoop [2002] ECR I-6191; Case C-274/96 Bickel and Franz [1998] ECR I-7637.

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of contract sketches a picture of a very classically liberal law.51 However, that label attaches much less comfortably to the body of secondary legislation, where the primacy of individual freedom over other and collective interests is far less apparent. A freedom of contract-based free movement law does not therefore mean that there is a freedom of contract-based internal market. Nor does it even mean that the Court is offering a counterweight to legislation since its more liberal pronouncements often have self-neutralising indirect consequences—for example by serving to stimulate legislation.52 All this chapter has attempted to do is to model more precisely the way in which the Court has intervened in cross-border economic situations. The longer-term consequences of its interventions and their place in the wider European economic and social programme are topics for consideration elsewhere.

51 Although doubts may be raised as a result of reverse discrimination, see A Tryfonidou, Reverse Discrimination in EC Law (The Hague, Kluwer Law International, 2009); D Hanf, ‘Reverse Discrimination in EU Law: Constitutional Aberration, Constitutional Necessity, or Judicial Choice?’ (2011) 18 Maastricht Journal 29; G Davies, ‘Freedom of Movement, Horizontal Effect, and Freedom of Contract’ (2012) 20 European Review of Private Law (forthcoming). 52 W Kerber and R van den Bergh, ‘Mutual Recognition Revisited: Misunderstandings, Inconsistencies, and a Suggested Reinterpretation’ (2008) 61 Kyklos 447; KJ Alter and S Meunier-Aitsahalia, ‘Judicial Politics in the European Community. European Integration and the Pathbreaking Cassis de Dijon Decision’ (1994) 26 Comparative Political Studies 535; Davies, above n 8; CF Sabel and WS Simon, ‘Destablization Rights: How Public Law Litigation Succeeds’ (2004) 117 Harvard Law Review 1015.

5 The Impact of the General Principles of Union Law upon Private Relationships MICHAEL DOUGAN

I. Introduction This chapter considers the impact of the general principles of Union law upon private relationships.1 The legal landscape is more complicated than might appear at first sight—a complexity that is best tackled by recalling some important points about the general scheme by which Union law takes effect within the national legal systems. In particular, it is necessary to separate out two main issues which are in fact often conflated. The first concerns identifying who precisely is bound by the substantive obligation created under any given provision of Union law. For example, it may be an obligation directed only towards public authorities in the exercise of their public law powers; or one directed instead, or also, towards private parties as regards their own private law activities. The second issue concerns when that substantive obligation can be relied upon before the national courts. For example, it may be that a public law obligation binding on the Member State should be raised only in litigation between the relevant beneficiary of Union law and the public authorities; or it might also be raised, collaterally, in a dispute between the relevant beneficiary of Union law and another private party, where the outcome of that dispute hinges upon the legality of some intervening public act.2 Whereas answering the first issue is essentially an exercise in interpretation of the relevant Union law provisions, dealing with the second issue depends (at least in part) upon certain constitutional parameters relating, in particular, to the 1 Constraints of time and space require us to adopt a deliberately narrow approach to this question, which does not engage with certain broader issues, such as the relevance of the Charter of Fundamental Rights now that it has become legally binding and contains various fundamental rights which were previously recognised only as general principles of Union law; and, for example, how other jurisdictions have dealt with the horizontal application of fundamental rights and the potential lessons for Union law (whether such rights derive from the Charter or are to be considered as general principles of Union law). 2 See further eg A Dashwood, M Dougan, B Rodger, E Spaventa, and D Wyatt, Wyatt and Dashwood’s European Union Law, 6th edn (Oxford, Hart Publishing, 2011) ch 8.

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type of Union provision involved. One set of rules applies to Treaty provisions.3 Another set of rules applies to Directives.4 Only having clarified the position as regards Treaty provisions and Directives should we proceed to consider the legal framework governing the general principles of Union law—the reason being that those general principles are second-order legal norms, which only apply when they have been triggered by some other provision of Union law; moreover, perhaps the most interesting legal questions arise from the interaction between the enforceability of the ‘primary’ trigger and that of the ‘secondary’ general principle.

II. The Impact of Treaty Provisions upon Private Relationships Where a Treaty provision imposes substantive obligations only upon private parties, as with Articles 101 and 102 TFEU on Union competition law, then obviously those substantive obligations can be enforced in litigation between two private parties.5 Similarly, if the relevant Treaty provision imposes substantive obligations upon both public and private parties, as is the case with Article 157 TFEU on equal pay between men and women, or Article 45 TFEU on the free movement of workers, then obviously those substantive obligations can be enforced in litigation against an employer, whether the latter is of a public or private nature.6 What if the relevant Treaty provision imposes substantive obligations only upon the Member State, as with Article 34 TFEU on the free movement of goods? In such situations, the substantive obligation can be enforced in litigation against the Member State itself.7 In addition, however, the Court has found that the substantive obligation contained in Article 34 TFEU can also be raised collaterally in litigation between two private individuals, where the outcome of their dispute depends upon the legality of a Member State act. Indeed, there are a significant number of rulings where two private actors are in dispute—eg about performance of a contract—and the outcome depends upon the compatibility of some public law measure with the Treaty rules on the free movement of goods.8

3

Although the same principles would apply also to regulations and certain decisions. Although again, the same principles would apply to certain decisions, ie those addressed only to the Member States. See Case C-80/06 Carp [2007] ECR I-4473. 5 Eg Case 127/73 BRT v SABAM [1974] ECR 51. 6 Eg Case 43/75 Defrenne v Sabena [1976] ECR 455 on Art 157 TFEU and Case C-281/98 Angonese [2000] ECR I-4131 on Art 45 TFEU. 7 From the countless cases to illustrate that point, it suffices to recall Case 120/78 ‘Cassis de Dijon’ [1979] ECR 649 or Case C-405/98 Gourmet International [2001] ECR I-1795. 8 Eg Case 74/76 Iannelli & Volpi v Meroni [1977] ECR 557; Case C-315/92 Verband Sozialer Wettbewerb v Clinique Laboratories [1994] ECR I-317; Case C-33/97 Colim v Biggs [1999] ECR I-3175; 4

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III. The Impact of Directives upon Private Relationships The situation as regards Union Directives is complicated by the fact that such measures prescribe the ends but not the means: even if certain substantive obligations are ultimately envisaged for private parties in fields such as consumer or employment law, they must still be mediated through the exercise by the Member State of its public law powers in adopting legislative or administrative provisions adequate for ensuring the full transposition of those substantive obligations into the domestic legal order. For present purposes, we are concerned only with the ability of a Union Directive to have direct effect in the absence of full and correct transposition by the Member State. Insofar as a Directive seeks to impose substantive obligations upon the Member State, those substantive obligations can be enforced in litigation against the public authorities, regardless of whether the relevant obligations are to be considered public or private in nature: for example (in the former case), the obligation to hold an environmental impact assessment;9 or (in the latter case), employment rights for workers.10 Enforcing the substantive obligations of the Member State may well have certain consequences for a private party whose rights or interests hinge upon the compatibility of the Member State’s action with the unimplemented Union Directive. On the one hand, it is now well established that, if an individual brings an action against a public authority based upon an EU Directive, enforcement of the public authority’s substantive obligations before the national courts may well have certain ‘incidental effects’ for another private individual who is not, however, directly involved in the litigation.11 On the other hand, the situation is less clear where the Member State’s own substantive obligations are raised as a collateral issue in litigation which directly involves two private parties. It is arguable that, if an individual can enforce the Member State’s obligations in vertical litigation and another private party must suffer the consequences, an unimplemented Directive should be capable of have exactly the same effects within the context of horizontal litigation, since both the nature of the substantive obligation being enforced and the consequences of its enforcement for the private party remain exactly the same.12 In the absence of any clear authority, however, the situation remains open to debate.13 Case C-159/00 Sapod Audic v Eco-Emballages [2002] ECR I-5031; Case C-322/01 Deutscher Apothekerverband [2003] ECR I-14887. 9

Eg Case C-72/95 Kraaijeveld [1996] ECR I-5403. Eg Case 152/84 Marshall [1986] ECR 723. 11 Eg Case C-201/02 Wells [2004] ECR I-723 and Joined Cases C-152/07 to 154/07 Arcor [2008] ECR I-5959. 12 The Court itself in Case C-201/02 Wells (n 11) seemed to suggest that that was a potential explanation for otherwise bothersome rulings such as Case C-194/94 CIA Security [1996] ECR I-2201 and Case C-443/98 Unilever Italia [2000] ECR I-7535. 13 See further eg K Lenaerts and T Corthaut, ‘Of Birds and Hedges: The Role of Primacy in 10

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Insofar as a Directive seeks to impose substantive obligations upon a private party—regardless of whether or not it also imposes substantive obligations upon the public authorities—it is well established that that Directive cannot of itself be enforced against an individual.14 The national courts must try to interpret existing legislation so far as possible in accordance with the Directive;15 but if that cannot be done, the Directive must remain unenforced vis-à-vis the private party who was ultimately intended to comply with its substantive provisions.16 Moreover, it is not possible to evade this restriction on the enforceability of Union Directives against private parties by invoking the Member State’s inherent obligation to transpose such measures into the domestic legal system. Unlike with the obligations imposed under Article 34 TFEU as regards the free movement of goods, the Member State’s duty to transpose a Union Directive cannot be raised collaterally in an otherwise plainly horizontal dispute, even though the outcome of that litigation depends ultimately upon the legality of the Member State’s existing legislation.17

IV. The Situation as Regards General Principles of Union Law When it comes to the potential impact of the general principles of Union law upon private relationships, a traditional understanding of the constitutional position would require us to highlight two key features of this particular source of Union law. First, the general principles of Union law form part of the constitutional and administrative law of the Union’s legal order.18 By their very nature, they are intended to impose limits to the exercise of power conferred upon the public authorities in the general interest. The general principles therefore consist of public law obligations: they are not part of private law and do not seek directly to control the activities of private parties.19 Secondly, as we mentioned before, the Invoking Norms of EU Law’ (2006) 31 European Law Review 287; M Dougan, ‘When Worlds Collide! Competing Visions of the Relationship between Direct Effect and Supremacy’ (2007) 44 Common Market Law Review 931. 14

Eg Case C-91/92 Faccini Dori [1994] ECR I-3325. Eg Case 106/89 Marleasing [1990] ECR 4135. 16 Eg Cases C-397/01 to C-403/01 Pfeiffer [2004] ECR I-8835. 17 As in disputes such as Case C-91/92 Faccini Dori (n 14). 18 We do not here use the term ‘administrative law’ in the narrow sense of applying only to activities of the executive, but as shorthand for the public law that applies to all state activities, whether legislative, executive or indeed judicial in nature. 19 Save where the latter can be assimilated to a public body in some particular context, eg because they exercise powers delegated to them by the public authorities in the general interest or have been otherwise ‘woven into the fabric of government’. Consider eg Case C-447/09 Prigge, Judgment of 13 September 2011; cf Cases C-297-298/10 Hennigs, Judgment of 8 September 2011. 15

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general principles of Union law are ‘second-order’ obligations: they do not apply independently to any given situation; their application must first be triggered by bringing the situation within the scope of the Treaties. The precise definition of what falls ‘within the scope of the Treaties’ for those purposes remains unclear,20 but there is broad consensus on the proposition that it embraces three main situations: where the Union institutions are exercising powers conferred by or pursuant to the Treaties;21 where the Member State is discharging its duty under the Treaties to implement Union law within its own legal system and thus exercising executive power on the Union’s behalf;22 and where the Member State seeks rather to derogate from its binding obligations under Union law.23 Where national measures fall outside the scope of the Treaties, there are no grounds for assessing their compatibility with the general principles of Union law.24 Bearing those twin features in mind—the essentially administrative law nature of the general principles, and their second-order application only having been triggered by some other provision of Union law—we can begin to map out the potential relevance of the general principles for private relationships. For those purposes, it is worth distinguishing (a) circumstances where the relevant trigger for the application of the general principles of Union law lies in the application of a primary Treaty provision from (b) circumstances where the relevant trigger lies in the enforcement of a Union Directive.

A. Where the Trigger Is a Treaty Provision If the substantive obligation is imposed by the Treaty upon the Member State, and that substantive obligation is raised in vertical litigation against the public authorities, then the substantive obligation is both binding on and enforceable against the public authority. Moreover, the general principle whose application is triggered by such an application of the Treaty (usually because the Member State is seeking to derogate from its Union obligations) will also be both binding on 20 See further eg T Tridimas, The General Principles of EU Law, 2nd edn (Oxford, Oxford University Press, 2006); X Groussot, General Principles of Community Law (Groningen, Europa Law Publishing, 2006). 21 Eg Case C-377/98 Netherlands v Parliament and Council [2001] ECR I-7079 (Union legislature); Case C-404/92P X v Commission [1994] ECR I-4737 (Union executive); Case C-185/95P Baustahlgewebe v Commission [1998] ECR I-8417 (Union judiciary). 22 Eg Case 5/88 Wachauf [1989] ECR 2609; Joined Cases C-31/91 to C-44/91 Lageder [1993] ECR I-1761; Case C-2/92 Bostock [1994] ECR I-955; Case C-292/97 Karlsson [2000] ECR I-2737; Joined Cases C-20/00 and 64/00 Booker Aquaculture [2003] ECR I-7411; Case C-101/01 Lindqvist [2003] ECR I-12971. This includes the obligation to provide for the enforcement of Union law within the domestic legal system: consider eg Case 222/84 Johnston [1986] ECR 1651; Case C-276/01 Steffensen [2003] ECR I-3735. 23 Eg Case C-260/89 ERT [1991] ECR I-2925; Case C-368/95 Familiapress [1997] ECR I-3689; Case C-60/00 Carpenter [2002] ECR I-6279; Joined Cases C-482 and 493/01 Orfanopoulos [2004] ECR I-5257. In this context, note also the ‘balancing of rights’ rulings, eg Case C-112/00 Schmidberger [2003] ECR I-5659; Joined Cases C-570 and 571/07 Blanco Pérez [2010] ECR I-4629. 24 Eg Case 12/86 Demirel [1987] ECR 3719; Case C-159/90 SPUC v Grogan [1991] ECR I-4685; Case C-299/95 Kremzow [1997] ECR I-2629. Cf Arts 4(1) and 5(2) TEU.

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and enforceable against the public authority.25 That is not to say that the position is entirely straightforward: in particular, the Court sometimes appears unsure (at best) and inconsistent (at worst) about when to treat a situation as falling within the scope of the primary Treaty provisions and/or when to consider the application of the general principles of Union law to situations that do clearly fall within the scope of the Treaties.26 For present purposes, however, such problems are less important than the underlying point of principle: vertical situations falling within the scope of the primary Treaty provisions should attract scrutiny under the general principles of Union law. If the substantive obligation is imposed by the Treaty upon the Member State, but that substantive obligation is raised in horizontal litigation between two private parties, then the substantive obligation is not binding on the individual— but as we have seen, it can still be raised as a collateral issue whose determination will affect the outcome of the private litigation. Moreover, that collateral assessment of whether the Member State has complied with its substantive obligations under the Treaty will trigger the application of the second-order general principles of Union law. Again, those general principles will not be binding as such upon the individual—but they can still form part of the relevant legal framework used to determine the outcome of the collateral public law issue, and may thus ultimately determine the outcome of the private litigation.27 If the substantive obligation is imposed by the Treaty upon a private party and that substantive obligation is raised in horizontal litigation between two individuals, then, obviously, the substantive obligation is both binding on and enforceable against the defendant; it might seem equally self-evident that the general principles of Union law cannot be considered binding on and enforceable as such against the defendant and, as a consequence, the general principles of Union law have no role to play in such situations. And yet we know from cases such as Viking Line and Courage v Crehan that the general principles of Union law clearly do apply even in such disputes.28 One view is that such cases amount to an extension of the general principles of Union law into the private law sphere, so that those general principles become horizontally binding not only in a collateral sense, but also in a true sense, insofar as they have begun not only to control the actions of public authorities as a body of ‘European administrative law’, but also to regulate the autonomy of individual actors as a body of ‘European private law’. However, perhaps the preferable view is that the general principles of Union law remain public law 25

Eg Case C-260/89 ERT [1991] ECR I-2925; Case C-244/06 Dynamic Medien [2008] ECR I-505. For a recent example, consider Case C-391/09 Runevič-Vardyn and Wardyn, Judgment of 12 May 2011, the Court refrained from considering whether a Union citizen, whose position clearly fell within the scope of the Treaties, should be protected by a general principle of Union law guaranteeing equal treatment on grounds of ethnic origin. Cf rulings such as Case C-413/99 Baumbast [2002] ECR I-7091. 27 Eg Case C-368/95 Familiapress (n 23). 28 Case C-438/05 Viking Line [2007] ECR I-10779 and Case C-453/99 Courage v Crehan [2001] ECR I-6297. 26

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obligations which are not directly binding upon the private defendant; but they remain binding upon the Member State and are in fact of continued relevance to this otherwise entirely horizontal litigation because there is a public law dimension to the dispute which triggers their application. Consider the ruling in Viking Line. A national court faced with a clash of rights (freedom of establishment versus the right to collective action) was obliged to interpret Union law so as to strike an appropriate balance between those two rights. The litigation was horizontal in the sense that it involved substantive rights and obligations between two private parties—but the national courts had to exercise a significant margin of discretion in settling that litigation, for which purpose they were obliged to take into account their own obligation (when acting within the sphere of Union law) to protect fundamental rights as general principles of Union law.29 Similarly, consider the ruling in Courage v Crehan. A national court which establishes a breach of Union law is obliged to furnish the beneficiary with effective judicial protection of their rights under the Treaties. Again, the litigation may well be horizontal in the sense that it involves substantive rights and obligations between two private parties—but national courts exercising jurisdiction over any category of Union law claims are under an autonomous duty to ensure that the remedies and procedural rules available under the domestic legal system conform to the principles of equivalence and effectiveness, as well as the right of access to judicial process, as general principles of Union law.30

B. Where the Trigger Is a Directive If the obligations contained in a Union Directive are raised in vertical litigation against a public authority, then those obligations are both binding on and enforceable against that public authority. Moreover, the general principles of Union law whose application is triggered by such an application of the directive (usually because the Member State is, or at least is meant to be, implementing its Union law obligations) will also be both binding on and enforceable against the same public authority.31 For those purposes, of course, each case must still be assessed on its own merits to ensure that the situation really does fall within the scope of Union law: consider, for example, the finding in Römer that German rules should not be assessed for their compatibility with the general principle of Union law guaranteeing equal treatment on grounds of sexual orientation, in respect of the period before expiry of the deadline for implementing the Equal Treatment Framework Directive,32 where there was no other factor capable of bringing the disputed national rules within the scope of the Treaties.33 29

See further eg Dashwood et al (n 2) chs 10 and 11. Ibid, ch 9. 31 Eg Case C-442/00 Caballero [2002] ECR I-11915; Case C-101/01 Lindqvist (n 22). 32 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L303/16. 33 Case C-147/08 Römer, Judgment of 10 May 2011. Cf Case C-427/06 Bartsch [2008] ECR I-7245. 30

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If the obligations contained in the Directive are raised rather in horizontal litigation against another individual, then, as we have seen, the Directive cannot of itself provide the basis for imposing obligations upon a private party. As regards the scope for triggering the second-order general principles of Union law, however, two main possibilities arise. The first possibility is that—although the dispute is undeniably horizontal in its character and there can be no question of the Directive itself producing novel obligations for the private defendant—there is nevertheless some other public law dimension to the case which is capable of activating the general principles of Union law. If that happens, ie if a horizontal dispute involving a Union Directive nevertheless manages to trigger the vertically applicable general principles of Union law, those general principles will not be binding as such upon the individual, but they can still form part of the relevant legal framework used to settle the collateral public law issue, and may thus ultimately determine the outcome of the private litigation. Consider the ruling in Mangold,34 which concerned a horizontal dispute involving national legislation incompatible with the Equal Treatment Framework Directive.35 There could be no direct effect for the Directive itself because (in the first place) the deadline for its transposition in the relevant Member State had not yet expired and (in the second place) Directives cannot of themselves impose obligations upon private parties. However, the situation still fell within the scope of the Treaties because the disputed national legislation (almost coincidentally) was intended to implement another Union Directive concerning the protection of fixed-term workers.36 That fortuitous circumstance triggered the general principles of Union law, including the principle of equal treatment on grounds of age. The incompatibility of the national legislation with the general principle of Union law had become a collateral public law issue which could be raised and settled even in the context of a horizontal dispute between two private parties. Consider also the ruling in Kücükdeveci,37 another horizontal dispute involving Contrast with the rulings in Case C-144/04 Mangold [2005] ECR I-9981 and Case C-555/07 Kücükdeveci [2010] ECR I-365 (discussed below). 34 See Case C-144/04 Mangold (n 33). See further eg D Schiek, ‘The ECJ Decision in Mangold: A Further Twist on Effects of Directives and Constitutional Relevance of Community Equality Legislation’ (2006) 35 Industrial Law Journal 329; E Muir, ‘Enhancing the Effects of Community Law on National Employment Policies: The Mangold Case’ (2006) 31 European Law Review 879; A Dashwood, ‘From van Duyn to Mangold via Marshall: Reducing Direct Effect to Absurdity?’ (2006– 07) 9 Cambridge Yearbook of European Legal Studies 81; C Tobler, ‘Putting Mangold in Perspective’ (2007) 44 Common Market Law Review 1177; A Masson and C Micheau, ‘The Werner Mangold Case: An Example of Legal Militancy’ (2007) 13 European Public Law 587; J Jans, ‘The Effect in National Legal Systems of the Prohibition of Discrimination on Grounds of Age as a General Principle of Community Law’ (2007) 34 Legal Issues of Economic Integration 53. 35 Directive 2000/78/EC (n 32). 36 Council Directive of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP [1999] OJ L175/43. 37 Case C-555/07 Kücükdeveci (n 33). See further eg G Thüsing and S Horler, Annotation of Kücükdeveci (2010) 47 Common Market Law Review 1161; P Cabral and R Neves, ‘General Principles

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national legislation which was incompatible with the Equal Treatment Framework Directive. Again, there could be no direct effect for the Directive itself: although the deadline for transposition had now expired, the dispute was still between two private parties. But again, the situation fell within the scope of the Treaties: this time not because the national legislation was intended to implement some another Union Directive; but (according to the Court) because the subject matter of the dispute fell within the personal and material scope of the Equal Treatment Framework Directive and could thus be located within a field regulated by Union law. On that basis, it was possible to trigger the general principles of Union law, including the principle of equal treatment on grounds of age. As in Mangold, the incompatibility of the national legislation with the general principles of Union law had become a collateral public law issue which could be raised and settled even in the context of a horizontal dispute between two private parties.38 That legal framework may well provide an explanation for cases such as Mangold—but that is not to say, of course, that our explanation is entirely satisfactory. For example, Mangold and Kücükdeveci raise a difficult point of legal principle: should a non-directly effective provision of Union law be capable of providing the basis for applying a directly effective general principle of Union law? Some commentators have criticised this mismatch between the non-direct effect of the trigger measure and the direct effect of the general principle, arguing that it opens the door to an almost uncontrolled extension of the scope of application of the general principles of Union law.39 In fact, the present author is less troubled by this idea. After all, one of the main reasons why a Union measure does not produce direct effect is that it leaves some discretion to the Member State, be it significant, involving real policy choices; or essentially formal, such as the transposition of clear and unconditional provisions of a Union Directive into national law. Moreover, one of the main purposes of the general principles of Union law is to control the exercise of the Member State’s discretion when acting within the scope of the Treaties—as when exercising its discretion when it comes to implementation. There seems nothing wrong in principle, therefore, to admit that a Union measure lacks direct effect while at the same time insisting that the Member State must exercise its corresponding discretion in accordance with the general principles of Union law. Indeed, to say otherwise might deprive the general principles of much of their rationale and useful effect.40 of EU Law and Horizontal Direct Effect’ (2011) 17 European Public Law 437; E Muir, ‘Of Ages In— And Edges Of—EU Law’ (2011) 48 Common Market Law Review 39. 38 Contrast with rulings such as Case C-147/08 Römer, Judgment of 10 May 2011 and Case C-427/06 Bartsch (n 33), where the national measures fell outside the scope of Union law and thus could not be assessed against the general principles of Union law. 39 Eg E Spaventa, ‘The Horizontal Application of Fundamental Rights as General Principles of Union Law’ in A Arnull, C Barnard, M Dougan and E Spaventa (eds), A Constitutional Order of States? Essays in EU Law in Honour of Alan Dashwood (Oxford, Hart Publishing, 2011). 40 See M Dougan, ‘In Defence of Mangold?’ in A Arnull, C Barnard, M Dougan and E Spaventa (eds), A Constitutional Order of States? Essays in EU Law in Honour of Alan Dashwood (Oxford, Hart Publishing, 2011).

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Kücükdeveci raises another difficult point of legal principle: in what sense could the Member State in that dispute be said to have been ‘acting within the scope of the Treaties’ when it was neither implementing nor derogating from its Union law obligations? On the one hand, it has been argued that the situations falling within the scope of the Treaties should be enlarged beyond situations of ‘pure’ implementation or derogation by the Member State so as also to include the situation where there is a mere coincidence in subject matter between Union and national law: provided the relevant field is occupied by some measure of Union law, the situation will fall within the scope of the Treaties for the purposes of triggering the general principles of Union law, even though there is no meaningful sense in which the relevant Member State act can be described as either an implementation of or derogation from its first order obligations under the Treaties.41 On the other hand, the present author finds it difficult to identify a plausible constitutional basis for such a dramatic extension in the potential scope of application of the Union’s system of administrative law. Why should existing national rights and obligations be replaced with an entirely new corpus of Union law—not because the Member State is acting as a direct delegatee of Union law by enforcing, or as a conscious detractor from Union law by seeking to avoid, its Treaty obligations, but merely because there is a coincidence of subject matter between some measure of Union secondary law and the exercise of national regulatory competence? Such a prospect could enormously enlarge the potential reach of the ‘European public law order’: the Union would effectively assume a far-reaching authority to define and enforce the rule of law, even for situations where the relationship between the assertion of Union and the exercise of Member State competences is relatively tenuous.42 So much for our first possibility, ie where a first-order horizontal dispute nevertheless involves a second-order public law issue. The second possibility is that the dispute is again undeniably horizontal in character, so that there can still be no question of the relevant Directive itself producing novel obligations for the private defendant, but this time there is no real public law dimension to the case which would be capable of activating the general principles of Union law. In other words, the dispute concerns an obligation under a Union Directive which was intended to apply to the private party and there is no meaningful way of linking his or her conduct to a public law default by the Member State itself (other than perhaps in the broadest possible constitutional sense that the legal order does not positively prevent the private party from acting as he or she has done). In such a situation, the general principles of Union law cannot apply independently to the conduct of the private party (because that would run against their very administrative law nature); and although the general principles 41

See eg Case C-427/06 Bartsch (n 33) Opinion of AG Sharpston, para 69. See Dougan (n 40). On this point, consider other recent rulings exploring the scope of application of Union law, eg Case C-382/08 Neukirchinger, Judgment of 25 January 2011; Case C-147/08 Römer, Judgment of 10 May 2011; Joined Cases C-483/09 and C-1/10 Gueye, Judgment of 15 September 2011. 42

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of Union law remain binding on the Member State, there is simply no trigger which can bring them into play. This is in contrast to the situation in Viking Line: without any enforceable first-order substantive rights or obligations, there would be nothing for the national court to interpret, based upon its secondorder obligation to respect fundamental rights as general principles of Union law. Similarly, by contrast to the situation in Courage v Crehan: without any enforceable first-order substantive rights or obligations, there would be nothing for the national court to enforce, based upon its second-order obligation to ensure effective judicial protection as general principles of Union law.

V. True Horizontal Application of the General Principles of Union Law? In fact, the only way that the general principles of Union law could become relevant in such situations would be if we simply changed their very nature: from being principles of European administrative law, to becoming principles of European private law. As we have seen, cases such as Viking Line, Courage v Crehan, Mangold or Kücükdeveci could be interpreted as evidence that the Court has already started applying the general principles of Union law as such to genuinely private conduct. However, we found no evidence in the case law as it stands to suggest that the general principles of Union law have moved beyond their function as administrative law obligations aimed at controlling the conduct of Member States (albeit that those administrative law obligations can sometimes also be raised as collateral issues in horizontal disputes between two individuals) so as to become truly horizontal in their application (in the sense of being capable of determining the conduct of private parties in the exercise of their own autonomy). The dispute which perhaps came closest to inviting the Court to take that step was Audiolux.43 The Court rejected the existence of a general principle of Union law based on the equality of shareholders, according to which minority shareholders would be protected by the dominant shareholder’s obligation, when acquiring or exercising control of a company, to offer to buy their shares under the same conditions as those agreed when a shareholding in that company conferring or strengthening the control of the dominant shareholder was acquired. In particular, the Court could not find any compelling evidence to support such a general principle from the existing state of Union secondary law; nor could it consider such a general principle to be a manifestation of the well-established 43 Case C-101/08 Audiolux [2009] ECR I-9823. See further eg J Bengoetxea, Case C-101/08, ‘Case C-101/08, Audiolux SA and Others  v.  Groupe Bruxelles Lambert SA (GBL) and Others, Bertelsmann AG and Others, Judgment of the Court (Fourth Chamber) of 15 October 2009’ (2010) 47 Common Market Law Review 1173.

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right to equal treatment between individuals who find themselves in comparable situations. The Court concluded that [t]he general principles of [Union] law have constitutional status while the principle proposed by Audiolux is characterised by a degree of detail requiring legislation to be drafted and enacted at [Union] level by a measure of secondary [Union] law. Therefore, the principle proposed by Audiolux cannot be regarded as an independent general principle of [Union] law.44

In other words: the Court did not appear to rule out the possibility in principle of recognising a general principle of Union law, the primary purpose of which was to impose obligations upon and between private parties. However, Advocate General Trstenjak was more explicit in affirming the orthodox constitutional position: a general principle of Union law of the sort claimed by the applicants would by its very nature be difficult to swallow, since it was not directed towards the exercise of public power by the Union or Member State authorities.45 That said, Advocate General Trstenjak appeared to refine her position on the underlying point of principle in the subsequent case of Dominguez.46 Both the Advocate General and the Court agreed that, although certain French rules limiting a worker’s entitlement to paid annual leave were to be considered incompatible with the standards imposed by the Working Time Directive,47 in a situation where the disputed rules could not be interpreted in conformity with the provisions of the Directive, it was not possible for the latter to be enforced per se within the context of a private employment relationship. However, the Advocate General proceeded to examine various possibilities for achieving a favourable outcome for the employee by other means—including whether it was possible to recognise the right to paid annual leave as a general principle of Union law and for the latter to produce independent legal effects in relations between two private parties. At the risk of doing injustice to this long and complex Opinion, it suffices to observe that Advocate General Trstenjak refused to exclude the possibility in principle that those general principles of Union law which enjoyed the status of fundamental rights should indeed be capable of direct application to relations between individuals.48 By contrast, the Court itself refused to engage with any further possibilities for enforcing the employee’s right to paid annual leave beyond the right to seek compensation from France under the Francovich case law.49 In particular, the Court refrained from expressing any view on whether the right to paid annual leave should be recognised as a general principle of Union law,50 or on whether the latter should be capable of being 44

Case C-101/08 Audiolux (n 43) para 63. Ibid, Opinion of AG Trstenjak, para 77. 46 Case C-282/10 Dominguez, Judgment of 24 January 2012. 47 Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time [2003] OJ L299/9. 48 Case C-282/10 Dominguez (n 46) Opinion of AG Trstenjak, paras 89–143. 49 Cases C-6 and C-9/90 Francovich [1991] ECR I-5357. 50 Although the Court has already explicitly linked the right to paid annual leave with the 45

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enforced against public law acts, such as the disputed French measures, collaterally during the course of these horizontal proceedings;51 let alone on whether the general principles of Union law can indeed go even further, so as directly to create rights and obligations of a truly private law nature. For now, therefore, the important question remains open whether the general principles of Union law should or even could evolve into general principles of European private law. That is a subject tackled in greater depth by other contributors to this volume.52 For present purposes, it is sufficient to offer some thoughts on the various challenges which such an evolution might pose for legal scholars. First, and perhaps most fundamentally, what would be the constitutional justification for developing an unwritten body of European private law obligations? It is often said that the function of the general principles of Union law is one of ‘gap filling’: the Union legal order is a new and comparatively young creation, so it needs the general principles of Union law to offer solutions to novel problems, which the Treaties and/or the Union legislature have failed to address for themselves.53 However, while ‘gap filling’ may be a necessary part of the justification for the general principles of Union law, it is not in itself a sufficient constitutional basis for determining either their existence or their scope. There are a great many gaps in the world: they do not all need filling by Union law, let alone by its general principles. If one wishes to argue that Union law, and more specifically the general principles of Union law, should fill some gap in the coverage and coherence of the legal universe, then one needs to provide a convincing constitutional justification for that extension of Union competence. After all, even the evolution of the general principles of Union law must satisfy the fundamental principle of conferral laid down in Article 5(2) TEU relevant provisions of the Charter, eg Case C-155/10 Williams, Judgment of 15 September 2011; Case C-214/10 Schulte, Judgment of 22 November 2011. 51 In a manner comparable to Case C-144/04 Mangold (n 33); Case C-555/07 Kücükdeveci (n 33). Note that there are numerous cases where the Court has dealt (in particular) with rights to equal treatment under Union directives but without making any reference to the general principles of Union law, eg Case C-388/07 Age Concern England [2009] ECR I-1569; Case C-88/08 Hütter [2009] ECR I-5325; Case C-229/08 Wolf, Judgment of 12 January 2010; Case C-341/08 Petersen, Judgment of 12 January 2010; Case C-104/09 Roca Álvarez, Judgment of 30 September 2010; Case C-499/08 Andersen, Judgment of 12 October 2010; Case C-45/09 Rosenbladt, Judgment of 12 October 2010; Case C-356/09 Kleist, Judgment of 18 November 2010; Cases C-250/09 and C-268/09 Georgiev, Judgment of 18 November 2010; Cases C-159-160/10 Fuchs, Judgment of 21 July 2011. Cf D Schiek, ‘Age Discrimination Before the ECJ: Conceptual and Theoretical Issues’ (2011) 48 Common Market Law Review 777. 52 See also eg X Groussot and HH Lidgard, ‘Are There General Principles of Community Law Affecting Private Law?’ in U Bernitz, J Nergelius and C Cardner (eds), General Principles of EC Law in a Process of Development (The Hague, Kluwer Law International, 2008); M Safjan and P Mikłaszewicz, ‘Horizontal Effect of the General Principles of EU law in the Sphere of Private Law’ (2010) 18 European Review of Private Law 475; A Hartkamp, ‘The Effect of the EC Treaty in Private Law: On Direct and Indirect Horizontal Effects of Primary Community Law’ (2010) 18 European Review of Private Law 527; Spaventa (n 39). 53 Eg Tridimas (n 20). Consider further eg K Lenaerts and J A Gutiérrez-Fons, ‘The Role of General Principles of EU Law’ in A Arnull, C Barnard, M Dougan and E Spaventa (eds), A Constitutional Order of States? Essays in EU Law in Honour of Alan Dashwood (Oxford Hart Publishing, 2011).

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(the Union only enjoys those powers which have been attributed to it under the Treaties) as well as the principle of institutional balance contained in Article 7(2) TEU (each institution must act within the limits of the powers conferred on it in the Treaties). Of course, the development of unwritten norms such as the general principles of Union law makes it unrealistic to identify a concrete ‘legal basis’ for this particular assertion of Union competence—other than the general direction under Article 19(1) TEU that the Union courts should ensure, in the interpretation and application of the Treaties, that ‘the law is observed’. Nevertheless, the Court can still be expected to demonstrate that its interpretation of the Treaties and its development of the Union legal order as a whole have some persuasive constitutional justification. In that regard, the constitutional justification for the development of the general principles of Union law qua administrative law principles is clear and persuasive: if the Union is entrusted with the exercise of public power, then Union law must impose certain standards to ensure that that power is exercised in a way that is consonant with the values of our liberal democracies; likewise, if the Member States stray into the realm of the European public space, they can be expected to abide by the same standards, since otherwise the coherence of the Union’s administrative safeguards could be fatally compromised.54 But what might be the constitutional justification for the evolution of an unwritten body of primary law that defines various private law rights and obligations? There is no exercise of public power which stirs our concern to protect the citizen from an overbearing government. There may well be types of private conduct that we disapprove of, standards of private protection that we would prefer, and potential reductions in legal complexity across the Member States that might save time and money for market actors. But those are all issues for a legislature to deliberate over and (if appropriate) intervene in. In the absence of such intervention by the competent political institutions in the exercise of their legitimate competences under the Treaties to regulate private relationships, it is difficult to identify the rationale for ‘filling’ those particular ‘gaps’ in the legal universe through the medium of the general principles of Union law, other than an attempt to persuade the Court to exercise its judicial power as an alternative to legislation. Moreover, it is worth recalling the price to be paid for conferring constitutional status upon certain principles by virtue of their elevation to the status of unwritten primary law: policy choices which should rightly be the subject of contestation among democratically elected and/or accountable institutions are effectively removed from the political domain, henceforth enjoying a status 54 See further eg E Spaventa, ‘Federalisation v. Centralisation: Tensions in Fundamental Rights Discourse in the EU’ in M Dougan and S Currie (eds), 50 Years of the European Treaties: Looking Back and Thinking Forward (Oxford, Hart Publishing, 2009). However, note that EU scrutiny as regards Member State derogations still remains controversial. Consider eg PM Huber, ‘The Unitary Effect of the Community’s Fundamental Rights: The ERT Doctrine Needs to be Reviewed’ (2008) 14 European Public Law 323; N Nic Shuibhne, ‘Margins of Appreciation: National Values, Fundamental Rights and EC Free Movement Law’ (2009) 34 European Law Review 230.

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equivalent to the Treaties themselves, making it very difficult indeed for the Union’s political institutions or the Member States (even in their capacity as ‘Masters of the Treaties’) to express their preference for an alternative vision of state intervention in the socio-economic relationships between citizens.55 Secondly, even assuming that we could find a compelling constitutional justification for the development of an unwritten body of European private law rights and obligations, would it really be helpful to describe such a development in terms of the general principles of Union law? To bundle new private law principles together with old public law principles within one and the same legal category would create an entirely unnecessary and yet rather serious problem: the need to distinguish carefully between those general principles which would continue to perform their traditional function of furnishing the Union legal order with its unwritten code of administrative law; as compared to those general principles which would also or instead serve as the basis for a novel body of Union law aimed at regulating the private legal sphere (albeit still only within the scope of application of the Treaties). If a judge-made body of European private law is indeed to emerge, perhaps it should be clearly and separately identified as such, for example, as Hesselink does in his exploration of the case law supporting the development of general principles of European civil law.56 Thirdly, though, one should address the issue of whether it would even be possible to draw such a distinction between general principles of Union public law, as compared to general principles of Union private law, given the current state of development of the Union legal system. After all, there is no clear differentiation in EU law between what counts as a public or private law situation. Consider, for example, the rule embodied in Article 45 TFEU concerning nondiscrimination against migrant workers. That rule might be breached by purely private conduct (as in the case of an individual employer whose terms and conditions discriminate against migrant employees);57 or in what could be seen as a private law context by a public authority (if the latter discriminates in its own terms and conditions of employment);58 or instead by what would undoubtedly be classified as the administrative conduct of a public authority (eg in setting the criteria for access to employment training programmes);59 or by the regional/ national assembly in exercising its legislative prerogatives (to set out the statutory framework of applicable employment law);60 or indeed by means of improper 55 See further eg M Dougan, ‘Judicial Activism or Constitutional Interaction? Policymaking by the ECJ in the Field of Union Citizenship’ in H Micklitz and B de Witte (eds), The ECJ and the Autonomy of the Member States (Antwerp, Intersentia, 2012) and extensive references therein. 56 See MW Hesselink, ‘The General Principles of Civil Law: Their Nature, Role and Legitimacy’ in this volume. 57 Eg Case C-281/98 Angonese [2000] ECR I-4139. 58 Eg Case C-379/87 Groener [1989] ECR 3967. 59 Art 7(3) of Regulation (EU) No  492/2011 of the European Parliament and of the Council of 5  April 2011 on freedom of movement for workers within the Union [2011] OJ L141/1 (which replaces Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community [1968] OJ L257/2). 60 Eg Case 167/73 Commission v France [1974] ECR 359.

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judicial conduct (based on the famous Köbler case) which consists in refusing to vindicate the migrant worker’s Union law rights.61 One and the same provision of Union law might thus manifest itself in a variety of public and private law contexts. The problem becomes more complicated still because of the different national contexts within which the relevant provisions become fully operational. The Court has long held (in rulings such as Bozzetti) that Member States are competent to designate the national courts that have jurisdiction over any given category of Union action.62 The Member State may therefore classify a particular dispute either as one of private law to be adjudicated through the civil courts, or as one of public law to be pursued through the administrative courts. In one Member State, discrimination against a migrant worker by a public authority as regards his/her terms and conditions of employment in the civil service might be treated as a private law matter to be dealt with by the ordinary industrial tribunals; whereas in other Member States, exactly the same type of dispute might be classified as falling within the realm of public law, meaning that it would have to be pursued through the administrative law courts.63 How should the Member State’s choice between the public or private context of a dispute influence whether the general principles of the Union’s public or private law should be brought to bear upon its resolution?

VI. Conclusions The general principles of Union law are not (as the law currently stands) directly applicable to purely private relationships. They remain what they always have been: second-order principles of European constitutional and administrative law which will attach to Member State conduct falling within the scope of the Treaties. In that public law guise, the general principles of Union law are nevertheless capable of having an increasingly significant impact upon private relationships— in particular, when an issue concerning the compatibility of a public act with the general principles of Union law arises collaterally in a horizontal dispute and thereby reshapes the legal framework within which the rights and obligations of the two private parties are to be defined. That impact has become increasingly significant because of rulings such as Kücükdeveci—in which the Court’s understanding of when a national measure will fall within the scope of the Treaties, and thus within the realm of the general principles of Union 61

Case C-224/01 Köbler [2003] ECR I-10239. Case 179/84 Bozzetti [1985] ECR 2301. Similarly eg Case C-446/93 SEIM [1996] ECR I-73 and Cases C-10-22/97 IN.CO.GE.’90 [1998] ECR I-6307. 63 Consider eg Case C-300/06 Ursula Voß [2007] ECR I-10573 (Germany) and Case C-268/06 Impact [2008] ECR I-2483 (Ireland). Consider also eg Case C-69/08 Visciano [2009] ECR I-6741. 62

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law, seems to be expanding ever further, so that even a coincidence in subject matter between national and Union law seems sufficient to trigger the Union’s system of administrative law. If that trend continues, then the number of situations in which a public law issue arises collaterally in a horizontal dispute will inevitably multiply as well. But otherwise, the Court has so far held back from developing the general principles of Union law in a genuinely horizontal way—to provide the seed for an unwritten body of European private law. In my view, the Court’s forbearance in this regard has been a good thing. Unless advocates of such a development provide a more convincing constitutional justification for the Union to assume responsibility in that field and in that form, it comes across as an attempt to smuggle a particular conception about the appropriate limits and nature of state intervention in private autonomy into the Union legal order, and to confer upon that choice a strong level of constitutional entrenchment, when those are issues which rightly pertain to the political and legislative responsibilities of the Council and the European Parliament.

6 Who Determines What Civil Courts Decide? Private Rights, Public Policy and EU Law SIMON WHITTAKER

I. Introduction Civil courts are public institutions constituted by the law to perform the public function of the administration of civil justice.1 They possess special, coercive powers to support their decision-making and are subject to special rules and constraints, in both cases unlike those of private persons or institutions.2 At the same time, the principal role of civil courts is the determination and protection of the relative rights of private individuals or private corporate bodies.3 This combination of public and private aspects in the character of civil courts has long been recognised by continental civil lawyers. So, for example, in French 1 There is a difficulty of English terminology here. In the English context, ‘civil courts’ normally refers to all courts other than criminal courts and, possibly, administrative tribunals and ‘civil procedure’ (notably, under the Civil Procedure Rules) reflects this, setting the general rules of procedure for civil cases including judicial review of administrative action. By contrast, in some continental legal systems (eg French law), ‘civil procedure’ (found in the Code de procédure civile (C pr civ)) is to be distinguished both from criminal procedure (found in the Code de procédure pénale) and from the procedure of the administrative courts (found in the Code de justice administrative). Even in such a system, the rules on civil procedure may extend beyond the adjudication of civil rights in a narrow sense (droits civils) and extend to other rights arising in private law. See J Vincent and S Guinchard, Procédure Civile, 27th edn (Paris, Dalloz, 2003) 14. In the present chapter, the law governing the ‘civil process’ or ‘civil procedure’ refers to those rules which deal with the adjudication of private rights (and not merely ‘civil rights’ in this narrower sense) by non-criminal courts (‘civil courts’), whether or not these rules or courts also deal with the adjudication of claims against the administration or other public bodies. 2 This sentence echoes the characterisation of French public law as a combination of ‘extraordinary powers’ (prérogatives exorbitantes du droit commun) and ‘extraordinary controls’ (sujétions exorbitantes). J Rivero, ‘Existe-t-il un critère du droit administratif?’ [1953] Revue de Droit Public 279; G Vedel and P Delvolvé, Droit administratif, Vol 1, 12th edn (Paris, PUF, 1992) 35–36. 3 As indicated in n 1 above, national laws treat the position of public corporations or bodies in different ways. So, while in some laws a public corporation may sue and be sued in the ‘civil courts’ little differently from a private person or body, in others a public corporation may sue or be sued only in special courts or following a special procedure. National differences of this sort depend on the existence (if any) of special jurisdictions or procedures for the application of administrative law and the extent to which (and circumstances in which) litigation involving public bodies is channelled towards these special jurisdictions or procedures.

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law the civil courts4 are seen as public institutions, with public powers and a public mission to do justice,5 but the civil process seeks to establish and enforce private rights as set out in private law. 6 This combination of the public character of civil judicial institutions and the private nature of the rights on which they pronounce creates a number of tensions. A prominent example of a situation where this tension has to be worked is found in the relative roles of the parties and the court in setting the questions to be decided by the court and the materials (facts, evidence and law) on the basis of which these questions are to be decided. Should the public character of courts mean that they should intervene so as to see justice done according to the parties’ substantive legal rights? Or should the private character of these legal rights mean that it is only for the parties themselves to set the court’s decision-making agenda? These very broad questions then break down into more particular ones. So, if, in principle, it is for claimants to decide whether or not to make a claim, is it solely for them to determine what to claim? If a claimant asks for one remedy, can/must the court sometimes substitute another? Is it solely for a claimant to allege the facts on the basis of which each claim is made? May the court refer to facts not relied on by a party but revealed to the court in the course of the process? Is it solely for the parties to adduce evidence in support of the facts which they allege or does the court have a role here too? And, having established a factual case, is it for the claimant to show how as a matter of law these facts justify the remedy which he or she seeks? Is it generally for the courts to apply the law to the facts presented to them or is the law also to be left to the parties’ submissions? In particular, can the court properly refer to law other than law relied on by the parties, especially where this involves a recharacterisation of the facts in legal terms? As will be seen, many of these questions concern the extent to which a civil court can act ‘of its own motion’ in relation to the substantive subject-matter of the litigation before it.7 As the French and German terminology puts it, should the court intervene d’office/ex officio in some or all of these situations, by reason of its own public position? As will be seen, national laws respond to these questions differently and also distinguish between the various aspects of the definition of the civil court’s 4

This translates tribunaux de l’ordre judiciaire. J Ghestin, G Goubeaux and M Fabre-Magnan, Traité de droit civil, Introduction générale 4th edn (Paris, LGDJ, 1998) 73. 6 M Planiol, G Ripert, and J Boulanger, Traité élémentaire de droit civil, vol I, 4th edn (Paris, LGDJ, 1948) 13–14, no 32, which even says that ‘civil procedure is no more than a detached chapter of civil law which governs the manner in which rights are given effect and defended before courts’, although later adding that it also touches public law in relation to the organisation of the courts and the use of public force for the protection of rights. Some French writers have argued that the law governing the civil process should be called ‘private judicial law’ (droit judiciare privé) in order to underline the idea that civil procedure belongs both to private law and to public law. See Vincent and Guinchard (n 1) 13, according to whom this terminology reached ‘its hour of glory’ in H Solus and R Perrot Droit judiciaire privé (Paris, Sirey, 1961). 7 The older English terminology ‘of its own motion’ was replaced by the Civil Procedure Rules (CPR) by ‘of its own initiative’, but this change has not affected the usage of the Court of Justice of the EU nor in EU legislation, which retain the older English expression. 5

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agenda, distinguishing between the relative roles of courts and parties in relation to facts, evidence and law. However, over the last few decades EU legislation and decisions of the Court of Justice of the EU have empowered and sometimes required the courts of Member States to address certain EU legal issues of their own motion. Where they do so in the context of civil litigation, this cuts across the existing national pattern of the relative roles of the parties and courts in determining the subject-matter of the case, whether in fact or in law. The purpose of this paper is to consider how this EU law relates to established national European approaches to the relative role of the parties and the courts in determining the questions which courts address and how this reveals their understanding of the function of the civil process. In order to do so, I will start by looking at three national law examples: English law, French law and German law. Do these laws support the recent claim of Advocate General Trstenjak that ‘civil law is characterised by the principle that it is for the parties to take the initiative, under which the parties are responsible for submitting all relevant facts on which the court must then base its decision’?8 What is the significance of the maxim—widely accepted on continental Europe but unknown to English law— that courts ‘know the law’ (curia novit legem or iura novit curia)? How does the question of the setting of the legal issues to be decided by a court relate to the mechanisms available for the gathering of evidence? Secondly, I will consider the explicit rules of the EU private international legislative acquis which impose on national courts a duty to raise issues of civil jurisdiction of their own motion under the Brussels I Regulation,9 and contrast the position as regards applicable law under the Rome I and Rome II Regulations.10 For under these instruments, in some situations uniform EU law requires national courts to consider whether or not they possess jurisdiction to hear a claim, but in no situation does uniform EU law presently require them to apply the foreign laws applicable under the uniform conflict of law rules. Thirdly, I will look briefly at the general approach of the Court of Justice of the EU to the question whether national courts must raise issues of EU law of their own motion under its case law following Van Schijndel.11 This case law rests on the EU principles of equivalence and effectiveness, recognising that, in general, rules governing civil procedure are for national laws, but also that national laws possess certain common features on which it should itself draw in its own decision-making. 8

Case C-137/08 VB Pénzügyi Lizing Zrt v Schneider, Judgment of 9 November 2010, para 110. Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2000] OJ L12/1 (the Brussels I Regulation). 10 Regulation (EC) no 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L177/6 (the Rome I Regulation); and Regulation (EC) 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) [2007] OJ L199/40 (the Rome II Regulation). 11 Joined Cases C-430/93 and C-431/93 Van Schijndel v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705. 9

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Fourthly, I shall consider the important (and apparently distinct) line of case law of the Court of Justice following Océano Grupo Editorial in 2000,12 according to which a national court has a duty to consider of its own motion the unfairness of a term in a consumer contract under the Unfair Contract Terms Directive of 1993.13 The Court justifies its view here on the basis that the protection of consumers enshrined in the Directive should be able to override any national legal obstacles. However, this case law raises difficult and as yet unresolved questions as to the extent and significance of intervention by national courts of their own motion so as to give effect to EU law. Again, while the Court of Justice and its Advocates General have at times referred to a ‘principle of the procedural autonomy of the Member States’,14 what becomes clear is that in these cases the Court is itself beginning to recognise substantive principles of civil procedure, which it discerns in the national laws of Member States and then gives a European legal significance by taking them into account in its own decision-making.

II. Three European National Laws Here I shall sketch out three national laws by way of illustration of different approaches to the relative roles of the parties and the courts in determining the issues to be decided in civil litigation: English law, French law and German law. It is important to say at the outset that for this purpose, any simple contrast between an ‘adversarial model’ and an ‘inquisitorial model’ is inadequate. First, the contrast is not a dichotomy; rather, ‘[t]here is a scale on which all procedural systems can be placed, at one end of which there is a theoretically pure adversary system and at the other the theoretically pure inquisitorial’.15 Secondly, while these terms have some merit in describing the different roles that parties or judges play in the gathering of evidence to support allegations of fact (so, for example, contrasting the traditional ‘adversarial role’ in an English criminal court and the investigative role of the juge d’instruction in France),16 they do not 12 Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial SA v Murciano Quintero [2000] ECR I-4941 below, 117–26. 13 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29. 14 Case C-473/00 Cofidis SA v Fredout, [2002] ECR I-10875, para 28; Case C-40/08 Asturcom Telecomunicaiones SL v Rodriguez Nogueira [2009] ECR I-9579, para 38. See further on the background and significance of this principle, V Trstenjak and E Beysen, ‘European Consumer Protection Law: Curia Semper Dabit Remedium’ (2011) 48 Common Market Law Review 95, 96–104, who trace it to Case 33/76 Rewe-Zentralfinanz eG and Rewe-Zentral AG [1976] ECR 1989. 15 JA Jolowicz, ‘Adversarial and Inquisitorial Models of Civil Procedure’ (2003) 52 International and Comparative Law Quarterly 281. 16 J Bell, ‘Criminal Procedure’ in J Bell, S Boyron and S Whittaker (eds), Principles of French Law, 2nd edn (Oxford, Oxford University Press, 2008) 127–28, who notes that French lawyers would see their system as a mixture of inquisitorial and ‘accusatorial’ elements.

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catch other important contrasts of approach between different laws, in particular the relative roles of civil courts and the parties in determining the issues to be decided.

A. English Law The changes to civil procedure introduced by the Civil Procedure Rules (CPR) from 1998 have been widely seen as bringing a fundamental change in the relative roles of the parties and of the court in the English civil process, from judicial passivity to a degree of judicial management.17 For this reason, I will sketch out the traditional approach to the relative roles of courts and parties in determining the issues to be decided and then ask how, if at all, this has changed under the CPR. The traditional approach of the English common law to the identification of the issues to be determined by a court is well caught by Holdsworth: [T]he object of pleading is to produce an issue, ie some specific question of law or fact for decision by the court or jury, which is agreed upon by the parties as the question in dispute between them.18

According to this model, the parties have to put forward their claims in the sense of the remedy sought by the claimant (or denied by the defendant) based on facts which they allege, in turn supported by evidence which they adduce. This necessarily involves the characterisation of the claim in legal terms, so, for example, a claim for damages for breach of contract and/or in the tort of negligence. An English court did not have any investigative role, ordering the parties to adduce evidence (whether oral or otherwise) which it considered would reveal the truth: the role of the court was to resolve the dispute identified by the parties.19 For this purpose, the parties had access to some very powerful procedural mechanisms for finding out the truth, notably, discovery of documents, but even here ‘[t]here is no independent power in the court to say that … it would like to inspect the documents with a view to possible production for its own assistance’.20 The parties’ roles extended beyond the legal characterisation of their claims (with any relevant allegations of fact, supported by evidence), for they had also to explain how the law justified their claims. Traditionally, this was not done in the pleadings (ie the documents exchanged by the parties before the trial), but was left instead to oral submissions and arguments by the parties at the hearing, 17 See the observations of RL Turner (Senior Master) in the Preface to the Civil Procedure Rules, pp vii and x, quoted by MN Howard (ed), Phipson on Evidence, 15th edn (London, Sweet and Maxwell, 2000) 13. 18 WS Holdsworth, A History of English Law, vol IX, 1st edn (London, Methuen & Co Ltd, 1926) 264 (emphasis added), and see WS Holdsworth, A History of English law, vol III, 1st edn (London, Methuen & Co Ltd, 1926) 627–29. 19 Jolowicz (n 15) 283–84. 20 Air Canada v Secretary of State for Trade [1983] 2 AC 394, 438, per Lord Wilberforce, quoted by Jolowicz (n 15) 285.

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whether at trial or on appeal.21 As a result, the issues on which the parties disagreed were identified by a process of elimination through the pleadings (where allegations were admitted, not admitted or denied), but the legal authority for these assertions was left to the advocate at the hearing. Once the pleadings had closed, the case would go to trial on the issues so identified, whether these issues were factual or legal or both. In principle the court was not entitled to identify new issues which the parties had not themselves raised either in the pleadings or orally, even if these issues appeared to arise on the facts as they had been pleaded. However, in Goldsmith v Sperrings Ltd22 Lord Denning MR challenged this position and would have decided the case on the basis of his ‘own researches’, observing that ‘[a]n erroneous proposition should not be accepted as good law simply because counsel have passed it by in silence and have not sought to challenge it’. By contrast, the majority of the Court of Appeal (Scarman LJ and Bridge LJ) disagreed, the latter on the basis, inter alia, that Lord Denning’s approach would amend the grounds of the appellant’s pleaded case, while at the same time denying the respondent any point of reply in ‘breach of the rule audi alterem partem which applies alike to issues of law and to issues of fact’.23 This orthodox position was reaffirmed in Hoecheong Products Co Ltd v Cargill Hong Kong Ltd by the Privy Council,24 which considered that the established principles which inhibit the parties from raising new points on appeal, particularly where the facts have not been investigated at the trial  … apply equally where it is the court, rather than the parties, which seeks to introduce the new legal issue.25

According to Lord Mustill,26 as a general rule it is not for the court to identify legal issues which, in its view, arise from the claims of the parties.27 While sometimes the court may identify new legal materials on an existing issue, where it does so they must be subjected to party argument, and it should not itself introduce ‘an entirely new question of law and fact’ except in rare situations.28 Three main concerns therefore lie behind this approach: first, the introduction by the court of a new issue introduces an element into the dispute between the parties which is not of their making; secondly, without the opportunity for argument, deciding the issue would be unfair to one or both of the parties; and thirdly, in many situations the introduction of a new issue would bring with it the need for further facts (and therefore further evidence), normally unavailable 21 Holdsworth (n 18) vol IX, 329: ‘[P]arties must plead the facts on which they intend to rely, and not the legal conclusions which they put upon these facts’. 22 Goldsmith v Sperrings Ltd [1977] 1 WLR 478. 23 Ibid, 508; cf Scarman LJ, ibid, 500. 24 Hoecheong Products Co Ltd v Cargill Hong Kong Ltd [1995] 1 WLR 404. 25 Ibid. 26 Ibid, 409. 27 Ibid. 28 Ibid.

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on appeal and, even at trial, a matter properly within the hands of the parties rather than the courts. To what extent has this traditional position been changed by the CPR? Under these rules, the parties are under a duty to help the court in furthering its overriding objective of dealing with cases justly,29 and the court has the task of encouraging the parties to co-operate with each other in the conduct of the proceedings.30 To help courts further the overriding objective, they have a number of management powers over the process, including powers to strike out a statement of case or to pare down the issues to be tried or appealed.31 To this extent, there has indeed been a shift away from traditional ‘judicial passivity’ towards a degree of judicial interventionism in the civil process. Nevertheless, neither the text nor the spirit of the new rules has changed the relative roles of the parties and the court in putting forward the issues to be tried, for while a court has the power to eliminate issues considered unworthy of trial or appeal, it cannot add to the issues (factual or legal) which it is to determine. This can be seen by the courts’ continuing views of the function of pleadings (‘statements of case’). Certainly, the CPR encourage the simplification of the particulars of claim and defence used by parties to set out before trial the facts on which they would rely by a requirement that they be concise and clear,32 but the purpose of pleadings remains ‘to mark out the parameters of the case that is being advanced by each party’ being ‘critical to identify the issues and the extent of the dispute between the parties’.33 Moreover, even in relation to evidence and proof, [the CPR] do not confer on the court the powers which are to be found in other jurisdictions—commonly called inquisitorial or investigative—by which the court itself decides the areas of enquiry and what facts it wishes to establish and, in some cases, by whom the facts are to be established. [Nor do they] signal a major departure from the general principle that it is primarily for each party to decide what its case is and how best it is to be presented to the other party or parties or to the court.34

So while a court can order a party to put forward a clear and concise claim on pain of its being struck out, it should not take the case out of a party’s hands or require a party to put forward a case which is not its preferred case.35 There is therefore nothing in the CPR to suggest that the courts are entitled to recharacterise the legal basis of the parties’ claims, though they do possess a power to

29

CPR Part 1(1) and 1(3). CPR Part 1.4 (2)a. 31 CPR Parts 3.4(1) and CPR 52.3(7), respectively. 32 Part 16.2(a) and see St Albans Court Ltd v Daldorch Estates Ltd, The Times 24 May 1999, per Arden J; McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775. 33 McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775, 793, per Lord Woolf. 34 Circuit Systems Ltd v Zuken-Redac (UK) Ltd [2001] EWCA Civ 482, [2001] BLR 253, at paras 22 and 58–63, per Aldous LJ, quoting with approval the observations of HHJ Humphrey Lloyd QC, para 40 of his unreported judgment below. 35 Circuit Systems Ltd v Zuken-Redac (UK) Ltd (n 34) para 22. 30

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award a remedy not claimed by a party in its statement of case.36 Moreover, it is still for the parties to advance the law on which they rely as well as the facts, although since the CPR there has been a shift towards the documentary presentation of these arguments before the hearing (as ‘skeleton arguments’) rather than this being left to oral presentation at the hearing.37 Overall, therefore, the central features of the traditional approach to the roles of the parties and the courts in setting the subject-matter of the dispute remain the same: in general, English courts cannot add to a party’s claim nor give it support by reference to unpleaded fact or unargued law. As a result, there is a paradox at the heart of English judicial decision-making. For while most English lawyers accept that judges can make law, the English civil process rejects the idea that the ‘courts know the law’ in the sense that they must apply the law relevant to the claims or facts advanced by the parties. The resulting restricted nature of English judicial decision-making is recognised by the exception to the binding force of precedent where decisions are made per incuriam, that is, without reliance on crucially relevant binding legal authority, whether legislative or judicial.38 The binding force of English judicial decisions turns on the issues identified by the parties as well as their factual context. However, this general approach according to which it is for the parties and not for the court to raise issues of law or mixed law and fact finds a significant exception in English law in the case of illegal contracts. In the words of Lord Mansfield, ‘[i]f, from the plaintiff ’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the Court says he has no right to be assisted’.39 So, where a contract is on its face illegal the court will not enforce it, whether the illegality is pleaded or not: here, therefore, the court can and ought to raise and to determine the issue of illegality of its own motion.40 On the other hand, where a contract is not illegal on its face, then evidence of extraneous circumstances tending to show that it has an illegal object should not be admitted unless the circumstances relied on are pleaded; and where unpleaded, facts which taken by themselves show that an illegal object has been put in evidence, the court should not act on them (and refuse to enforce the contract) unless it is satisfied that the whole of the relevant circumstances are before it and that the contract

36

CPR 16.2(5). According, for example, to the Queen’s Bench Guide, para 7.11.12 these must, inter alia, ‘concisely summarise the party’s submissions in relation to each of the issues, [and] cite the main authorities relied on, which may be attached’. As regards appeals, see Practice Direction 52.5.9. 38 R Cross and JW Harris, Precedent in English Law, 4th edn (Oxford, Oxford University Press, 1991) 148–52, quoting Lord Evershed MR in Morelle Ltd v Wakeling [1955] 2 QB 389, 406. As CK Allen, Law in the Making 7th edn (Oxford, Oxford University Press, 1964) 246, put it, ‘in practice per incuriam appears to mean per ignorantiam’. 39 Holman v Johnson (1775) 1 Cowper 341, 343. 40 Scott v Brown, Doering, McNab & Co [1892] 2 QB 724, 728, per Lindley LJ. See also Lopes LJ at 732, who notes that ‘the illegality of the contract was not pleaded. The point was taken by the Court and acted upon.’ 37

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was illegal.41 This is interesting for present purposes, first, in that it qualifies the general principle that courts should not take issues of law of their own motion, justifying this on the ground of public policy; and, secondly, in that the question of whether this raising of the issue then allows a court to determine the issue depends on whether the court can properly do so, given that some issues of the illegality of a contract require a court to find facts and it may not be able to do so given the facts before it. A court being able to raise an issue is not the same as a court being entitled to determine an issue. English law (apart from the EU instruments) has applied its general approach to pleading and evidence in determining questions of jurisdiction and the application of foreign law. As regards jurisdiction, the traditional approach to the existence of jurisdiction in the sense of a court’s power to entertain substantive proceedings has been described as ‘purely procedural’.42 As regards claimants, by bringing a claim before the High Court they are said to submit to the English jurisdiction and this permits the defendant to bring a counter-claim, even where permission to serve process would not otherwise be given.43 As regards defendants in the case of actions in personam (here, as distinct from admiralty actions in rem), the court has jurisdiction if the defendant has been served with a claim form and this can be done where the defendant is present within the jurisdiction or where the court exercises its discretion to permit service of a claim form outside the jurisdiction.44 As Dicey, Morris, and Collins observe: Normally [that is, aside from the Brussels I Regulation], an English court is not required of its own motion to consider whether it has jurisdiction, although where a plaintiff seeks permission to serve a defendant out of the jurisdiction  …, he has to satisfy the court that the case is a proper one for service out of the jurisdiction.45

As regards applicable law, the traditional approach of English law requires the applicability of foreign law to be pleaded and, treating it as a species of fact, further requires evidence of foreign law to be adduced by a party.46 As Willes J observed in Lloyd v Guibert: 47 [A] party, who relies upon a right or an exemption by foreign law, is bound to bring such law properly before the Court, and to establish it in proof. Otherwise the Court,

41 North Western Salt Co Ltd v Electrolytic Alkali Ltd [1914] AC 462, 476–77, per Lord Moulton. The text paraphrases the summary of these points in H Beale (ed), Chitty on Contracts, 30th edn (London, Sweet & Maxwell, 2008) para 16-025. 42 J Fawcett and JM Carruthers, Cheshire, North & Fawcett: Private International Law, 14th edn (Oxford, Oxford University Press, 2008) 353. 43 L Collins et al (eds), Dicey, Morris, & Collins on The Conflict of Laws, 14th edn (London, Sweet & Maxwell, 2008) para 11-131. 44 CPR Part 6. 45 Collins et al (n 43) para 11-070. 46 See further JM Carruthers and EB Crawford, ‘United Kingdom’ in C Esplugues, JL Iglesias, and G Palao (eds), Application of Foreign Law (Munich, Sellier, 2011) 395–96. 47 Lloyd v Guibert (1865–66) LR 1 QB 129.

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Simon Whittaker not being entitled to notice such law without judicial proof, must proceed according to the law of England.

This position therefore has two elements. The first is that in the absence of any pleaded foreign law, English law will be applied, whatever the English rules on the conflict of laws would otherwise indicate.48 The second is that, if foreign law is pleaded, then it must be established by evidence.49 So, following its general approach to the determination of issues of technical fact, in the absence of agreement between them, the parties put forward evidence which (they say) supports their contention as to the content of the applicable foreign law.

B. German Law50 In German law, civil justice (meaning proceedings in private law matters in front of state courts) has the purpose of giving effect to individual (‘subjective’) private law rights and therefore aims to do substantive justice on the basis of the ‘true’ facts and substantive law applicable, rather than merely resolving disputes.51 This approach reflects the ‘state’s response to the individual citizen’s inherent “claim to justice” (Justizanspruch or Justizgewährungsanspruch) which is rooted in the concept of a state ruled by law (Rechtsstaat)’.52 Civil justice is itself based on a number of procedural principles, of which two are particularly important for present purposes: the principle of party disposition (Dispositionsgrundsatz or Dispositionsmaxime) and the principle of party presentation (Verhandlungsgrundsatz or Beibringungsgrundsatz). The ‘principle of party disposition’ refers to the power of the parties freely to define the subject-matter of the proceedings (Streitgegenstand), this usually being defined as the ‘claims for relief ’ (Anträge) and the relevant facts.53 It is seen as reflecting the general proposition that a holder of a substantive private law right enjoys free disposition of it.54 So, in general, the claimant (or the parties, as the 48

Collins et al (n 43) paras 9-003 and 9-025. Rather than saying that where foreign law is not established, it is presumed to be the same as English law, the modern better view is ‘simply to say that where foreign law is not proved, the court applies English law’: Collins et al (n 43) para 9-025. 50 This section is based on research assistance undertaken by Dr Moritz Hennemann, for which the author is most grateful, and also draws considerably on PL Murray and R Stürner, German Civil Justice (Durham, Carolina Academic Press, 2004) ch 6. 51 Murray and Stürner (n 50) 4, 153; T Rauscher in T Rauscher, P Wax, and J Wenzel, Münchener Kommentar zur Zivilprozessordnung, vol 1, 3rd edn (Munich, CH Beck, 2008), Einl mn 8 (‘MüKo ZPO’); L Rosenberg, KH Schwab and P Gottwald, Zivilprozessrecht, 17th edn (Munich, CH Beck, 2010) 2ff; E Schilken, Zivilprozessrecht, 6th edn (Munich, Vahlen, 2010) 5ff; M Vollkommer in R  Zöller, Zivilprozessordnung—Kommentar, 29th edn (Cologne, Dr Otto Schmidt, 2012) Einl mn 39 (‘Zöller’). (‘Einl mn’ refers to Einleitung (= Introduction) to a commentary on a particular section of a code or statute, followed by the respective marginal number of that introduction.) 52 Murray and Stürner (n 50) 153. 53 O Jauernig, Zivilprozessrecht, 29th edn (Munich, CH Beck, 2007) 118ff; Rosenberg, Schwab and Gottwald (n 51) 504ff. 54 R Greger in Zöller (n 51) Vor § 128 mn 9; Murray and Stürner (n 50) 156ff; Rauscher in MüKo ZPO (n 51) Einl mn 274ff; K Reichold in H Thomas and H Putzo, Zivilprozessordnung—Kommentar, 49

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case may be) decides whether to start proceedings, their subject-matter and their termination by settlement.55 In principle, therefore, a court cannot grant something that has not been claimed by the claimant (often expressed by the maxim ne eat iudex ultra petita partium).56 The ‘principle of party presentation’ refers to the ability of the parties to present evidence to the court and it therefore gives them the power of controlling the factual basis of the proceedings. This principle is not set out in any single legislative provision but is said to be based on the general idea of private autonomy and to lie behind a number of provisions of the Code of Civil Procedure.57 To this extent, it can be said that German civil justice takes an adversarial approach, in contrast to the inquisitorial or investigative approach taken by German criminal procedure.58 However, both these principles find an important qualification in the duty of a civil court to give ‘hints and feedback’ (Hinweis) to the parties in the course of the proceedings.59 Rather than being ‘an expression of inquisitorial responsibility for determining the truth of the case’, this duty requires ‘the judge to advise and assist the parties in resolving their dispute according to law’,60 and is therefore justified by German lawyers by reference to the need to provide substantive justice.61 So, under § 139 of the Code of Civil Procedure, (1) The court is to discuss with the parties the relevant facts and issues in dispute from a factual and legal perspective to the extent reasonable and to raise questions. It is to cause the parties timely and completely to declare their positions concerning all material facts, especially to supplement insufficient references to relevant facts, to designate the means of proof, and to set forth claims for relief based on the facts asserted. (2) The court may base its decision on a claim, other than a minor auxiliary claim, on a point of fact or law which a party has apparently overlooked or considered insignificant only if the court has called the parties’ attention to the point and given opportunity for comment on it. The same provision applies if the court’s understanding of a point of fact or law differs from the understanding of both parties.62

This duty allows a court to raise (and ultimately to decide upon) issues of law 33rd edn (Munich, CH Beck, 2012) Einl I mn 5; Rosenberg, Schwab and Gottwald (n 51) 395; Schilken (n 51) 159. (The first reference in this note refers to ‘Vor § 128’ meaning that before (‘vor’) the commentary to § 128 there is a special commentary normally including introductory remarks on the legal topic that it dealt with there.) 55 Schilken (n 51) 160: ‘über Einleitung, Gegenstand und Ende des zivilprozessualen Verfahrens’; Murray and Stürner (n 52) 156–57. 56 § 308(1) ZPO (Zivilprozessordnung or Code of Civil Procedure). Jauernig (n 53) 68; Schilken (n 51) 161. 57 Murray and Stürner (n 50) 159; but see esp § 138 ZPO. 58 Ibid, 11 and 159. 59 § 139 ZPO; Murray and Stürner (n 50) 166–77. 60 Ibid, 167. 61 Ibid, 177. 62 § 139(1) and (2) (trans Murray and Stürner (n 50) 167–68).

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or fact which the parties have overlooked, though it must raise them with the parties so that they can be subject to argument.63 The duty extends to matters of evidence and proof, so that where a party fails to request the taking of evidence on a disputed factual issue, the court is expected to bring this omission to their attention. Once evidence put forward by the parties has been heard, the court must explain to the parties its view on it and indicate the points at which there might be remaining uncertainty. It is still controversial whether a court is required to suggest new sources of evidence to the parties.64 On the other hand, German law takes a different approach to the application of the law to the facts, caught by two maxims: da mihi facta, dabo tibi ius and iura novit curia. The court ‘knows the law’ and must apply it to the facts which are presented by the parties,65 and so the law is not subject to the ‘principle of party presentation’.66 The law which the court must ‘know’ refers to national law, EU law (even where not directly applicable) and public international law, and the court’s duty to determine the law extends to its proper interpretation.67 The principle of iura novit curia is seen as absolute: the court must apply the relevant law even if the court is not familiar with the rules, if legal literature is not easily accessible or its lack of practical experience may lead to the likelihood of a ‘wrong’ decision.68 While the parties may submit legal arguments as to the relevant law, the court is not bound by them,69 even if the parties agree on a certain point of law.70 This approach is also taken to questions of the characterisation of facts in legal terms. So while, as has been noted, the decision-making of a court is confined to the ‘subject-matter of the proceedings’,71 a claimant does not have to specify the legal basis of his or her claim: claims based on different legal grounds do form part of the ‘subject matter of the proceedings’.72 As a result, a court is free 63

Murray and Stürner (n 50) 170–71. Ibid, 173. 65 A Baumbach, W Lauterbach, J Albers and P Hartmann, Zivilprozessordnung, 69th edn (Munich, CH Beck, 2011) § 293 mn 1; H-W Laumen, in H Prütting and M Gehrlein, ZPO Kommentar, 4th edn (Cologne, Luchterhand, 2012) § 284 mn 7 and § 293 mn 1; D Leipold in F Stein and M Jonas, Kommentar zur Zivilprozessordnung, vol 3, 22nd edn (Tübingen, Mohr Siebeck, 2005) vor § 128 mn 160; R Geimer in Zöller (n 51) § 293 mn 1; H Prütting in MüKo ZPO (n 51) § 284 mn 43 and §  293 mn 2ff; Rauscher in MüKo ZPO (n 51) Einl mn 306; Rosenberg, Schwab and Gottwald (n 51) 399 and 620ff. 66 Rauscher in MüKo ZPO, Einl mn 306; H-J Ahrens in B Wieczorek and R A Schütze, Zivilprozessordnung—Großkommentar, vol II 2, 3rd edn (Berlin, de Gruyter, 2008) § 284 mn 21 (on EU law). 67 R Geimer in Zöller, § 293 mn 1; Leipold in Stein and Jonas (n 65) § 293 mn 4ff and 11. 68 R Schütze in Wieczorek and Schütze (n 66) § 293 mn 7, although the Bundesgerichtshof (Federal Supreme Court) on 27 November 1998, NJW 1999, 638, recognised an exception in tax law matters before a civil court. 69 Leipold in Stein and Jonas (n 65) vor § 128 mn 160ff; Rauscher in MüKo ZPO (n 51) Einl mn 306; Rosenberg, Schwab and Gottwald (n 51) 399 and 758; Schilken (n 51) 165. 70 BGH, 13 December 1968, JR 1969, 102; Leipold (n 65) vor § 128 mn 160; Rosenberg, Schwab and Gottwald (n 51) 399 and 758; Schilken (n 51) 165; Vollkommer in Zöller (n 51), Einl mn 84 (in the situation where the parties have a common position on the law there is a minority of scholars advocating the opposite approach). 71 Baumbach et al (n 65) § 308 mn 4; Murray and Stürner (n 50) 330ff. 72 Murray and Stürner (n 50) 194; BGH, 29 November 2007, NJW 2008, 1067; Rosenberg, Schwab and Gottwald (n 51) 509. 64

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to base its judgment on a different legal basis from any identified by the parties, provided that this is within the ‘claims for relief ’ brought by the claimant as supplemented by any appropriate ‘hints’ which the court has given.73 Finally, the approach of German law to issues of international jurisdiction and applicable law completely reflects its wider acceptance of the maxim iura novit curia. So, under German law generally (and not merely as a result of the Brussels Convention/Brussels I Regulation), a German court has a duty to verify the existence of its own jurisdiction as it relates to its own motions and at any stage in the proceedings.74 Furthermore, the (German) rules of private international law form part of its national law and therefore a court must apply them ex officio,75 regardless of whether or not the parties ask it to do so.76

C. French Law The position of French law as regards the relative roles of the parties and the court in civil litigation differs again and, to a certain extent, falls between the positions adopted by English law and German law.77 French jurists often refer in this respect to the distinction between an accusatorial and inquisitorial model of procedure,78 but then comment that the French civil process under the (New) Code of Civil Procedure enacted in the early 1970s reflects neither of these models. The starting-point of French law is that civil litigation by its nature is seen as involving a private dispute, requiring the application of private law, and that therefore both its initiation and manner of proceeding are the responsibility of the parties.79 Moreover, the Code of Civil Procedure explicitly provides both 73 Baumbach et al (n 65) § 308 mn 4; Jauernig (n 53) 69; H-J Musielak in H-J Musielak (ed), Kommentar zur Zivilprozessordnung, 9th edn (Munich, Vahlen, 2012) § 308 mn 15. 74 Baumbach et al (n 65) Übers § 12 mn 8; Geimer in Zöller (n 51) IZPR mn 94; Murray and Stürner (n 50) 524. (‘Übers’ refers to Übersicht (abstract or summary); and IZPR refers to Internationales Zivilprozessrecht (conflict of civil procedure laws or civil procedure international law).) 75 Ahrens in Wieczorek and Schütze (n 66) § 284 mn 22; Leipold in Stein and Jonas (n 65) § 293 mn 24 and 30; Prütting in MüKo ZPO (n 51) § 293 mn 8; Schütze in Wieczorek and Schütze (n  65) § 293 mn 4. 76 BGH, 25 September 1997, NJW 1998, 1321; Leipold in Stein and Jonas (n 65) § 293 mn 30; Schütze in Wieczorek and Schütze (n 66) § 293 mn 4; C Trautmann, ‘Ausländisches Recht vor deutschen und englischen Gerichten’ (2006) 14 Zeitschrift für Europäisches Privatrecht (ZEuP) 283, 287. There is a minority view taken by some German scholars according to which ‘facultative conflicts rules’ (Fakulatives Kollisionsrecht) will apply only if at least one party raises the issue. Cf Schütze in Wieczorek and Schütze (n 66) § 293 mn 4 and Trautmann, above, 287ff. According to M Huber in Musielak (n 73) § 293 mn 8, another possible qualification on this position is found in the possibility that the behaviour of the parties to the litigation can be treated as an agreement on the choice of law, which is sometimes able to determine the law applicable (as in the case of contract), but this view has been criticised on the basis that the parties do not have any intention to form such an agreement and that the court’s proper response is to raise the issue or provide a ‘hint’ under its general power so as to establish whether the parties want German law to apply. See Trautmann, above, 288. 77 The following draws on my own discussion in Bell, Boyron and Whittaker (n 16) 85–90. 78 Eg G Couchez, Procédure civile, 14th edn (Paris, Dalloz Sirey, 2006) 229–30. 79 Arts 1 and 2 C pr civ.

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that ‘the subject-matter of the litigation is determined by the respective claims [prétensions] of the parties’ and that ‘the court must pronounce on all claims put to it but on these alone’.80 For this purpose, it is for the parties to make any allegations of fact necessary to support their claims.81 However, French civil courts enjoy a very important and often far from ‘passive’ role, particularly in relation to the gathering of evidence (les preuves). This can be seen in particular in the case of the juge de mise en état (a judge who may be appointed to oversee the preparation of the case before it is heard), but it is by no means restricted to this context. Thus, while it is indeed primarily for the parties to put together their own case, as the Code of Civil Procedure puts it, ‘[t]he court oversees the proper running of a case; it has the power to set periods of time [for performance of procedural acts] and to order any necessary procedural measures’.82 So, while it is necessary ‘for each party to establish according to law the facts necessary for the success of its claim’,83 it is for the court to decide, either of its own motion or on the application of a party, whether to order the production of a document, the examination of a witness, or the commissioning of an expert report.84 Thus, while the burden of proof rests on the parties, in a very real sense the parties and the judge share the responsibility for gathering evidence of the facts to be judged. More difficult, and still controversial, is the relative role of the parties and the court in relation to the law. Certainly, it is for the court to apply the law to the facts which come before it (though modern French lawyers do not tend to refer to the maxim according to which ‘the court knows the law’ for this purpose),85 and while the parties may be invited to make submissions on the law applicable to their case,86 a court is by no means restricted to the legal sources brought to its attention. But this still leaves the problem of the relative roles of the parties and the court as regards the legal classification or characterisation of the facts which they allege, the ‘legal grounds’ (moyens de droit) of their claims. For example, if a claimant has bought a television set which no longer works, owing, it is alleged, to a manufacturing defect, under the Civil Code a claimant could have claims against the seller in terms of substantial mistake, latent defect or a ‘failure to deliver conforming property’, but the question arises whether the court is bound to apply the rules of law which apply to these legal classifications of the facts alleged, or whether it may or must choose between them or any other which it thinks is legally correct. Here, Article 12 of the Code of Civil Procedure states that: The court must give or restore the exact classification to the facts and legal transactions 80

Arts 4 al 1 and 5 C pr civ. The English translations in the text are the author’s own. Art 6 C pr civ. 82 Art 3 C pr civ. 83 Art 9 C pr civ. 84 Art 10 C pr civ, and see Whittaker in Bell, Boyron and Whittaker (n 16) 99–109. 85 ‘Le juge tranche le litige conformément aux règles de droit qui lui sont applicables’: Art 12 al 1 C pr civ. 86 Art 13 C pr civ. 81

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which are the subject of the litigation and not stay with the characterization suggested for them by the parties.87

Despite this apparent legislative clarity, the different chambers of the Cour de cassation have given different responses to these questions as to the reclassification of a claim by a court and to an extent these have been driven by the context in which they are made.88 Indeed, for some commentators, the Cour de cassation holds that Article 12 imposes an obligation on lower courts to reclassify claims before them when it wishes to quash their decisions, but also holds that it merely empowers them to do so when it does not!89 According to a leading treatise, though, the proper position is that the courts must classify the parties’ claims if (i) the parties have not done so;90 (ii) the parties have done so but wrongly; and (iii) where a court has exercised its discretion to pick up and rely in its decision on facts from the material before it which have not been specifically relied on by the parties in their submissions (so-called faits adventices).91 On the other hand, where the parties have not relied on particular facts in their submissions and the court has not picked them up from the faits adventices, then the court may but need not classify the facts in question, for these are said to be facts or legal transactions which the court may legitimately ignore. The Code of Civil Procedure also provides that a court is bound to keep to any legal classification or point of law submitted to it by the parties where the latter have expressly agreed to restrict their dispute in this way, provided that this concerns only those rights of which they have free disposal.92 Overall, therefore, in modern French law, rather than following the classic distinction according to which the facts are for the parties whereas the law is for the court, the contrast is more subtle, with the parties and the courts having predominant but not exclusive roles in their traditional domains.93 French law has, however, taken a very different approach to the relative roles of the parties and the court in questions of international jurisdiction and the application of foreign law. As regards international jurisdiction, the starting-point of French law was that the Civil Code attributed international jurisdiction where one of the parties was a French national,94 and French courts deduced from this that they lacked jurisdiction over disputes between foreigners.95 This ‘debatable and disastrous’ position was gradually whittled away over the course of the nineteenth and 87

Art 12 al 2 C pr civ (emphasis added). For the details, see J Vincent and S Guinchard (n 1) 531ff. 89 R Martin, ‘L’article 6-1 de la Convention européenne de sauvegarde des droits de l’homme contre l’article 12 du nouveau code de procédure civile’, Dalloz 1996 Chronique 20. 90 Since 1998, this is most unusual as since then Art 56 C pr civ has required any claim by assignation to include ‘an explanation of its grounds in fact and in law’. 91 Art 7 al 2 C pr civ. 92 Art 12 al 3 C pr civ. 93 Vincent and Guinchard (n 1) 515. 94 Arts 14 and 15 C pr civ. 95 Y Loussouarn, P Bourel, and P de Vareilles-Sommières, Droit international privé, 9th edn (Paris, Dalloz, 2007) 616–17; Civ, 17 July 1826, DP 1826 1 418; S 1827 1 13. 88

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early twentieth centuries, but was not finally abandoned until 1948.96 The basis of the modern French position was set some ten years later, when it was held that in principle the approach of legal rules on domestic jurisdiction should be extended to the international sphere,97 with the result that the courts sometimes referred to questions of the nationality or domicile of one or more of the parties and sometimes to the subject-matter of the litigation.98 How has this background affected the traditional approach of French law to the relative roles of the parties and the court in relation to international jurisdiction? As a matter of domestic French jurisdiction an important distinction was drawn between ‘attributed jurisdiction’ (la compétence d’attribution) which was determined by reason of the subject-matter of the case (la compétence ratione materiae), and ‘territorial jurisdiction’ (la compétence territoriale), which was determined either by the person of the litigants or the location of the case (la compétence ratione personae vel loci).99 Rules on ‘attributed jurisdiction’ are normally considered to be ‘a matter of public policy, which leads to their application by a court of its own motion and which also rules out their exclusion by jurisdiction agreements’.100 By contrast, rules on territorial jurisdiction are concerned with the allocation of cases according to their locality, and this is generally seen as a matter of convenience and not a matter of public policy.101 Since 1976 legislation has deemed international jurisdiction to be a matter of la compétence d’attribution,102 and as a result in general a court (whether a lower court or the Cour de cassation) may raise of its own motion the question of its own international jurisdiction.103 Rather oddly, it remains somewhat unclear whether or not this power is restricted to the situation where the rule of international jurisdiction is a matter of public policy.104 As regards applicable law, the question whether, in the absence of a party relying on foreign law, a French court may or even must apply foreign law to a case before it has been the subject of ‘an abundant and unfortunately very uncertain and fluctuating case-law’.105 However, under the influence of the changing 96 Loussouarn, Bourel and de Vareilles-Sommières (n 95) 616; Civ Sect, 21 June 1948, l’affaire Patiño, JCP 1948 II 4422. 97 Civ, 19 October 1959, l’arrêt Pelassa, D 1960, 37. 98 Loussouarn, Bourel and de Vareilles-Sommières (n 95) 618–19. 99 Ibid, 610. 100 Ibid. 101 Ibid, 611–12. 102 Art 92 al 2 C pr civ, reenacting décret no 76-1236 of 28 December 1976 modifiant certaines dispositions en matière de procédure civile, Journal Officiel de la République Française of 30 December 1976, 7633, art 2. 103 Loussouarn, Bourel and de Vareilles-Sommières (n 95) 634. 104 Civ (1), 16 December 1986, Bull Civ I no 300, Rev crit DIP 1987, 401. Besides these general rules (and apart from the position under the Brussels I Regulation), there remains in French law the (much-criticised) special jurisdiction of French courts where one of the parties is a French national. Here, where a party does not invoke this special jurisdiction, the court’s decision on the basis of other rules will not be quashed, but it will be if the court invokes the special jurisdiction where the party has not invoked it. See M-L Niboyet and G de Geouffre de la Pradelle, Droit international privé, 2nd edn (Paris, LGDJ, 2009) 347. 105 Loussouarn, Bourel and de Vareilles-Sommières (n 95) 314.

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approach to the relative roles of parties and the court in civil procedure more generally after the enactment of the new Code of Civil Procedure, since the 1990s the courts have generally distinguished between cases which concern ‘alienable rights’ and ‘inalienable rights’ (droits disponibles and droits indisponibles).106 Where a party’s alienable rights are in issue, then that party, not having raised the issue of the application of foreign law, cannot then complain of a court’s deciding on the basis of French law. On the other hand, where a party’s inalienable rights are in issue, the court has a duty to apply of its own motion the foreign law determined by the relevant rule of the conflict of laws, and its failure to do so will be subject to sanction. This approach obviously places a great deal of weight on the distinction between alienable and inalienable rights, a distinction that has been seen as unclear as a matter of French domestic law and difficult to apply to private international law given that in the latter context it would be natural to apply the applicable law to determine the issue rather than French law as the law of the forum—and this begs the question.107 Moreover, whether or not the case involves inalienable rights, where neither party has raised the issue of the application of foreign law, the court’s application of foreign law as directed by the relevant French conflict of laws rules is not open to challenge: even as regards alienable rights, the Cour de cassation has recognised a power in a lower court to apply foreign law in these circumstances of its own motion, subject to the parties’ right to be heard.108

D. Comparisons Overall, the German and the French approaches to the relative roles of the parties and the court to the definition of the subject-matter of civil litigation differ significantly from the English approach. It is true that all three take the same starting-point by holding that it is for the parties to define the subjectmatter of their claims and to allege facts based on evidence which they produce for the court, but, unlike German law, English law takes the principles of ‘party disposition’ and ‘party presentation’ much further and gives to the parties the power to determine how these claims should be characterised in legal terms, and to raise with the court any legal issues arising from those claims: it is not for the court to supplement a party’s claim or defence, to recharacterise them in legal terms, or otherwise to pick up and address any legal issues which are not raised by one or other party, in the way foreseen by German’s empowerment of judges to give the parties ‘hints and feedback’. The position on these questions in French law is also more nuanced than in English law, distinguishing between situations where a court may and where it must recharacterise a claim 106 Ibid, 315ff; Vincent and Guinchard (n 1) 540–41. The leading cases are Civ (1), 5 November 1991, Rev crit DIP 1992, 314 and Civ (1), 27 January 1998, Bull civ I no 27, JCP 2000 II 10098. 107 Loussouarn, Bourel and de Vareilles-Sommières (n 95) 316. 108 Ibid, 317–18.

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and according to whether the relevant facts are before it in the dossier, whether relied on by the parties or not. On the other hand, in both French and German law, in principle it is for the courts to determine the relevant law to be applied to the claims put to them, whereas in English law the relevant law is the subject of legal submission by the parties and in principle judges must not rely on their private researches to raise legal points not put by the parties. Both English and German law follow their own general traditional patterns of the relative roles of the parties and courts in their approaches to international jurisdiction and applicable foreign law. English courts do not ‘know the law’ (English or foreign) and they do not take judicial notice of an issue of private international law or of foreign law of their own motion: instead, foreign law is treated as an unusual issue of fact and so must be pleaded and established by evidence. German law also takes its position logically through to its approach to international jurisdiction and private international law, by holding that a court must verify its own jurisdiction of its own motion and apply foreign law to a case before it where German private international law requires it to do so: a court has the power and the duty to determine the existence of its own jurisdiction; and a court ‘knows’ the (German) conflicts rules on applicable law and, therefore, must where possible apply the foreign law to which it is directed. By contrast, French law has taken special approaches to the questions of the relative roles of the parties and courts as regards both international jurisdiction and foreign law, also taking different views as to the question whether a court can raise these issues of its own motion. How have these general national positions been affected by developments at the EU level?

III. EU Private International Law Since the amendment of the EC Treaty following the Treaty of Amsterdam, EU law has contained important new powers to take measures concerning the conflict of laws and international jurisdiction,109 and the European legislator has been active both in bringing existing (non-EU) European instruments within the fold of EU law (the Brussels Convention of 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters being superseded by the Brussels I Regulation,110 and the Rome Convention of 1980 on the law applicable to contractual obligations being superseded by the Rome I Regulation),111 as well as adding new instruments, most notably the Rome II Regulation on the law applicable to non-contractual obligations.112 As a result, all EU Member 109

Arts 61 and 65 EC. These powers are now contained in Arts 67 and 81 TFEU. Above n 9. 111 Above n 10. 112 Above n 10. 110

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States have enjoyed a uniform scheme of foreign jurisdictional rules and almost all have a uniform basis for determining applicable law in international cases in relation to contractual and non-contractual obligations.113 However, there is a striking contrast of approach between the instruments on jurisdiction and those on applicable law in relation to the question of whether a national court may or must raise a point of law of its own motion.

A. The National Court’s Role in Relation to its Own International Jurisdiction In outline, the Brussels I Regulation sets a general principle of jurisdiction based on the domicile of the defendant,114 this general position being then supplemented by a number of special grounds of jurisdiction,115 some of which are available to a claimant in the alternative to the rule of domicile (as in the case of claims ‘in matters relating to a contract’ or ‘in matters relating to a tort’)116 and some of which are not or not necessarily (as in the case of insurance,117 consumer contracts118 and individual contracts of employment).119 As regards a handful of situations, jurisdiction is determined exclusively regardless of domicile, for example, in relation to ‘proceedings which have as their object rights in rem in immovable property or tenancies of immovable property’ where ‘the courts of the Member State in which the property is situated’ have jurisdiction.120 Finally, the Regulation recognises the existence of jurisdiction in the case of jurisdiction agreements (subject to various conditions) and in the case of the defendant’s acknowledgement of jurisdiction by entering an appearance other than to contest jurisdiction.121 The Regulation also makes special provision as regards the staying of proceedings and declining of jurisdiction by courts of Member States in cases of lis pendens and pending related actions.122 As the recitals to the Regulation make clear, the purposes of this scheme are to maintain and develop ‘an area of freedom, security and justice’ based on principles of cooperation and mutual trust between the courts of Member States and the need for the harmonious administration of international justice.123 The Brussels I Regulation is very concerned to regulate the question whether a court must raise the question of international jurisdiction of its own motion 113

The exception here is Denmark. Brussels I, Arts 2 and 4, distinguishing between persons domiciled and those not domiciled in a Member State. 115 Ibid, Art 3. 116 Ibid, Arts 5(1) and 5(3). 117 Ibid, Arts 8–14. 118 Ibid, Arts 15–17. 119 Ibid, Arts 18–21. 120 Ibid, Art 22. 121 Ibid, Arts 23 and 24, respectively. 122 Ibid, Arts 27–30. 123 Brussels I Regulation, Recitals 1, 3 and 15. 114

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and dedicates its section 8 to ‘Examination as to jurisdiction and admissibility’. Article 25 sets a clear start as regards cases of exclusive jurisdiction: Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction.124

For this purpose, it is irrelevant whether or not the parties to the litigation have expressly or impliedly accepted jurisdiction.125 Moreover, this clear rule in favour of a duty in a court seized of a claim to consider the issue of international jurisdiction of its own motion is developed by Article 26(1), according to which: Where a defendant domiciled in one Member State is sued in a court of another Member State and does not enter an appearance, the court shall declare of its own motion that it has no jurisdiction unless its jurisdiction is derived from the provisions of this Regulation.

Again, the raising of the issue of its own possible lack of jurisdiction by a court is expressed as a duty (‘the court shall declare’) and not merely as a power, but the duty arises only where a defendant is domiciled in one Member State and is sued in another (these conditions echoing the general principle of jurisdiction),126 and where the defendant has failed to enter an appearance. Where these conditions are satisfied, in principle a court seized of a claim must declare its own lack of jurisdiction of its own motion, and take jurisdiction only if it possesses jurisdiction on the basis of other provisions of the Regulation (eg on one of the grounds of special jurisdiction or under a jurisdiction agreement).127 A national court should therefore consider its own international jurisdiction so as to protect the rights of absent (EU-domiciled) litigants—a concern for the ‘rights of the defence’ later reflected in the exception to recognition of judgments in cases where the defendant did not appear and was not properly served with the process.128 Conversely, according to Queirolo, where a defendant enters an appearance without challenging the court’s jurisdiction, then he is generally ‘deemed to represent a tacit acceptance of such jurisdiction’.129 Therefore, apart from cases attracting exclusive jurisdiction: 124

Emphasis added. I Queirolo, Commentary on Arts 25–26 in U Magnus and P Mankowski (eds), Brussels I Regulation (Munich, Sellier, 2007) 449, 452. 126 Art 2 Brussels I Regulation. 127 The court is required to ‘stay the proceedings so long as it is not shown that the defendant has been able to receive the document instituting the proceedings or an equivalent document in sufficient time to enable him to arrange for his defence, or that all necessary steps have been taken to this end’: Art 26(2) Brussels I Regulation. 128 Art 34(2) Brussels I Regulation. Recital 18 refers to the ‘rights of the defence’ allowing a defendant to appeal against a declaration of enforceability of a judgment, with Art 45(1) making clear that such an appeal may be made only on the ground of one the exceptions contained in Arts 34 and 35. See further Queirolo (n 125) 467–68 on the relationship between Arts 26(2) and 34(2). 129 Queirolo (n 125) 466, referring to Art 24’s provision which acknowledges a court’s jurisdiction where a defendant enters an appearance in these circumstances, apart from where another court has exclusive jurisdiction under Art 22. 125

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Acceptance of jurisdiction prevails over the other criteria set out in the uniform law even superseding provisions contained in a clause concerned with the choice of the competent forum. The recognition of the role of the parties’ autonomy in the choice of the jurisdictional body leads to weight being given to the parties’ will in all its manifestations, whether expressed prior to, or after, the initiation of proceedings.130

In the result, the Brussels I Regulation both empowers and requires a court of a Member State to consider whether or not it has jurisdiction under the Regulation in cases where the defendant has not entered an appearance and in cases of exclusive jurisdiction. Outside these situations, a court of a Member State may apply its own national rules as to the question whether it can or must address of its own motion the question whether or not it possesses international jurisdiction. There are, however, two more situations in which the Brussels I Regulation requires a court seised of a claim to consider its own position in relation to international claims. Article 27 Brussels I governs lis pendens and provides that: 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.

This is not a case of a court seised itself having no jurisdiction (it may do so under the relevant grounds in Brussels I), but where nonetheless it should not determine a claim of which it is seised until such time as a Member State first seised has decided its own jurisdiction, this being required by the principle of ‘mutual trust in the administration of justice in the Community’.131 Similarly, Article 28 Brussels I provides that ‘[w]here related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings’.132 Again, we see that the Brussels I Regulation requires national courts to consider a legal issue arising between parties even where it has not been raised before them. In his Report on the Brussels Convention in 1978 on the accession of Denmark, Ireland and the UK, Professor Schlosser commented that an obligation to observe the rules of jurisdiction of its own motion is by no means an unusual duty for a court in the original Member States.[133] However, the United Kingdom delegation point out that such a provision would mean a fundamental change for its courts. Hitherto United Kingdom courts had been able to reach a decision only on the basis of submissions of fact or law made by the parties. Without 130

Ibid, 466. Brussels I Regulation, Recital 16 (though actually referring to the recognition of judgments). 132 Art 28(1), emphasis added. 133 Original in the sense of the six signatories to the Treaty of Rome of 1958. 131

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infringing this principle, no possibility existed of examining their jurisdiction of their own motion.134

From what has been explained earlier about German and French law, it will be seen that the Brussels Convention (followed by the Brussels I Regulation) adopted a compromise position between the approaches to international jurisdiction among the original Member States. Unlike German law, the Brussels Convention/Brussels I Regulation do not always require Member State courts to verify of their own motion whether or not they possess international jurisdiction,135 nor do they restrict this duty in the same way as does French law.136 Nevertheless, as Schlosser noted, the rules contained in the Brussels Convention/Brussels I Regulation fit relatively easily into the civil laws. So, for example, Queirolo states simply that, where either Articles 25 or 26 Brussels I apply, the court will need to consider the qualification of any facts before it in legal terms under the principle iura novit curia.137 On the other hand, Queirolo accepts that the determination of which facts the courts are allowed to rely on is a much more difficult question: must ‘the court  … confine its investigation to the facts that the plaintiff submits’ following the ‘so-called presentation theory’, or should it instead ‘consider all the material that is relevant for the purposes of the judgment on the merits, including the possibility to request explanations and additional information in accordance with the procedural rules of its domestic system’ following the ‘full cognisance theory’?138 Her conclusion appears to be that the court must conduct the examination of its own jurisdiction on the basis of the contents of the available documents or on the basis of what the court establishes independently, within the limits of preliminary investigation procedures and subject to the restrictions in, and complying with, any further terms of reference envisaged in its legal system.139

As yet the Court of Justice has not had occasion to resolve this sort of difficulty, though it has made clear that where a national court lacks jurisdiction under the Brussels Convention, its duty to decline jurisdiction applies even at the level of ‘cassation’ before a national supreme court and despite national rules which would have prevented the court from reviewing the grounds raised by the parties.140 On the other hand, the Court has also held that a national court’s duty to consider its own jurisdiction under the Brussels I Regulation does not mean that a national court of appeal must do so after the decision at trial has

134 Report of Professor Schlosser on the Convention on the Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain to the Brussels Convention [1979] OJ C59/71, para 22. 135 Above, at 101. 136 Above, at 103–04. 137 Queirolo (n 125) 456. 138 Ibid, 455–56. 139 Ibid, 461, and see further 462. 140 Case 288/82 Duijnstee v Goderbauer [1983] ECR 3663, paras 14–15.

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become final,141 on the ground of ‘the importance, both for the Community legal order and national legal systems, of the principle of res judicata’.142 Even in the light of the principle of sincere co-operation arising from Article 10 EC (now Article 4(3) TEU), the national court was not under an obligation to review and set aside a final judicial decision if that decision should infringe Community law, here the uniform rules on jurisdiction set by the Brussels I Regulation.143 How, though, have English courts coped with the duties under the Brussels Convention/Brussels I Regulation to raise issues of jurisdiction of their own motion given their general approach to the relative roles of the parties and the courts, both as to international jurisdiction and more generally? Interestingly, English law has used the pre-trial process to ensure that the claimant alerts the court to the question of international jurisdiction where it must itself verify its jurisdiction under the Brussels I scheme or stay proceedings before it on the ground of lis pendens. As has been seen,144 under the traditional (and general) English law, the court’s permission must be sought for service outside the jurisdiction, but this requirement does not apply where jurisdiction exists under the Brussels I Regulation. So, where jurisdiction is claimed under the Brussels I Regulation, a claimant may serve a claim form on a defendant out of the UK jurisdiction without the permission of the Court, but must also file with the claim form a notice of the grounds on which this is claimed to be the case.145 The relevant part of the notice in question requires the claimant (or typically his or her solicitor) to state that the court has jurisdiction under the Regulation and that ‘that no proceedings are pending between the parties in the courts of any other part of the United Kingdom or any other Member State’.146 The Court seised of the claim is, therefore, on notice of the fact that service has been made outside the jurisdiction and that there are no parallel proceedings, either lis pendens or a ‘related action’.147 A court seised of such a claim will also be put on notice to assess the significance of the failure of the defendant to enter an appearance within the meaning of Article 26 of the Brussels I Regulation. In this way, a UK court will be in a position to fulfil its duties under Articles 25 to 28 of the Regulation to verify of its own motion its own jurisdiction or to stay the proceedings before it on the ground of lis pendens. This leaves, however, the secondary question as to how an English court would determine the question of jurisdiction in the absence of submissions and, where appropriate, evidence adduced by the parties. Where both parties are before the court, English courts have held that the standard of proof as to the

141

Case C-234/04 Kapferer v Schlank & Schick GmbH [2006] ECR I- 2585. Ibid, para 20. 143 Ibid, para 24. 144 Above, at 97. 145 CPR 6.33 and 6.34. 146 Form N510 Service out of the Jurisdiction specified by Practice Direction 6B para 2.1. 147 Arts 27 and 28 of the Brussels I Regulation. 142

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existence of jurisdiction under the Regulation is that of a ‘good arguable case’.148 According to Waller LJ, ‘Good arguable case’ reflects in [the interlocutory context] that one side has a much better argument on the material available. It is the concept which the phrase reflects on which it is important to concentrate, ie of the court being satisfied or as satisfied as it can be having regard to the limitations which an interlocutory process imposes that factors exist which allow the court to take jurisdiction.149

This test is ‘intended to encapsulate the critical rule that the court must be as satisfied as it can be, having regard to the limitations which the interlocutory process imposes, that factors exist which allow the court to take jurisdiction’.150 As a result, where a claimant has not made such a ‘good arguable case’, then the English court will not take jurisdiction under the Regulation. By analogy, where the Brussels I Regulation requires an English court to address the question of its jurisdiction of its own motion, the proper test would be whether the court is satisfied that it has jurisdiction given the claims and evidence before it.151 Such an approach would accord with the decision of the Court of Justice in Effer SpA v Kantner, where it held, in a context of a claim where jurisdiction turned on the existence of a contract between the parties, that a court ‘may examine, of its own motion even, the essential preconditions for its jurisdiction, having regard to conclusive and relevant evidence adduced by the party concerned, establishing the existence or the inexistence of the contract’.152 What both this decision and the English case law make clear is that in determining its own jurisdiction a court must come to a view taking into account the facts and evidence which are before it. The national court has a duty to decide, but not a duty to investigate.

B. The National Court’s Role in Relation to Applicable Foreign Law On first reading the Rome I and Rome II Regulations setting uniform rules of applicable law governing (respectively) contractual and non-contractual obligations, one is left with the impression that the rules determining applicable law which they designate are mandatory for the courts of Member States. So, for example, Recital 6 of the Rome I Regulation states: 148

Fawcett and Carruthers (n 42) 226–27. Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 547, 555 quoted with approval in Bols Distilleries BV (trading as Bols Royal Distilleries) v Superior Yacht Services Ltd [2007] 1WLR 12, para 26, by Lord Rodger of Earlsferry. See also WPP Holdings Italy Srl v Benatti [2007] EWCA Civ 263, [2007] 1 WLR 2316, paras 40–41. 150 WPP Holdings Italy Srl v Benatti (n 149) para 41, per Toulson LJ. 151 There is a requirement in English law that the claimant must establish that there is a serious issue to be tried on the merits, at least in cases of special jurisdiction. See Fawcett and Carruthers (n 42) 227. 152 Case 38/81 Effer SpA v Kantner [1982] ECR 825, para 7; Case C-68/92 Shervill v Press Alliance SA [1995] ECR I-415, paras 95–96 and the Opinion of AG Darmon, paras 35–36. 149

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The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought.

Moreover, the provisions determining the scope of the Regulation and the substantive provisions determining applicable law in various situations are all expressed in imperative language. For example, Article 2’s provisions on ‘universal application’ provides that ‘any law specified by this Regulation shall be applied whether or not it is the law of a Member State’ and Article 3’s leading provision on ‘freedom of choice’ provides that ‘[a] contract shall be governed by the law chosen by the parties’.153 Despite this imperative language, however, the general view is that the Rome I and Rome II Regulations do not require the courts of Member States seised of a claim coming within the scope of their provisions to consider the issue of the application of foreign law of their own motion, and instead leave the question of whether it is for the parties to claim (and prove) foreign law or for the court to apply foreign law to the national rules of the conflict of laws and procedure.154 As a result, whether a court of a Member State actually applies the uniform rules of applicable law depends on its own rules governing the application and determination of foreign law. The practical effects of this position have been subject to criticism, leading to the commissioning by the European Commission of a study on the approach to the application of foreign law in all Member States,155 the preface of which points to the need for change on the basis that the present position ‘violates legal certainty and contradicts the objective of ensuring full access to justice to all European citizens within the European Union’.156 The study concludes by recommending the enactment of a EU Regulation on the ascertainment of the content and manner of application of foreign law, one of whose principles should be that the ‘application of foreign law should be made ex officio by the national authority, which must use its best endeavours to ascertain the content of foreign law’.157 If such an approach were followed, national courts would ‘know’ the EU rules on applicable law and would be under a duty to try to find out the foreign law so designated. This position would be highly reminiscent of the German approach 153

Art 3(1) of the Rome I Regulation (emphasis added). Collins et al (n 43) para 9-011, support this in the context of the Rome Convention of 1980 on the basis that its scope expressly excludes ‘evidence and procedure’ with the exception of issues of burden of proof. See also Rome Convention, Arts 1(2)(h) and 14. The equivalent provisions are contained in Rome I, Arts 1(3) and 18. Cf R Fentiman, Foreign Law in English Courts (New York, Oxford, 1998) 80–97, who argued that under the Rome Convention 1980 the pleading of foreign law may be mandatory where the provisions governing applicable law are themselves mandatory (as in the case of consumers and employees), and that the question how foreign law is pleaded is procedural, but the question whether it is pleaded is substantive. 155 This study, foreseen in part by Art 30(1)(i) of the Rome II Regulation, is published as C Esplugues, JL Iglesias and G Palao, Application of Foreign Law (Munich, Sellier, 2011) xxvi. 156 Ibid, xxvi. 157 Ibid, 95 (‘Principle IV’). 154

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to applicable foreign law, but would require a radical change of approach in those national systems (including English law) where the application and the content of foreign law rests (wholly or primarily) with the parties to the litigation.

IV. The General Position of the Court of Justice as to the Application of EU Law by National Courts of their own Motion In some ways surprisingly, the Court of Justice has not held that the principle of supremacy of EU law and/or the duty of co-operation of Member States require national courts to raise questions of EU law of their own motion and, where appropriate, to apply its rules to the cases before them.158 However, the Court has placed important general qualifications on this position based on the principles of equivalence and effectiveness, as well as taking a special approach in the context of consumer protection following Océano Grupo Editorial.159 Both the general position and its qualifications can be seen clearly in Van Schijndel, decided by the Court in 1995.160 In that case, employees complaining of the compulsory nature of their occupational pension scheme argued before the Dutch Supreme Court (the Hoge Raad) that the lower court should have considered ‘if necessary of its own motion’ the compatibility of this membership with EU law.161 Under the law of the Netherlands, parties before the Hoge Raad applying for cassation of a lower court’s decision were not entitled to introduce new arguments except on points of pure law, whereas their arguments had rested on new facts and circumstances not relied on or established below: the Dutch court therefore asked whether the principle of judicial passivity in cases involving civil rights and obligations freely entered into by the parties entail  … that additional pleas on points of law cannot require courts to go beyond the ambit of the dispute defined by the parties themselves nor to rely on facts or circumstances other than those on which a claim is based.162

The Court of Justice held first that where a national court either can or must raise of its own motion points of law based on binding domestic rules which have not been raised by the parties, such an obligation also exists where binding EC rules are concerned.163 The Court further held that: 158

Art 10 EC, now as amended Art 4(3) TEU. On the latter, see below, at 117. 160 Joined cases C-430/93 and C-431/93 Van Schijndel (n 11). For further discussion see Trstenjak and Beysen (n 14) 97–104. 161 Joined Cases C-430/93 and C-431/93 Van Schijndel (n 11) para 10. 162 Ibid, para 11. 163 Ibid, paras 13–14. 159

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17. In the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from the direct effect of Community law. However, such rules must not be less favourable than those governing similar domestic actions nor render virtually impossible or excessively difficult the exercise of rights conferred by Community law.  … 19. For the purposes of applying those principles, each case which raises the question whether a national procedural provision renders application of Community law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, before the various national instances. In the light of that analysis the basic principles of the domestic judicial system, such as protection of the rights of the defence, the principle of legal certainty and the proper conduct of procedure, must, where appropriate, be taken into consideration. 20. In the present case, the domestic law principle that in civil proceedings a court must or may raise points of its own motion is limited by its obligation to keep to the subject-matter of the dispute and to base its decision on the facts put before it. 21. That limitation is justified by the principle that, in a civil suit, it is for the parties to take the initiative, the court being able to act of its own motion only in exceptional cases where the public interest requires its intervention. That principle reflects conceptions prevailing in most of the Member States as to the relations between the State and the individual; it safeguards the rights of the defence; and it ensures proper conduct of proceedings by, in particular, protecting them from the delays inherent in examination of new pleas.

This important judgment therefore explains the principles on which EU law generally requires a national court to raise EU law of its own motion, the principles of equivalence and the principle of effectiveness (though the latter is interpreted in a restrictive way), and acknowledges that in general it is for national laws to lay down rules of civil procedure, but then holds that these national laws have in common certain features which EU law should recognise as worthy of consideration. In a civil case, these common features include the principle that it is for the parties to take the initiative in relation to the subjectmatter of their dispute and the facts which they adduce for this purpose, the court being able to act of its own motion only in exceptional cases where the public interest requires its intervention.164 In this way, the Court recognised certain ‘common principles’ of national laws (referred to tentatively as ‘conceptions prevailing in most of the Member States as to the relations between the State and the individual’). As regards the case before it, the Court concluded that the principle that it is for the parties to determine the subject-matter of the suit meant that national courts were not required to raise an issue of EU law of their motion where to do so would undermine the courts’ passive role and 164

Ibid, para 21.

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require them to rely on facts and circumstances not pleaded by the parties.165 This provides a striking contrast with the Court’s approach in Duijnstee in the context of the duty to decline jurisdiction under the Brussels Convention, where the Dutch Supreme Court had been required to consider the question of jurisdiction even on an application for cassation. Subsequently, the Court of Justice has continued this general approach.166 In doing so, the Court has emphasised the importance of ‘the principle that, in a civil suit, it is for the parties to take the initiative, the court being able to act of its own motion only in exceptional cases where the public interest requires its intervention’. In Van der Weerd167 the Court considered whether EC law required a national court to raise of its own motion whether a national administrative measure for the control of foot-and-mouth disease infringed provisions of Community legislation. Having cited its earlier case law in Van Schijndel, the Court held that in the circumstances, there was no infringement of the principle of equivalence given that national procedural rules which did allow a court to raise an issue of its own motion did so only as regards issues relating to the infringement of rules of public policy, which was not the case as regards the Community rules in question.168 Moreover, in terms of the principle of effectiveness, the Court considered whether the national procedural rule in question ‘renders the exercise of rights conferred by the Community legal order on individuals impossible or excessively difficult’ in the context of ‘the role of that provision in the procedure, its progress and its special features’.169 The Court held that requiring the possibility for the national court to consider the EU law issue ‘would go beyond the ambit of the dispute as put before it’.170 Interestingly, the Court distinguished Océano Grupo Editorial and its then successor cases on the Directive of 1993 on unfair terms in consumer contracts on the basis that this case law was justified by ‘the need to ensure that consumers are given effective protection’ by that Directive.171 As a result, in the circumstances, EU law did not require the national court to raise of its own motion a plea based on Community law, ‘irrespective of the importance of that provision to the Community legal order’.172 What, therefore, is so particular about the 1993 Directive that gives such added force to the principle of effectiveness beyond the power normally foreseen by the Van Schinjdel case law? Or can the two lines of case law be reconciled? 165

Ibid, para 22. See, in particular, Case C-312/-9 Peterbroeck, Van Campenhout & Ci e SCS v Belgium [1995] ECR 1-4615; Case C-455/06 Heemskerk BV and Firma Schaap v Productschap Vee en Vlees [2008] ECR I-8763, which confirms that EU law does not require national courts to contradict the principle according to which an individual bringing an action must not be placed in a less favourable position than if he had not done so (‘principle of the prohibition of reformatio in pejus’). 167 Joined Cases C-222/05 to C-225/05 Van der Weerd v Minister van Landbouw [2007] ECR I-4233. 168 Ibid, paras 29–32. 169 Ibid, para 33. 170 Ibid, para 37. 171 Ibid, para 40. 172 Ibid, para 41. 166

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V. Océano Grupo Editorial and its Progeny In Océano-Grupo Editorial a Spanish court seised with a claim for payment under a consumer contract asked the Court of Justice whether Community law allowed it to consider of its own motion the validity of an express clause in the contract purporting to confer domestic jurisdiction on it in the light of the controls in the Unfair Terms in Consumer Contracts Directive 1993 and the fact that, while all the defendants were Spanish residents, none of them were domiciled in the area of jurisdiction of the court designated by the clause, although this included the principal place of business of the claimant.173 The Court held that the national court could so determine on two principal grounds. First, as a matter of substance, in the Court’s view the term in question ‘satisfies all the criteria enabling it to be classed as unfair for the purposes of the Directive’.174 Such an exclusive jurisdiction clause setting the court at the place of business of the trader rather than the domicile of the consumer may make it difficult for him to enter an appearance. In the case of disputes concerning limited amounts of money, the costs relating to the consumer’s entering an appearance could be a deterrent and cause him to forgo any legal remedy or defence. Such a term thus falls within the category of terms which have the object or effect of excluding or hindering the consumer’s right to take legal action, a category referred to in subparagraph (q) of paragraph 1 of the Annex to the Directive.175

In such circumstances, the term ‘must be regarded as unfair’ within the meaning of the Directive.176 Secondly, according to the Court, ‘the system of protection introduced by the Directive is based on the idea that a consumer is in a weak position visà-vis the seller or supplier, as regards both his bargaining power and his level of knowledge’.177 For this purpose, the Directive provides two different sorts of protections. The first (in Article 6) is that any unfair term within the scope of the Directive is ‘not binding on the consumer’, and this aim ‘would not be achieved if the consumer were himself obliged to raise the unfair nature of such terms’, given that many consumers would be ignorant of their protection.178 Moreover, the Directive puts in place a second system of protection (in Article 7) which provides for the authorisation of ‘persons or organizations having a legitimate interest under national law in protecting consumers’ to take action so as to protect consumers. Given both these systems of protection, the court’s power to determine of its own motion whether a term is unfair must be regarded as constituting a proper means both of achieving the result sought by 173 Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial (n 12) para 19, noted in S Whittaker, ‘Judicial Interventionism and Consumer Contracts’ (2001) 117 Law Quarterly Review 215. 174 Ibid, para 21. 175 Ibid, para 22. 176 Ibid, para 24. 177 Ibid, para 25. 178 Ibid, para 26.

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Article 6 of the Directive  … and of contributing to the aim of Article 7, since if the court undertakes such an examination, that may act as a deterrent and contribute to preventing unfair terms in contracts concluded between consumers and sellers or suppliers.179

A national court was therefore able to determine of its own motion whether a term of a contract before it was unfair in deciding whether a claim should be allowed to proceed. This decision is both understandable and surprising. It is understandable given the background in the European (and soon to be EU) law governing international jurisdiction under the Brussels Convention/Brussels I Regulation, the latter of which was just about to be enacted at the time of the Océano Grupo Editorial decision, for under these instruments an express international jurisdiction clause cannot have the effect of setting the jurisdiction for proceedings against a consumer outside the country where the consumer is domiciled.180 If a consumer domiciled in one Member States fails to make an appearance where a court of another Member State is seised of a claim against him or her under a choice of international jurisdiction clause, then that court would have to verify and decline jurisdiction under Article 26 of the Brussels I Regulation. On the other hand, the justification for holding that a national court is entitled to consider the unfairness of the term was not based on the principle of equivalence or on the general considerations of effectiveness of EU law as against the legitimate aims of national procedural law following the general approach established in Van Schijndel,181 but rather directly on the fact that the relative weakness and legal ignorance of consumers justifies a power in courts to intervene without the issue being raised by the relevant party, here the consumer: while these can be thought of as considerations of mandatory norms of public policy (‘normes impératives d’ordre public économique’, as Advocate General Saggio put it in the French version of his Opinion) arising from the EC legislation, the Court itself did not refer to ‘public policy’ or the ‘public interest’ explicitly to justify its view.182 The reach of this decision and some of its difficulties have been the subject of considerable case law in the Court, even just in the context of the Directive on unfair contract terms.183 179

Ibid, para 28. Brussels I, Arts 16(2) and 17. Joined Cases C-430/93 and C-431/93 Van Schijndel (n 11). 182 The Court of Justice of the EU itself held that such a national jurisdiction clause is unfair within the meaning of the Directive. Later, however, the Court has affirmed that while it ‘may interpret general criteria used by the Community legislation in order to define the concept of unfair terms  … it should not rule on the application of these general criteria to a particular term, which must be considered in the light of the particular circumstances of the case in question’ by national courts. See Case C-237/02 Freiburger Kommunalbauten GMbH Baugesellschaft & Co KG v Hofstetter [2004] ECR I-3403, para 22, and Case C-472/10 Nemzeti Fogyasztóvédelmi Hatóság v Invitel Távközlési Zrt, Judgment of 26 April 2012 (where the Court of Justice gave the national court guidance for this purpose). 183 Case C-473/2000 Cofidis (n 14); Case C-237/02 Freiburger Kommunalbauten (n 182); Case 180 181

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First, the Court soon held that a national court’s power to address the unfairness of a term in a consumer contract was not limited to jurisdiction clauses. In Cofidis, the Court held that the fixing of a time-limit under national procedural law on the court’s power to question the fairness of a term ‘is liable to affect the effectiveness of the protection intended by Articles 6 and 7 of the Directive’ as traders could simply wait for the expiry of this period to deprive consumers of the benefit of that protection.184 In its context, the time-limit period therefore rendered the application of Community law ‘impossible or excessively difficult’ within the terms of the Court’s general case law.185 Secondly, in Mostaza Claro186 the Court of Justice held that national courts have a duty and not merely a power to intervene of their own motion in order to ensure that the protection promised by the Directive is effectively ensured for consumers. The Court therefore ruled that a national court faced with a claim by a consumer for annulment of an arbitral award against him or her must annul the award if it considers that the arbitration clause on the basis of which the arbitration took place was invalid as an unfair term in a consumer contract within the meaning of the Directive, even though the consumer had not raised the issue of invalidity in the course of the arbitral proceedings and would normally be prevented from raising the issue by a subsequent action for annulment of the award as a matter of national procedural law. According to the Court: The nature and importance of the public interest underlying the protection which the Directive confers on consumers justify … the national court being required to assess of its own motion whether a contractual term is unfair, compensating in this way for the imbalance which exists between the consumer and the seller or supplier.187

While the circumstances in which this statement was made were special in that the arbitration clause in issue was seen as compromising the consumer’s fundamental right to a fair hearing,188 the court’s duty is expressed very generally and is grounded principally on Article 6 of the Directive itself and on the nature of the protection that it provides. Thirdly, in Asturcom Telecommunicaciones the Court of Justice considered whether a national court seised with a claim to enforce an arbitral award against a consumer where the arbitrators acted under an arbitration clause in a consumer C-168/05 Mostaza Claro v Centro Móvil Milenium SL [2006] ECR I-10421; Case-243/08 Pannon GSM Zrt v Győrfi [2009] ECR I-4713; Case C-40/08, Asturcom Telecomunicaiones (n 14); Case C-137/08 VB Pénzügyi Lizing Zrt (n 8). 184

Case C-473/2000 Cofidis (n 14) para 35. Ibid, para 37. 186 Case C-168/05 Mostaza Claro (n 183). 187 Ibid, para 38. 188 Case C-168/05 Mostaza Claro (n 183), Opinion of AG Tizziano, paras 57 and 59. The Court of Justice also relied in part on the fact that, in the case before it, Spanish national procedural law allowed a court to annul an arbitral award on the basis of a failure to observe national rules of public policy and this meant that as a matter of EC law a Spanish court had to be able to do so on the grounds of Community public policy (the principle of equivalence). See ibid, para 35, applying Case C-126/97 Eco Swiss China Time Ltd v Benetton International NV [1999] ECR I-3055, para 37. 185

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contract can and/or must consider the unfairness of that arbitration clause within the meaning of the 1993 Directive, even where the consumer was neither present in the arbitration proceedings nor was applied to the appropriate court for the annulment of the arbitrators’ decision (as she was entitled under the applicable national law).189 Advocate General Trstenjak had argued that the national court has both the power and the duty to do so,190 but the Court of Justice took a more nuanced line. Its starting point was ‘the principle of res judicata’, noting that in order to ensure stability of the law and legal relations, as well as the sound administration of justice, it is important that judicial decisions which have become definitive after all rights of appeal have been exhausted or after the expiry of timelimits provided to exercise those rights can no longer be called into question.191

The need not to undermine the finality of ‘definitive’ decisions applies also to final (unchallenged) arbitral decisions. The Court then applied its general approach in Van Schijndel, holding that: In the absence of Community legislation in this area, the rules implementing the principle of res judicata are a matter for the national legal order, in accordance with the principle of the procedural autonomy of the Member States. However, those rules must not be less favourable than those governing similar domestic actions (principle of equivalence); nor may they be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by Community law (principle of effectiveness).192

In the Court’s view, the imposition of a reasonable time-limit for the bringing of proceedings challenging the arbitral decision (in the case, two months from notification of that decision) is not liable to make the exercise of Community law rights virtually impossible or excessively difficult.193 Moreover, the need to comply with the principle of effectiveness cannot be stretched so far as to mean that, in circumstances such as those in the main proceedings, a national court is required not only to compensate for a procedural omission on the part of a consumer who is unaware of his rights, as in the case which gave rise to the judgment in Mostaza Claro, but also to make up fully for the total inertia on the part of the consumer concerned who, like the defendant in the main proceedings, neither participated in the main proceeding nor brought an action for annulment of the arbitration award, which therefore became final.194

In applying the principle of equivalence, the Court of Justice further held that the conditions imposed by domestic law under which the courts and tribunals may apply a rule of Community law of their own motion must not be less favourable

189

Case C-40/08 Asturcom Telecomunicaiones (n 14). Ibid, Opinion of AG Trstenjak, paras 74 and 81. 191 Ibid, para 36. 192 Ibid, para 38. 193 Ibid, paras 41–46. 194 Ibid, para 47. 190

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than those governing the application by those bodies of their own motion of rules of domestic law of the same ranking.195

For this purpose, the 1993 Directive’s rule holding unfair terms ‘not binding on the consumer’ is a mandatory rule, attaining the rank of a rule of public policy (d’ordre public). Therefore, where a national court seised with an action for enforcement of a final arbitral award would, under domestic rules of procedure, assess of its own motion whether an arbitration clause was in conflict with domestic rules of this character, then it would be obliged to do so for the purposes of the 1993 Directive, as long as it has available the legal and factual elements necessary for this task.196 In this way, the Court of Justice sought to balance the policy of protecting the consumer pursued by the 1993 Directive and the policy of promoting the finality of decision-making (even of private arbitral decisions), which EU law recognises; and, at a more general level, to balance the demands of an EU principle (or principles) and the so-called principle of the ‘autonomy’ of national procedural laws. By doing so, to an extent, the Court drew back from its apparently greater willingness to intervene in (and override) national approaches to the relative roles of national courts and the parties to civil litigation previously revealed in Océano Grupo Editorial, placing the limits of the duty to raise the question of the conformity of the terms of a contract with EU law within the framework of its general Van Schijndel case law. Fourthly, in Pannon and Pénzügyi Lizing the Court of Justice was asked for guidance as to how national courts should proceed to determine the question of the unfairness of a term in a consumer contract once they had raised it of their own motion given the fact-sensitive nature of the test of unfairness.197 In Pannon the Court restricted the obligation of a national court to assess the unfairness of a contract term to the situation of ‘where it has available to it the legal and factual elements necessary for that task’.198 This recognises that in some situations a national court will not be in a position to come to a view as to the fairness of a term in the circumstances, in part owing to the absence of the consumer’s own representations or evidence adduced for this purpose as the nature of the civil process relies on the parties to place facts and their evidence before the court. The Court added that the national court is not … required under the Directive to exclude the possibility that the term in question may be applicable, if the consumer, after having been informed of it by that court, does not intend to assert its unfair or non-binding status.199

So, a national court is not obliged to consider the unfairness of a term where a

195

Ibid, para 49. Ibid, paras 50–55. 197 Case C-243/08 Pannon (n 183); Case C-137/08 VB Pénzügyi Lizing Zrt (above n 8). 198 Case C-243/08 Pannon (n 183) para 32. 199 Ibid, para 34 and see para 35 referring to an exception to the non-application of a term found to be unfair ‘if the consumer opposes that non-application’. 196

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consumer is present and has taken a judicially informed decision not to challenge the term. In Pénzügyi Lizing Zrt the Court was then asked specifically whether a national court’s duty to address the fairness of a term in a consumer contract (there, a choice of domestic jurisdiction clause) meant that it ‘is obliged to undertake, of its own motion, an examination with a view to establishing the factual and legal elements necessary to that examination where the national procedural rules permit that only if the parties so request’.200 The particular difficulty of doing so in the context was that the claim was made by a business in ‘ex parte proceedings, which do not require the court to hold a hearing or hear the other party’.201 Advocate General Trstenjak advised that Community law does not require the national court to undertake an investigation of its own motion for the purpose of obtaining the legal and factual elements necessary to assess the unfairness of a contractual term where it does not have such elements available to it. The powers of the national court are determined rather by national procedural law.  … [I]n the laws of the Member States, civil law is characterised by the principle that it is for the parties to take the initiative, under which the parties are responsible for submitting all relevant facts on which the court must then base its decision.202

Advocate General Trstenjak therefore accepted as a principle of national civil laws the propositions expressed in the German context in terms of the principle of party disposition and the principle of party presentation.203 Following the Advocate General’s reasoning, the duty of a national court to raise the issue of the unfairness of a term may or may not result in a decision by that court as to the unfairness of the term: a duty to raise an issue is not the same as a duty to decide it. However, the Court took a different approach. It acknowledged its earlier case-law under which the guarantee of protection intended by the Directive may require positive action by the court unconnected with the actual parties to the contract, but it then identified a two-stage process. Thus, In the exercise of the functions incumbent upon it under the provisions of the Directive, the national court must ascertain whether a contractual term which is the subject of the dispute before it falls within the scope of that Directive. If it does, that court must assess that term, if necessary, of its own motion, in the light of the requirements of consumer protection laid down by that Directive.204

Given that the Directive ‘applies to any term conferring exclusive territorial jurisdiction which was not individually negotiated appearing in a contract concluded between a seller or supplier and a consumer’, then ‘the national court must  …, 200 Case C-137/08 VB Pénzügyi Lizing Zrt (n 8) para 45 (although the national court’s question had earlier (para 25) been expressed in permissive rather than mandatory terms). 201 Ibid, para 17. 202 Ibid, Opinion of AG Trstenjak, paras 107–16, esp paras 110 (original emphasis) and 115. 203 Above, at 98–99. 204 Case C-137/08 VB Pénzügyi Lizing Zrt (n 8) para 49.

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in all cases and whatever the rules of its domestic law, determine whether or not the contested term was individually negotiated’.205 The Court continued that: As regards the second stage of that examination, it must be found that the contractual term which is the subject of the dispute in the main proceedings provides, as the referring court states, for the exclusive territorial jurisdiction of a court which is not the court in whose jurisdiction the defendant lives or the one with jurisdiction for the place where the applicant has its registered office but the one which is situated close to the registered office of the appellant both geographically and in terms of transport links.206

In these circumstances, its earlier decision in Océano Grupo Editorial held that ‘such a term must be regarded as unfair within the meaning of the Article 3 of the Directive’, the Court finding support for this view in the example of a term in sub-paragraph (q) of the indicative list of terms.207 As a result, the Court did not find it necessary to address the wider implications of the question addressed to it and, in particular, whether a national court has a power or a duty to examine facts not available to it on the face of the documents put before it by the business and not normally obtainable under its national procedural powers. I have left the most difficult and interesting questions until last. It has been seen that the Court of Justice has held that the ‘mandatory public policy’ of the protection of weaker parties (here consumers) justifies its requiring national courts to raise and, if possible, determine the unfairness of a term in a consumer contract within the scope of the 1993 Directive. By doing so, has it gone further than its general case-law following Van Schijndel? Certainly, there is no reference in most of the cases following Océano Grupo Editorial on unfair terms to the principle of equivalence;208 on the other hand, it may be thought that the imposition of the duty in national courts to raise the question of the unfairness of a term can be justified on the basis that otherwise the exercise of a consumer’s EU rights would be rendered ‘virtually impossible or excessively difficult’ so that the control of unfair terms falls within the express qualification on the general ‘principle that, in a civil suit, it is for the parties to take the initiative’ recognised by the Court in Van Schijndel as regards ‘exceptional cases where the public interest requires its intervention’.209 While the Court has recognised that the duty in national courts exists in principal proceedings against a consumer without separate consideration as to whether in the circumstances the public interest requires the court’s intervention, in other types of proceedings (eg a challenge to a decision in enforcement proceedings of an arbitral award), the 205 Ibid, para 51. By way of aside, it may be noted that the force of the burden of proof as to individual negotiation being on the business under Art 3(2) of the 1993 Directive (n 13), would appear to mean that a national court would be entitled to assume that a term was not individually negotiated unless the business established otherwise. 206 Case C-137/08 VB Pénzügyi Lizing Zrt (n 8) para 52. 207 Ibid, paras 53 (emphasis added) and 54. 208 The exception is Case C-40/08 Asturcom Telecomunicaiones (n 14). 209 Joined Cases C-430/93 and C-431/93 Van Schijndel (n 11); Case C-429/05 Rampion v Franfinance SA [2007] ECR I-8017.

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balancing between the principle of res judicata and the principle of effectiveness applies even in the context of unfair terms. From this perspective, the Océano Grupo Editorial case law appears to be a particular (if special) example of the Van Schijndel case law rather than entirely distinct. Given this, how has the Court has treated the question whether a national court must raise a question of EU consumer protection law beyond the context of the control of unfair contract terms? First, in Rampion,210 the Court considered whether a French court had the power to consider the availability of remedies for the consumer against a lender as provided by the Consumer Credit Directive.211 French law generally would distinguish for this purpose between public policy rules designed to order society [règles d’ordre public de direction], adopted in the general interest and which the court may rise of its own motion, and public policy rules designed to protect specific interests [règles d’ordre public de protection], adopted in the interest of a particular category of persons and which may be relied upon only by persons belonging to that category.212

According to this national distinction, the rules of consumer protection in the Consumer Credit Directive fell into the latter category and therefore did not justify judicial intervention. Nevertheless, the Court of Justice held that the national court must be able to raise the rights of the consumer of its own motion, given that the purpose of the Consumer Credit Directive was to ensure the creation of a common consumer credit market and the protection of consumers.213 In its view, the considerations which convinced the Court in Océano Grupo Editorial were equally applicable to the case before it. The Consumer Credit Directive ‘seeks to confer on the consumer, in well-defined circumstances, rights vis-à-vis the grantor of credit over and above the consumer’s normal contractual rights against the grantor of credit and against the supplier of the goods and services’,214 and this aim ‘could not be effectively achieved if the consumer were himself obliged to invoke the right to pursue remedies which he enjoys’, ‘in particular because of the real risk that the consumer may be unaware of his rights or may encounter difficulties in exercising them’.215 In this way, the Court applied the Océano Grupo Editorial case law to the context of consumer credit without qualification. On the other hand, in Martín Martín the Court of Justice considered whether a national court of appeal may, of its own motion, declare void a contract which

210

Case C-429/05 Rampion (n 209). Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1986] OJ L42/48, repealed and replaced by Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers [2008] OJ L133/66. 212 Case C-429/05 Rampion (n 209) para 58. 213 Ibid, para 59. 214 Ibid, para 64. 215 Ibid, para 65. 211

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infringes the Doorstep Selling Directive’s provisions on consumer protection,216 even though the issue had not been raised at first instance.217 In doing so, the Court followed the approach in Van Schijndel, noting that limitation on the power of the national court is justified by the principle that, in a civil suit, it is for the parties to take the initiative, and that, as a result, the court is able to act on its own motion only in exceptional cases where the public interest requires intervention.218

According to the Court, the Doorstep Selling Directive seeks to redress the imbalance and, therefore, disadvantage with which consumers, as ‘weaker parties’ are faced in the circumstances of doorstep selling by providing them with a right of cancellation, notice of which the business must give to them.219 This notice of the consumer’s rights ‘plays a central role in the overall scheme of the directive’, ‘for the exercise of that right and, therefore, for the effectiveness of consumer protection sought by the Community legislature’.220 As a result, the public interest justifies a positive intervention by the national court within the meaning of the Van Schijndel case law so as to ‘compensate for the imbalance between the consumer and the trader’ in the context.221 Moreover, even though the Directive requires only that the consumer be given a right of cancellation of the contract, the Court held that a national court is entitled to declare a contract void in these circumstances: first, because the Directive allows national authorities discretion in determining the consequences which follow the infringement in question; and secondly, because the Directive puts in place only a minimum level of harmonisation.222 However, in its only reference to the line of case law following Océano Grupo Editorial the Court accepted that ‘the national court seised may also have to take account, in certain circumstances, of the consumer’s wish not to have the contract at issue cancelled’,223 citing ‘by analogy’ its decision in Pannon.224 In Martín Martín the Court therefore appears to prefer to recognise a power in national courts to address an issue of law involving the protection of a ‘weaker party’ within the framework of the Van Schijndel case law (and in terms of the ‘public interest’ justifying an exception to the general principle of party initiative in civil litigation) rather than the case-law following Océano Grupo Editorial, 216 Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises, [1985] OJ L 372/31, (repealed and replaced by Directive 2011/83/EU of the European Parliament and of the council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council, [2011] OJ L 304/64). 217 Case C-227/08 Martín Martín v EDP Editores SL [2009] ECR I-11939, para 18. 218 Ibid, para 20. 219 Ibid, paras 21–26. 220 Ibid, para 27. 221 Ibid, para 28. 222 Ibid, paras 32–33. 223 Ibid, para 35. 224 Case C-243/08 Pannon (n 183) para 33.

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even though the latter was relied on before by the parties to the case and was the basis of the approach recommended by Advocate General Tizzano.225 Martín Martín therefore suggests that the Court was not seeking to extend any special treatment recognised by Océano Grupo Editorial to other situations of consumer protection. Nevertheless, the decisions in Rampion and Martín Martín raise the more general question as to which situations the Court of Justice of the EU should and will see as proper for the power and/or duty to raise an issue of EU law by reason of the needs of the public interest or public policy. Apart from other examples of existing EU consumer protection legislation, there is a potentially very important example in the context of the law applicable under the Rome I and Rome II Regulations. As has been explained, the general view is that these Regulations do not require the courts of Member States to raise the question of the applicability of foreign law of their own motion, but this could be challenged as regards some of their provisions whose aim is the protection of certain categories of ‘weaker parties’.226 So, for example, under the Rome I Regulation, special rules of applicable law apply so as to protect consumers in certain situations, policyholders under insurance contracts, passengers under contracts of transport, and employees,227 all of whom are referred to in its recitals as ‘weaker parties’.228 Given the likely ignorance of many consumers, policyholders, passengers, and employees of the rules of private international law put in place by Rome I for their protection, should EU law require national courts to raise the issue of their own motion?229 And if the category of ‘weaker parties’ is to be extended from consumers in this way, should the question of the relative roles of the parties and national courts in determining the issues to be determined in the context of EU employment law be opened more widely? While the force of the argument in terms of the public interest in ensuring that the rights of employees (as well as of consumers) is a strong one, the implications of such an approach for the civil process in national laws would be far-reaching.230

225

Ibid, Opinion of AG Tizzano, paras 26, 33 and 71ff. As earlier noted, this was suggested before Océano Grupo Editorial by Fentiman (n 154) 83–84 and 94–95. 227 Arts 5–8 of the Rome I Regulation. 228 Ibid, Recital 23, introducing Recitals 24–36. 229 As Fentiman notes (n 154) 96, the impact of this approach would often be to allow the forum to apply its own rules of mandatory consumer protection despite a choice of a foreign law governing the contract, by way of the combined impact of what are now Art 16(2) of Brussels I and Art 6 of Rome I. 230 For another possible example in the context of the Commission’s Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final, see S Whittaker, ‘The Proposed “Common European Sales Law”: Legal Framework and the Agreement of the Parties’ (2012) 75 Modern Law Review 578, 591–93. 226

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VI. Conclusion In French law and in German law, the tension between private and public law elements within the law governing the civil process is explicitly recognised. An important area in which this tension is worked out lies in the relative roles of the parties and the court in relation to setting the subject-matter of the case, in terms of claims, facts and the law. In both these systems, civil justice is seen as requiring the court to apply the law to the claims brought before them, it being the role of courts to do justice by upholding the parties’ substantive rights deriving from private law: the fundamental purpose of the civil process is to do justice according to the law. On the other hand, both laws recognise that in private law cases it is primarily for the parties to set their respective claims and to put forward (and support with evidence) the facts on which these claims are based. To this extent, therefore, they both accept the principles of ‘party disposition’ and ‘party presentation’ even though this terminology is found only in the German context and even though they differ considerably as to the extent to which and the way in which they qualify this starting-point. By contrast, the fundamental purpose of the English civil process remains the resolution of an agreed dispute, this dispute being identified and delineated by the parties through their pleadings and submissions. English law does not see the role of courts as to do substantive justice according to the parties’ (private) rights in some absolute sense and the extent to which it enables the parties to control the subject-matter of the courts’ decision-making emphasises the ‘private’ nature of the process. Moreover, the parties’ control of their case extends even to issues of law, both in terms of the legal characterisation of facts and more generally, to the extent that English judges consider it improper to decide cases on the basis of their ‘own researches’ and English courts are not bound by earlier decisions made per incuriam. On the other hand, both French law (quite generally) and English law (in the context of illegal contracts) accept that sometimes a court must raise certain types of legal issue of its own motion where legal public policy so demands. It will be seen, therefore, that the question whether a court may or must raise an issue of law of its own motion lies at the centre both of the relative roles of parties and the court in the civil process and of the extent to which public policy should qualify the private nature of substantive individual rights. In turning to EU law’s approach to the question whether a national court may or must raise an issue of EU law of its own motion, we find some familiar difficulties and some further complications. First, the starting-point is that the vast majority of the law of civil procedure is not the subject of harmonisation at the EU level and this includes the core questions relating to the relative roles of the parties and the court in defining what the court must determine. Moreover, national civil procedures are intimately related to the judicial institutional arrangements which those systems

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have developed, for example, in relation to the gathering of evidence or the nature of the appeal/review of judicial decision-making. This lies behind the recognition by the Court of Justice of the EU of the principle of the procedural autonomy of Member States. However, secondly, EU legislation does sometimes impact directly on the procedures of national civil courts, most clearly in the area of international jurisdiction in civil and commercial matters under the Brussels I Regulation. There the legislation itself takes a position on the circumstances in which the courts of Member States must raise issues of their own motion, as in the cases of exclusive jurisdiction, failure of a defendant to enter an appearance and lis pendens. The Regulation still leaves the detailed mechanisms of how the court goes about raising these issues to national procedural rules or practices. By contrast, at present the EU instruments governing applicable law do not formally require national courts to raise the issue of applicable law of their own motion, apparently on the basis that this falls within their exclusions of ‘evidence and procedure’. This means that the question whether or not a national court must raise the application of foreign law in an appropriate case is itself left to national law. Thirdly, and more generally, EU law relies on national courts to give effect to EU law, this being required by the duty of sincere co-operation in Article 4(3) TFEU (ex Article 10 EC). Therefore, the Court of Justice has recognised situations where national courts must raise an issue of EU law of their own motion, whatever the position obtaining in the relevant national laws. In doing so, there appear to be two fairly distinct lines of case law: a general approach following Van Schijndel, where the principles of equivalence and effectiveness (interpreted restrictively in terms of the national law rendering ‘virtually impossible or excessively difficult the exercise of rights conferred by Community law’) lead to the recognition of an original power in a national court to raise an EU issue of its own motion only in ‘exceptional cases where the public interest requires its intervention’;231 and the case law following Océano Grupo Editorial, where the court simply asserts that the effectiveness of EU protection for ‘weaker’ and ‘ignorant’ parties requires national judicial intervention. Fourthly, in the Océano Grupo Editorial case law the Court of Justice has had some difficulty in clarifying what a national court should do after it has raised an issue of its own motion. It is clear that, in principle, it is for national courts, rather than for itself, to find the facts material to the issue so raised and to apply the relevant EU legal concept to those rules. So, if a national court is able to decide the issue which it has raised given the facts and evidence before it, then the Court of Justice would require it to do so. On the other hand, although this has not yet been decided, in my view EU law should not require a national court to gather new facts or evidence of facts of its own motion once it has raised an 231 Joined Cases C-430/93 and C-431/93, Van Schijndel (n 11) para 21, quoted above, text following n 162.

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issue of its own motion except where national procedural law would so allow in the equivalent national situation: this would qualify too much the principle of party initiative in relation to the facts and evidence which Advocate General Trstenjak has recognised as common to the civil laws of Member States.232 Finally, whether in terms of extending the impact of the Océano Grupo Editorial case law or of finding more examples of ‘exceptional cases where the public interest requires its intervention’ under Van Schijndel, there are a number of further situations in which the Court of Justice could properly require national courts to raise issues of their own motion on the ground of EU public policy, notably, where EU legislation seeks not merely to protect ‘weaker parties’ but also to rebalance their position vis-à-vis other potential parties to litigation. In deciding whether or not to do so, the Court has to balance the desirability of supporting the effectiveness of EU legislation against the radical effect of this change not merely on national rules of civil procedure but also on national conceptions of the civil process. For this purpose the Court is likely to continue to recognise very general principles of civil procedure common to the civil laws of Member States, such as the principle of party initiative and its main exception in cases involving the public interest and the importance of res judicata. In doing so, paradoxically, the Court of Justice brings these principles within the fold of EU law itself and thereby begins to develop its own, European conception of the civil process.

232

Above, at 122.

7 The General Principles of Civil Law: Their Nature, Roles and Legitimacy MARTIJN W HESSELINK

I. Introduction In a number of recent judgments, the Court of Justice of the European Union referred to ‘the general principles of civil law’, ‘allgemeine Grundsätze des Zivilrechts’ or ‘principes généraux du droit civil’. These cases raise a number of questions concerning the nature, role and legitimacy of such principles. Do these principles belong to national law or to EU law? In either case, what can be their roles and effects? So far, the Court has referred to these principles merely in the context of the interpretation of Directives. But could they also play other roles, for example, in gap-filling or even in setting aside national law or secondary EU law, notably Directives and regulations? In the latter case, could such principles yield direct horizontal effects in the sense that they become the source of rights and obligations between private parties? And how do they relate to the familiar ‘general principles of EU law’, such as the equality principle and the principle of effectiveness, which have constitutional status? Depending on the answers to these questions, the general principles of civil law could represent an instance of more or less strong involvement of EU law in private law relationships, the unifying theme of the present volume. I understand this theme as referring not only to direct horizontal effect of EU law in the narrow sense of creating, modifying, or extinguishing the rights and obligations of private parties,1 but also to direct effect in the broader sense that individuals can invoke and rely on them in (horizontal) cases against other private parties (ie not only through (vertical) claims against the state),2 and indeed to indirect 1 AS Hartkamp, ‘The General Principles of EU Law and Private Law’ (2011) 75 Rabels Zeitschrift für ausländisches und internationales Privatrecht 241, 249 and AS Hartkamp, ‘The Effect of the EC Treaty in Private Law: On Direct and Indirect Horizontal Effect of Primary Community Law’ (2010) 18 European Review of Private Law 527, proposes to reserve the term for this narrow category. The narrow definition fits well with the private law perspective on the sources of right and obligations of private parties. 2 This broader definition of direct effect is closer to its original international law meaning where the effect is perceived from the perspective of the enforcement of obligations arising under the Treaties. It does not fit well, however, with direct effect of secondary EU law (and of unwritten primary EU law). For a discussion of various definitions of direct effects, see eg P Craig and G de Búrca, EU Law. Text, Cases and Materials, 5th edn (Oxford, Oxford University Press, 2011) 181ff.

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horizontal effects such as, in particular, the interpretation of national law in conformity with EU law (harmonious interpretation). The Court’s discovery of general principles of civil law in recent cases has worried some authors, such as Weatherill, who wrote that he was ‘anxious that these rulings seem uncritically ready to absorb search for general principles of civil law as proper task of the EU and, specifically, of its Court’.3 Others, however, have welcomed this new source of European private law and have encouraged the Court to further pursue this path. Hartkamp, for example, wrote recently that ‘[i]n the light of the expansion of the private law component of EU law it is likely and desirable that the ECJ will undertake to increase the number of useful rules and principles of civil law’.4 Clearly, the desirability of more general principles of civil law very much depends on what they actually are and on what roles they are likely to play. But this is not the only consideration. A crucial factor is also how they come about. This raises questions related to where the Court found these principles, what methods it will use in the future for discovering new ones and to what extent the Court will inform us about its discovery procedure. It may very well be that the reference by the Court to general principles of civil law in these recent cases was purely accidental and was not meant to introduce a new concept or category in any technical sense. However, even if that were the case it would still be worth exploring whether the Court should actually start formulating such general principles of European private law, in addition to the general (or fundamental) principles of EU law, and what the nature and roles of such private law principles should be. This chapter starts with a brief presentation of the recent cases in which the Court actually referred explicitly to the general principles of civil law in section II below. It then proceeds, in section III, to enquire into the nature of the concept, discussing in particular what its elements of ‘general’, ‘principles’ and ‘civil law’ might refer to. Section IV then continues the analysis by addressing the different functions and effects that general principles of civil law might have. Section V discusses how these principles of civil law, and future new ones, could become legitimate private law norms. At the end of the chapter some conclusions will be drawn.

II. The Principles Before we can address any questions concerning the nature, roles and legitimacy of general principles of civil law we need to examine in some detail the cases 3 S Weatherill, ‘The “Principles of Civil Law” as a Basis for Interpreting the Legislative Acquis’ (2010) 6 European Review of Contract Law 74, 84. 4 Hartkamp (n 1) 258.

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where the Court of Justice of the European Union recently discovered these principles. The four clearest instances are Société thermale d’Eugénie-Les-Bains (2007), Hamilton (2008), Messner (2009) and E Friz (2010). I will introduce these cases briefly in their order of appearance.

A. Société thermale d’Eugénie-Les-Bains Société thermale d’Eugénie-Les-Bains was a case relating to the interpretation of a tax law Directive.5 The reference for preliminary ruling was made by the French Conseil d’État in the course of proceedings between Société thermale and the Ministry of the Economy, Finance and Industry concerning the application of value-added tax (VAT) to deposits collected by Société thermale on the reservation of hotel rooms and retained by it following the cancellation of some of those reservations. The case turned on the nature of deposits in the hotel sector. In that context the question arose whether the payment of a deposit by the client can be regarded as (part of) the consideration for the service provided by the hotelier. The Court of Justice held that this was not the case because the obligations for the client to pay and for the hotelier to provide the accommodation arise directly from the contract, not from the payment of the deposit. The Court justified its decision relying on the notion of general principles of civil law, in the following consideration: 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.6

The issue had arisen in a French dispute and both the French Code de la consommation and the Code Civil contain relevant provisions concerning deposits which were cited in the proceedings.7 However, the Court’s task was to interpret an EEC Directive, not French law.8 Nevertheless, the resolution of 5 Case C-277/05 Société thermale d’Eugénie-les-Bains v Ministère de l’Économie, des Finances et de l’Industrie [2007] ECR I-6415. Arts 2(1) and 6(1) of the 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 1977 L145/1 (‘the Sixth Directive’). 6 Case C-277/05 Société thermale d’Eugénie-les-Bains (n 5) para 24 (emphasis added). 7 See Art L  114-1 Code de la consommation and Art 1590 Code civil. 8 Cf Case 126/78 Nederlandse Spoorwegen [1979] ECR 2041, Opinion of AG Reischl, concerning the interpretation of the Second Directive, at 2059: ‘Moreover, it cannot depend on the civil law principle followed in the individual Member States since, on the one hand, the revenue treatment of a matter is distinguishable from its civil law treatment and, on the other, the civil law principle may vary from country to country, which would lead to a varied interpretation of a concept of Community law.’

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the tax law question whether VAT was due could clearly benefit from received classifications and definitions in the area of private law. And the Court would probably simply have referred to the European Civil Code had there been one. In the absence of written European rules of general private law, however, the Court resorted to unwritten principles. Thus, in this case the general principles of civil law functioned as unwritten background principles for the interpretation of written secondary EU law. In this case the Court merely postulated the existence of the principle without clarifying where it had found it. On the other hand, however, the principle of the binding force of contract is not a very controversial one in Europe.9

B. Hamilton In Hamilton the Court had to decide on a reference for a preliminary ruling from the Oberlandesgericht of Stuttgart (Germany), relating to the interpretation of the Doorstep Selling Directive.10 The question was whether the national legislature is entitled to provide, as the German legislator had, that the right of cancellation laid down in Article 5(1) of that Directive may be exercised no later than one month from the time at which the contracting parties have performed in full their obligations under a contract for long-term credit, also where the consumer has been given defective notice concerning the exercise of that right. The Court answered the question in the affirmative. In its reasoning, it referred to the general principles of civil law. The Court said: 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.11 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.12 9 In para 25 the Court phrases the same principle as ‘the principle that contracts must be performed’. Case C-277/05 Société thermale d’Eugénie-les-Bains (n 5). 10 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 (‘Doorstep Selling Directive’). 11 This is obviously a mistranslation. Compare the same sentence in French, the working language of the Court: ‘En effet, l’utilisation, à cette disposition, du terme «engagement» indique, ainsi que l’a fait valoir Volksbank lors de l’audience devant la Cour, que le droit de révocation peut être exercé à moins qu’il n’existe pour le consommateur, au moment de l’exercice dudit droit, aucun engagement découlant du contrat dénoncé’ (emphasis added). 12 Case C-412/06 Annelore Hamilton v Volksbank Filder eG [2008] ECR I-2383, para 24 (emphasis added). The term termination is also somewhat misleading here as it suggests (active) termination by one party of the contract (eg for non-performance), whereas what is meant here is (also) the mere coming to an end (or the end) of a contract. Compare, again, the French version: ‘Cette logique

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Again, the reference to the general principles of civil law occurs in the context of the interpretation of a Directive, this time in the area of consumer law. And here too, as in Société thermale d’Eugénie-Les-Bains, the Court could not adduce national (in this case German) general contract law in order to make a point concerning the interpretation of EU law. Therefore, with a view to an autonomous interpretation of the Directive it had to refer to more general or European background rules or principles of contract law. In the absence of a written general European contract law it resorted to unwritten law. However, like in Société thermale d’Eugénie-Les-Bains, the Court did not speak of principles ‘of EU law’, thus suggesting that these principles might actually belong to, rather than derive from, the laws of the Member States. Again, there is no attempt at providing any empirical basis (in comparative law) or rational basis (in natural law) for the acknowledgement of a general principle. However, in this case the Court’s reasoning from principle (as opposed to the outcome) is not convincing. On the one hand, in many countries rights and duties can continue to exist even after a contract has come to an end, for example, in the case of non-competition clauses (which may constitute a ‘postcontractual relationship’). On the other hand—and more to the point here—the mere fact that a contract has been completely performed, and the contractual relationship has come to an end, does not necessarily imply that the contract giving rise to these obligations can no longer be affected. The best example is the avoidance of a contract, for example, for mistake or fraud, which may very well be retroactive. Similarly, it is entirely conceivable that a withdrawal right could also be exercised, retroactively, even after the contract has come to an end because all the obligations that the contract had given rise to have already been performed. Therefore, there exists, in most Member States, no general principle to the effect that a party cannot withdraw from a contract (by terminating, avoiding or cancelling it) once all obligations under the contract law have been performed. Most Member State laws do contain a general principle of discharge by performance, the principle that the Court seems to be hinting at, but that principle does not suffice to justify the Court’s decision. In his opinion in this case, Advocate General Maduro had also referred to a general principle.13 His opinion differs from the Court’s ruling in a number of relevant respects. First, he speaks explicitly of a ‘principle common to the laws of the Member States’. Secondly, he provides some prima facie evidence for its existence by referring to the Lando principles, the Gandolfi code and the acquis principles.14 Third, the principle that he quotes does actually exist in most if not relève d’un des principes généraux du droit civil, à savoir que l’exécution complète d’un contrat résulte, en règle générale, de la réalisation des prestations mutuelles des parties à ce contrat et de la fin de celui-ci’ (emphasis added). 13

Case C-412/06 Hamilton (n 12) Opinion of AG Poiares Maduro, para 24. O Lando, E Clive, A Prüm and R Zimmermann (eds), Principles of European Contract Law. Part III (The Hague, Kluwer Law International, 2003); G Gandolfi (ed), Le code européen des contrats (Milan, Giuffrè, 2004) and Principles of Existing EC Contract Law (Acquis Principles), Contract 1, 14

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all Member States, ie the principle of ‘the placing of a time-limit on the exercise of a right, most often referred to as “limitation”’. And, finally, he points out that this principle ‘might well ultimately appear at Community level in the context of the creation of a common frame of reference for European contract law’.15 This is, of course, not the place to discuss the merits of the Court’s decision.16 The point here is rather that the mere postulation of a general principle, without providing any (even prima facie) evidence, comparative or other, makes it difficult to assess the merits of the Court’s reasoning and makes it hard to predict what new principles we may expect in the future.

C. Messner The ruling in Messner, a decision on a reference for a preliminary ruling from the Amtsgericht Lahr in Germany, concerned the interpretation of the Distance Selling Directive.17 Pia Messner had bought a second-hand laptop computer via the Internet from Firma Stefan Krüger. After a few months the display became defective. Upon Krüger’s refusal to repair the defect free of charge, Ms Messner exercised her right of withdrawal, which she still had because she had never received a notice from the seller concerning the existence of that right. Ms Messner sought reimbursement of the price, but Krüger counterclaimed compensation for the use made of the computer by Ms Messner amounting to a sum (based on the average market rental price) somewhat higher than the purchase price. Such a claim for compensation could be successful, in principle, under German law. However, having doubts whether German law as it stood was compatible with the Distance Selling Directive, in particular Article 6, the Court in the main proceedings referred the question to the Court of Justice for preliminary ruling. In its response, the Court held as follows: [T]he answer to the question referred is that the provisions of the second sentence of Article 6(1) and Article 6(2) of Directive 97/7 must be interpreted as precluding a provision of national law which provides in general that, in the case of withdrawal by a consumer within the withdrawal period, a seller may claim compensation for the value of the use of the consumer goods acquired under a distance contract. However, those provisions do not prevent the consumer from being required to pay compensation for the use of the goods in the case where he has made use of those goods in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment, on condition that the purpose of that directive and, in particular, the Part 1, Pre-contractual Obligations, Conclusion of Contract, Unfair Terms, vol I (Munich, Sellier, 2007) respectively. 15

Case C-412/06 Hamilton (n 12) at para 24. Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights [2011] OJ L304/64 (‘Consumer Rights Directive’ (CRD)) follows AG Maduro’s approach, by introducing in its Art 10, para 1, a one year cut-off period running from the end of the initial withdrawal period. 17 Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts [1997] OJ L144/19 (‘Distance Selling Directive’). 16

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efficiency and effectiveness of the right of withdrawal are not adversely affected, this being a matter for the national court to determine.18

Note that the Court refers to ‘the principles of civil law’, not the general principles of civil law. Note also that in this case it is less clear than in Société thermale d’Eugénie-Les-Bains and Hamilton whether the Court actually means European principles or principles common to the laws of the Member States. It is possible that here the Court merely intends to refer to the principles of civil law of the Member State at hand. Indeed, in this case the Court seems to be trying to find the right balance between, on the one hand, the requirements of the Distance Selling Directive and, on the other hand, the fundamental private law principles prevailing in the Member State that has to transpose the Directive, in this case Germany. Having said that, this particular Member State is of course not unique in this respect. On the contrary, most Member States contain general principles of good faith and unjust enrichment. Nevetheless, these principles are not general European principles given the fact that some Member States (notably the United Kingdom, for English law) do not recognise a general principle of good faith, whereas other Member States, although containing a general principle of unjustified enrichment, do not generally require—on account of that latter principle (or another)—compensation for use after unwinding contracts that have already (partially or entirely) been performed.19

D. E Friz Finally, in E Friz a consumer who had invested a large sum in a real property fund established in the form of a partnership contract that had been concluded during an unsolicited doorstep-selling visit at his home cancelled his participation in the partnership after having been a member for more than a decade. According to (judge-made) German law as it stood, in these circumstances, the cancellation would not have a retroactive effect (effect ex tunc), in the sense that the consumer would get his entire investment back, leaving any existing losses for the remaining partners (who presumably included other consumers as well): the consumer could only claim the value of his interest at the date of his retirement from membership and could therefore get back less than the value of his capital contribution or might even have to participate in the losses of that fund (effect ex nunc). In a reference for a preliminary ruling the German Bundesgerichtshof asked the Court of Justice whether this rule was compatible with Article 5(2) of the Doorstep Selling Directive. The Court answered in the affirmative. In its reasoning the Court referred to the general principles of civil law. The Court said:

18 Case C-489/07 Pia Messner v Firma Stefan Krüger [2009] ECR I-7315, para 26 (emphasis added). 19 See H Schulte-Nölke, C Twigg-Flesner and M Ebers (eds), Consumer Law Compendium: The Consumer Acquis and its Transposition in the Member States (Munich, Sellier, 2008) 560–61.

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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.20

This time, the Court is discussing a national rule (with a view to its compatibility with a Directive) and argues that the rule is intended to ensure a fair division of risks among the parties, ‘in accordance with the general principles of civil law’. It seems that the Court here has national principles in mind, although the phrase does not exclude a more general (or even universal) notion of general principles of civil law. After all, the Court could have referred specifically to ‘the German principles of civil law’ or to ‘the general principles of German civil law’. In any case, any rules existing in other Member States which are similar or based on the same or similar principles of civil law will also be held by the Court to be compatible with the Directive. That brings some resemblance of this decision with the Messner ruling. From the Court’s judgment we do not get to know what exactly these principles were. The Court refers to an observation by the BGH in its decision for reference,21 but that observation is not quoted in the Court’s own decision. The principles that the BGH had referred to in its decision actually were the Grundsätze der fehlerhaften Gesellschaft (principles of defective partnership), in particular the Grundsätze über den fehlerhaften Gesellschaftsbeitritt (principles of defective accession to a partnership).22 In her Opinion in this case, Advoacte General Trstenjak referred to these principles, stating that It is therefore clear from the principles of that case-law [ie national case law] in relation to a ‘defective partnership’ (fehlerhafte Gesellschaft) that exercise of the right of renunciation does not have the effect of restoring the status quo ante.23

It is very well possible that the Court borrowed its ‘principles’ formula from its Advocate General. And it is clear that in her opinion the term ‘principles’ refers to the principles of (unwritten) German law as established in the case law of the BGH. 20 Case C-215/08 E  Friz GmbH v Carsten von der Heyden, Judgment of 15 April 2010, paras 48–49 (emphasis added). 21 The reference itself, as published, does not refer to principles. See Reference for a preliminary ruling from the Bundesgerichtshof (Germany) lodged on 22  May 2008, [2008] OJ C209/23. 22 See BGH, 5 May 2008, II ZR 292/06 (Betriebs-Berater). 23 Case C-215/08 E Friz (n 20) Opinion of AG Trstenjak, para 18.

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Interestingly, in this case the Court goes into the substance of the balancing of interests. It seems to accept the kind of interests that German private law takes into account and also the way in which and the extent to which they are taken into account, even though this leads to less than complete protection of the consumer. In other words, the Court accepts (as it had already done in Schulte) that effective protection is not the same as maximum protection.24 And once the Court does not require the maximisation of consumer protection it will inevitably have to address the other private interests at stake and the private law principles that protect them. Thus, the Court is forced into private law reasoning and, one way or another, it will develop European private law principles. It is true that the Court will not set the specific private law rules: that will be left to the Member State lawmakers (legislators and courts) but it does engage in a debate about the underlying principles and, in this case, approves the application of the principles that had been developed by the German supreme civil court. Since the Court of Justice will follow the same reasoning concerning any other Member State having similar private law principles, the Court is effectively developing, in dialogue with the Member State courts, European private law principles. This raises the question whether these principles should be categorised as European in the strict sense of being part of EU law (and if so, which part) or merely in the broader sense of belonging, as background principles, to the developing multi-level system of private law in Europe or to a common European private law space. This brings us to the nature of the general principles of civil law.

III. Their Nature What does the Court mean when it refers to the general principles of civil law? In this section, I will consider each of the composing elements of the expression separately, ie ‘general’, ‘principles’ and ‘civil law’. Before addressing those three main elements, it is worth pointing out that the Court refers to ‘the (general) principles of civil law’. The use of the determinate article (in all language versions) seems to convey the message that these principles already existed before the Court referred to them. This matches with the idea that the Court discovers rather than invents such principles.25 On the other hand, we should probably not exaggerate the importance of the precise wording of the Court’s rulings.

24 Case C-350/03 Elisabeth Schulte and Wolfgang Schulte v Deutsche Bausparkasse Badenia AG [2005] ECR I-9215. 25 Cf eg K Lenaerts and JA Gutiérrez-Fons, ‘The Constitutional Allocation of Powers and General Principles of EU Law’ (2010) 47 Common Market Law Review 1629, 1635.

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A. General In what sense are these principles general? With regard to the subjects or the persons they apply to, or the places where they apply, or a combination of these? I will discuss, in turn, the substantive, personal and territorial scope of the general principles of civil law.

(i) Substantive Scope One possibility is that these principles are general as opposed to specific to certain sectors of civil law, eg certain types of contracts. This general/specific distinction would be similar to the familiar distinctions between general and specific private law, and between general and specific contract law. The harmonisation in the area of private law by the European legislator has been referred to (usually critically) by scholars as being ‘pointilliste’ or piecemeal.26 The European Commission, approaching the issue from a market-building perspective, speaks of a ‘sector-specific’ approach.27 In its 2003 Action Plan on European contract law, for example, the Commission discusses ‘the existing approach of sectoral harmonisation of contract law’,28 which it contrasts with possible ‘non-sector-specific solutions, such as an optional instrument’.29 The idea is also akin to an expression contained in the scope provision of the Consumer Rights Directive: ‘This Directive shall not affect national general contract law.’30 Most of the principles that the Court has referred to so far indeed seem to be general in this sense: the binding force of contract (Société thermale d’EugénieLes-Bains), discharge by performance (Hamilton), good faith and unjustified enrichment (Messner) are principles of general contract law or (even more broadly) of the general law of obligations. Their scope of application is not limited to contracts for the supply of hotel services (Société thermale d’EugénieLes-Bains), or contracts concluded in a doorstep selling situation (Hamilton) or via the Internet (Messner). However, the substantive scope of the ex nunc effect of a withdrawal from a partnership (E Friz) is not general in this respect; it seems to be specific to partnership contracts, or even only to partnerships establishing a closed-end real property fund.31 At first sight, the idea of principles of civil law with a broad general scope seems to lead to a massive increase in the scope of EU private law, and a corre26 See eg W-H Roth, ‘Transposing “Pointillist” EC Guidelines into Systematic Codes—Problems and Consequences’ (2002) 10 European Review of Private Law 761, 764. 27 Communication from the Commission to the European Parliament and the Council, a More Coherent European Contract Law, an Action Plan, Brussels COM(2003) 68, no 55. 28 Ibid, no 5. 29 Ibid, no 89. 30 Consumer Rights Directive (n 16) Art 3 (Scope), para 5; see also Recital 14. 31 Of course, the notion of ex tunc effect is general and also the principle (accepted in many countries) that the termination of a contract (as opposed to its annulment) is not retroactive. However, the question was precisely to what categories (and its related principles) the right of withdrawal should be assimilated.

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lated decrease in the space left for the national maker of private law. In other words, the discovery of these principles seems to raise justified worries about competence creep. If there is no legal basis for a written European civil code,32 then surely the Court should not introduce an unwritten one—as principles— through the back door. However, this is not necessarily what is happening here at all. With regard to the general principles of EU law, for example, the Court has made clear that they apply only to cases that fall within the scope of European Union law.33 So, even though the principle of non-discrimination on grounds of age, as adopted in Mangold and Kücükdeveci, has direct horizontal effect (in the broad sense indicated above), it does not apply (ie has no effect at all) outside the scope of EU law.34 There is every reason for the Court to adopt the same policy in relation to the general principles of civil law. Indeed, nothing in the cases where the Court has referred to the general principles of civil law, so far, suggests that the Court intends to extend the scope of EU private law. Therefore, the general principles of civil law are principles that can apply to many (or even all) existing areas of EU law, but do not create new areas of EU private law. To the extent that these principles are national (or similar to national ones),35 of course, the scope of these national principles (where they exist) may extend, on the national level, as national principles, beyond the areas of private law that are affected by EU private law.

(ii) Personal Scope Another possibility, however, is that the principles are meant to be general in the sense that they apply to all types of parties, not merely consumers. Strictly speaking, this interpretation would be somewhat strained because usually business-to-consumer (B2C) law is referred to as ‘consumer law’, business-to-business (B2B) law as ‘commercial law’, and only the private law applicable to all types of relationships—ie B2C, B2B and C2C—is usually called ‘civil law’. Thus, in combination with ‘civil law’, the element of ‘general’ would be redundant (or the other way around). Having said that, it seems likely that the Court means to refer to principles that are applicable to more than one type of party. An important characteristic 32 See eg W van Gerven, ‘Coherence of Community and National Laws: Is there a Legal basis for a European Civil Code?’ (1997) 5 European Review of Private Law 465. Cf J Basedow, ‘Un droit commun des contrats pour le marché commun’ (1998) 50 Revue internationale de  droit  comparé 7. 33 The same principle applies to the fundamental rights. According to Art 6(1) TEU the provisions of the Charter do not extend in any way the competences of the Union as defined in the Treaties, and pursuant to para 2, the accession by the EU to the ECHR will not affect the Union’s competences as defined in the Treaties. 34 Case C-555/07 Seda Kücükdeveci v Swedex GmbH & Co KG, Judgment of 19 January 2010, para 23. See earlier (less explicitly) Case C 144/04 Werner Mangold v Rüdiger Helm [2005] ECR I-9981, para 75. However, the ‘scope of the Treaties’ which is relevant in this regard is not always easy to determine. See M Dougan, ‘In Defence of Mangold?’ in A Arnull, C Barnard, M Dougan and E Spaventa (eds), A Constitutional Order of States? Essays in EU Law in Honour of Alan Dashwood (Oxford, Hart Publishing, 2011) 219. 35 On this possibility, see further below.

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of the main category of private law rules with a limited personal scope, ie the rules applicable only in relationships between business and consumers, is that they aim at the categorical protection of the latter group. However, even though EU consumer law must aim at a ‘high level of consumer protection’,36 it does not follow from this requirement or from the principle of effet utile that consumer protection must be absolute, or even that it must be maximised. Other interests and objectives may play a role as well. And such other relevant interests (usually private but sometimes also public) traditionally have been expressed, and balanced, in the general rules and principles of private law. This seems to be exactly what happened in Hamilton, Messner and E Friz.37 In all three cases, the Court of Justice was evaluating the effectiveness of consumer protection that the Member State (in all three cases Germany) was achieving through its transposition of a consumer protection Directive. In all three cases, the interest of consumer protection had been balanced by the Member State against other interests, in particular certain interests of other parties to transactions with consumers. And the Court was limiting its evaluation not simply to the level of consumer protection that was achieved. It also (marginally) evaluated the kind of interest that were allowed to enter the balancing exercise, and thus—to put it more straightforwardly—the kind of interests of other parties that could justify the limitation of consumer protection. It did so, not on the level of concrete rules, or by directly balancing the relevant interests, but by reviewing the private law principles that the Member State had applied.

(iii) Territorial Scope A third possibility is that these principles are meant to be general, as in general for the whole European Union, as opposed to merely (and specifically) national. That idea is reminiscent, of course, of the general principles of EU law (formerly, of Community law), such as, for example, the equality principle, the reliance principle and the principle of effectiveness (effet utile).38 These principles are a well-known and important source of primary EU law, which can also be invoked in disputes between private parties, eg concerning contractual relationships, as became clear in the landmark decisions Mangold and Kücükdeveci. Even though these general principles of EU law often originate in the laws of the Member States, which is reflected in the recurrent expression ‘principles common to the laws (or the constitutional traditions) of the Member States’, they have also become European Union principles, and are applicable as such, ie as (primary) EU law.39

36

See Arts 114(3) and 169(1) TFEU. Case C-277/05 Société thermale d’Eugénie-les-Bains (n 5) is different in this respect. 38 See T Tridimas, The General Principles of EU Law, 2nd edn (Oxford, Oxford University Press, 2006). 39 A second category of general principles of EU law are those which are inherent in the legal order of the EU as it can be derived from the aims and structure of the founding Treaties. See eg 37

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On the other hand, it is not certain that the Court means to refer to ‘the general principles of civil law’ in the analogous sense of general principles of EU private law. The Court does not mention the European Union in the phrase it uses: it speaks of ‘general principles of civil law’, not ‘general principles of EU civil law’. Thus, the Court may also regard these principles as being entirely national principles (but, of course, possibly existing in more than one Member State). In all four of the cases considered here, the principle that the Court referred to as one of ‘the (general) principles of civil law’ was recognised as a principle in the Member State where the case was situated. It may very well be that in Hamilton, Messner and E  Friz the Court was not saying more than that a limitation of consumer protection on the basis of these principles, where they exist in the national legal system, is compatible with the Directives.40 On the other hand, in Société thermale d’Eugénie-Les-Bains the Court was clearly looking for an autonomous European principle, similar to the autonomous interpretation of private law concepts in the Brussels I and Rome I Regulations: the actual existence of the same principle in the national law of the referring court does not seem to have been a precondition.41 Another possibility is that the Court deliberately refrains from locating the general principles of civil categorically (ie en bloc) and exclusively at either the European or national level. Maybe the Court envisages a more flexible and chameleonic nature for these principles. Indeed, it seems to be one of the main advantages of the normative category of principles that, in comparison to rules, they are more flexible. Thus, in particular, they could become the ideal tool for further developing the emerging multi-level system of private law in Europe,42 or a common European private law space.43 They could contribute to bringing more coherence and convergence to European private law. And for that purpose it is not necessary for them to have a very clearly defined scope of territorial application. Whether they are merely general principles recognised in the laws of the Member States or also principles of EU law is of limited importance especially in their role as principles providing the background against which Directives are interpreted (ie in practice the main role so far). Tridimas (n 38) 4; Case C-101/08 Audiolux SA ea v Groupe Bruxelles Lambert SA (GBL) and Others and Bertelsmann AG and Others [2009] ECR I-9823, Opinion of AG Trstenjak, para 69. 40 There is a parallel here with the Courage case (Case C-453/99 Courage Ltd v Crehan [2001] ECR I-6297), where the Court relied on the unclean-hands principle as ‘a principle which is recognised in most of the legal systems of the Member States’ to conclude that EU law does not preclude a national rule based on that same principle. 41 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2000] OJ L12/1; Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L177/6. 42 In the same sense A Metzger, Extra legem, intra ius: Allgemeine Rechtsgrundsätze im Europäischen Privatrecht (Tübingen, Mohr Siebeck, 2009). See also J Basedow, ‘The Court of Justice and Private Law: Vacillations, General Principles and the Architecture of the European Judiciary’ (2010) 18 European Review of Private Law 443. 43 Compare Lenaerts and Gutiérrez-Fons (n 25) 1631, with regard to the general principles of EU law: ‘common constitutional space’.

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However, this view clearly depends on one’s general conception of European (private) law and its system(s). There are at least three different ways of looking at European private law: a nationalist, a dualist (or pluralist) and a Europeanist way.44 In the nationalist perception, the Europeanisation of private law is a process that affects and modifies the national systems of private law of each Member State. On this view, although most of private law is of domestic origin, today an increasing part is of European extraction. The focus is on how to integrate these ‘foreign’ elements into the original national system without upsetting it too much. In a dualist view, in contrast, on the territory of each Member State there are two systems: a national and a European one. Both these systems are complementary and interrelated but nevertheless distinct. In other words, each Member State has its own national system of private law, in addition to which they together share a common system of EU private law. On this view, the focus is quite naturally on tracing the exact border between the two systems. (A variant is a pluralist view where, for example, international treaties may add additional systems.) From a Europeanist perspective, all private law in the European Union forms one single and gradually integrating system. The focus is on the interplay between the different levels of governance and on how the progressive coherence of the whole multilevel system and the gradual convergence of its components can be achieved. On this latter view, an increasing part of European private law is regulated at the EU level, while a considerable part is still regulated at the national level (and a minor part on the global level—think, for example, of the United Nations Convention on Contracts for the International Sale of Goods) of one and the same system. These are three different ways of looking at the same phenomenon, ie of private law in Europe, neither of which can be said at the outset to be more true (positively) or more right (normatively). It is impossible to discuss the issue in a neutral fashion. Rather, the relative attractiveness of these models depends on one’s more general views on the nature, future and finality of the European Union.45 Indeed, the issue of how many legal systems there are in Europe is closely related (if not identical) to the vexed question of Kompetenz-Kompetenz.46 A nationalist reading of the cases we saw above would probably lead to the conclusion that the Court is only referring to general principles of national civil law.47 These principles apply, as national, in the Member States. So, on this view there are no general principles of European Union private law. Indeed, this view matches the fact that the Court itself does not speak of EU principles. If these 44 This paragraph draws on MW Hesselink ‘The Common Frame of Reference as a Source of European Private Law’ (2009) 83 Tulane Law Review 919, 932–36. For a similar distinction, see J Dickson, ‘Directives in EU Legal Systems: Whose Norms Are They Anyway?’ (2011) 17 European Law Journal 190, 192, whose (a) ‘27 plus 1’ model (or the ‘distinct but interacting legal systems’ model), (b) ‘part of member states’ legal systems’ model and (c) ‘one big legal system’ model are roughly similar to what I call, respectively, the (a) dualist, (b) nationalist and (c) Europeanist perspectives. 45 See U Haltern, ‘On Finality’ in A von Bogdandy and J Bast (eds), Principles of European Constitutional Law, 2nd edn (Oxford, Hart Publishing, 2010) ch 6. 46 See JHH Weiler, The Constitution of Europe: “Do the New Clothes Have an Emperor?” and Other Essays on European Integration (Cambridge, Cambridge University Press, 1999) ch 9. 47 Except maybe in Case C-277/05 Société thermale d’Eugénie-les-Bains (n 5).

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principles are merely principles of the Member State at hand, that the Court merely mentions as possibly existing in the Member States, then they will only apply to the extent that the law of the Member State law actually contains such a principle (or a rule based on it). For example, a seller from a legal system (such as English law) that does not contain a good faith principle could not claim compensation for use on this ground (but maybe she could do so on the basis of unjustified enrichment, the other justifying principle accepted by the Court in Messner). From the dualist perspective the question of where these principles are located is crucial. If they are principles of national law they cannot also be at the same time principles of EU law and vice versa. Therefore, if the Court was referring to general principles of EU civil law, then these principles are different from any principles existing at the national level going under the same name. In other words, there will be the various national principles of good faith in each of the Member States (as the case may be) plus one European one with its own autonomous meaning. And each of these principles, the existing national ones and the European one, has its own field of application. The dualist model already leads to great practical difficulties when limited only to legislation and other concrete written rules. However, when it comes to general principles, which are unwritten, generally abstract and whose own borderlines are vague, then the exercise of drawing the borderline between national and EU law becomes even more challenging (and hence attractive to doctrinally oriented scholars). The situation is much easier from the Europeanist point of view (indeed, too easy in the eyes of nationalists and dualists, who will denounce the lack of analytical rigour and legal certainty). If one regards all private law in the European Union as one single, gradually integrating system and strives for the progressive coherence of the whole multi-level system and the gradual convergence of its components, then the idea of general principles does not look like a problem but rather like a welcome solution. From the Europeanist perspective there is no great need to draw formal distinctions between national and European principles. Rather, the focus will be on the substantive convergence of the various versions, Member State and Union, of the same principle. And for this purpose the malleable nature of principles is an advantage. Borderlines are helpful for those who wish to separate but an obstacle for those who wish to unite. The general principles of civil law, as a network of pan-European principles of civil law related, sometimes loosely sometimes more closely, to similar principles at the national (and indeed the global) level could become ideal building blocks or cement (or even foundations) for a developing multi-level system of European (private) law. From this perspective, the language used by the Court of Justice in Société thermale d’Eugénie-Les-Bains, Hamilton, Messner and E  Friz contains nothing puzzling or worrying,48 nor does the role that the Court attributed to these principles in these cases. 48

In Société thermale d’Eugénie-Les-Bains, Hamilton, and E  Friz the Court refers to ‘the general

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B. Principles What does the Court mean when it refers to ‘principles’? Is its aim to distinguish these from rules? Does the Court mean to take a stance in a famous debate in legal theory? Or is the aim more strategic: to avoid an impression of encroaching upon the task of the legislator?

(i) Principles and Rules There are many different theories concerning the nature of general principles of law, and principles play a central role in some prominent theories of law, notably in Dworkin’s idea of ‘law as integrity’.49 Dworkin draws a sharp distinction between principles and rules. According to Dworkin, rules have an all-or-nothing character, whereas principles are characterised by a dimension of weight.50 Principles play an important role in finding the existing right answer to any question of law: when the existing materials do not seem to yield a distinct answer (‘hard cases’), courts must try to find a principle that does provide a solution to the case and fits with the relevant legal materials and with the prevailing political morality. In contrast, legal positivists reject the existence of principles: where the law runs out, courts have discretion. However, ‘inclusive positivists’, like Coleman and probably Hart, accept the existence of principles to the extent that acknowledged sources of law refer to them.51 For the nature and attributes of principles this seems to imply that whatever a statute or a legal precedent (or anything else that the rule of recognition acknowledges as a source of law) refers to as being a principle, will count, for that reason alone, as a principle, quite apart from its further characteristics. It does not seem likely that the Court of Justice of the European Union intended to take a stance in this debate: its use of the concept seems to be compatible with both an essentialist and a mere appelationist conception of principles. This does not exclude, of course, the possibility of analysing the Court’s rulings in terms of one or more of these theories, and deciding in those terms whether these purported principles really are principles, quite apart from what the Court says.52 This may be important, in particular, when it comes to the legit-

principles of civil law’. However, in Messner the Court uses the expression ‘the principles of civil law’ without the adjective ‘general’. From the Europeanist perspective, nothing important turns on this difference in language. 49 For a full statement of that idea, see R Dworkin, Law’s Empire (Cambridge, MA, Harvard University Press, 1986). 50 See R Dworkin, Taking Rights Seriously (Cambridge, MA, Harvard University Press, 1977) ch 2. 51 See J Coleman, The Practice of Principle: In Defence of a Pragmatist Approach to Legal Theory (Oxford, Oxford University Press, 2001) and HLA Hart, The Concept of Law, 2nd edn (Oxford, Clarendon Press, 1994) Postscript. 52 For a sophisticated analysis in such terms, see C Mak, ‘Hedgehogs in Luxembourg? A Dworkinian Reading of the CJEU’s Case Law on Principles of Private Law and a Reply of the Fox’ (2012) 20 European Review of Private Law (forthcoming).

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imacy of what the Court is doing: are these principles an exercise in legitimate law-making, and what are its limits? That will be the subject of section V below. On a more descriptive note, for now the Court seems to use the concept in a very basic, literal sense of starting points, ie starting points for reasoning—in this case legal reasoning. What the Court seems to be doing, in particular, is to allow certain types of grounds for limiting consumer rights. As mentioned, European consumer protection law cannot be about the blunt and absolute maximisation of consumer protection. In the cases that we have seen here, the Court tells national courts what reasons are acceptable for limiting consumer protection. In Messner, for example, the Court is concerned with ‘the efficiency and effectiveness of the right of withdrawal’.53 The Directive leaves the determination of the legal consequences, in part, to the Member States. However, this is subject to the principle of effectiveness (a general principle of EU law). The question is then to figure out what is necessary to permit a consumer to make effective use of his right of withdrawal. The Court does not say in any detail what specific limitations are permitted. It limits itself to evaluating in general terms the reasoning of national law by acknowledging certain principles that can come into play, thus giving guidelines without determining exactly what role these principles should play. The Court says: It is in the light of those principles [both the general principles of civil law and the principle of effective protection, it seems] that the national court must resolve the actual case before it, taking due account of all the elements of that case.54

Thus, the general principles also allow the Court to respect the principle of subsidiarity by not going more than necessary into the details of national law. In other words, whereas a dualist view would require a sharp dividing line between national and EU law, it is precisely the vagueness of principles that are located somewhere between national and European law that here allows the Court to interfere no more than necessary with national law. That the Court regards the general principles of civil law as starting points for legal reasoning or as guidelines for dispute resolution is also illustrated by the way in which the Court referred to them in Hamilton. ‘That logic flows from one of the general principles of civil law’, the Court said there.55 The idea of a logic that flows from principles, in other words of principled reasoning and rational discourse, fits well with the idea of developing a system of private law in Europe that is as coherent as possible across the different levels of law-making.

(ii) Judges and Legislators Rules are adopted by legislators, while principles are discovered by judges. Therefore, although most of the principles that the Court has formulated so far (eg 53

Case C-489/07 Messner (n 18) paras 24–29. Ibid, para 28. 55 Ibid, para 42. 54

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the binding force of contract, discharge by performance, good faith and unjust enrichment) have the typical characteristics of generality and abstractness which are usually associated with generals principles of law, it is not excluded that the Court also used the concept of ‘general principles of civil law’ for another reason. Given the fact that the idea of a European Civil Code is controversial, not least because of doubts as to whether there would be a legal basis for it, it would be rather bold for the Court to do what the European legislator is not allowed to do, ie adopt unwritten legal rules that would normally belong in a civil code. Therefore, the Court may have thought it to be more prudent to refer to principles rather than to rules. Such strategic reasons would be very similar to the ones that also made the drafters of the Unidroit principles and the Lando principles opt for the terminology of principles, ie their lack of legislative power. I will come back to the separation of powers dimension below in the context of discussing legitimacy.

C. Civil Law What exactly does the Court mean when it refers to ‘the general principles of civil law’? Civil as opposed to what? In EU legal language ‘civil law’ is a familiar term, just like the related terms of ‘civil liability’, ‘civil action’, ‘civil proceedings’ and ‘civil-law remedies’. For example, in the words of the Court, the Courage case concerned ‘certain consequences in civil law’ of a breach of Article 101 TFEU.56 Civil law is often contrasted with administrative, criminal or tax law, 57 in similar fashion to how a ‘civil court’ is often contrasted with criminal and administrative courts. See, in this respect, also the Brussels I Regulation on jurisdiction (etc) in ‘civil and commercial matters’; the Court has developed a rich case law on the (autonomous) interpretation of the concept of ‘civil matters’ in this context.58 In the TFEU, in the title concerning the area of freedom, security and justice, Chapter 3 (consisting of one provision: Article 81) concerns ‘judicial cooperation in civil matters’. Traditionally, in many countries ‘civil law’ has been contrasted with ‘commercial law’. However, the use of the term ‘civil law’ in European law often rather seems to include ‘commercial law’, sometimes even explicitly. The same seems to be true for the way in which the Court intends its general principles of civil law. There is nothing in the four cases where the Court refers to (general) principles of civil law that excludes commercial cases from their scope of application. Thus, it seems, the Court could just as easily resort to these principles in a case

56

Case C-453/99 Courage (n 40) para 35. See eg Case C-195/02 Commission of the European Communities v Kingdom of Spain [2004] ECR I-785, para 40: ‘legal consequences of a civil, criminal and administrative nature’. 58 Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1. 57

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concerning the interpretation of the Late Payment Directive, whose scope is limited to ‘commercial transactions’.59 In practice, therefore, ‘civil law’ seems to mean ‘private law’—though the latter term, in contrast, is used much less frequently by European authorities.60 This may explain why the Court refers to civil law. However, nothing fundamental would change (except an increase in precision and clarity), it seems, if the Court changed its terminology and began referring to ‘the general principles of private law’. Indeed, if the principles are understood as principles belonging to the multi-level system of European private law or to a common European private law space, then the most appropriate name would be ‘general principles of European private law’.61

IV. Their Roles What roles do the general principles of civil law play in the cases that we saw? And what further roles might we expect?

A. Interpretation, Gap-filling and Correction For the general principles of EU law it is familiar to distinguish three functions: interpretation (secundum legem), gap-filling (praeter legem) and correction (contra legem).62 Interestingly, these three functions coincide with the three traditional functions of good faith, a prominent source of unwritten judge-made private law in the civil law tradition. This is not surprising because these three functions simply coincide with the three roles that courts will inevitably have to play when applying abstract rules (ie statutes and codes) to concrete cases.63 Indeed, these were already regarded as the three functions of praetorian (ie 59 Directive 2011/7/EU of 16 February 2011 on combating late payment in commercial transactions (recast) [2011] OJ L48/1, Art 1 (on subject matter and scope); for a definition, See art 2: ‘“commercial transactions” means transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or the provision of services for remuneration’. 60 Sometimes, reference is made to a legal person, contract of employment, etc, ‘governed by private law’ or to ‘a private-law association’. And in a recent case concerning the Rome Convention (now Rome I regulation), the Court of Justice held that ‘[t]he function of the Convention is to raise the level of legal certainty by fortifying confidence in the stability of legal relationships and the protection of rights acquired over the whole field of private law’ (Case C-133/08 Intercontainer Interfrigo SC (ICF) v Balkenende Oosthuizen BV and MIC Operations BV ECR [2009] I-09687, para 23, emphasis added). The TFEU sometimes refers to ‘private law’, see eg Arts 54 and 272. 61 In the same sense, Basedow (n 42) 462. 62 See eg Tridimas (n 38) 27ff; Metzger (n 42); Hartkamp (n 1) 256; and for the interpretative and gap-filling functions, Case C-101/08 Audiolux (n 39) Opinion of AG Trstenjak, para 68. 63 See MW Hesselink, ‘The Concept of Good Faith’ in AS Hartkamp, MW Hesselink, EH Hondius, C Mak and CE du Perron (eds), Towards a European Civil Code, 4th edn (Alphen aan den Rijn, Kluwer Law International 2011) 619.

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‘judge-made’) law by Papinian,64 from whom Wieacker borrowed them in order to describe the functions of §  242 of the Bürgerliches Gesetzbuch, the general good faith clause in the German civil code.65 Do the general principles of civil law fulfil the same three interpretative, gapfilling and corrective functions? The four cases in which the Court has explicitly referred to general principles of civil law are all instances of the interpretation of EC Directives against the background of these principles. Indeed, background rules of general private law seem indispensable, especially for the interpretation of EU Directives that aim at sector-specific consumer protection. As Beale put it, ‘a great deal of general contract law that is not explicitly referred to in the acquis is nonetheless essential background to it’.66 Arguably, Messner could also be regarded as a case of gap-filling (the distinction between interpretation and gap-filling being notoriously vague). However, none of them is an instance of correction (or review). Nor has there been, so far, any attempt by referring national courts to introduce this idea with the Court.67 This is in contrast to the ‘general principles of EU law’. There, the Court made it clear that these principles can set aside provisions of national law in disputes between private parties.68 Moreover, in Audiolux the central question of whether there was a general principle of EU law concerning shareholder equality was discussed because if such a principle did exist, the plaintiffs claimed, then it would have been directly horizontally effective and would have set aside the otherwise applicable national law of Luxembourg.69 However, Hartkamp is right in pointing out that there is nothing, in principle, in the nature of general principles of civil law that excludes that they could also play such a corrective role.70

B. Direct Effect (i) As Unwritten Secondary EU law Could the general principles of civil law have direct effects on relationships between individuals in the (narrow) sense that they would create, modify, or 64 D 1.1.7: ‘Ius praetorium est, quod praetores introduxerunt adiuvandi vel supplendi vel corrigendi iuris civilis gratia propter utilitatem publicam  …’. 65 F Wieacker, ‘Zur Rechtstheoretischen Präzisierung des § 242’ in Recht und Staat in Geschichte und Gegenwart; Eine Sammlung von Vorträgen und Schriften aus dem Gebiet der gesamten Staatswissenschaft, nrs 193/194 (Tübingen, Mohr, 1956) 22. 66 H Beale, ‘The European Commission’s Common Frame of Reference Project: A Progress Report’ (2006) 2 European Review of Contract Law 303, 312. 67 Indeed, in none of the cases that we have seen did the reference for preliminary ruling refer to the general principles of civil law. In contrast, in Case C-101/08 Audiolux (n 39) it was the referring national court that explicitly asked the question whether the references to the equality of shareholders in a number of EC Directives were manifestations of a general principle of Community law. 68 See Case C-555/07 Kücükdeveci (n 34) and Case C 144/04 Mangold (n 34). 69 Case C-101/08 Audiolux (n 39) para 63. 70 Hartkamp (n 1) 256. Whether that would be legitimate is a different question, which will be discussed in section V.

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annul rights and obligations between them, similar, for example, to Article 101 TEU (ex Article 81 EC) that directly nullifies certain agreements that distort competition within the internal market?71 Keeping in mind the three possible functions of these principles, the question then becomes whether acts of private parties, such as contracts (provided of course that they are within the scope of EU law), must be interpreted, supplemented (gap-filling) and reviewed (corrected) in the light of the general principles of civil law. For the general principles of EU law—in particular the principle of nondiscrimination—Hartkamp has argued that they could produce direct horizontal effects for the reason that ‘here as elsewhere there is no good reason to distinguish between written and unwritten primary law’.72 At first sight, this reasoning might seem to imply that primary EU law and direct horizontal effect are two sides of the same coin. However, that is probably not what Hartkamp meant since the doctrine of direct effect, be it horizontal or vertical, is not limited to primary law. All binding EU law, including secondary legislation, can have direct effect as long as the relevant provision is sufficiently clear, precise and unconditional.73 For example, the regulation on air passengers’ rights produces direct horizontal effects, such as a right to compensation, between passengers and airline companies.74 In any case, Hartkamp is right that in relation to direct horizontal effects there is no good reason to distinguish between written and unwritten EU law. Supremacy and, as the case may be, direct effect of EU law should not depend on whether the relevant EU law is written or unwritten. This leads to the conclusion that whether or not the general principles of civil law, as a category, have the primary law status possessed by the general principles of EU law is not decisive for the question of whether they could produce direct horizontal effects. Also, if the general principles of civil law were located merely at the secondary level of EU law (on this question, see further below, section C(ii)), this would not per se be an impediment for them having direct effect. Rather, what seems more relevant is the requirement for direct effect that the legal provision be sufficiently clear, precise and unconditional. Principles may often be too general to pass this test. Having said that, the recent NCC Construction Danmark case,75 which will be discussed in more detail below (section C(ii)), seems to suggest that only principles of primary EU law can have direct effect. This brings us to the question 71 As mentioned above, this direct horizontal effect in a narrow sense can be distinguished from direct effect in the broader sense of being directly applicable in disputes between private parties. In other words, the review of contract law is not the same as the review of a contract. 72 Hartkamp (n 1) 250. 73 Cf Craig and de Búrca (n 2) 180; AS Hartkamp, Europees recht en Nederlands vermogensrecht (Asser/Hartkamp 3-I*), 2nd edn (Deventer, Kluwer, 2011) nr 12. 74 See Art 5 of Regulation No 261/2004 of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 (Text with EEA relevance)—Commission Statement [2004] OJ L46/1. Cf Joined Cases C-402/07 and C-432/07 Sturgeon, Christopher Sturgeon, Gabriel Sturgeon and Alana Sturgeon v Condor Flugdienst GmbH [2009] ECR I-10923, para 45. 75 Case C-174/08 NCC Construction Danmark A/S v Skatteministeriet [2009] ECR I-10567.

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whether the general principles of civil law are (sometimes also) principles of primary law, with direct effect.

(ii) As Unwritten Primary EU law In a number of cases (notably Viking and Laval) the Court of Justice has accepted direct horizontal effect of market freedoms.76 Hartkamp points out an important problem with the direct horizontal effect of market freedoms.77 If a party can invoke its market freedom directly in a private law dispute, eg concerning a contract, then the other party, as the law stands now, can only invoke essentially public interests to counter that right.78 Merely private (and typically merely economic) interests cannot be raised to defeat the direct effect of the other party’s freedom. Effectively, that could mean a limitation of the private autonomy of individuals for the sake of market building. In the past, justified worries have been expressed that EU private law is dominated by the internal market and that the effect of the market freedoms might be the ‘constitutionalisation’ of party autonomy and freedom of contract.79 Here, however, the opposite seems to happen: freedom of contract and party autonomy are defeated by the market freedoms. Whereas traditionally private law disputes have been a matter of balancing the interests of the private parties,80 incrementally on a case-to-case basis by courts and on a more abstract level in codifications, the direct horizontal effect allows only for the balancing of exclusively public interests. Hartkamp argues that the exception system should be extended for direct horizontal effect cases.81 Maybe the general principles of civil law could provide a solution here. Could not the general principles of civil law contribute to developing a specific justification regime for the horizontal effect of market freedoms? They would bring in the private law interests. And they would do so in a way that does not necessarily have to worry those who fear the constitutionalisation of the freedom of contract because in this way private autonomy and its limits would enter the 76 Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-10779; Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet and Others [2007] ECR I-11767. 77 See Hartkamp (n 1). 78 In Bosman, the Court did not seem to see any difficulty: ‘There is nothing to preclude individuals from relying on justifications on grounds of public policy, public security or public health. Neither the scope nor the content of those grounds of justification is in any way affected by the public or private nature of the rules in question.’ Case C-415/93 Union royale belge des sociétés de football association ASBL v Jean-Marc Bosman [1995] ECR I-4921, para 86. 79 Study Group on Social Justice in European Private Law, ‘Social Justice in European Contract Law: A Manifesto’ (2004) 16 European Law Journal 653. 80 However, in more recent approaches, especially in law and economics, private law should explicitly (and, according to some, even exclusively) serve public goals such as the maximisation of social welfare. See eg L Kaplow and S Shavell, Fairness versus Welfare (Cambridge, MA, Harvard University Press, 2002). 81 Hartkamp (n 1) 548. In the same sense H Schepel, ‘Who’s Afraid of the Total Market? On the Horizontal Application of the Free Movement Provisions in EU Law’ in I Lianos and O Odudu (eds), Trust, Distrust and Economic Integration (Cambridge, Cambridge University Press, forthcoming) 628.

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equation.82 In this way, all relevant private interests, readily balanced (or still to be balanced but as principles), could come directly into play. For example, the Court has already referred to both the principle of the binding force of contract and its traditional counter-principle of good faith.83 The result would be, of course, that the general principles of civil law (or some of them) would gain the constitutional status of primary law. This could be conceived in two different ways. Either, as a matter of interpretation of the market freedoms, the general principles of civil law (or some of them) would become part of the justification regime for horizontal effect of the market freedoms. Or these principles (or some of them) would independently, as it were, counterbalance these freedoms. In the latter interpretation, it seems, this would be a case of direct horizontal effect of the principles themselves. In the former, they would be absorbed by the Treaty provisions on market freedoms, in a way very similar to private law principles applicable in the context of the private law remedies in competition cases based by the Court on Article 101 TFEU.84 The question arises, however, whether it is all worth the effort. If direct horizontal effect is going to be limited, first, to the freedom of establishment and the freedom to provide services (free movement of goods is so far excluded),85 and then by general principles of civil law, thus creating a differentiation between the justification regimes in vertical and horizontal cases (leading inevitably to demarcation problems), and if the horizontal effect is going to be limited anyway to cases where the acts of private parties (contracts, etc) have the ability to obstruct free movement (which is rarely the case, because of competition), then this may yield very little economic benefit, while coming at a price of greater complexity and legal uncertainty.86 Therefore (and also for more traditional reasons, such as the division of labour with competition law), several observers have argued for a retreat from direct horizontal effect of the market freedoms.87 If, however, the Court persists (or even extends) direct horizontal effect, then a principled approach, informed by general principles of private law, is to be preferred over a mere balancing of public and private interests. And from the perspective of coherence there seems to be good reason at least to co-ordinate these principles

82 That risk would indeed exist if freedom of contract was simply elevated to the constitutional status of a general principle of EU law, as was recently proposed by M Safjan and P Mikłaszewicz, ‘Horizontal Effect of the General Principles of EU Law in the Sphere of Private Law’ (2010) 18 European Review of Private Law 475, 484. 83 Compare Art 1134 French Civil Code, paras 1 and 3 respectively. Cf C Jamin, ‘Une brève histoire politique des interprétations de l’article 1134 du code civil’ (2002) 178 Dalloz 901. 84 See Case C-453/99 Courage (n 40). 85 See, however, Case C-438/05 Viking (n 76) Opinion of AG Poiares Maduro. 86 In this sense, see H Schepel (n 81) 630. In his contribution to this volume, G Davies, ‘Freedom of Contract and the Horizontal Effect of Free Movement Law’, argues that the law of free movement is almost certainly welfare reducing (at best, there is a deferred welfare gain) and should rather be understood as a project in transformative social engineering, essentially political, seeking to nudge Europeans into changing their domestic preferences for more European ones. 87 See eg P Oliver and W-H Roth, ‘The Internal Market and the Four Freedoms’ (2004) 41 Common Market Law Review 407.

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with private law principles developed, accepted or acknowledged in other areas of EU law, such as competition law (eg Courage, Manfredi).

C. The Hierarchy of Norms To the extent that the general principles of civil are (also) part of EU law, the question arises where they are located in the hierarchy of norms: (also) on the level of primary (‘constitutional’) EU law or merely on the level of secondary EU law, or both?

(i) Their Relationship to the General principles of EU Law The general principles of EU law have played a prominent role in shaping EU law.88 These principles, which include important examples such as equality, proportionality and effectiveness, enjoy ‘constitutional’ status in the sense that they are unwritten primary law on the same hierarchical level as the founding Treaties. These principles may also be relevant for private law disputes, as was well illustrated by the Mangold case. What is the relationship, if any, between the general principles of EU law and the general principles of civil law? Is there some (potential) overlap between the two categories? Can certain general principles of civil law be recognised as general principles of EU law? In Audiolux, the Court said: The general principles of Community law have constitutional status while the principle proposed by Audiolux is characterised by a degree of detail requiring legislation to be drafted and enacted at Community level by a measure of secondary Community law. Therefore, the principle proposed by Audiolux cannot be regarded as an independent general principle of Community law.89

This reasoning suggests that there is some link between the degree of detail and constitutional status. The more detailed the principle, the less likely it is to be a constitutional principle. That makes sense: choices concerning details and exceptions belong to the realm of the ordinary legislator.90 However, this reasoning, on its own, would not defeat the candidacy for acquiring constitutional status of, for example, the principles of binding force, good faith and unjustified enrichment since these are very general and broad principles. What seems to have been decisive, rather, was the fact that Audiolux was trying to achieve some direct effect of the principle. What Audiolux needed 88 Different names were used in the past, including ‘fundamental principles’, etc, but since the entrance into force of the Lisbon Treaty the Court has usually referred to them as ‘general principles of EU law’. See eg Case C-279/09 DEB Deutsche Energiehandels- und Beratungsgesellschaft mbH v Bundesrepublik Deutschland, Judgment of 22 December 2010, concerning the principle of effective judicial protection. 89 See explicitly Case C-101/08 Audiolux (n 39) para 63. 90 See ibid, para 62: ‘A principle such as that proposed by Audiolux presupposes legislative choices, based on a weighing of the interests at issue and the fixing in advance of precise and detailed rules.’

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was a principle that had direct horizontal effect between the private parties and enjoyed supremacy over the otherwise applicable Luxembourg law, which contained no such principle and only rules of company law favouring its adversary. Indeed, it is far from clear that the Court in a different case concerning, for example, the interpretation of a company law Directive could not have accepted the same principle that it rejected as a general principle of EU law, in the shape of a general principle of civil law. Because in the latter type of cases, as we have seen, the way the principle works is not absolute. The Court is not implying in Messner, etc (nor in Courage) that these principles are absolute, without exception—on the contrary. Therefore, what the Court actually seems to be saying in Audiolux is that the principle that Audiolux proposed is not sufficiently clear, precise and unconditional to have direct horizontal effect. At first sight it seems self-evident that the principles of the binding force of contract, good faith and unjust enrichment, even though they are among the most fundamental and general principles of private law are nevertheless not constitutional principles. Indeed, they cannot be found in any of the constitutions of the Member States of the Union. The reason is simply that these principles, as Hartkamp puts it, ‘are not sufficiently important for them to be counted as general principles of EU law’.91 As central as, for example, the principle of good faith may be to private law, there is an obvious (and categorical) difference between this principle and, say, the general principle of equal treatment. Nevertheless, it is not entirely self-evident what exactly constitutional means in the context of the European Union. It has become customary to refer to the primary EU law of the founding Treaties as its constitutional framework, ie today essentially the TEU, the TFEU and the Charter.92 In addition, the Court of Justice of the EU has acknowledged by analogy that unwritten primary law has similar constitutional status.93 However, as to the substance, it is far from selfevident why certain rules and doctrines belong to the constitutional framework of primary law. Not only does the European constitution look rather economic, it also does not even generally guarantee economic freedoms and competition but focuses more specifically on cross-border trade, which seems odd for constitutional liberties. What is true for written law is even more strongly so for unwritten law. In the absence of any previous recognition by the Court, it is not self-evident at all what could one day become recognised as a principle of primary EU law. Some guidance may be found in the aims and values of the EU as expressed in the Treaties and the Charter of Fundamental Rights of the European Union.94 But any further or deeper basis is lacking. One could imagine, for example, that constitutional status would be granted to 91

Hartkamp (n 1) 257. See Art 1(3) TEU. According to this provision, the TEU and the TFEU ‘constitute the Treaties on which the Union is founded’. 93 Cf F Jacobs, foreword to Tridimas (n 38) ix: ‘Thus the general principles rank alongside the Treaties as primary sources of Community law, prevailing over conflicting legislation.’ 94 See Art 2 TEU. 92

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those principles that are truly fundamental for human flourishing and progress, ie those principles that contribute most to giving individuals real opportunities to live full and creative lives and to be and to act as they want. This approach, the capabilities approach to human progress, is much more inclusive than conventional economic indicators such as gross domestic product.95 From such a perspective, it is self-evident that the discrimination of minority shareholders should not be the first candidate to become a constitutional principle. Similarly, the general principles of civil law that we have seen so far, although fundamental to the law of obligations, are clearly not fundamental to society. Their bearing on human flourishing is much weaker, and more indirect, than, for example, the principle of non-discrimination on grounds of age. On the other hand, however, it is also not obvious that the invalidity of cartels that affect cross-border trade between Member States (Article 101 TFEU) or the freedom to move goods from one EU country to another (Article 28 TFEU) are more fundamental to human flourishing than the principles that contracts are binding, that unjustified enrichments must be reversed or that no one is bound to a contractual relationship after having fulfilled all their obligations, or, indeed, the principle according to which all contracts have to be performed in accordance with ‘a standard of conduct characterised by honesty, loyalty and consideration for the interests of the other party’.96

(ii) Principles of Secondary EU Law? In several areas, EU law refers to general principles that clearly have no constitutional status. Think, for example, of the ‘general principles concerning the health and safety of workers’,97 and ‘the general principles of food law’.98 A very interesting case in this respect is NCC Construction Danmark, which concerned the interpretation of ‘the Sixth Directive’99 and the scope of the principle of fiscal neutrality with regard to turnover taxes.100 It is worth citing the ruling of the Court in this case in extenso: 95 For a powerful recent statement of this approach, see MC Nussbaum, Creating Capabilities: The Human Development Approach (Cambridge, MA, Belknap Press, 2011). 96 The duty of good faith and fair dealing as defined in Art 2(b), Proposal for a regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final (CESL). 97 See Art 1(2) of Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work [1989] OJ L183/1: ‘[This Directive] contains general principles concerning the prevention of occupational risks, the protection of safety and health, the elimination of risk and accident factors, the informing, consultation, balanced participation in accordance with national laws and/or practices and training of workers and their representatives.’ Cf Joined Cases C-397/01 to C-403/01 Bernhard Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV [2004] ECR I-8835, para 4. 98 Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety [2002] OJ L31/1. 99 The same tax law Directive that was central in Case C-277/05 Société thermale d’Eugénie-lesBains (n 5). 100 Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member

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First of all, it should be noted that the principle of fiscal neutrality resulting from the provisions of Article 17(2) of the Sixth Directive implies that a taxable person may deduct all the VAT levied on goods and services acquired for the exercise of his taxable activities. In that regard, it is necessary to add that, according to settled case-law, the principle of fiscal neutrality, and, in particular, the right to deduct, as an integral part of the VAT scheme, is a fundamental principle underlying the common system of VAT established by the relevant Community legislation. That principle of fiscal neutrality was intended by the Community legislature to reflect, in matters relating to VAT, the general principle of equal treatment. However, while that latter principle, like the other general principles of Community law, has constitutional status, the principle of fiscal neutrality requires legislation to be drafted and enacted, which requires a measure of secondary Community law (see, by analogy, with regard to the protection of minority shareholders, Case C-101/08 Audiolux and Others [2009] ECR I-0000, paragraph 63).  … It is also appropriate to point out that the general principle of equal treatment, of which the principle of fiscal neutrality is a particular expression at the level of secondary Community law and in the specific area of taxation, requires similar situations not to be treated differently unless differentiation is objectively justified. It requires, in particular, that different types of economic operators in comparable situations be treated in the same way in order to avoid any distortion of competition within the internal market, in accordance with the provisions of Article 3(1)(g) EC.101

This decision is of interest in the present context for a number of reasons. First, because the principle of fiscal neutrality, although ‘a fundamental principle’, is nevertheless not a constitutional principle. This confirms the idea that the fundamental character is not decisive for the classification as a constitutional principle. By analogy, for example, the principles of the binding force of contract and of good faith, although arguably principles fundamental to private law, are not necessarily also constitutional principles. Secondly, because here the fundamental principle underlies the common system of VAT established by Community legislation and is intended by that legislator, top down as it were. This is in contrast with the more bottom-up nature of the general principles of civil law. Thirdly, the Court rejects the constitutional status for this principle for reasons similar to those mentioned in Audiolux (a judgment from two weeks earlier, by the same chamber, but with a different rapporteur, that the Court explicitly refers to by way of analogy), ie that the principle of fiscal neutrality requires legislation to be drafted and enacted, which requires a measure of secondary Community law.102 Fourthly, and most relevant here, the principle of fiscal neutrality is a particular expression at the level of secondary Community law and in the specific area of taxation of the general principle of equal treatment. This means that there States relating to turnover taxes—Common system of value added tax: uniform basis of assessment [1977] OJ L145/1 (the ‘Sixth Directive’). 101

Case C-174/08 NCC Construction Danmark (n 75) paras 39–46 (references omitted). Incidentally, would not the same but inversed analogy suggest that a principle of equal treatment of shareholders could be recognised as a general principle of secondary EU (company) law? 102

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are principles located at the level of secondary EU law, not only at the level of primary EU law. By analogy, the general principles of civil law that we have seen so far could also be located on the secondary level of EU law. In NCC Construction Danmark, as in Audiolux, the aim of the plaintiff was for the principle to get around the otherwise applicable national law (either as gap-filling or as correction) and this may have been an important reason for the Court to deny it the constitutional status of a general principle of EU law. If this is true, then the implicit conclusion is that the Court thinks that only general principles of primary law can have such effects. That would mean that general principles of secondary EU law have more limited effects than general principles of primary EU law. For example, it could be that they have no corrective (review) function and/or no direct horizontal effect. However, as we saw above, the corrective function and direct effect are not necessarily limited to primary EU law. Therefore, it remains to be seen what choices the Court will make in this regard. In any case, the conclusion seems to be justified that the general principles of civil law can be regarded (also) as principles at the level of secondary EU law, that is to say, as unwritten secondary EU law with at least an interpretative function.

D. Sovereignty and Subsidiarity What effect does the discovery by the Court of Justice of general principles of civil law have on the autonomy of national private law makers? Are the general principles of civil law a threat to Member State sovereignty in the area of private law?

(i) A Reminder on Scope It is important to point out as a reminder that whatever effect the principles will have will remain within the scope of EU law. The general principles of civil law cannot become a source—direct or indirect—of rights or obligations outside the scope of EU law. This means, in the first place, that the principles cannot operate beyond the competences of the EU legislator. Pursuant to the principle of conferral, the Union can act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein; competences not conferred upon the Union in the Treaties remain with the Member States (Article 5(2) TEU).103 Since the discovery and application by the Court of the general principles of civil law is an act of the Union, just as much as legislation, this means that these also can never operate beyond the areas in which the EU has competence. In other words, if the EU has no competence to enact a European Civil Code that replaces national law, then the Court of Justice also has no competence to enact an unwritten European Civil Code in the form of principles. 103 Moreover, the use of Union competences is governed by the principles of subsidiarity and proportionality (Art 5(1) TEU).

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Moreover, this also means that, in the cases of shared competence (which include the areas most relevant for private law such as the internal market and consumer protection), the principles can only apply to subjects in relation to which the European legislature has actually made use of its competence by enacting EU law. Specifically in relation to gap-filling, this means that the Court can use the principles for filling gaps in existing EC Directives but not gaps existing between different Directives. So, paraphrasing Michaels’ metaphor, no new islands in the ocean nor any land reclamation in between existing islands.104

(ii) Member-State-Friendly Interpretation of EU Law A second important point is that in none of the cases that we have seen so far has the outcome gone against national principles of private law. In each case the Court refers to general principles of civil law that are recognised (also) in the Member State at hand. Société thermale d’Eugénie-Les-Bains goes against the autonomy of the national tax law legislator. However, this happens on the basis of the principles of private law that also exist in France (ie the principle of the binding force of contract). Thus, it does not go against the national private law making autonomy. In Hamilton, one can even say that the general principles of civil law came to the aid of the national private law legislator. The general principle (in this case, discharge by performance) provided the basis for a limitation to consumer protection that merely national principles could not so easily have justified. Very similarly, in Messner the Court allowed a limitation to consumer protection on the basis of general principles (in this case, good faith and unjust enrichment). The same applies also in E  Friz: the national legislator is allowed to limit consumer protection on the basis of general principles of civil law (in this case, the principle of the mere ex nunc effect of withdrawal from a partnership) that are implicitly approved by the Court of Justice. If anything is limited or tempered, especially in the latter three cases, by the general principles of civil law, it is the maximisation of EU consumer protection. It is not the Member States that should be worried but rather the BEUC and other consumer groups. In a case note on Hamilton and Messner, Weatherill recently wrote: Even if one is prepared to engage in the quest for ‘systematisation’ of the EU’s legislative acquis, the consequence of success in such a quest is unavoidably that limits are placed on national autonomy in the areas touched—incrementally, as a ‘patchwork’— by the EU. A more coherent system at EU level may lead to a less coherent system at national level. Such a starkly destructive outcome is not inevitable, but this is where the Court’s use of general principles of civil law may lead, and it is one reason why it is troubling.105

104 R Michaels, ‘Of Islands and the Ocean: The Two Rationalities of European Private Law’ in R Brownsword, H-W Micklitz, L Niglia, and S Weatherill (eds), The Foundations of European Private Law (Oxford, Hart Publishing, 2011) 139. 105 S Weatherill, ‘The “Principles of Civil Law” as a Basis for Interpreting the legislative Acquis’ (2010) 6 European Review of Contract Law 74, 80.

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Even though this observation is generally true—there is an obvious tension between coherence ambitions at the national level and coherence efforts on the European level106—in the particular cases under discussion here (and in Weatherill’s case note) the net effect of the Court’s use of general principles so far seems to be the opposite. What, for example, could have happened if the Court had not resorted to the general principles? In Hamilton, Messner and E  Friz the Court might very well have decided that the principles of civil law at hand, this time in the guise of national principles, had to be set aside with a view to achieving effective consumer protection. Thus, the counterfactual probably would be more intrusive for national law and more upsetting for the national system. The case would be very different if the general principles of civil law at the EU level were used by the Court against general principles of civil law existing at the national level. But so far, in all four cases where the court explicitly refers to the (general) principles of civil law, these principles work in support of (twinsister) principles existing at the national level. In fact, the reasoning in these cases is quite similar to that adopted by the Court in Courage. The difference being, of course, that competition is an area of exclusive competence for the EU (see now Article 3 TFEU), whereas consumer protection and the internal market are areas of shared competence between the Union and the Member States (Article 4 TFEU). In Courage, in a bold move of judicial activism, the Court laid the foundations, to be further developed subsequently in Manfredi,107 for a regime of private enforcement of competition law. After having established, first, that a party to a contract liable to distort competition can obtain relief from the other contracting party, and that Article 85 EC (now Article 101 TFEU) precludes a rule of national law under which a party to a contract liable to restrict or distort competition is barred from claiming damages for loss caused by performance of that contract on the sole ground that the claimant is a party to that contract, the Court then allowed a more limited exception to liability by ruling that Community law does not preclude a rule of national law barring a party to a contract liable to distort competition from relying on his own unlawful actions to obtain damages where it is established that the latter party bears significant responsibility for the distortion of competition. The Court reached this conclusion after having referred to ‘a principle which is recognised in most of the legal systems of the Member States’. The Court said: Similarly, provided that the principles of equivalence and effectiveness are respected … Community law does not preclude national law from denying a party who is found to bear significant responsibility for the distortion of competition the right to obtain damages from the other contracting party. Under a principle which is recognised in most of the legal systems of the Member States and which the Court has applied in 106 See, in more detail, MW Hesselink, ‘The Ideal of Codification and the Dynamics of Europeanisation: The Dutch Experience’ (2006) 12 European Law Journal 279. 107 Joined Cases C-295/04 to C-298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] ECR I-6619.

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the past  … a litigant should not profit from his own unlawful conduct, where this is proven.108

The Court is not imposing an in pari delicto, nemo auditur or ‘unclean hands’ principle, as a European general principle of civil law, on the Member States— even though it could have done so given the fact that competition law is an area of exclusive Union competence—so Member States that do not have such a principle are not forced to introduce it. Nor is the Court simply leaving the matter to national law. It does something more subtle: it accepts that a Member State that has such a principle can limit the right to damages (and the private enforcement) on the basis of such a national principle, provided that the principles of equivalence and effectiveness (which are two general principles of EU law) are respected. And the reason for accepting this particular exception lies in the fact that it is based on a principle which is recognised in most of the legal systems of the Member States (and which the Court has applied in the past). What is therefore actually happening so far is the mirror image of the EU-friendly interpretation of the national constitution that the Bundesverfassungsgericht says is required by the German Constitution.109 Here, the Court interprets EU law (in this case Directives) in such a way that it is congruent with certain general principles of civil law existing also in a Member State. In other words, it undertakes a Member-State-friendly interpretation of EU law.

E. Chameleonic Principles In Courage the Court laid the foundations for the private enforcement of EU competition law, and thus for a new branch of EU private law. Since EU competition law is primary EU law, the private enforcement regime is also located on the level of primary EU law. The regime itself was not formulated by the Court in terms of principles, but rather as an interpretation of Article 101 TFEU. However, as we saw, in Courage the Court held that ‘[u]nder a principle which is recognised in most of the legal systems of the Member States and which the Court has applied in the past’, a litigant should not profit from their own unlawful conduct.110 This consideration led the Court to the conclusion that Community law does not preclude a rule of national law barring a party to a contract restricting competition from relying on his own unlawful actions to obtain damages in certain cases. It is a separate question to what extent this principle thus (partly) becomes (also) a principle of European law—the answer seems to be in the affirmative since the Court says that it has applied the principle in the past: what other than EU law can the Court apply?—but to the extent that it 108

Case C-453/99 Courage (n 40) para 31. Derived from Arte 23(1) and the Preamble of the Basic Law. See BVerfG, 30 June 2009, BVerfGE 123, 267 (the Lisbon judgment), para 225. See also BVerfG, 6 July 2010, 2 BvR 2661/06, para 58 (Honeywell) and BVerfG, 7 September 2011, 2 BvR 987/10 (Greek bail-out) para 109. 110 Case C-453/99 Courage (n 40) para 31 (references omitted). 109

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is European law it must be of primary law. It must be a (potential/possible) limitation to the private enforcement regime that follows from Article 101 TFEU on the same level as the general rule of liability following from that article, because otherwise the principle holding the exception would be overruled by the general rule (without the exception). Similarly, as we saw above, if the Court is going to pursue its course of the horizontal effect of market freedoms, then inevitably the Court will be developing another branch of European private law. This branch, by definition, will also be located on the level of primary EU law. It remains to be seen to what extent the Court will choose to co-ordinate these two new branches of European private law with each other and with other areas of European private law,111 and whether the Court will do so in terms of general principles of civil law.112 If it does, then inevitably the same principle (in terms of substance) will operate at different levels of EU law, primary and secondary, chameleonically changing its status from constitutional to secondary. In addition, as we saw, the principles may also operate at different levels of governance, national and EU, and maybe even at both levels at the same time. In particular, the general principles of civil law tend to work in support of the same principles (or their twin-sisters) existing at the national level. This chameleonic and multi-functional nature of the general principles of civil law would fit very well, as we saw, with the idea of European private law as one dynamic, gradually converging multi-system of European private law (or a European private law order) and of Europe as one single private law space, but is much more problematic from other perspectives. This brings us to the legitimacy of the general principles of civil law.

V. Their Legitimacy What, if anything, makes the general principles of civil law a legitimate source of private law in Europe? Or, to put it more explicitly in the terms of the present volume, can the general principles of civil law be a legitimate form of involvement of EU law in private law relationships? This question has a general and a more specific aspect. First, are general principles of civil law a legitimate source of (unwritten) law? Second, what makes a particular principle legitimate? How should the Court of Justice—and only the Court of Justice?—go about ‘discovering’,113 or ‘acknowledging the existence of ’,114 new (general) principles of civil law? 111 Think, for example, of the non-contractual liability of the EU. See Art 340(2) TFEU, pursuant to which ‘the Union shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties’ (emphasis added). 112 On horizontal coherence, see below, V.B(iii). 113 See Lenaerts and Gutiérrez-Fons (n 25) 1635. 114 Compare Case C-555/07 Kücükdeveci (n 34) (with reference Mangold, para 75) para 34: ‘[T]

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A. Ensuring that the Law Is Observed If it is true that the functions of general principles coincide with the three tasks that courts will inevitably have to fulfil when applying existing abstract rules to new concrete cases, then does not the office of the judge in itself already justify resorting to general principles and, thus, provide legitimacy to all the principles that it finds necessary for fulfilling its tasks? Courts have to interpret, fill gaps and occasionally correct rules. This simply follows from the nature of adjudication. In a positivist fashion, such institutional legitimation, based on the office of the judge, could simply be based on Article 19 TEU. Pursuant to the first paragraph of that article, ‘The Court of Justice of the European Union … shall ensure that in the interpretation and application of the Treaties the law is observed.’ This article, and its predecessor Article 220 EC, are often cited as the justification for the Court’s development of the general principles of EU law.115 The legitimacy of the principles would then derive directly from the legitimacy of the founding Treaties. On the other hand, these provisions do not explicitly refer to general principles. There are provisions in the Treaty that refer to general principles but they have a narrow scope, notably the non-contractual liability of the EU.116 Thus, the positivist argument could actually be inverted. Moreover, and more importantly, the tasks of the Court could at most justify the general existence and functions of general principles, but not their content: which principles should the Court adopt or find and which should it reject? Anything goes? If not, how can the acknowledgrment of certain principles, and not others, be justified?

B. Coherence After earlier signs of its inclination in the opposite direction,117 the Court of Justice more recently (and sometimes even explicitly) seems to be adopting a more systematic mode of interpretation.118 This may be part of a development from an instrumental (mainly market building) teleological into a more rightsoriented legal order, from objectives to principles, and from interests to rights. How do the general principles of civil law fit into this picture?

he Court has acknowledged the existence of a principle of non-discrimination on grounds of age which must be regarded as a general principle of European Union law.’ 115

See eg Tridimas (n 38) 19. See Art 340 TFEU, see above n 111. 117 Notably the Simone Leitner case, where the Court refused to borrow the definition of ‘damage’ from the Product Liability Directive for determining the meaning of the same concept in the Package Travel Directive, in spite of the suggestion by its advocate general to do so. See Case C-168/00 Simone Leitner v TUI Deutschland GmbH Co KG [2002] ECR I-2631, Opinion of AG Tizzano, paras 29–33. 118 Explicitly in Case C-348/07 Turgay Semen v Deutsche Tamoil GmbH, [2009] ECR I-2341, para 29. 116

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(i) Law’s Integrity In Dworkin’s theory of law, principles are closely related to his right answer thesis and his idea of law’s integrity: the legal system as a seamless web providing answers to all questions of law from which Hercules, ‘an imaginary judge of superhuman intellectual power and patience who accepts law as integrity’,119 could derive the rights (and obligations) that individuals have.120 That theory does not necessarily fit well with the post-national condition, multi-level governance and, in particular, the nature of EU law, based on limited and sometimes shared competences, and with legislative instruments such as Directives which lack direct horizontal effect but have to be interpreted harmoniously. In this context, it is not clear what it exactly means to take European rights seriously.121 What the theory does, however, is underscore the close link between principles and coherence. So, whatever we think generally of law as integrity and the single right answer thesis, if the general principles of civil law can contribute to making European private law more coherent, and if this increased coherence does not come at too high a price, eg in terms of national sovereignty (an important if), then surely their discovery by the Court of Justice of the EU must be welcomed.

(ii) Vertical Coherence As we saw, and will further discuss below, general principles of civil law, because of their flexible and informal nature which allows them to operate on more than one level of governance, could make an important contribution to the coherence and convergence of private law making on the national, European and indeed global level. For example, sales law in the CISG,122 the Consumer Sales Directive123 and in a number of Member States is based at least in part on similar principles.124 As legislative devices they are all very rigid. The revision of the Consumer Sales Directive recently failed (ie the subject was dropped almost entirely from the Consumer Rights Directive). And it is also unlikely that countries such as the Netherlands or Germany will soon update their recodification (1992) or law reform (2002), which shaped their sales law after the CISG model. Also, CISG itself—because of its success—will be difficult to change, even though it is already more than three decades old and many gaps and ambiguities have been discovered. In these circumstances, underlying principles can be helpful in ensuring the development of sales law and, where possible (see on this below), its convergence. All this can happen without undermining the sovereignty of the 119

Dworkin (n 49) 239. For the latest statement, extending the idea of integrity well beyond the law into a more general theory of value, see R Dworkin, Justice for Hedgehogs (Cambridge, MA, Belknap Press, 2011). 121 In the same sense, see Mak (n 52). 122 United Nations Convention on contracts for the international sale of goods (1980). 123 Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12. 124 See S Grundmann, ‘Consumer Law, Commercial Law, Private Law: How Can the Sales Directive and the Sales Convention Be so Similar? (2003) 14 European Business Law Review 237. 120

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democratically elected lawmaker who can retain the final say. Such a multi-level dialogue in a common European private law space could help remove unnecessary contractions. Ideally, it could even lead to a reflective equilibrium.125

(iii) Horizontal Coherence The general principles of civil law could contribute not only to the vertical coherence of the multi-level system of private law in Europe, but also to its horizontal coherence. This latter aspect is probably even more urgent. The European legislature, with its sector-specific approach, has produced, on the European level, a colourful patchwork of rather incoherent bits and pieces of private law.126 That is true, not only within specific areas of policy, such as consumer law, where, for example, general concepts such as damage and consumer are defined differently, but also among these different areas. The initial aim of the reform of the acquis was to tackle this problem.127 However, in the course of the Action Plan process the scope of the review became increasingly narrow. From the outset, the exercise had already been limited to contract law: despite efforts from scholars to demonstrate that tort and property should be included on account of the coherence objective that was said to be at the basis of the reform,128 these subjects were excluded right from the outset. Moreover, the review was soon further limited to consumer contract law.129 Then the scope was reduced from eight130 to only four Directives,131 and further still to two (and a tiny bit of a third one).132 Other large chunks of EU private law have remained entirely outside the scope of this endeavour to make European private law more coherent. Think only of the private enforcement of competition law: the Commission’s White Paper did not even refer to the acquis reform that was underway.133 These proposals for private enforcement of competition law were sparked, of course, by the Court’s case law in Courage and Manfredi. In those cases, the Court gave some very broad Directives concerning the regime. In Courage it allowed the unclean hands defence, as we saw, and in Manfredi the Court addressed 125 Cf J Rawls, A Theory of Justice, rev edn (Cambridge, MA, Belknap Press, 1999). In his theory, the equilibrium is between one’s principles and one’s judgement, and is limited to what Rawls calls the basic structure of society. Here, the equilibrium could be between the different levels of governance. 126 Cf LAD Keus, Europees privaatrecht—Een bonte lappendeken; Preadviezen, uitgebracht voor de Vereniging voor Burgerlijk Recht en de Nederlandse Vereniging voor Europees Recht (Lelystad, Vermande, 1993). 127 See Action Plan (n 27). 128 See C von Bar and U Drobnig (eds), The Interaction of Contract Law and Tort and Property Law in Europe: A Comparative Study (Munich, Sellier, 2004). 129 European Commission, First Annual Progress Report on The Common Frame of Reference COM(2005) 456. 130 European Commission, Green Paper on the Review of the Consumer Acquis COM(2007) 744. 131 Proposal for a Directive of the European Parliament and of the Council on consumer rights COM(2008) 614/3. 132 See the CRD (n 16). 133 European Commission, White Paper on Damages Actions for Breach of the EC antitrust rules COM(2008) 165.

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causation and the amount of damages (expectation damages). However, there was no sign of any attempt at articulation in terms of private law principles. Why expectation damages? Because they are contractual? But they seem to be allowed also in claims against third parties (ie other members of the cartel), which is itself already puzzling in the light of the general private law principle of privity of contract. From the perspective of legitimacy, therefore, it seems urgent also for the Court to start addressing seriously the coherence of its own rulings in the area of private law. In practical terms this means that when it invokes or implicitly applies private law principles, it should try to use the same general principle of private law (or ‘general principles of civil law’), even when it deals with private law questions in different policy areas of the Union. In other words, the same general private law principles should apply, in principle, to consumer law, passenger’s rights, commercial agency, Rome I, Brussels I, Francovich, Article 340(2) TEU (non-contractual liability of the Union), private enforcement of competition law, and the horizontal effect of market freedoms, to mention only a few examples. And if the Court finds that it should resort to different principles for different areas, it should explain why different general principles should apply to these subjects. The point here is not that coherence is the most important value that should trump all other law-making considerations, or that coherence is an unproblematic concept. The argument is rather that it is irrational for EU private law makers to strive for micro-coherence without paying any attention to the broader picture, and that different answers to the same question in different areas, without any justification, are arbitrary and therefore lacking in legitimacy.

C. Discourse and Dialogue In reality, a European court that tries to find general principles of civil law does not have to start from scratch. On the contrary, not only at the national level but increasingly also at the European level (‘European private law’) and indeed the global level (‘private law theory’), there is a sophisticated body of knowledge about fundamental questions and fundamental principles of private law. Could such expert knowledge provide legitimacy? Would a judgment by the Court of Justice of the EU directly, through its own critical assessment of legal scholarship, or indirectly, via documented opinions of its Advocates General, informed by legal scholarship, become more legitimate for that reason alone? Scholarship can be regarded as a manifestation of society’s development and sophistication (division of labour). With regard to legal scholarship, Habermas has pointed out that the comparatively high degree of rationality connected with legal institutions distinguish these from quasi-natural institutional orders, for the former incorporate

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doctrinal knowledge, that is, knowledge that has been articulated and systematized, brought to a scholarly level, and interwoven with a principled morality.134

Given this high degree of rationality, Hercules could regard himself as part of an interpretative community of experts.135 Therefore, it seems, the Court of Justice could benefit from borrowing the findings of legal scholars, and from engaging in a more explicit and reasoned debate with legal scholarship. Of course, in the Member States there are different traditions concerning the relationship between judges, legislators and academics.136 And the expectations of each of us will inevitably be influenced by our own national experiences. While a German scholar might expect the Court to follow, in principle, any existing consensus among legal scholars, an English legal scholar will much more readily accept the Court’s role as a protagonist. Similarly, for me, as a Dutchman, the best way forward seems to be through a prominent role of the Advocates General, who, assisted by their Referendars, produce well-documented and reasoned opinions which engage in an explicit debate with legal scholarship. The opinions of Advocate General Trstenjak, notably in the Audiolux case (but also in several other cases),137 are exemplary in this respect. The Court can then refer to these and cherry-pick from them without always having to engage directly with the nuances of academic debate. Clearly the debate concerning principles of law, including general principles of civil law, cannot remain restricted to legal experts alone. One reason is that any position in this debate is necessarily informed by a political background understanding of the legal system as a whole and of the place of private law in it. And that political background understanding clearly is not merely a scientific matter to be sorted out among scholars and other legal experts. In the words of Habermas: The dispute over the correct paradigmatic understanding of the legal system, a subsystem reflected in the whole of society as one of its parts, is essentially a political dispute. In a constitutional democracy, this dispute concerns all participants, and it must not be conducted only as an esoteric discourse among experts apart from the political arena. In virtue of their prerogatives and, more generally, their professional experience and knowledge, members of the judiciary and legal experts participate in this contest of interpretations in a privileged way; but they cannot use their professional authority to impose one view of the constitution on the rest of us.138

What Habermas says here concerning constitutional law applies equally, also 134 J Habermas, Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy (Cambridge, Polity Press, 1996) 80 and 114. In the German original, J Habermas, Faktizität und Geltung: Beiträge zur Diskurstheorie des Rechts und des demokratischen Rechtsstaats (Frankfurt, Suhrkamp, 1992) 106–07 and 146: ‘ein dogmatisch durchgestaltetes, d.h. artikuliertes, auf wissenschaftliches Niveau gebrachtes und mit einer prinzipiengeleiteten Moral verschränktes Wissenssystem’. 135 Ibid, 224. 136 RC van Caeneghem, Judges, Legislators & Professors; Chapters on European Legal History (Cambridge, Cambridge University Press, 1987). 137 See Case C-101/08 Audiolux (n 39) Opinion of AG Trstenjak. 138 Habermas (n 134) 395.

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in Habermas’ own view,139 to private law.140 Since a legal order is legitimate to the extent that it secures at the same time the private and public autonomy of its citizens, it is crucial, also for private law, that the addressees of the law can regard themselves as its authors.141 This does not mean, however, either for public or private law, that only direct democratic input could be the key to legitimate law-making. We should not throw out the baby with the bath water. More democracy and a more inclusive deliberative politics do not mean less (at least not in an absolute sense) scholarly input. In our complex society expert knowledge is indispensable. What is crucial, however, is that the expert knowledge at the political centre of decision-making is informed by public opinions flowing freely also from citizens at the periphery, instead of being imposed upon them from the centres of political and economic power.142 Therefore, to the extent that legal scholarship provides rational reconstructions of the legal experience of us all, and not merely of a limited section of society sharing homogeneous values and interests, it can contribute to making the discovery of new general principles of civil law more legitimate. In the cases where the Court has referred to the general principles of civil law, it has done so in a rather apodictic fashion. It is not clear what the origin of these principles was. They were not referred to as principles ‘recognised in most of the legal systems of the Member States’ (as was the unclean hands principle in Courage). Nor were they presented as a reflection of the communis opinio prevailing among legal experts. In one case (Hamilton), the Advocate General had proposed a general principle, which was acknowledged in legal scholarship, but the Court decided the case on the basis of another principle without explaining why. And in another case (Messner) the Court labelled as general, without giving any explanation, a principle (ie good faith) which has been one of the most controversial principles in the academic debate on European private law. Legal scholarship has in common with legal principles that it is not necessarily confined within national borders. They both are, or can easily become, transnational. The role of general principles in bringing coherence and convergence in the multi-level system of private law in Europe can be easily matched by the emerging European legal scholarship. Thus, the general principles of civil law, informed by transnational legal scholarship, could play an important role in the vertical dialogue between law-makers at the national, EU and global levels. European private law principles and scholarship can find each other in a common European legal space.143 This also suggests that formal distinctions between different categories of 139

Ibid. Compare also the idea, expressed by M Kumm, ‘Who Is Afraid of the Total Constitution? Constitutional Rights and Principles and the Constitutionalization of Private Law’ (2006) 7 German Law Journal 341, 359, of private law as applied constitutional law. 141 Habermas (n 134) 408–09. 142 Ibid, 380–81. 143 Compare, with regard to the general principles of EU law, Lenaerts and Gutiérrez-Fons (n 25). 140

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principles, national and European, primary and secondary law, should not be exaggerated. Just as the public opinions of Member States should be open towards each other, so too should arguments of principle not be obstructed by formal borders. This is not to say that there should be only pan-European principles (just like one single pan-European public opinion is not the solution).144 The common law traditionally has not recognised a general principle of good faith. Although that fact should not enter some formal calculus of qualified majority voting, nevertheless it does mean that the Court should think twice before claiming it to be a general principle with a pervasive mandatory role. Again, one should not be naïve. There are risks of ‘framing’ and ‘agenda setting’, for example through an exclusive focus on one single academic project, as a ‘common frame of reference’. Therefore, we should constantly and actively strive for openness, pluralism and diversity of contributions. But it would also be irrational to dismiss out of hand any insights from legal scholarship merely because it came from experts. What is needed is a critical examination of the scholarly knowledge production. And to the extent that this knowledge is biased, for example, by conservatism or captured by special interests, it can be set aside. What we need is a critical, open and continuous exchange and flow of ideas between the Court and legal academia which is as open as possible and informed as much as possible by the stakeholders at the periphery.

D. Principles and the Acquis Should the general principles of civil law be derived (by the Court, assisted by scholars) primarily or even exclusively from the acquis communautaire? At first sight this might seem like an attractive idea, especially from the perspectives of the separation of powers and the limited competences of the EU. Should not, also in Europe, the law-making powers rest as much as possible with the legislator, especially now that the democratic input from the European Parliament is on the rise? And are not general principles that remain as close as possible to the acquis the best guarantee against competence creep and an incremental reduction of national sovereignty? As we saw above, in another area (ie tax law) the Court regards the principle of fiscal neutrality as a principle of secondary EU law, ‘a fundamental principle underlying the common system of VAT established by the relevant Community legislation’, a principle that ‘was intended by the Community legislature to reflect’ the general principle of equal treatment. Thus, the principle of fiscal neutrality is a principle underlying the acquis (in the area of VAT law) and its content and nature are determined (at least in part) by the intentions of the EU legislator. Should not then, by analogy, the general principles of civil law be principles underlying the common system of civil law established by the 144 Habermas (n 134) 307 and J Habermas, Europe: The Faltering Project (Malden, Polity Press, 2009) 106.

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relevant EU legislation as intended by the EU legislator? The answer is of course ‘no’ because there is no general civil law acquis. There is no common system of civil law established by the relevant EU legislation from which legislative intent of the EU legislator concerning general principles of civil law can be derived. From the perspective of general private law, the acquis communautaire is a patchwork, whereas from the perspective of EU policy and legislation there is common market law and consumer protection law but there is no such thing as general private law with regard to which the intent of the EU legislator could be derived. The vast majority of Directives—including the Consumer Rights Directive—are based exclusively on Article 114 TFEU and its predecessors. And clearly from the aim of the approximation of laws for the establishment and functioning of the internal market and even from the aim of a high level of consumer protection (Article 114(3) TFEU), it is not possible to derive any general principles of civil law. Even the idea of general principles of the acquis in the area of private law is a contradictory notion because, as mentioned, the private law acquis is a patchwork. Indeed, the methodology that was adopted for developing ‘acquis principles’ has been criticised (rightly, in my view) for exactly this reason.145 Moreover, and most importantly, the Court clearly does not refer to acquis principles in any of the four cases that we saw. It refers to general principles of civil law, not to principles of consumer law and not even to general principles underlying the acquis communautaire in the area of private law. That would also have been pointless: what the Court needed were general principles of private law, not acquis or consumer law principles. So, in this respect the general principles of civil law that the Court refers to in Société thermale d’Eugénie-Les-Bains, Hamilton, Messner and E  Friz are quite different from the principle of fiscal neutrality. Both are principles, the former ‘general’ and the latter ‘fundamental’, both seem to be located (in part) on the level of secondary EU law, but the tax law principles are essentially acquis principles, whereas the general principles of civil law are clearly not. With regard to general principles of EU law, ie the fundamental principles that are located on the level of primary law and thus have constitutional status, a distinction is usually made as to their origin between principles deriving from the common traditions of the Member States, on the one hand, and principles deriving from the objectives of the EU on the other.146 The former could be referred to as bottom-up (inductive) and the latter as top-down (deductive) principles.147 A similar distinction could be drawn in relation to principles that are not necessarily located at the level of primary EU law. The principle of fiscal neutrality would clearly be an example of a top-down principle located at the 145 See N Jansen and R Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the ‘Principles of the Existing EC Contract Law’’ (2008) 71 Modern Law Review 505. 146 See Tridimas (n 38). 147 See Lenaerts and Gutiérrez-Fons (n 25), Metzger (n 42) and, more generally, W van Gerven, ‘Codifying European Private Law: Top Down and Bottom Up’ in S Grundmann and J Stuyck (eds), An Academic Green Paper on European Contract Law (The Hague, Kluwer Law International, 2002) 405.

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level of secondary EU law, underlying the acquis in the area of VAT law and an expression of the legislative intent of the European legislator. The general principles of civil law, at least the ones to which the Court has so far referred, are examples of bottom-up (inductive) principles that are (or should be) derived from the common private law traditions of the Member States. This is not to say that principles in the area of private law could only be bottom-up (inductive) principles deriving from common traditions and never top-down principles underlying a certain area of EU legislation. On the contrary, in analogy to principles ‘underlying the common system of VAT established by the relevant Community legislation’, the Court could develop principles underlying, for example, the protection of consumers against unfair terms. In Pénzügyi Lízing the Grand Chamber of the Court of Justice pointed out, with references to earlier cases (Océano, Mostaza Claro and Asturcom), that ‘according to settled case-law, the system of protection introduced by the Directive is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge’.148 If the Unfair Terms Directive introduced a ‘system’, and if that system is ‘based on’ a certain ‘idea’ (which can easily be assimilated to legislative intent), then it seems entirely possible, and indeed appropriate, for the Court to deduce some underlying principles. However, these would be unfair terms or (depending on its level of generality) consumer protection principles, not general principles of civil law. However, one should not draw to sharp a distinction between these two ideal types of principles. In a non-formal comparison of the private laws of the Member States, with a view to distilling bottom-up principles of civil law, the acquis should also play a role. Indeed, today’s national private law has been actively and passively shaped to a considerable extent by the acquis—actively, in the sense that Member State laws were modified as a result of EU law, most clearly as a consequence of EC Directives. Directives have to be transposed into national law and are binding as to the result to be achieved, but they leave to the national authorities the choice of form and methods (Article 288 TFEU). There were rather divergent transposition strategies and some Member States sometimes opted for supererogatory transposition.149 In Germany, for example, as a result of the Schuldrechtreform, on several subjects, what was originally European consumer law became national general private law.150 Such large-scale reforms of national law, which are triggered by EU law, are simply unintelligible without taking into account the relevant Directives. Thus, already for this reason alone the acquis has to be taken into account in any serious comparison of national 148 Case C-137/08 VB Pénzügyi Lízing Zrt. v Ferenc Schneider, Judgment of 9 November 2010, para 46. 149 W van Gerven, ‘A Common Law for Europe: The Future Meeting the Past?’ (2001) 9 European Review of Private Law 485, 491, using the term ‘spill-over effect’. 150 See eg S Grundmann, ‘Germany and the Schuldrechtsmodernisierung 2002’ (2005) 1 European Review of Contract Law 129; R Zimmermann, ‘Contract Law Reform: The German Experience’ in S Vogenauer and S Weatherill (eds), The Harmonisation of European Contract Law, Implications for European Private Laws, Business and Legal Practice (Oxford, Hart Publishing, 2006) 71.

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general principles of private law. However, the acquis has also affected national law passively in the sense that what the European legislator had already taken care of did not need to be done any more by the national legislator. In other words, in the absence of the acquis, national private law might have looked quite different. Here the (by definition hypothetical) examples are the reverse of those of the Schuldrechtsreform: in some Member States what became consumer law as a result of EC Directives could have been adopted as general private law, applicable in B2C and B2B cases, had the national legislator taken the initiative before the European legislator. Therefore, national private law to a large extent assumes the existence of the acquis and to the extent that national and EU private law are complementary, national private law is unintelligible without knowing the acquis. Indeed, the Principles of European Contract Law have been criticised for disregarding the acquis.151 Metzger is right that this may explain, in part, why they have had little influence on the Court’s case law.152 The Draft Common Frame of Reference (DCFR) was an improvement in this respect,153 although it was rightly criticised for not sufficiently integrating the acquis and the common core, but merely juxtaposing them.154

E. Principles and Common Core The fact that top-down principles, derived deductively from the acquis and its objectives, cannot do the job that the Court wants the general principles of civil law to do, does not in itself make bottom-up principles, which are derived in an inductive fashion from the laws of the Member States, legitimate. The mere fact that principles are common to the legal systems of the Member States is, of course, not a sufficient reason for these principles to be legitimate. Even a principle that exists in all Member States can be unjust, or come to be regarded as no longer just, as the historical development of the law, including private law, has shown. Conversely, the absence of the recognition of a principle in all Member States (or even the majority of them) should not always bar the recognition of it by the Court, because that absence itself might be unjust.155 The main reason why the common core nature of general principles of civil law can contribute to their legitimacy is that it removes the potentially delegitimising factor of the usurpation of national law-making prerogatives (and the erosion of national legal cultures). In the presence of truly general principles, 151 H Beale and O Lando (eds), Principles of European Contract Law, Parts I and II—Prepared by the Commission on European Contract Law (The Hague, Kluwer Law International, 2000). 152 Metzger (n 42). 153 C von Bar et al (eds), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR): Outline Edition (Munich, Sellier, 2009). 154 See H Eidenmüller, F Faust, HC Grigoleit, N Jansen, G Wagner and R Zimmermann, ‘The Common Frame of Reference for European Private Law—Policy Choices and Codification Problems’ (2008) 28 Oxford Journal of Legal Studies 659. 155 In the same sense, with regard to the general principles of EU law, see Lenaerts and GutiérrezFons (n 25).

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there is a ‘no-conflict’ situation, to borrow a term from US private international law doctrine, where it becomes immaterial whether a general principle of national law or one of EU law applies since on whatever level of law-making the principle is formally located (national, EU or global), it will always point in the same direction. The conflict between national and EU competence dissolves. The more it can be plausibly shown that a certain rule or principle belongs to the principles common to the laws of the Member States, the less the Court’s resorting to such principles undermines (in a substantive sense) the autonomy of national law makers in the area of private law—and vice versa. Indeed, to take an example from the recent case law concerning the general principles of EU law, one of the reasons why the Mangold decision has been so controversial is that most observers were surprised by it. Not many were aware, before Mangold, that a principle of non-discrimination concerning age existed.156 This is equally true for private law. From the perspective of legitimate European private law making it is crucial that the general principles of civil law genuinely represent the common core of private law in Europe. Moreover, especially when this is not self-evident, the common core character of the principle should also be demonstrated by the Court. In this respect, the case law of the Court of Justice, so far, leaves much to be desired. As we saw above, the Court simply postulates the principles without providing any evidence. That is especially troubling when it comes to principles that are clearly not common core such as, in particular, the principle of good faith. If anything, that principle has traditionally been regarded as a principle that keeps the legal traditions of the Member States divided, the civil law systems endorsing it, the common law systems rejecting it.157 (Indeed, the good faith principle is a genuine principle of civil law in this different sense of not being a principle of common law.) It is true that the acquis occasionally refers to the standard of good faith, and to that extent it has become part of the law of all Member States, but this occurs (by definition) in a limited context, in this case notably unfair terms in consumer contracts.158 On the other hand, however, the Principles of European Contract Law, the DCFR, the Feasibility Study for an optional instrument,159 and the proposed Common European Sales Law (CESL) 156 See R Herzog and L Gerken, ‘Stoppt den Europäischen Gerichtshof ’, Frankfurter Allgemeine Zeitung, 8 September 2008, who use the following phrases: ‘fabrication’, ‘pulled out of a hat’, ‘invented’. 157 See eg Bingham LJ in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433: ‘In many civil law systems, and perhaps in most legal systems outside the common law world, the law of obligations recognises and enforces an overriding principle that in making and carrying out contracts parties should act in good faith. … English law has, characteristically, committed itself to no such overriding principle but has developed piecemeal solutions in response to demonstrated problems of unfairness.’ See also Lord Falconer, opening speech to the European Contract Law Conference (London, 26 September 2005): ‘You could say, that the English common law of contract is now a world-wide commodity. It has become so because it is a system that people like. … It is clear and built upon well-founded principles, such as ... the absence of any general duty of good faith.’ 158 Art 3(1) of Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29 (‘Unfair Terms Directive’). 159 Commission Expert Group on European Contract Law, Feasibility Study for a future instrument in European Contract Law, 3 May 2011

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contain a general good faith duty,160 albeit with varying intensity and roles, which has led to a lively debate.161 Therefore, Weatherill is completely right that the Court had something to explain here.162 One research project that has been going on for more than a decade is actually called the Common Core of European Private Law. This project was inspired by the famous Cornell project.163 That latter research project, in turn, aimed at establishing general principles of civilised nations in the sense of Article 38 (1)(c) of the Statute of the International Court of Justice.164 Although the common core project does not focus on formulating principles (its aim is rather the ‘mapping’ of existing similarities and differences) it nevertheless has yielded a host of comparative information in the fields of contract, tort and property law, including an entire volume on good faith in European contract law.165 It should be noted, however, that comparative law does not necessarily lead only to common core findings. On the contrary, it has been shown time and again that legal systems with sometimes literally the same civil code provisions come to very different outcomes.166 Even the common core project itself has led to many findings of different resolution of the same hypothetical case. For this reason, Kennedy recently referred to it as the ‘“Contradiction within the Core” project’.167 There is something else to be learned from more than a century of experience in private law comparison, which can be of crucial importance when it comes to the legitimacy of any legal comparison conducted with a view to law-making, ie the importance of methodological issues. For example, in functional comparison (the dominant method, for obvious reasons, in applied and pragmatic comparative studies) the way the functional question is formulated is crucial (and normatively charged) because of its framing and agenda setting implications. This does not delegitimise the functional method per se. But it does require an awareness of where the normative issues occur. 160 See Art 1:201 PECL, Art III-1:103 DCFR, Art 8 of the Feasibility Study, and Art 2 of the proposed CESL. 161 See O Lando, ‘Is Good Faith an Over-arching General Clause in the Principles of European Contract Law?’ in M Andenas et al (eds), Liber amicorum Guido Alpa; Private Law beyond the National Systems (London, British Institute of International and Comparative Law, 2007) 601; and H Beale, ‘General Clauses and Specific Rules in the Principles of European Contract Law: The “Good Faith” Clause’ in S Grundmann and D Mazeaud (eds), General Clauses and Standards in European Contract Law (The Hague, Kluwer Law International, 2006) 205. 162 See Weatherill (n 3). 163 See M Bussani and U Mattei, ‘The Common Core Approach to European Private Law’ (1997) 3 Columbia Journal of European Law 339. 164 See RB Schlesinger, ‘Research on the General Principles of Law Recognized by Civilized Nations’ (1957) 51 American Journal of International Law 734; and RB Schlesinger (ed), Formation of Contracts: A Study of the Common Core of Legal Systems (Dobbs Ferry NY, Oceana Publications,1968). 165 R Zimmermann and S Whittaker, Good Faith in European Contract Law (Cambridge, Cambridge University Press, 2000). 166 See R Sacco, ‘Legal Formants: A Dynamic Approach to Comparative Law’—parts I and II (1991) 39 American Journal of Comparative Law 1 and 343. 167 D Kennedy, ‘A Transnational Genealogy of Proportionality in Private Law’ in R Brownsword, H-W Micklitz, L Niglia, and S Weatherill (eds), The Foundations of European Private Law (Oxford, Hart Publishing, 2011) 214.

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F. Principles and Model Rules Do the general principles of civil law become more legitimate when they are based on, or developed in a dialectical relationship to, the principles that have been formulated in the context of several academic projects? In the area of contract law, these projects include the Unidroit principles of international commercial contracts,168 the Principles of European Contract Law169 and the Principes contractuels communs.170 These principles are generally as concrete as the ordinary rules of contract law, as they can be found in the civil codes of the Member States. Indeed, the first provision of the Principles of European Contract Law explicitly says that ‘These Principles are intended to be applied as general rules of contract law in the European Union.’171 It is not surprising, therefore, that in the follow-up projects, ie the DCFR172 and the recent Feasibility Study that provided the basis for the European Commission’s CESL proposal,173 which were also drawn up by academics, this time at the request of (and, in the latter case, in collaboration with) the European Commission,174 there was a terminological shift from principles towards (model) rules. The first version of the DCFR contained, in addition to the model rules, a long list of underlying principles which was reduced, a year later, to four.175 The feasibility study only states three such general principles: freedom of contract, good faith and fair dealing, and informality.176 In the Commission’s proposal for a CESL, informality is substituted with co-operation.177 As mentioned earlier, it does not seem very useful to draw sharp distinctions between rules and principles. It is more a matter of degree: it seems more appropriate to reserve the term of principles for the more general and abstract norms which often underlie, in the sense that they can explain, sets of more concrete rules.178 Thus, the question remains whether, with a view to legitimacy, 168

Unidroit Principles of International Commercial Contracts Rome (Rome, Unidroit, 2010). See above n 151. 170 B Fauvarque-Cosson and D Mazeaud (eds), Principes contractuels communs (Paris, Société de Législation Comparée, 2008). 171 Art 1:101(1) PECL (emphasis added). 172 See above n 153. 173 See above n 159. 174 See Commission Decision of 26 April 2010 setting up the Expert Group on a Common Frame of Reference in the area of European contract law [2010] OJ L105/109. 175 For a critical assessment of this remarkable development, which represents a marked ideological shift towards conservatism, see MW Hesselink, ‘If You Don’t Like Our Principles We Have Others. On Core Values and Underlying Principles in European Private Law: A Critical Discussion of the new “Principles” Section in the Draft Common Frame of Reference’ in R Brownsword, H-W Micklitz, L Niglia, and S Weatherill (eds), The Foundations of European Private Law (Oxford, Hart Publishing, 2011) 59. 176 Arts 7–9. 177 Art 3 CESL. 178 Cf Habermas (n 134) 310 (‘higher-level norms’). Contrast Dworkin (n 49) chs 2 and 3, and R Alexy, Theorie der Grundrechte (Frankfurt, Suhrkamp, 1994) 77 (‘Jede Norm ist entweder eine Regel oder ein Prinzip’). 169

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it makes a difference whether the Court of Justice borrows concrete model rules from these academic projects or merely from the few very general and abstract principles that some of these projects have formulated. In practical terms, the Court seems not to need both. Indeed, some of the Court’s Advocates General tend to assimilate the model rules in the DCFR with the general principles of civil law.179 On the other hand, most of the general principles of civil law that the Court has discovered so far are actually quite general: the binding force of contract, discharge by performance, good faith and unjustified enrichment.180 And especially in the context of the interpretation of Directives, it is likely that the Court will often need principles of an intermediate level of abstraction. Micklitz has argued that the Court should not resort to the model rules in the DCFR for inspiration: The short reference [to the general principles of civil law] in Hamilton opens up a new horizon of research. What kind of principles are meant here? Certainly not the ones the DCFR is presenting since they do not contain principles but solutions.181

In contrast, Basedow has argued that [w]hat is needed for private law are principles of a lower degree of abstraction and generality’ and that the CFR ‘contains a large number of principles of medium abstraction which could prove to be highly useful for the interpretation and application of existing Union instruments.182

From the point of view of legitimacy there does not seem to be any reason why it should be more acceptable for the Court to develop more abstract rather than more concrete general principles of civil law. What does seem to raise more important legitimacy issues, however, is the question from which projects the Court should borrow. For all their similarities and substantive continuity there are also differences between these sets of principles and model rules. Which of them should the Court resort to for inspiration? Should it consistently limit itself to one text, eg the one that has had the financial and political support of the European Commission, granting it a de facto monopoly?183 Or should it adopt a more pluralistic approach? As long as none of these texts have received any 179 See eg Case C-412/06 Hamilton (n 15) Opinion of AG Maduro. In Case C-334/00 Fonderie Officine Meccaniche Tacconi SpA v Heinrich Wagner Sinto Maschinenfabrik GmbH Fonderie Officine Meccaniche Tacconi SpA v Heinrich Wagner Sinto Maschinenfabrik GmbH [2002] ECR I-7357, Opinion of AG Geelhoed, the Advocate General referred to Art 2.15 of the Unidroit principles when conducting autonomous interpretation of the Brussels Convention (now ‘Brussels I Regulation’). 180 The exception is the principle of ex nunc effect of the withdrawal from an investment partnership referred to in Case C-215/08 E Friz (n 20). 181 H-W Micklitz, ‘Failure or Ideological Preconceptions—Thoughts on Two Grand Projects: The European Constitution and the European Civil Code’ EUI Working Papers 2010/4, 20. 182 Basedow (n 42) 464 and 469, respectively. See also KP Purnhagen, ‘Principles of European Private or Civil Law? A Reminder of The Symbiotic Relationship Between the ECJ and the DCFR in a Pluralistic European Private Law’, forthcoming in European Law Journal (available at SSRN: http://ssrn.com/abstract=1652039), who advocates a symbiotic relationship between the Court of Justice and the DCFR. 183 Critical of this idea, on economic grounds, is K Riesenhuber, ‘A Competitive Approach to EU Contract Law’ (2011) 7 European Review of Contract Law 115.

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additional legitimacy, in particular democratic legitimacy through the adoption after substantive discussions and amendments by the Commission, Council and Parliament, as an official legislator’s toolbox, there does not seem to be any good reason why the Court should focus its attention primarily, or even exclusively, on only one of these texts. On the contrary, on the one hand, it could find convincing arguments in different texts, while, on the other hand, where all texts are in agreement on a certain point this may provide prima facie evidence (but not more than that—think only of the risk of path dependence) of the existence of a general principle of civil law. At least for practical reasons, the presumption of progress, it may be a good idea to start the analysis from the latest version.

G. Principles and Values Many fundamental principles could also be regarded as underlying values. Does this mean that principles are legitimate simply because of their value? Such a direct legitimation of principles as values is certainly conceivable but it comes at a price. The price is the collapse of the distinction between law and politics. If we derive the legitimacy of principles, as sources of rights and obligations, directly from their societal value, then the question of what rights and duties we have comes to depend directly on our common conception of the good life. This leads to a perfectionist notion of the law, which communitarians will be happy with, but which is incompatible with a liberal notion of the rule of law. It is for this reason that Habermas emphasises the importance of the distinction between principles-oriented adjudication and value-oriented adjudication.184 And he criticises the Bundesverfassungsgericht185 and Alexy who regards principles as optimising prescriptions (Optimierungsgebote),186 for failing to respect this distinction, which leads to ‘value jurisprudence’ (Wertejudikatur) and the ‘tyranny of values’ (Tyrannei der Werte).187 As legal norms, principles are, like moral rules, modelled after obligatory norms of action—and not after attractive goods.188 In other words, values belong to people whereas only principles 184

Habermas (n 134) 209. See famously the Lüth ruling, BVerfG, 15 January 1956, BVerfGE 7, 198; NJW 1958, 257: ‘Ebenso richtig ist aber, daß das Grundgesetz, das keine wertneutrale Ordnung sein will, in seinem Grundrechtsabschnitt auch eine objektive Wertordnung aufgerichtet hat und daß gerade hierin eine prinzipielle Verstärkung der Geltungskraft der Grundrechte zum Ausdruck kommt. Dieses Wertsystem das seinen Mittelpunkt in der innerhalb der sozialen Gemeinschaft sich frei entfaltenden menschlichen Persönlichkeit und ihrer Würde findet, muß als verfassungsrechtliche Grundentscheidung für alle Bereiche des Rechts gelten; Gesetzgebung, Verwaltung und Rechtsprechung empfangen von ihm Richtlinien und Impulse. So beeinflußt es selbstverständlich auch das bürgerliche Recht; keine bürgerlichrechtliche Vorschrift darf in Widerspruch zu ihm stehen, jede muß in seinem Geiste ausgelegt werden’ (references omitted, emphasis added). 186 Alexy (n 178) ch 3. 187 C Schmitt, Die Tyrannei der Werte, 3rd edn (Berlin, Duncker and Homblot, 1960) 41: ‘Wer Wert sagt, will geltend machen und durchsetzen.’ 188 Alexy (n 178) especially 143ff, claims that rational argumentation (as opposed to mere subjective decision making) is also possible in relation to the balancing of values. 185

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belong to the law. Therefore, the category of principles should be reserved for higher-order and more abstract norms than ordinary rules (although a rigid or categorical distinction in the Dworkinian or Alexian sense seems artificial and unhelpful) and should be distinguished conceptually from values, even though there will often be important substantive overlaps (it would be very surprising if we attributed little value to our principles). Unlike the general principles of EU law, the general principles of civil law that we have seen so far do not look very much like values. Nevertheless, the issue is relevant for private law as well. Very often, certain values are attributed to private law as their underlying values. Autonomy is often presented as the principal value underlying private law. Others argue that private law is based on both autonomy and solidarity, and that much of the development of private law in the twentieth century can be explained in terms of the tension, balancing or compromise between these two values. Still others point to equality, be it formal or substantive. Dignity is also often mentioned to explain certain parts of private law. Finally, some people, especially certain scholars in law and economics, regard efficiency as the basic value underlying private law. Article I-1:102 DCFR attributes interpretative and gap-filling roles to the underlying principles. However, the underlying principles that the DCFR refers to are ‘freedom, security, justice and efficiency’, which in reality are values rather than principles.189 Also the proposed CESL provides for an interpretative and gap-filling role for ‘underlying principles’.190 In contrast to the DCFR, however, the CESL proposal does not itself list or codify any underlying principles. This suggests that the CESL intends the underlying principles as higher-level norms rather than as values. The CESL also contains a section called ‘general principles’. However, although these principles are indeed principles, and not mere values, and could also be regarded as ‘underlying principles’, it does not seem that the principles in the sense of Article 4 of the CESL are meant to be limited to these three. The proposal for a CESL rightly does not list any underlying values or does it refer to them more generically.

H. Principles and Objectives Having said this, the reality today is that the European Union is, at least in part, a teleological and instrumental legal order.191 It is true that the Court of Justice has held since the 1970s that respect for fundamental rights forms an integral part of the general principles of law protected by the Court of Justice,192 189

See Hesselink (n 175).  Art 4(1) and (2) of the CESL (Interpretation). 191 See eg CU Schmid, ‘The Thesis of the Instrumentalisation of Private Law by the EU in a Nutshell’ in C Joerges and T Ralli (eds), European Constitutionalism without Private Law, Private Law without Democracy, ARENA Report No 3/11, RECON Report No 14 (Oslo, Arena, 2011) 11. 192 Case 11/70 Internationale Handelsgesellschaft mbH v Einfuhr- und Vorratsstelle für Getreide und Futtermittel [1970] ECR 1125. 190

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that this has been codified in the Maastricht Treaty, and that the Union also recognises the fundamental rights set out in the Charter (Article 6 TEU).193 The fact remains that the Union is also characterised—maybe still primarily—by its objectives, both general (‘The Union’s aim is to promote peace, its values and the well-being of its peoples’),194 and more specific, in particular of course ‘the aim of establishing or ensuring the functioning of the internal market’ (Article 26 TFEU), but also, for example, ‘to promote the interests of consumers and to ensure a high level of consumer protection’ (Article 169(1) TFEU).195 The objective of a high level of consumer protection inevitably leads to teleological reasoning. As a clear example, see Mostaza Claro, where the Court held as follows: [A]s the aim of the Directive is to strengthen consumer protection, it constitutes, according to Article 3(1)(t) EC, a measure which is essential to the accomplishment of the tasks entrusted to the Community and, in particular, to raising the standard of living and the quality of life in its territory. The nature and importance of the public interest underlying the protection which the Directive confers on consumers justify, moreover, the national court being required to assess of its own motion whether a contractual term is unfair, compensating in this way for the imbalance which exists between the consumer and the seller or supplier.196

However, as we saw, the objective of a high level of consumer protection cannot solve private law disputes. It provides no answer to the question of what rights consumers have. A similar problem can be seen in the context of the horizontal effect of market freedoms. Market freedoms attach to individuals but have been given to them (instrumentally) with a view to attaining public objectives (ie market building). The instrumental nature of these freedoms naturally leads to a balancing of interests. This explains why Hartkamp, Basedow and others have argued for including private law interests into the balancing exercise.197 However, Schepel has pointed out how difficult it is for private interests to compete with—or,

193 Art 6(1) TEU: ‘The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union  …’. Art 6(3) TEU: ‘Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union’s law.’ 194 Art 3(1) TEU. 195 The Charter of Fundamental Rights of the EU also provides, in Art 38, that ‘Union policies shall ensure a high level of consumer protection’, suggesting that a high level of consumer protection is a right (under Art 52(2) Charter), or (more likely, but no less problematic) a principle (under Art 52(5) Charter), recognised by the EU. 196 Case C-168/05 Mostaza Claro v Centro Movil Milenium SL [2006] ECR I-10421, paras 37–38 (references omitted). 197 J Basedow, ‘Mangold, Audiolux und die allgemeine Grundsätze des europäischen Privatrechts’ in S Grundmann, B Haar, H Merkt et al (eds), Unternehmen, Markt und Verantwortung. Festschrift für Klaus J Hopt zum 70 Geburtstag (Berlin, De Gruyter, 2010) 40, explicitly advocates that the Court resort to Interessenjurisprudenz.

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rather, as—public interests to be balanced against market objectives: ‘the total market is a scary thing’.198 The recent introduction of the category of general principles of civil law seems to represent a potentially important shift in the Court’s reasoning in relation to EU private law. It suggests a commitment to reasoning from principle rather than a balancing of (and choosing between) competing interests. Obviously, the difference between reasoning from principles and rights, on the one hand, and choosing to promote certain values and interests, on the other, should not be reified: it does not exist ‘out there’. Nor is it a matter of black and white, rather a question of less or more. But a more principles-oriented approach to European private law should certainly be welcomed. The fact that the European legal order is, in part, purposive does not imply that for that reason any attempt at principled reasoning should be abandoned. On the contrary, any reasoned inroads into the Union’s teleology are more than welcome. Private law rules which express a general concern for individuals in a vulnerable position are desirable, indeed indispensable, if we take the private autonomy of individuals seriously. However, the aim of a high level of consumer protection is a rather blunt objective in this context, which can easily go against the substantive autonomy of individuals, including vulnerable persons. Therefore, a shift from a dogmatic attachment to the Treaty objective of a high level of consumer protection, especially when the consumer protection (and thus the citizens) becomes instrumental to the aim of a properly functioning internal market,199 to a principled private law reasoning that takes the substantive autonomy (in the sense of capabilities) of individuals seriously, should be welcomed as an important mark of progress for European private law.

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See Schepel (n 81). The Explanatory Memorandum in the Commission’s proposal for a Consumer Rights Directive explained, on p 2, that ‘[t]he objective of the proposal is to contribute to the better functioning of the business-to-consumer internal market by enhancing consumer confidence in the internal market and reducing business reluctance to trade cross-border.’ See also the CRD (n 16) Recital 65. 199

8 The Court of Justice’s Principle of Effectiveness and its Unforeseeable Impact on Private Law Relationships PETER ROTT

I. Introduction The principle of effectiveness is a legal concept that the Court of Justice of the EU has developed in order to ensure that EU law is implemented not only by words but actually takes effect in the legal orders of the Member States. It does not deal with the implementation of written EU law in a narrow sense, but rather with the legal environment consisting of national procedural and substantive law. In other words, the Court has developed an instrument to scrutinise rules of national procedural and substantive law that may have been adopted or developed with or without the context of EU law but that nevertheless impact on implemented EU law. This instrument is not only used in state–citizen relationships but also in European private law. It may lead to the non-application or reinterpretation of provisions of national procedural or substantive law and therefore defeat the expectations that motivated the actions of the private parties involved. Thus, the principle of effectiveness is in tension with the principle of legal certainty that is of high importance in national legal orders as well as EU law. This chapter presents the principle of effectiveness and its application by the Court of Justice in private law relationships and discusses its justification at the constitutional level, ie in the relationship between the Court and the Member States, and its justification to directly interfere with private law relationships The main emphasis of the chapter is thereby on the balance between effectiveness and legal certainty, ie protection from unexpected legal effects of private parties that act in good faith.

II. The Principle of Effectiveness Generally speaking, Member States of the EU enjoy procedural autonomy. In

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the absence of specific EU legislation, Member States are free to organise their administrative procedures and court systems according to their national preferences. As Advocate General Jacobs stated in van Schijndel und van Veen: [T]he assumption underlying the system established by the Treaties, however, is that the need for effectiveness and proper judicial protection can normally be satisfied by national remedies enforced through the national courts in accordance with national procedural rules. … The underlying premise is that States based on the rule of law will organize their national legal systems in such a way as to ensure proper application of the law and adequate legal protection for their subjects. It is therefore only exceptionally that the Court will need to intervene to ensure that effect is given to Community law.1

Nevertheless, the Court of Justice has emphasised for many years that the Member States are not entirely free in determining the way in which citizens can pursue their rights as conferred by EU law. National provisions, be they of substantive or procedural law, have come under the scrutiny of the principle of effectiveness. The Court first developed this principle in 1976, in the Rewe and Comet cases.2 In its negative form, the principle of effectiveness prohibits Member States from framing the conditions for the enforcement of individual rights in such a way that makes it virtually impossible or excessively difficult to obtain reparation.3 In its positive form, which is perhaps of even greater importance today, the principle of effectiveness was first enshrined in the anti-discrimination directives of the 1970s, namely in Article 6 of the Directive relating to the application of the principle of equal pay for men and women,4 and in Article 6 of the Directive on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions.5 This positive form has been codified in numerous secondary law instruments, including EU consumer law. For example, under 1 Joined Cases C-430/93 and 431/93 Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705, Opinion of AG Jacobs, paras 29ff. 2 Case 33/76 Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland [1976] ECR 1989, para 5; Case 45/76 Comet BV v Produktschap voor Siergewassen [1976] ECR 2043, paras 11–18. 3 Case C-261/95 Rosalba Palmisani v Istituto nazionale della previdenza sociale (INPS) [1997] ECR I-4025, para 27, with further references. 4 Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women [1975] OJ L45/19, on which see Case 109/88 Handels- og Kontorfunktionærernes Forbund I Danmark v Dansk Arbeitsgiverforening for Danfoss [1989] ECR 3199, para 14; Directive 75/117/EEC was later replaced by Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L204/23. 5 Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L39/40 (‘The Equal Treatment Directive’), on which see eg Case 14/83 Sabine von Colson and Elisabeth Kamann v Land Nordrhein-Westfalen [1984] ECR 1891, paras 18 and 22–23, confirmed by Case C-271/91 M Helen Marshall v Southampton and South West Hampshire Area Health Authority [1993] ECR I-4367, paras 23ff.

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Article 7(1) of the Unfair Contract Terms Directive,6 Member States shall ensure that, in the interests of consumers and of competitors, adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers. More recent Directives refer to ‘sanctions’ or ‘penalties’. Under Article 11(1) of the Directive on the distance marketing of financial services,7 Member States shall provide for appropriate sanctions in the event of the supplier’s failure to comply with national provisions adopted pursuant to this Directive. According to Article 11(3), these penalties must be effective, proportional and dissuasive. Importantly, the Court has applied the principle of effectiveness not only to procedural law but also to substantive law. Advocate General Ruiz-Jarabo Colomer has spoken of the ‘case-law of the Court, which requires the national courts to provide a certain level of procedural and substantive protection in accordance with the principles of effectiveness and equivalence’.8 In spite of the leeway granted through the open-ended wording of these formulas, the Court of Justice has demonstrated its willingness to exercise control over their implementation. Since its first appearance in the 1970s, the principle of effectiveness has been considered in several hundred of the Court’s cases.9

A. Areas of Application with Relevance for Private Law Relationships Most legal issues concerning (the lack of) effectiveness have first arisen in public law relationships, and many of them in the area of tax law. Remarkably, however, the Court has often transferred its findings to private law relationships in later case law. Examples are overly short prescription periods, national rules related to the burden of proof and restrictions on available evidence, and importantly, the availability of remedies. In the meantime, we can find a number of private law cases in which the Court has applied or at least considered the principle of effectiveness. In the area of consumer law, one could point at unfair contract terms cases such as Cofidis,10 Mostaza Claro11 and Pannon,12 and at doorstep 6 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29. 7 Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services [2002] OJ L271/16. 8 Case C-396/07 Mirja Juuri v Fazer Amica Oy [2008] ECR I-8883, Opinion of AG Ruiz-Jarabo Colomer, para 56. See also Joined Cases C-52/99 and C-53/99 Office national des pensions (ONP) v Gioconda Camarotto and Giuseppina Vignone [2001] ECR I-1395, Opinion of AG Alber, para 38. See also A Metzger, ‘Unanwendbarkeit von Ausschlussfristen bei ihrem Verstoß gegen den Effektivitätsgrundsatz des Gemeinschaftsrechts’ [2004] Zeitschrift für Europäisches Privatrecht (ZEuP) 154, 157. 9 For an overview of the wealth of the case law of the Court of Justice of the EU on the principle of effectiveness, see P Rott, Effektivität des Verbraucherrechtschutzes: Rahmenfestlegungen des Gemeinschaftsrechts (2006) available at http://download.ble.de/04HS033.pdf. 10 Case C-473/00 Cofidis SA v Jean-Louis Fredout [2002] ECR I-10875. 11 Case C-168/05 Elisa María Mostaza Claro v Centro Móvil Milenium SL [2006] ECR I-10421. 12 Case C-243/08 Pannon GSM Zrt v Erzsébet Sustikné Györfi [2009] ECR I-4713.

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selling cases such as Schulte13 and Crailsheimer Volksbank,14 or at the distance selling case of Pia Messner.15 In employment law, the principle of effectiveness has featured particularly prominently in anti-discrimination cases such as von Colson and Kamann16 or Levez.17 In competition law, the cases of Courage18 and Manfredi19 have attracted much attention. The legal effect of the principle of effectiveness is that a minimum standard of effectiveness is established by EU law and this must be determined autonomously by interpreting EU law.20 In the event that national law breaches the principle of effectiveness, the obstructing national provision has to be abolished or amended in order to bring national law in line with EU law with effect for the future.21 More interesting for this chapter, however, is the impact of the decisions of the Court of Justice on pending cases, or, more broadly speaking, on existing private law relationships. Here, we have to distinguish the substantive law governing private law relationships from the procedural law allowing or preventing the pursuit of rights that are conferred on citizens by EU law. The reason for this distinction lies in the fact that, due to general principles of EU law, EU law takes different effects in these two areas.

B. Impact on Substantive Law According to the established case law of the Court of Justice, the impact of EU law on private law relationships depends on the status of the provisions of EU law, namely their forming part of primary law or coming in the form of a Regulation or Directive. Primary EU law contains few provisions that govern private law relationships, the primary examples being those concerning unequal payment of men and women (Article 157(1) TFEU) and unlawful restrictions of competition (Article 101 TFEU). These provisions have direct effect on private law relationships, ie they are directly applicable and must be applied by the national courts. The same would apply to substantive rules of private law in regulations in the terms of Article 288 TFEU. Regulations are, however, rare in 13 Case C-350/03 Elisabeth Schulte, Wolfgang Schulte v Deutsche Bausparkasse Badenia AG [2005] ECR I-9215. 14 Case C-229/04 Crailsheimer Volksbank eG v Klaus Conrads, Frank Schulzke and Petra SchulzkeLösche, Joachim Nitschke [2005] ECR I-9273. For more details, see P Rott, ‘Linked Contracts and Doorstep Selling: Case Note on Cases C-350/03–Schulte and C-229/04–Crailsheimer Volksbank’ (2006) 1 Yearbook of Consumer Law 403. 15 Case C-489/07 Pia Messner v Firma Stefan Krüger [2009] ECR I-7315. 16 Case 14/83 von Colson (n 5). 17 Case C-326/96 BS Levez v TH Jennings (Harlow Pools) Ltd [1998] ECR I-7835. 18 Case C-453/99 Courage Ltd v Bernard Crehan [2001] ECR I-6297. 19 Joined Cases C-295/04 to C-298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA and others [2006] ECR I-6619. 20 See only Joined Cases C-222/05 to C-225/05 J Van der Weerd, Maatschap Van der Bijl, JW Schoonhoven and others v Minister van Landbouw, Natuur en Voedselkwaliteit [2007] ECR I-4233, Opinion AG Maduro, para 17. 21 Case 104/86 Commission v Italy [1988] ECR 1799, para 12.

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the area of European private law.22 In contrast, according to the established case law of the Court, EU Directives, which form the bulk of European private law, have no horizontal direct effect on private law relationships, the leading case being that of Faccini Dori.23 Nevertheless, judgments of the Court of Justice can impact on private law relationships due to the principle of interpretation in the light of EU law. Under this principle, national courts are required to interpret their national law in the light of the wording and purpose of EU law. In later judgments, including the judgment in the doorstep selling case of Schulte, the Court has clarified that the national court is required, when applying the provisions of domestic law adopted for the purpose of transposing obligations laid down by a directive, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the Directive.24 The principle of interpretation in the light of EU law immediately applies in cases where the principle of effectiveness is codified in the Directive in question. An example is the aforementioned case of von Colson and Kamann that was decided under Article 6 of the Equal Treatment Directive.25 The Court has, however, also applied the concept of interpretation in the light of EU law to those cases in which the principle of effectiveness was not codified in a specific provision of a certain directive.26 In this context the quote from the Schulte judgment is of particular relevance since the lack of effectiveness stems from a legal environment that may be entirely unrelated to, for example, the implementation of a specific directive. Thus, the two cases of the codified and non-codified principle of effectiveness shall not be distinguished in the following. Through the instrument of interpretation in the light of EU law the legal position of private parties may change in the following three ways: (i) unexpected obligations may arise, (iii) unexpected remedies may be made available, and (iii) expected remedies may be made unavailable. All these alterations in comparison with what was expected may create new liability or risk for one

22 Notable examples are the regulations that have been adopted in the area of travel law. See Regulation (EC) No 261/2004 of the European Parliament and of the Council establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights [2004] OJ L46/1; Regulation (EC) No 1371/2007 of the European Parliament and of the Council on rail passengers’ rights and obligations [2007] OJ L315/14; Regulation (EU) No 1177/2010 of the European Parliament and of the Council concerning the rights of passengers when travelling by sea and inland waterway [2010] OJ L334/1; Regulation (EU) No  181/2011 of the European Parliament and of the Council concerning the rights of passengers in bus and coach transport [2011] OJ L55/1. 23 Case C-91/92 Paola Faccini Dori v Recreb Srl [1994] ECR 3325. 24 Case C-350/03 Schulte (n 13) para 71 (emphasis added). See also Case C-212/04 Konstantinos Adeneler and others v Ellinikos Organismos Galaktos (ELOG) [2006] ECR I-6057, para 108. 25 Above n 5. 26 See eg Case C-327/00 Santex SpA v Unità Socio Sanitaria Locale n 42 di Pavia [2003] ECR I-1877, para 62; Case C-241/06 Lämmerzahl GmbH v Freie Hansestadt Bremen [2007] ECR I-8415, para 63; Case C-364/07 Spyridon Vassilakis and others v Dimos Kerkyras [2008] ECR I-90, para 5.

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of the parties of a private law relationship, which, if known in advance, would have affected the bargain.

(i) Unexpected Legal Obligations Unexpected legal obligations are not an unusual phenomenon in EU law, as interpreted by the Court of Justice, although they have often been criticised as being in breach of the principle of legal certainty. For example, implementing Faccini Dori, Italian courts derived a right to withdraw from a doorstep selling contract from ‘general principles’ of Italian contract law.27 Similarly, following the Heininger decision of the Court,28 the German courts found a right to withdraw from a secured credit contract that was concluded in a doorstep situation, which seemed to have been explicitly excluded by national law.29

(ii) Unexpected Remedies In the same way, national courts by implementing case law of the Court of Justice related to the principle of effectiveness may create remedies in situations where none had been available before. An example may again be the German doorstep selling law, where prior to the judgments of the Court of Justice in Crailsheimer Volksbank, the Bundesgerichtshof (BGH, the Federal Court of Justice) had held that, in cases where an independent intermediary had initiated the contract between a consumer and trader at the former’s premises, the doorstep selling law only applied if the trader had been aware or should have been aware of the doorstep situation.30 The Court of Justice of the EU, however, concluded that the Doorstep Selling Directive did not contain such a subjective element but merely required the existence of the doorstep selling situation.31 Following this judgment, the BGH adjusted its case law with retroactive effect, allowing consumers to withdraw from contracts concluded through intermediaries as described.32 Another example is the case of Courage, where English law did not allow a party to an illegal agreement to claim damages from the other party. Following this rule, Bernard Crehan, a publican who was the victim of anti-competitive practices by the Courage brewery, could not have claimed damages for the loss he suffered from a beer tie that was in breach of EU competition law.33 Using 27 See Tribunale di Roma, 17 October 1994, Contratti 1996, 13; Corte di Cassazione, 20 March 1996, Giustizia Civile 1996 I 2970. 28 Case C-481/99 Georg Heininger and Helga Heininger v Bayerische Hypo- und Vereinsbank AG [2001] ECR I-9945. 29 See BGH, 9 April 2002, Der Betrieb (DB) 2002, 1262. 30 See eg BGH, 12 November 2002, NJW 2003, 424, 425. 31 Case C-229/04 Crailsheimer Volksbank (n 14) paras 42ff. 32 See BGH, 12 December 2005, NJW 2006, 497; BGH, 14 February 2006, NJW 2006, 1340; BGH, 25 April 2006, Zeitschrift für Wirtschaftrecht (ZIP) 2006, 940. 33 Case C-453/99 Courage (n 18). See also N Reich, ‘The “Courage” Doctrine: Encouraging or Discouraging Compensation for Antitrust Damages (2005) 42 Common Market Law Review 35.

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the nullity of any agreements or decisions prohibited pursuant to Article 101(2) TFEU (then Article 85(2) EEC) as a starting point, the Court held that The full effectiveness of Article 85 of the Treaty and, in particular, the practical effect of the prohibition laid down in Article 85(1) would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.34

Therefore, the Court decided that Article 85 EEC precluded a rule of national law under which a party to a contract liable to restrict or distort competition within the meaning of that provision is barred from claiming damages for loss caused by performance of that contract on the sole ground that the claimant is a party to that contract. In the case at hand, the Court’s judgment, however, was of little relevance in the end. The English High Court denied on factual grounds any claim of injury by Mr Crehan.35

(iii) Unexpected Lack of Remedies Equally, the case law of the Court of Justice may lead to the non-application of remedies that had appeared to be available when the contract was concluded. In Pia Messner36 the Court interpreted the Distance Selling Directive37 with a view to the consequences of the consumer’s withdrawal from the contract. The question at hand was whether or not the trader was entitled to claim compensation for the use that the consumer had made of the product prior to her withdrawal from the contract, a claim which was technically allowed under German law. The Court held that ‘the functionality and efficacy of the right of withdrawal would be impaired if the consumer were obliged to pay compensation simply as a result of having examined and tested the goods acquired under a distance contract’.38 Therefore, only a national provision that requires a consumer to pay fair compensation in the case where he or she has made use of the goods acquired under a distance contract beyond examining and testing is in line with the directive. Moreover, the Court of Justice held that even in that latter case, the amount of compensation to be paid by the consumer could not ‘adversely affect the functionality and efficacy of the right of withdrawal’.39 Whilst that particular issue does not seem to have since been litigated in German courts, the BGH followed the judgment of the Court of Justice in Pia Messner in a similar situation, this time relating to compensation for deterioration of a water bed that had been tested (or used) for three nights, by interpreting German law restric-

34

Case C-453/99 Courage (n 18) para 26. B Crehan v Interpreneuer Pub Co & Brewman Group Ltd [2003] EWHC 1510 (Ch). 36 Case C-489/07 Pia Messner (n 15). 37 Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts [1997] OJ L144/52. 38 Case C-489/07 Pia Messner (n 15) para 24. 39 Ibid, para 27. 35

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tively. As a result, and in accordance with the views of the Court of Justice, the BGH rejected any claim for damages for a three-night test.40

C. Impact on Procedural Law The primary field of the principle of effectiveness has been procedural law, and of course procedural law has great influence on the enforceability of private law remedies. One example that has reached the Court of Justice more than once is the ex officio application of consumer law by courts. Especially in cases where consumers, perhaps for financial reason, refrain from taking legal representation, ex officio control of standard terms may be the decisive factor in protecting consumer rights. The issue was first discussed in cases regarding unfair contract terms such as Océano Grupo,41 Mostaza Claro42 and Pannon,43 where the Court confirmed the necessity of ex officio control. The findings were then also applied in consumer credit law, as in Rampion and Godard,44 and doorstep selling law, as in Martín Martín.45 Procedural rules, such as the obligation of a court to consider EU law ex officio, or provisions related to the admissibility of court action or evidence, formally and firstly concern the relationship between the state and the citizens. Thus, in these cases the principle of effectiveness, regardless whether it has been codified or not, can have direct effect in the sense that the procedural restriction has to be set aside and must not be applied in the private law case in question.46

D. Unexpected Liability or Risk Changes of the law in its practical application, namely those taking place in the case law due to a reinterpretation of national law in the light of the principle of effectiveness, constitute the risk of new instances of liability for a party to a private law relationship. This is obvious where unforeseen obligations arise, such as the obligation to inform the consumer of their right to withdraw. Depending on the particularities of the national legal system,47 failure to inform the consumer of this right may lead not only to an extension of the withdrawal period but also to damages, a successful collective action by consumer organi40

See BGH, 3 November 2010, NJW 2011, 56. Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial v Murciano Quintero [2000] ECR I-4941. 42 Case C-168/05 Mostaza Claro (n 11). 43 Case C-243/08 Pannon (n 12). 44 Case C-429/05 Max Rampion, Marie-Jeanne Rampion, née Godard v Franfinance SA, K par K SAS [2007] ECR I-8017, para 65. 45 Case C-227/08 Eva Martín Martín v EDP Editores, SL [2009] ECR I-11939, paras 27ff. 46 Case C-261/95 Palmisani (n 3) para 30. 47 See eg P Rott, ‘Effective Enforcement and Different Enforcement Cultures in Europe’ in T  Wilhelmsson, E Paunio, and A Pohjolainen (eds), Private Law and the Many Cultures of Europe (The Hague, Kluwer Law International, 2007) 305. 41

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sations, administrative fines or even criminal sanctions.48 Criminal sanctions, however, normally require fault, which may be absent in the case of unforeseen legal obligations.49 As with the requirement of fault, damage claims arising from interpretation in light of the relevant directive have been a point of controversy in the literature.50 In contrast, the unexpected lack of remedies does not result in a retrospective breach of the law but rather in a change of the economic position that must have formed part of the initial calculation of the price of the product or service. For example, the existence or non-existence of a claim for compensation of the use of goods sold via distance selling, as discussed in Pia Messner, certainly influences, within the limitations set by market conditions, the price of those goods. Unexpected remedies granted to the other party, and also the removal of substantive or procedural obstacles to enforcement of the other party’s rights, presuppose a breach of duty in the first place. Nevertheless, the wrongdoer might have acted differently had he or she been aware of the law as interpreted with hindsight. Proponents of law and economics argue that the law can be used to deter certain behaviours—liability, for instance, can be used in this way. Remedies, such as damage claims, are classified as primary costs. Potential wrongdoers are assumed to include such primary costs into their analysis of the usefulness of their activities and in particular into their decisions related to compliance or non-compliance with their duties.51 This assumption is also shared by the Court of Justice in its assessment of the effectiveness of sanction systems. In Berlusconi and others, Advocate General Kokott summarised the position of EU law regarding the effectiveness of sanctions as follows: A penalty is dissuasive where it prevents an individual from infringing the objectives pursued and rules laid down by Community law. What is decisive in this regard is not only the nature and level of the penalty but also the likelihood of its being imposed. Anyone who commits an infringement must fear that the penalty will in fact be imposed on him.52

Changes to the enforcement system in a broad sense, including remedies, prescription periods, and the procedural setting, therefore change the basis of the initial decision to comply with the law. It is this aspect that appears to have

48 In France, for example, consumer law is enforced by means of criminal law. See Case C-361/89 Criminal proceedings against Patrice Di Pinto [1991] ECR I-1189. 49 See case C-168/95 Criminal Proceedings against Luciano Arcaro [1996] ECR I-4705, para 42. 50 See HD Jarass, ‘Richtlinienkonforme bzw. EG-Rechtskonforme Auslegung, insbesondere im Bereich des Umweltschutzes’ in HD Jarass and LF Neumann (eds), Umweltschutz und Europäische Gemeinschaften (Berlin, Springer, 1992) 35, 46ff. Cf M Nettesheim, ‘Auslegung und Fortbildung nationalen Rechts im Lichte des Gemeinschaftsrechts’ (1994) 119 Archiv des öffentlichen Rechts 261, 276, according to whom this method of interpretation does not create greater uncertainty than other methods of interpretation. 51 See eg G Calabresi, The Costs of Accidents, 5th edn (New Haven, Yale University Press, 1977) 26 and 68ff; H Eidenmüller, Effizienz als Rechtsprinip, 2nd edn (Tübingen, Mohr Siebeck, 1998) 34ff. 52 Joined Cases C-387/02, C-391/02, and C-403/02 Silvio Berlusconi, Sergio Adelchi, Marcello Dell’Utri [2005] ECR I-3565, Opinion of AG Kokott, para 89.

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led some proponents of law and economics to argue that the design of an efficient legal order should have been a task for legislators, not courts.53 To sum up, the various effects of the application of the principle of effectiveness to pending cases create unexpected risk or liability, awareness of which might have changed the initial bargaining of a contract and/or the initial decision to comply with contractual or legal duties.

III. Justification of the Principle of Effectiveness A. The Constitutional Level—The Legal Basis At the constitutional level, two relationships are of interest: first, the relationship between the EU legislature and the Court of Justice of the EU; and second, the relationship between the Court and the Member States.

(i) The Relationship between the Court and the EU Legislator With regard to the relationship between the EU legislature and the Court of Justice54 it should be noted that the Court can only apply the principle of effectiveness where the EU legislator has refrained from regulating the same issue in an act of EU secondary law. Thus, where the EU legislator has decided to establish an ineffective solution, the Court cannot correct this decision. For example, in the case of Heininger the Court held that a consumer could not exercise a right of withdrawal that he or she was unaware of, and that it was the trader’s responsibility to inform the consumer of this right. Therefore, it was not in accordance with the directive to limit the right of withdrawal in time if the trader failed to inform the consumer accordingly.55 This view deserves support, in particular when taking account of the fact that doorstep sellers target particularly vulnerable consumers, such as elderly persons. The EU legislation in the Consumer Rights Directive introduced a maximum withdrawal period of one year.56 While it restricts the ability of the consumer to exercise the right of withdrawal conferred by the Directive, this provision cannot be overthrown by the Court using the principle of effectiveness. At the same time, the Court of Justice is not meant to act as a quasi-legisla53 See eg Eidenmüller (n 51) 486. Cf C Ott and H-B Schäfer, ‘Die Ökonomische Analyse des Rechts—Irrweg oder Chance wissenschaftlicher Rechtserkenntnis?’ (1988) 43 Juristenzeitung 213, 214. 54 For detailed analysis, see F Snyder, ‘The Effectiveness of European Community Law: Institutions, Processes, Tools and Techniques’ (1993) 56 Modern Law Review 19. 55 Case C-481/99 Heininger (n 28) para 45. 56 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights [2011] OJ L304/64.

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tor.57 A dispute relating to the extent to which the Court should be allowed to define the standards of effectiveness arose in Grundig Italiana,58 a tax law case. Whilst the Court would usually declare a national provision as being in breach of the principle of effectiveness, it went one step further in this case. The Italian legislator had shortened prescription periods for applications for tax refunds and allowed for a transitional period of only 90 days. This, the Court held, was so short that it rendered virtually useless the right to a refund; conversely, the Court also held that a period of at least six months appeared to be reasonable.59 In Cash & Carry, a subsequent case, Advocate General Ruiz-Jarabo Colomer described this approach as a situation where the Court of Justice had ‘assume[d] duties of the legislature’, which led to ‘ arbitrariness and a misunderstanding of the preliminary ruling procedure’.60

(ii) The Relationship between the Court and Member States The relationship between the EU and Member States is, amongst others things, governed by the principles of subsidiarity and proportionality. These principles have significance in both procedural and substantive law. In procedural law, the starting point is the principle of procedural autonomy, as explained at the outset of this chapter. In substantive law, the principles of subsidiarity and proportionality require the EU to use its competence only insofar as it is necessary to reach the intended result, which implies that there may be no need, and therefore no competence, to regulate all the details of a certain area of law. Nevertheless, as explained above, the EU has developed the principle of effectiveness and has applied it to issues of procedural as well as substantive law. The Court of Justice found the legal basis for this approach in the principle of co-operation as enshrined in Article 4(3) TFEU (ex Article 10 EC).61 In the case of rights that are conferred on citizens through Directives, Article 288(3) TFEU (ex Article 249(3) EC) has been applied, according to which a Directive ‘shall be binding, as to the result to be achieved, upon each Member State to which it is addressed’.62 In principle, the Court’s competence reaches as far as is necessary to ensure that Member States live up to their duties under Articles 4(3) and 288(3) TFEU, and it is restricted to the same extent as the EU legislator’s competence, which is constrained by the principles of subsidiarity and proportionality.

57 This has been criticised by G Borges, ‘AGB-Kontrolle durch den EuGH’ [2001] Neue Juristische Wochenschrift 2061. 58 Case C-255/00 Grundig Italiana SpA v Ministero delle Finanze [2002] ECR I-8003. 59 Ibid, paras 40ff. 60 Case C-30/02 Recheio Cash & Carry SA v Fazenda Pública/Registro Nacional de Pessoas Colectivas [2004] ECR I-6051, Opinion of AG Ruiz-Jarabo Colomer, para 35. 61 Case 33/76 Rewe-Zentralfinanz (n 2) para 5; Case 45/76 Comet (n 2) paras 11–18. See also more recently, Case C-470/04 N v Inspecteur van de Belasingdienst Oost/kantoor Almelo [2006] ECR I-7409, para 59, and Case C-432/05 Unibet (London) Ltd and others v Justitiekansler [2007] ECR I-2271, para 38. 62 Case 14/83 von Colson (n 5) para 15.

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B. Substantive Legitimacy of Interference with Private Law Relationship (i) Preliminary Considerations The question of the substantive legitimacy of the Court’s activities in relation to the principle of effectiveness is of significance for several reasons. Most importantly, the principle has a kind of retroactive effect in that it disregards the expectations of the parties at the time the contract was concluded and at the time of the court action. This issue has also arisen in other situations where national courts had to interpret national law in the light of EU law and alter their comparatively orthodox understandings of domestic provisions. The situation may, however, have graver consequences in the effectiveness cases since the rules that the Court of Justice applies in such cases are less visible to the parties that enter into a contract than legislative provisions of EU law that the national legislator had failed to implement correctly and in a timely fashion. Thus, one might conclude that the balance between the need for correct implementation and application of EU law on the one hand, and legal certainty on the other, is more likely to indicate the prevalence of the latter. This imbalance was apparent in earlier cases where the Court of Justice held that the compliance of national law with the principle of effectiveness was compensated by the fact that in these cases the Member States could be seen to have abused their procedural autonomy. Member States had, for example, raised taxes in breach of EU law and subsequently refused to return the unlawfully collected money by relying on limitation of actions.63 Or, after they had been advised that in principle they had to return unlawfully raised taxes, they attempted to resist the obligations to repay by asking the applicant to prove his losses, and in particular, that he, as a trader, had not been able to pass those losses onto his customers, which is often impossible to prove.64 In private law, an example of such an abusive approach is the employment law case of Levez.65 In that case, the employer, TH Jennings (Harlow Pools) Ltd, provided Mrs Levez with inaccurate information about the level of remuneration received by employees of the opposite sex performing similar work. When she finally discovered the dishonesty, the employer relied on prescription. The Court held that if national law allowed this, the employer would be able to deprive his employee of the means provided for by the Directive of enforcing the principle of equal pay before the courts, which would be manifestly incompatible with the principle of effectiveness. In consumer law, one could mention the case of Cofidis, where banks used unfair contract terms and subsequently wished to rely on prescription. The Court held that the Unfair

63

Case C-255/00 Grundig Italiana (n 58). See eg Case 199/82 Amministrazione delle Finanze dello Stato v Societa San Giorgio SpA [1983] ECR 3595, para 14. 65 Case C-326/96 Levez (n 17). 64

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Contract Terms Directive66 precluded a national provision which, in proceedings brought by a seller or supplier against a consumer, prohibits the national court, on expiry of a limitation period, from finding, of its own motion or following a plea raised by the consumer, that a term of the contract is unfair: To deprive consumers of the benefit of that protection, sellers or suppliers would merely have to wait until the expiry of the time-limit fixed by the national legislature before seeking enforcement of the unfair terms they would continue to use in contracts.67

However, the case law of the Court of Justice has developed beyond cases of abuse of rights. As mentioned in the beginning of this chapter, the positive side of the principle of effectiveness has also gained momentum in EU law, and it now requires Member States to take active steps in order to achieve the result envisaged by EU law. Thus, the Court has applied the principle of effectiveness in situations where Member States appeared to be unwilling fully to endorse the aims of EU law and to act accordingly. Examples include the lack of effective sanctions for the breach of EU law, as implemented in the national law of Ireland in relation to certain waste management operations,68 and of France in relation to the failure to control fishing activities.69 When considering the substantive legitimacy of the Court’s interference with private law relationships it is again useful to distinguish the different effects that the principle of effectiveness may have on private law relationships.

(ii) Obstacles to Access to Justice and Unexpected Remedies The case of Cofidis provides an example of a case in which the Court of Justice attacked an obstacle to access to justice. When looking at the balance of interests of the parties involved—ie the consumer’s right not to be bound by unfair terms versus the bank’s interest in voiding access to justice after a given period of time (here, two years)—it would seem that a basic consideration of EU law would obtain, namely that the wrongdoer should not be rewarded.70 Arguably, the bank could include the improbability of being taken to court in its economic calculations of credit costs, but these expectations do not appear to be legitimate and therefore worthy of protection. Where an obligation or a prohibition was clearly visible in the law, and the likelihood of its enforcement merely appeared to be small at the time of its breach, it seems justified to grant greater weight to effective enforcement than to the wrongdoer’s reliance on the probability of getting away with the breach. In the same way, there is no legitimate reason to see why a trader should benefit from consumers’ lack of legal knowledge, and be thereby protected by a prohibition addressed to the court against taking into account ex officio the issue of unfairness of contract terms. 66

Above n 6. Case C-326/96 Levez (n 17) paras 31ff. Case C-494/01 Commission v Ireland [2005] ECR I-3331, para 61. 69 Case C-304/02 Commission v France [2005] ECR I-6263, paras 37ff. 70 See Case 199/82 San Giorgio (n 64) Opinion of AG Mancini, 3627–28. 67 68

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Similar considerations apply where the victim of unlawful behaviour, that is to say, behaviour that breaches EU law, is granted an unexpected remedy by a national court following a decision of the Court of Justice in the light of the principle of effectiveness. Provided that the obligation or prohibition was clearly visible in the law, the wrongdoer should not be rewarded for relying on the unavailability of a remedy against the breach. The case of Heininger provides an example. Doorstep credit sellers had failed to inform consumers about their right of withdrawal and subsequently relied on the expiry of that right after one year. With regard to credit institutions, the Court rightly argued that ‘if those institutions choose such methods in order to market their services, they can easily safeguard both the interests of consumers and their own requirements as to legal certainty by complying with their duty to supply consumers with information’.71

(iii) The Non-availability of Remedies and Unexpected Obligations Particularly difficult cases are those where remedies that appeared to be available according to national law are struck out by courts following a Court of Justice ruling or, even more controversially, where obligations of private parties are determined with retrospective effect. Indeed, legal certainty seems to be unreasonably affected where obligations have been unforeseeable at the time of action or where traders’ calculations of cost are thwarted by unforeseeable reinterpretation of the law. It should, however, be noted at this point that the content of national law and its consequences for particular private parties are not always clear-cut. Often, the law on a given issue will be considered unclear among lawyers of that jurisdiction. In such a situation, the expectation of a private party that has decided to rely on an interpretation which is most favourable to him or her seems to deserve less protection than cases where the existence of additional obligations was truly unforeseeable. Other aspects to consider here, which may tip the balance towards the application of the principle of effectiveness, can include some of the overarching objectives of EU law. This is particularly evident in the aforementioned primary law effectiveness cases related to the principle of equal pay for men and women and to the functioning of competition, but it generally applies to the EU objective of market integration. The function of EU internal market law is not only to find a balance between the interests of the parties of a given private relationship, but also to contribute to the functioning of the internal market by ensuring that EU law is effectively enforced.72 This is obvious, for example, from Article 7(1) of the Unfair Contract Terms Directive, which shows that the aim of the Directive is not only consumer protection but also the removal of obstacles to competition.73 Overall, the rights or interests of the party that is negatively affected by non71

Case C-481/99 Heininger (n 28) para 47. See H-W Micklitz, ‘The New German Sales Law—Changing Patterns on the Regulation of Product Quality’ (2002) 25 Journal of Consumer Policy 379, 384–85. 73 See also Case C-473/00 Cofidis (n 10) para 32. 72

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effective national law and the general objectives of EU law (eg competition, market integration or a particular social order) may well outweigh the protection of (perhaps uncritical) belief in the wording of national law. The balance needs to be struck by taking into account the circumstances of each individual case.

C. The Impact on Private Relationships in Practice When considering the impact of the principle of effectiveness in private law relationships, it is important to analyse the cases in which that impact has actually arisen.

(i) Case Numbers To begin with, it should be pointed out that the Court of Justice has so far demonstrated significant restraint in interfering with national rules on the ground of effectiveness. Although the principle of effectiveness has been considered in hundreds of cases referred to the Court of Justice, in the vast majority of those cases the Court accepted the national rules, or left it to the national court to assess whether the national provision in question rendered the enforcement of rights conferred upon individuals by EU law impossible, or made enforcement of such rights excessively difficult.74 The cases described in this chapter illustrate exceptions rather than the rule.

(ii) The Consideration of Legal Certainty or Uncertainty The Court has been conscious of constraints that stem from the principle of legal certainty. In fact, legal certainty has often been weighed against effectiveness— an example of a line of cases where this kind of balancing has occurred centres on the consequences of the national principle of res iudicata.75 An important aspect related to the concern for legal certainty is good faith. In certain situations, good faith can aid in achieving the result commanded by legal certainty. In Oelmühle Hamburg, a case concerning the repayment of a subsidy that was unduly granted for the processing of oil seeds harvested and processed within the Community, the Court accepted that the benefiting companies were allowed to use the defence to unjust enrichment claims since they had acted in good faith (having been defrauded themselves) and had already passed on the benefits to third parties from whom they could no longer recover monies.76 The Court clarified that, where the law was unclear, no protection needed to 74 See eg the overview of case law on limitation periods in Case C-88/99 Roquette Frères SA v Direction des services fiscaux du Pas-de-Calais [2000] ECR I-10465, Opinion of AG Ruiz-Jarabo Colomer, para 30. 75 See eg Case C-453/00 Kühne & Heitz NV v Productschap voor Pluimvee en Eieren [2004] ECR I-837, para 24 and Case C-2/06 Willy Kempter AG v Hauptzollamt Hamburg-Jonas [2008] ECR I-411, para 37. 76 Case C-298/96 Oelmühle Hamburg AG and Jb Schmidt Söhne GmbH & Co KG v Bundesanstalt für Landwirtschaft und Ernährung [1998] ECR I-4767, para 76.

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be granted to the party. For example, in the case of Peter,77 Mr Johannes Peter, a dairy farmer, had exceeded his milk quota, hoping that he would be granted an additional quota following an appeal which he had lodged for that purpose. When his appeal failed he applied for a remission of the levy, claiming that owing to his precarious financial position the payment would put at risk the existence of his holding. The Court held that under the principle of effectiveness such a remission could not be granted, stressing that ‘the producer, by delivering milk in excess of the quantity allocated to him, took a risk of which he was aware from the outset and the consequences of which he must bear’.78

(iii) The Role of the National Courts Finally, and perhaps most importantly, in the vast majority of private law cases (except those that find their cause in directly effective primary EU law)79 the principle of effectiveness is channelled through the principle of interpretation in light of the relevant Directive. Thus, the case law of the Court of Justice of the EU will only take immediate effect in a pending case if the national law can be interpreted in light of the principle of effectiveness, as outlined by the Court. In its established case law on the interpretation of national law in the light of directives, the Court always mentions that this obligation rests on national courts only ‘so far as possible’.80 What this means is that EU law does not require national courts to apply contra legem interpretation,81 which would be equivalent to a horizontal direct effect through the back door. This poses severe restrictions on the impact of a judgment of the Court of Justice laying down the consequences of the principle of effectiveness, in particular where that judgment establishes (retrospective) obligations that had not been recognisable at the relevant time, or where it sets aside remedies that appeared to exist. The extent to which an interpretation of national law is possible given the relevant Directive surely depends on the methods of interpretation that are available at the national level. And whilst German civil courts, for example, have been fairly inventive in the past in their attempts to bring German law in line with EU law, the courts in other Member States may rely more heavily on the wording of an act of parliament, thereby ruling out the impact of the Court of Justice’s decision in a pending case. As mentioned, the German courts have gone far in both finding obligations (eg to inform about a right of withdrawal) and developing remedies in order to implement judgments of the Court of Justice. For example, in the case law following the Heininger decision, the BGH narrowed the scope of the meaning

77

Case C-290/91 Johannes Peter v Hauptzollamt Regensburg [1993] ECR I-2981. Ibid, para 15. 79 In these cases, however, the Court of Justice itself may include the protection of legal certainty in its considerations as mentioned above, at C.2. 80 See, for example, the quote from the Court’s judgment in Schulte (n 24). 81 Case C-212/04 Adeneler (n 24) para 110. 78

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of §  5(2) of the (old) Doorstep Selling Act82 in order to ensure that the right to withdrawal was retained in cases where the doorstep contract was a secured consumer credit contract. The court argued that the legislator had wanted to implement the Doorstep Selling Directive83 correctly, and that it could not be assumed that it had taken the resulting breach of this Directive into account when it drafted the contents of the Doorstep Selling Act.84 In the aftermath of the Quelle decision of the Court of Justice of the EU,85 the BGH in a similar case went even further and instead of restricting itself to interpretation, actually developed the law in such a way so as to comply with the interpretation of the Consumer Sales Directive laid down by the Court of Justice.86 It should, however, be mentioned that the BGH always considered the issue of legal certainty. In the line of cases following the Heininger judgment, the BGH held, amongst other things, that doorstep sellers’ reliance on the apparent meaning of the law did not deserve protection since the proper interpretation of §  5(2) of the (old) Doorstep Selling Act had been a subject of ongoing controversy.87 In Quelle the BGH claimed that the reinterpretation of German sales law was ‘within the framework of foreseeable development’. According to the court, the unrestricted application of the provision in question, §  439 of the German Civil Code, could not be regarded as certain because the compliance of that provision with EU law had been questioned from the outset.88 The principle of effectiveness is obviously more likely to have an impact on private law relationships in a legal system where a vast number of authors scrutinise the implementation of EU law in national law, with usually a wide variety of opinions being submitted, than in a system where courts stay close to the wording of a national provision as explained in the explanatory memorandum to the act or regulation. Generally speaking, however, the awareness of the European origin of a vast number of national provisions has increased dramatically in all EU Member States in recent years, thus making it more difficult to plead complete ignorance of a possibly unfavourable interpretation of national law in the light of the principle of effectiveness.89 82 Gesetz über den Widerruf von Haustürgeschäften und ähnlichen Geschäften of 16 January 1986, Federal Gazette 1986 I 122. 83 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. 84 See BGH, 9 April 2002, NJW 2002, 1881, 1882, with further references to the debate in the literature and judicature. 85 Case C-404/06 Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände [2008] ECR I-2685. 86 See BGH, 26 April 2008, NJW  2009, 427. Also, Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/52. 87 See BGH, 9 April 2002, Der Betrieb 2002, 1262. 88 See BGH, 26 November 2008, NJW  2009, 427. 89 See already G Winter, ‘Direktwirkung von EG-Richtlinien’ [1991] Deutsches Verwaltungsblatt (DVBl) 657, 665. Cf H-J Papier, ‘Direkte Wirkung von Richtlinien der EG im Umwelt- und Technikrecht’ [1993] Deutsches Verwaltungsblatt (DVBl) 809, 811.

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IV. Conclusion The principle of effectiveness is necessary for and complementary to the procedural autonomy of the Member States and their freedom to regulate the legal environment of implemented EU law. It can affect private law relationships primarily by setting aside obstacles to the enforcement of the law by a victim of a breach of EU law. In these cases, the principle of effectiveness may defeat the expectations of a private party as regards non-enforcement, or, in other words, in not being sanctioned for breach. However, such expectations can hardly be classified as ‘legitimate’ and worthy of legal protection. Moreover, an impact on private law relationships may occur in the form of unexpected obligations or unexpected non-availability of remedies, a result which may be in conflict with the principle of legal certainty. In these cases, the impact will, however, be mitigated twice: first, the Court of Justice will consider legal certainty as a limitation on the principle of effectiveness; and second, national courts will consider legal certainty again as a limitation to the possible interpretation of national law in light of the relevant directive. Thus, unexpected obligations or unexpected non-availability of remedies will only be allowed to arise in cases where the correctness of the national implementation of EU law has already been contested. In such cases, traders may be expected to be aware of the risk they take when complying with the law as it seems to stand (and which is more advantageous to them). If the risk of a less favourable interpretation of national law then materialises following clarification of the requirements of EU law by the Court of Justice of the European Union, then their overly optimistic expectations seem to deserve less protection than the protected interests of their contracting partners, or victims of a tort. With all these limitations in place, the principle of effectiveness should be regarded as a valuable instrument to achieve effective legal protection even in private law relationships.

9 The Constitutional Dimension of Private Law Liability Rules in the EU DOROTA LECZYKIEWICZ

I. The Function and Nature of Liability Rules It is a misconception that EU law is not interested in private law relationships. In fact, many aspects of economic integration involve recognition and regulation of relationships, which, looking from the perspective of the classical division into public and private law, we would be inclined to treat as ‘private’. Contractual relationships are a necessary ingredient of commerce and are the legal expression of market transactions. Employment contracts provide labour, one of the factors of production. Relationships between competitors and trading partners affect conditions on the market for both the competing traders and consumers. If these paradigmatic ‘private’ relationships are components of the EU market,1 it is not surprising that EU law intrudes deeply into defining the corresponding rights and duties of the parties in those relationships.2 Equally important seems to be a related issue of what happens when these relationships break down. EU law is thus interested in preventing a future breakdown of such relationships by imposing additional obligations on the parties.3 Finally, it may be interested in providing redress to those whose rights have been violated and punish those who, despite the best efforts of EU law, have failed to perform to the standard which best serves the common good.4 The involvement of EU law at the ‘liability’ stage of the relationship signifies 1 For example, Recital 2 in Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12 (‘Consumer Sales Directive’) points out that ‘free movement of goods concerns not only transactions by persons acting in the course of a business but also transactions by private individuals’. 2 See eg the Consumer Sales Directive, Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12; Council Directive 85/374 of 25 July 1985 on the approximation of laws concerning liability for defective products [1985] OJ L210/29 (‘Product Liability Directive’), Directive 2011/83/EU of the European Parliament and the Council of 25 October 2011 on consumer rights [2011] OJ L304/64 (‘Consumer Rights Directive’). 3 For example, by imposing a duty to inform or a right of withdrawal. 4 See eg the Consumer Sales Directive, the Product Liability Directive, Council Directive 90/314/ EEC of 13 June 1990 on package travel, package holidays and package tours [1990] OJ L158/59 (‘Package Travel Directive’) and Council Directive 2004/113/EC of 13 December 2004 implementing

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an interest of EU law in a post-breakdown situation, where the parties are already in a dispute. These disputes often take the form of judicial proceedings, although they can also be played out in other contexts, such as arbitration proceedings, out-of-court settlement negotiations and other forms of alternative dispute resolution. Yet it is probably an assumption of any legal system that liability rules will be primarily used by courts. In the context of judicial proceedings, a twoparty relationship between the claimant and the defendant becomes a three-party relationship, the third party being the judge. The judicial party in this relationship also has legally prescribed duties and powers. While it is the rules of civil procedure which take the lead in regulating duties and powers of courts vis-àvis the other parties in the proceedings, rules of liability also play a significant role—their verbal expression, manner of development and degree of precision impact on such issues as the scope of judicial discretionary power and the ability of courts to create law by concretising already existing rules. Apart from acknowledging the presence of a third party (ie the court), the other consequence of focusing on liability rules is the necessity to explore the relationship between primary and secondary duties. The imposition of liability leads to the creation of a secondary duty, eg a duty to compensate, but is in itself justified by the defendant’s breach of a primary duty, eg a duty not to cause harm by negligent conduct. A breach of a primary duty is not a straightforward issue. What behaviour is incompatible with a given duty and what behaviour could still be regarded as falling within the parameters of the duty are questions with which judges struggle.5 An issue which impacts upon these assessments is that of the content of the duty, which often involves complex interpretational endeavours.6 There may be doubts as to whether the range of persons bearing the duty includes the defendant, whether the claimant is a beneficiary of the duty or, in other words, whether the defendant’s duty is correlated to a right vested in the claimant. The defendant’s duty may be, after all, general and owed to the public at large. National liability regimes cannot escape these questions and it will be my argument in this chapter that for constitutional reasons EU law should also address them, regardless of whether the remedy provided in the event of breach and the resulting imposition of liability originate in EU or domestic law.7 The constitutional dimension of private law liability rules is most obviously related the principle of equal treatment between men and women in the access to and supply of goods and services [2004] OJ L373/37. 5 In English law, breach of duty in the tort of negligence, for example, involves a complex assessment of a range of factors, including foreseeability of damage (the level of risk), the gravity of damage and the cost of precautions. See Bolton v Stone [1951] AC 850; Overseas Tankship (UK) Ltd v The Miller Steamship Co (The Wagon Mound (No 2)) [1967] 1 AC 617. P Cane, Atiyah’s Accidents, Compensation and the Law, 7th edn (New York, Cambridge University Press, 2006) 36–53. 6 See eg Art 6 of the Product Liability Directive. The content of the producer’s duty is defined by reference to the concept of defectiveness, open to judicial interpretation. For the English interpretation of the standard of liability under the Product Liability Directive, see A v National Blood Authority [2001] 3 All ER 289. More on this point, S Whittaker, Liability for Products: English Law, French Law, and European Harmonisation (Oxford, Oxford University Press, 2005) 468–88. 7 T Eilmansberger, ‘The Relationship between Rights and Remedies in EC Law: In Search of

The Constitutional Dimension of Private Law Liability Rules in the EU 201 to the concern for the protection of private autonomy and the need to ensure that its restriction is properly justified. Because of issues of legal certainty this concern gains particular importance where the rules of private law liability are developed judicially, as is the case in the EU law context where, as it seems at present, the only likely source of general private law liability rules can be the case law of the Court of Justice.8

II. The Substantive Influence of EU Law on Private Law Liability Before I look more directly at the constitutional dimension of private law liability rules in the EU, it is first necessary to establish what substantive influence EU law has on private law liability. This influence can be divided according to the source of the intervention into the legislative and the judicial. Among the legislative instances of influence, first of all, it is necessary to mention the areas where the Union has introduced its own liability regimes. The Consumer Sales Directive, the Product Liability Directive, and arguably also the Package Travel Directive, lay down rules concerning the types of remedies and the conditions under which those have to be made available to consumers.9 The Directive on equal treatment of men and women in the access and supply of goods and services goes equally far in regulating liability.10 It explicitly prescribes liability in damages as the remedial response to the employer’s failure to apply the principle of equal the Missing Link’ (2004) 41 Common Market Law Review 1199; M Ruffert, ‘Rights and Remedies in European Community Law: A Comparative View’ (1997) 34 Common Market Law Review 307. 8 The first mature proposal for a European Civil Code, the Draft Common Frame of Reference (DCFR), included Book VI on non-contractual liability for damage. See C von Bar and E Clive (eds), Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR), vol 4 (Oxford, Oxford University Press, 2010). However, this part of the DCFR was not taken forward by the Commission and its Expert Group on the Common Frame of Reference. Commission’s Proposal of 11 October 2011 for a Regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final, which emerged from this process, also includes only provisions relating to the contract law of sale and the purely incidental issues of compensation (in the case of failure to comply with pre-contractual information duties and in the situation where the contract has been avoided because of a mistake, fraud, threats or unfair exploitation and the other party ‘knew or could be expected to have known of the relevant circumstances’). For more on this, see D Leczykiewicz, ‘“Where Angels Fear to Tread”: The EU Law of Remedies and Codification of European Private Law’ (2012) 8 European Review of Contract Law 47, 73. 9 The Consumer Sales Directive lays down the following remedies: repair or replacement of goods which are not in conformity with the contract of sale, in the first instance, and reduction in price or the rescission of the contract, in the second instance (see Art 3 of the Directive). The Product Liability Directive entitles persons injured by a defect in a product to claim compensation from producers and importers, and in certain circumstances also against the suppliers (see Arts 1 and 3 of the Directive). The Package Travel Directive requires the Member States to ensure that the organiser and the retailer of the package travel are liable for damage resulting for the consumer from the failure to perform or the improper performance of the contract (Art 5 of the Directive). 10 Directive 2004/113/EC (n 4) Art 8.

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treatment. The Directive on the enforcement of intellectual property rights also includes a provision which obliges the Member States to ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement.11

The legislative regulation of liability in consumer, gender equality and intellectual property law is not, however, exhaustive. It is the case law of the Court of Justice which controls or had initially controlled such issues as the precise consequences of exercising particular rights guaranteed by Directives or the level of compensation. For example, the consequences of the exercise by a consumer of the right of withdrawal guaranteed by a number of consumer Directives12 have been regulated by the Court of Justice through a number of preliminary ruling judgments.13 It is the Court which determined that only the direct cost of returning the goods can be charged to the consumer, who can nevertheless be additionally asked to pay for the use of goods, but only when his use was incompatible with ‘the principles of civil law’.14 The case law of the Court of Justice has now been codified in Article 14 of the Consumer Rights Directive, with the exception that the consumer is never liable for the diminished value of the goods (eg arising from use of the goods during the withdrawal period) if the trader has failed to provide notice of the right of withdrawal.15 The case law of the Court of Justice also regulates the level of compensation to which 11 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004] OJ L195/16, Art 13(1). 12 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, and Directive 97/7/ EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts [1997] OJ L144/19, Art 6, now both repealed and replaced by the Consumer Rights Directive (n 2) Art 14; Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis [1994] OJ L280/83, Art 5; Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC [2008] OJ L133/66, Art 14. 13 Case C-423/97 Travel Vac SL v Manuel José Antelm Sanchis [1999] ECR I-2195; Case C-350/03 Elisabeth Schulte and Wolfgang Schulte v Deutsche Bausparkasse Badenia AG [2005] ECR I-9215; Case C-229/04 Crailsheimer Volksbank eG v Klaus Conrads, Frank Schulzke and Petra SchulzkeLösche, Joachim Nitschke [2005] ECR I-9273; Case C-205/07 Lodewijk Gysbrechts and Santurel Inter BVBA [2008] ECR I-9947; Case C-489/07 Pia Messner v Firma Stefan Krüger [2009] ECR I-7315; Case C-511/08 Handelsgesellschaft Heinrich Heine GmbH v Verbraucherzentrale Nordrhein-Westfalen eV, Judgment of 15 April 2010; Case C-215/08 E  Friz GmbH v Carsten von der Heyden, Judgment of 15 April 2010. 14 Case C-489/07 Pia Messner (n 13) and Case C-350/03 Schulte (n 13). In Schulte the Court held that consumers could be asked to pay the value of the use of goods, but they should be protected by national law from negative consequences of the materialisation of the risk which they could have prevented had they been informed about the right of withdrawal. The Court did not explain what kind of risks it had in mind. Reich suggests that these might include the loss of rental income or the loss of property value. N Reich, ‘Protection of Consumers’ Economic Interests by EC Contract Law—Some Follow-up Remarks’ (2006) 28 Sydney Law Review 37, 45. 15 Art 14(2) of the Consumer Rights Directive. More on this point, see Leczykiewicz, above n 8.

The Constitutional Dimension of Private Law Liability Rules in the EU 203 victims of discriminatory acts are entitled,16 even where private law liability is not explicitly required by EU law.17 Due to a principle, which in the context of equal treatment is expressed both legislatively and judicially, the remedies chosen by the Member States have to satisfy the requirement of effective judicial protection or of an effective and dissuasive sanction.18 The need to ensure that the chosen remedy is effective allows the Court to demand that defendants are liable for the whole value of the loss and that their liability is not restricted by the condition of fault.19 Competition law is the area in which the substantive involvement of EU law in private law liability has been in its entirety the consequence of the case law of the Court of Justice, rather than legislation.20 Article 101 TFEU states merely that all agreements between undertakings, decisions by associations of undertakings and concerted practices that may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market are prohibited as incompatible with the internal market. It is exclusively the case law of the Court of Justice which prescribes that ‘a party to a contract liable to restrict or distort competition within the meaning of [Article 101 TFEU] can rely upon the breach of that provision to obtain relief from the other contracting party’ and that the Treaty ‘precludes a rule of national law under which a party to a contract liable to restrict or distort competition  … is barred from claiming damages for loss caused by performance of that contract on the sole ground that the claimant is a party to that contract’.21 Moreover, it is the case law of the Court that extends the right to claim damages, and therefore the defendant’s duty to compensate, to anyone. According to the ruling in Manfredi, third parties who have a relevant legal interest to rely upon the invalidity of an agreement or practice prohibited by that Community provision may claim damages for the harm suffered where there is a causal relationship between the agreement or concerted practice and the harm.22 As I have argued elsewhere,23 the Courage remedy should be seen as restricted to competition law. The two judgments in Courage and Manfredi do not introduce a general principle of private party liability into EU law. The Court made 16 Case 14/83 Sabine von Colson and Elisabeth Kamann v Land Nordrhein-Westfalen [1984] ECR 1891, para 23; Case C-271/91 M Helen Marshall v Southampton and South-West Hampshire Area Health Authority [1993] ECR I-4367, para 33; Case C-180/95 Nils Draehmpaehl v Urania Immobilienservice OHG [1997] ECR I-2195, para 37. 17 Art 17 of Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L303/16. 18 Case C-271/91 Marshall (n 16) para 24. 19 Case C-177/88 Elisabeth Johanna Pacifica Dekker v Stichting Vormingscentrum voor Jong Volwassenen (VJV-Centrum) Plus [1990] ECR I-3941, paras 24–26. 20 Cf European Commission, White Paper on Damages Actions for Breach of the EC Antitrust Rules COM(2008) 165 final. 21 Case C-453/99 Courage Ltd v Bernard Crehan [2001] ECR I-6297. 22 Joined Cases C-255/04 and C-298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] ECR I-6619. 23 D Leczykiewicz, ‘Private Party Liability in EU Law: In Search of the General Regime’ (2009– 10) 12 Cambridge Yearbook of European Legal Studies 257.

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much effort in these judgments to stress the particular nature and significance of the EU norm breached in both cases.24 Nevertheless, the judicial introduction of the Courage remedy constitutes a model of how future private law liability rules are most likely to be incorporated into the realm of EU law.

III. The Constitutional Importance of Private Law Liability Rules The constitutional importance of private law liability rules is not an instantly apparent issue. Private law, regarded as engaging with bilateral, often interpersonal, relations is not seen as the primary sphere of operation of constitutional law, which generally focuses on relationships between citizens and the state and between different organs of the state. To a large extent it concerns the exercise of public power. However, in recent years the trend to ‘constitutionalise’ private law has emerged. Constitutional rights are being applied in a private law context to modify obligations of the parties and to broaden the law’s remedial responses. Private law liability rules in themselves can also be seen as possessing constitutional importance. As Goldberg explains,25 individuals have a constitutional right to law that redresses wrongs. While his analysis is focused on English and US law, a remarkable similarity of reasoning can be observed in the context of EU law, where the provision of remedies is often explained and justified by the need to ensure ‘effective judicial protection’ of individuals,26 a principle which has been recently held by the Court of Justice to possess constitutional status.27 Private law liability rules form part of a larger institutional set-up aimed at ensuring adequate protection of citizens’ rights and capabilities. Another constitutional principle which plays a role in the context of private law liability rules is the principle of legality. If we look at liability as a civil law sanction, rather than merely as a mechanism of providing remedy, it becomes

24

Case C-453/99 Courage (n 21) para 20. JCP Goldberg, ‘The Constitutional Status of Tort Law: Due Process and the Right to a Law for the Redress of Wrongs’ (2005) 115 Yale Law Journal 524. 26 Case 222/86 Union nationale des entraîneurs et cadres techniques professionnels du football (Unectef) v Georges Heylens [1987] ECR 4097, para 14. 27 Case C-101/08 Audiolux SA v Groupe Bruxelles Lambert SA (GBL) [2009] ECR I-9823, para 63; Case C-174/08 NCC Construction Danmark A/S v Skatteministeriet [2009] ECR I-10567, para 42. A Arnull, ‘The Principle of Effective Judicial Protection in EU Law: An Unruly Horse?’ (2011) 36 European Law Review 51, 68. The presence in EU law of the principle of effective judicial protection has been based expressly upon the European human rights tradition: Arts 6 and 13 Europan Convention on Human Rights (ECHR). See Case 222/84 Marguerite Johnston v Chief Constable of the Royal Ulster Constabulary [1986] ECR 1651, para 18; Case 222/86 Heylens (n 26) para 14. A Ward, ‘National and EC Remedies under the EU Treaty: Limits and the Role of the ECHR’ in C Barnard and Odudu (eds), The Outer Limits of European Union Law (Oxford, Hart Publishing, 2009) 329, 333. 25

The Constitutional Dimension of Private Law Liability Rules in the EU 205 apparent that the principle of legality, so fundamental to criminal liability,28 should also be considered in the context of private law. Individuals are entitled to expect that their rights and obligations are defined by the law in a clear and prospective fashion, and that the expansion of their private law duties by case law is kept to minimum, stems from consistently applied concepts and principles, and makes the likely outcomes of disputes foreseeable and the whole process normatively justified.29 The safeguards demanded by the principle of legality play a fundamental role in the protection of private autonomy. It follows that unless interference with these safeguards is justified by a legitimate concern, private autonomy should be regarded as unduly restricted. In many legal systems private law liability regimes possess a relatively loose legislative structure, which makes them particularly open to judicial development. Judicial creation of remedies, especially where it circumvents statutory limits or is based on radical reinterpretations of established principles, raises concerns in the light of the constitutional principle of separation of powers. The need to separate the legislative and judicial powers, referred to as the principle of ‘institutional balance’, is not alien to EU law.30 The tension lies between the legislative method of regulating private law (be it by the EU legislator or national legislator) and the judicial (be it the Court of Justice or national courts under the direction of the Court of Justice). The Court of Justice maintains, at least ostensibly, that in the absence of harmonisation the competence to regulate remedies should remain primary with the national legislator. It holds that it is for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from European Union law, provided, first, that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and, secondly, that they do not render practically impossible or excessively difficult the exercise of rights conferred by European Union law (principle of effectiveness).31

28 Case C-303/05 Advocaten voor de Wereld VZW v Leden van de Ministerraad [2007] ECR I-3633, para 46. Art 49(1) of the Charter of Fundamental Rights. See also Case 80/86 Criminal proceedings against Kolpinghuis Nijmegen BV [1987] ECR 3969; Case C-168/95 Criminal proceedings against Luciano Arcaro [1996] ECR I-4705; Joined Cases C-387/02, C-391/02 andC-403/02 Criminal proceedings against Silvio Berlusconi [2005] ECR I-3565. For tax law, see Case C-412/03 Hotel Scandic Gåsabäck AB v Riksskatteverket [2005] ECR I-743, Opinion AG Colomer, para 42. 29 LL Fuller, The Morality of Law (New Haven, Yale University Press, 1969) 39. 30 See Case C-101/08 Audiolux (n 27) Opinion AG Trstenjak, paras 103–10. At para 107 AG Trstenjak points out: ‘As the Community institution within the meaning of Article 7(1) EC, the Court also forms part of that institutional balance. This fact implies that in its capacity as a Community judicial body which has the right under the first paragraph of Article 220 EC to ensure, within its jurisdiction, that in the interpretation and application of this Treaty the law is observed, it respects the rule-making powers of the Council and the Parliament.’ 31 Case C-432/05 Unibet (London) Ltd and Unibet (International) Ltd v Justitiekanslern [2007] ECR I-2271, para 43; Joined Cases C-222/05 to C-225/05 J van der Weerd v Minister van Landbouw, Natuur en Voedselkwaliteit [2007] ECR I-4233, para 28; Case C-2/06 Willy Kempter KG v Hauptzollamt Hamburg-Jonas [2008] ECR I-411, para 57; Case C-246/09 Susanne Bulicke v Deutsche Büro Service GmbH, judgment of 8 July 2010, para 25.

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So while the Court of Justice has created exceptions to the principle of superiority of the legislative route over the judicial (namely, where judicial intervention is demanded by the principles of equivalence and effectiveness) it continues to confirm its actuality in the case law.32 The principle of legislative superiority undoubtedly stems from the conviction that the legislative method allows for a more comprehensive and thorough regulation of the question of liability, ensures democratic legitimacy and draws on the more varied expertise of the legislature. In the EU context the argument against judicial intervention in the law of private liability receives support from yet another constitutional principle of the EU, the principle of conferral. According to Article 5(2) TEU, ‘the Union shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein’. The Treaties, arguably, confer on the EU not only competences expressly mentioned in competenceconferring provisions, but also those which can be inferred from the provisions prescribing the Union’s goals and objectives, and those imposing prohibitions and transferring rights, such as the Treaty provisions on free movement. On a certain view, on its own not without controversy, the Treaty also empowered the Court of Justice to lay down ‘general principles of law’, which form one of the sources of EU law.33 One such principle is that of ‘effective judicial protection’, now codified in Article 47 of the Charter of Fundamental Rights. The present textual basis of the principle of effective judicial protection does not change the fact that the Court of Justice should not be able to use it to create competences for itself. The Charter explicitly states that its effect is not to create new competences for Union institutions, which include the Court.34 The tension arising from the contentious nature of the Court’s competence to harmonise liability rules is best seen in the context of the Francovich judgment. Liability of the Member States for loss caused by a breach of EU law has been portrayed by the Court as a ‘principle’ which is ‘inherent in the system of the Treaty’.35 The ‘inherent’ nature of the principle was implicitly intended to explain why the Court of Justice had jurisdiction to introduce it judicially, without any textual basis in the Treaty empowering the Court to create such a principle.

32 Even in the context of Francovich liability, the Court of Justice accepts that more detailed issues remain to be regulated by national statutory rules. See Case C-429/09 Günter Fuß v Stadt Halle, Judgment of 25 November 2010, paras 91–94; Case C-279/09 DEB v Germany, Judgment of 22 December 2010, paras 28 and 59. 33 Art 19(1) TEU empowers the Court of Justice to ‘ensure that in the interpretation and application of the Treaties the law is observed’. Arguably, this provision also gave the Court the power to develop ‘general principles of law’ as one of the source of EU law. 34 Art 51(2) of the Charter of Fundamental Rights and Art 6(1) TEU. 35 Joined Cases 6/90 and 9/90 Andrea Francovich and Danila Bonifaci and others v Italian Republic [1991] ECR 5357, para 35.

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IV. Existing Concepts of EU Law and Private Law Liability In the previous section I identified some of the constitutional issues which EU law should address in the context of its involvement in private law liability. In this section I would like to examine the existing concepts of EU law which concern the use of EU norms in the resolution of private law disputes: ‘direct applicability’ and ‘direct effect’. ‘Direct applicability’ is an attribute possessed in EU law only by Regulations, which indicates that their provisions can be used by national courts without any further legislative or executive action being taken at the national level (Article 288 TFEU (ex Article 249 EC)). More generally, however, ‘direct applicability’ draws our attention to the broader question of the justiciability of an EU norm before a domestic court. Only Regulations can be used directly tout court. For other types of EU acts, in principle, it is first necessary to establish that they are ‘directly effective’. It follows that ‘direct effect’ also relates to the issue of justiciability. Yet, it goes further than that. The finding of ‘direct effect’ often serves the purpose of establishing whether the claimant has been conferred a substantive right by EU law.36 As a result, the inquiry into ‘direct effect’ can help us establish (but not determine) whether the claimant was vested with a private law right by EU law. The second question, at least with respect to a Treaty provision, is whether it applies ‘horizontally’.37 ‘Horizontal direct effect’ of a Treaty provision is most easily found to exist if the provision is addressed to individuals (eg Articles 101 and 102 TFEU) and imposes a clear prohibition. In other situations, where the wording of the provision does not explicitly mention individuals as its addressees, the horizontal applicability of the provision is a more complex matter. The overarching argument which justifies in a general manner applicability of Treaty provisions against non-state entities is the need to prevent the neutralising effects of actions taken by private actors in the exercise of their autonomy on aims pursued by those provisions.38 Two further arguments have 36 Case 26/62 NV Algemene Transport- en Expeditie Onderneming van Gend & Loos v Netherlands Inland Revenue Administration [1963] ECR 1. 37 Case 36/74 BNO Walrave and LJN Koch v Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española Ciclismo [1974] ECR 1405; Case C-415/93 Union royale belge des sociétés de football association ASBL v Jean-Marc Bosman [1995] ECR I-4921; Case C-281/98 Roman Angonese v Cassa di Risparmio di Bolzano SpA [2000] I-4139; Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-10779; Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet [2007] ECR I-11767. 38 Case 36/74 Walrave and Koch (n 37) para 18; Case C-415/83 Bosman (n 37) para 83; Case C-281/98 Angonese (n 37) para 32; Joined Cases C-51/96 and C-191/97 Christelle Deliège v Ligue francophone de judo et disciplines associées ASBL, Ligue belge de judo ASBL, Union européenne de judo [2000] ECR I-2549, para 47; Case C-309/99 JCJ Wouters, JW Savelbergh and Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577, para 120. Most recently, Case C-438/05 Viking (n 37) para 57: ‘[I]t is clear from its case-law that the abolition, as between Member States, of obstacles to freedom of movement for persons and freedom

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been provided by the Court to justify the horizontal use of a Treaty provision not directly addressed to individuals. The first argument concerns the ‘mandatory’ or ‘imperative’ nature of the provision in question;39 and the second centres on the prevention of inequalities arising from different regulatory approaches among the Member States.40 For example, the extent to which gainful employment is regulated by state rules is not uniform among the Member States. The void created by the absence of state regulation is sometimes filled by collective agreements and sometimes by individual employment contracts. EU law would have an uneven reach in different Member States if their sovereign decisions regarding how much power should be left to the market (employers, employees and their associations) determined the applicability of Treaty provisions. Against this background, ‘horizontal direct effect’ may seem to offer a promising start for the construction of private law liability rules in the EU. However, its potential is undermined by the inconsistent use of the concept by the Court of Justice in its case law. As a result, it is unclear whether ‘direct effect’ is necessary to find the existence of a right in EU law or the other way round.41 Moreover, in cases where the finding of direct effect is not preceded by the existence of a right, direct effect is often established solely because reliance by an individual on a given provision furthers its effectiveness.42 In the former situation, where the finding of ‘direct effect’ follows the existence of a right, the concept of direct effect performs no additional task and is, at least in terms of establishing private law liability, superfluous. In the latter situation, where ‘direct effect’ is used to strengthen the effectiveness of the EU norm, the finding of direct effect does not take us very far. It only shows that in a given context the policy objective of promoting effectiveness of EU law is particularly strong. In other words, before to provide services would be compromised if the abolition of State barriers could be neutralised by obstacles resulting from the exercise, by associations or organisations not governed by public law, of their legal autonomy.’ 39 This argument has been used, for example, with reference to Art 157 TFEU, prohibiting discrimination between men and women with respect to pay, to justify its horizontal applicability. See Case C-43/75 Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena [1974] ECR 455, paras 33–34 and 39. Because the case law of the Court of Justice does not explain how to distinguish ‘mandatory’ from ‘non-mandatory’ Treaty provisions, it is likely that the ‘mandatory’ or ‘imperative’ nature means simply a ‘binding force’, in which case the argument is quite empty of normative content. 40 Case 36/74 Walrave and Koch (n 37) para 19; Case C-415/83 Bosman (n 37) para 84; Case C-281/98 Angonese (n 37) para 33; Case C-438 Viking (n 37) para 34. 41 Case 8/81 Ursula Becker v Finanzamt Münster-Innenstadt [1982] ECR 53. 42 Case C-72/95 Aannemersbedrijf PK Kraaijeveld BV ea v Gedeputeerde Staten van Zuid-Holland [1996] ECR I-5403, para 56: ‘[W}here the Community authorities have, by directive, imposed on Member States the obligation to pursue a particular course of conduct, the useful effect of such an act would be weakened if individuals were prevented from relying on it before their national courts, and if the latter were prevented from taking it into consideration as an element of Community law in order to rule whether the national legislature’. In Joined Cases C-87/90 to C-89/90 A Verholen v Sociale Verzekeringsbank Amsterdam [1991] ECR 3757, the Court of Justice allowed an action based on a Directive to be brought by everyone who had ‘direct interest’ in the direct application of the Directive. Direct effect attached only for the sake of full effectiveness of Union law is sometimes described as ‘objective’ direct effect, to differentiate it from ‘subjective’ direct effect where an actual substantive right (and not just a right to rely) is granted to an individual by a provision.

The Constitutional Dimension of Private Law Liability Rules in the EU 209 we draw any conclusion from the finding of direct effect for the question of private law liability, it is necessary to enquire what kind of right was created or recognised by ‘direct effect’—ie a substantive right or a mere right to rely on an EU norm.43 Secondly, ‘horizontal direct effect’ does not seem to have any monopoly over the question of the horizontal application of EU norms. In disputes concerning intellectual property rights the Court often proceeds on the ground that Articles 34 and 36 TFEU are applicable, probably assuming that national courts will find a way of accommodating the Court’s rulings.44 In Hoffmann-La Roche45 the Court held that the rights-owner is able to rely on the protection of industrial and commercial property, listed as one of the available derogations in Article 36 TFEU, to restrict the intra-Community free movement of goods, by preventing the parallel import of goods produced in another Member State with the rightsowner’s authorisation, if the rights-owner has not yet exhausted his right to be the first to manufacture and place the product on the market.46 Equally, the producer in another Member State is able to rely in an action against the rightsowner under Article 34 TFEU, which guarantees free movement of goods, in order to prevent the applicability of national rules which protect the rightsowner, if those rules go beyond the right ‘to use [a] trade mark for the purpose of putting a product on the market for the first time’.47 Nowhere in the judgment do we find a statement which implies that by this ruling the Court deems the Treaty provisions on free movement of goods horizontally applicable. In fact, other judgments of the Court show that special conditions need to be met before a private body is considered bound by Article 34 TFEU and that private acts are generally outside the scope of this provision.48 While the concept of ‘horizontal direct effect’ does not provide the exclusive approach to the use of Treaty provisions in horizontal cases, it does offer an important contribution to legal certainty in the context of horizontal use of Directives. The negative side of ‘direct effect’ (ie the proposition that only directly effective norms of EU law can be used as a self-standing source of rights and duties before a national court) formally excludes Directives from providing a ground for establishing private law liability. This view is confirmed by rulings in which the Court held that the application of Directives on their own could

43 Some authors have argued that the EU version of the German Schutznorm theory should be used for this purpose. See Eilmansberger (n 7). 44 For more on the application of Treaty provisions in intellectual property cases, see TM Cook, EU Intellectual Property Law (New York, Oxford University Press, 2010) ch 2; C Seville, EU Intellectual Property Law and Policy (Cheltenham, Edward Elgar, 2010) ch 6. 45 Case 102/77 Hoffmann-La Roche & Co AG v Centrafarm Vertriebsgesellschaft Pharmazeutischer Erzeugnisse mbH [1978] ECR 1139. 46 Ibid, para 7. 47 Ibid. 48 See Case 249/81 Commission v Ireland [1982] ECR 4005; Case 222/82 Apple and Pear Development Council v Lewis [1983] ECR 4083. More recently, Case C-159/00 Sapod Audic v Eco-Emballages SA [2002] ECR I-5031, para 74.

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not lead to the imposition of an obligation on individuals.49 Because Directives cannot of themselves create obligations, their breach cannot give rise to private law liability.50 The benefit of excluding Directives from the sources of direct rights and duties, either independently or by negating their ‘direct effect’, is, however, undermined by the fact that Directives can be applied against individuals by means other than ‘direct effect’.51 They influence the interpretation of national law and in some situations may lead to exclusion of prima facie applicable national rules.52 Cases such as Unilever53 show that even Directives which do not create any substantive rights or obligations for the parties in a contractual relationship may be relied upon in cases involving disputes arising from these relationships.54 ‘Direct applicability’, except for providing a useful general indication of the importance of ‘justiciability’, also fails as a concept under which EU law asks questions about the existence of a private duty and a private right, and of their correlation. Arguably, the concept of ‘direct applicability’ was never meant to perform such a function. However, the matter is not helped by the fact that in Muñoz55 the Court inferred from the general attribute of ‘direct applicability’ of Regulations the conclusion that all Regulations ‘operate to confer rights on individuals which the national courts have a duty to protect’. The duty to protect rights conferred by Regulations generated the obligation of a national court to allow a claimant to enforce a regulation in civil proceedings.56 Thus, the Court conflated the issue of justiciability with conferral of rights. As a result, it further dissolved the already amorphous concept of EU rights. For this reason the judgment in Muñoz, and the connection it makes between ‘direct applica49 Case 152/84 MH Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) [1986] ECR 723, para 48; Case C-321/05 Hans Markus Kofoed v Skatteministeriet [2007] ECR I-5795, paras 42 and 45; Case 14/86 Pretore di Salò [1987] ECR  2545,  paras 19 and  20; Case C-168/95 Arcaro (n 28) paras 36 and  37. Case C-201/02 The Queen on the application of Delena Wells v Secretary of State for Transport, Local Government and the Regions [2004] ECR I-723, para 56: ‘the principle of legal certainty prevents directives from creating obligations for individuals. For them, the provisions of a directive can only create rights’. 50 Case C-91/92 Paola Faccini Dori v Recreb Srl [1994]  ECR  I-3325. For more detailed discussion, see Leczykiewicz (n 23) 268–69. 51 Case 152/84 Marshall (n 49) para 48; Case C-91/92 Faccini Dori (n 50) para 20; Joined Cases C-397 to 403/01 Bernhard Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV [2004] ECR I-8835, para 109. 52 Case C-441/93 Panagis Pafitis and others v Trapeza Kentrikis Ellados AE [1996] ECR I-1347; Case C-194/94 CIA Security International SA v Signalson SA and Securitel SPRL [1996] ECR I-2201; Case C-77/97 Österreichische Unilever GmbH v Smithkline Beecham Markenartikel GmbH [1999] ECR I-431; C-443/98 Unilever Italia SpA v Central Food SpA [2000] ECR I-7535. 53 Case C-443/98 Unilever Italia SA (n 52). 54 Unilever concerned a company’s refusal to pay for delivery of olive oil which was not labelled according to the requirements of a national technical regulation enacted in breach of the Member State’s obligations under the Directive. The Court of Justice held that the national technical regulation was to be disapplied in proceedings between the private parties. See H Schepel, ‘The Enforcement of EC Law in Contractual Relations: Case Studies in How Not to “Constitutionalize” Private Law’ (2004) 12 European Review of Private Law 661, 672; S Weatherill, ‘Breach of Directives and Breach of Contract’ (2001) 26 European Law Review 177. 55 Case C-253/00 Antonio Muñoz y Cia SA and Superior Fruiticola SA v Frumar Ltd and Redbridge Produce Marketing Ltd [2002] ECR I-7289. 56 Ibid, para 30.

The Constitutional Dimension of Private Law Liability Rules in the EU 211 bility’ and creation of rights, should be seen as irrelevant to the question of private law liability.57 It follows from the discussion above that the existing concepts of EU law as currently deployed by the Court of Justice are only partially helpful in determining when an EU norm should impose private law liability for its breach. Most importantly, horizontal direct effect of an EU norm should be clearly distinguished from the question of whether a violation of the norm should lead to private law liability. The former is a precondition of the latter but does not provide the full answer. After all, Treaty provisions or general principles of EU law, such as the principle of equal treatment, can be recognised as horizontally applicable for the sole purpose of using them to exclude application of a national rule in a private law dispute. EU norms may become ‘horizontal’ also by influencing the interpretation of rules originating in the laws of the Member States.58 For this kind of influence it is irrelevant whether the horizontal EU norm guarantees rights or imposes duties, questions that are of crucial importance where private law liability is in issue. For these reasons, the use of an EU norm to found private law liability should not be reduced to the question of whether this norm has horizontal direct effect.59

V. Principles and Justifications In the following part of this chapter I would like to examine the principles which should govern the involvement of EU law in private law liability, bearing in mind the fact that this involvement is likely to arise from the case law of the Court of Justice. The principle that underpins most of EU law’s involvement in many legal spheres, including the involvement of the Court of Justice in private law disputes, is the judge-made principle of effectiveness.60 This principle has many facets and understandably the terminology used by the Court of Justice to refer to it is not uniform. The Court uses the following terms: ‘effectiveness of Union law’, the ‘practical effect’ or ‘full effect’ of a particular act, and ‘the principle of effectiveness’. The term ‘principle of effectiveness’ seems to be restricted to cases concerning remedies and procedures, where it serves as one of the requirements restricting ‘national procedural autonomy’. The other terms appear in 57 For an opposite view, see G Betlem, ‘Torts, a European Ius Commune and the Private Enforcement of Community Law’ (2005) 64 Cambridge Law Journal 126. 58 Case 14/83 Von Colson (n 16); Case C-106/89 Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECR I-4135; Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial SA v Roció Murciano Quintero [2000] ECR I-4941; Case C-456/98 Centrosteel Srl v Adipol GmbH [2000] ECR I-6007; Joined cases C-397 to 403/01 Pfeiffer (n 51). 59 Cf Betlem (n 57). 60 See P Rott, ‘The Court of Justice’s Principle of Effectiveness and its Unforeseeable Impact on Private Law Relationships’ in this volume.

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cases involving a broad range of issues, such as compatibility of domestic law with EU law, disapplication of conflicting national norms, or the depth of interpretational obligations of national courts.61 Effectiveness was used by the Court to justify the involvement of EU law in private law liability in many cases. The two most vivid examples are Levez and Courge.62 In Levez the Court was asked to determine whether EU law precluded a rule of national law which limited an employee’s entitlement to arrears of remuneration or damages for breach of the principle of equal pay to a period of two years prior to the date on which the proceedings were instituted, there being no possibility of extending that period. The important factual circumstance of the case was that the claimant’s delay in bringing a claim was attributable to the fact that the employer had deliberately misrepresented to her the level of remuneration received by persons of the opposite sex performing the same work. The Court was clearly concerned about the consequences of deceitful acts by private employers and wanted to prevent such employers from depriving their employees of ‘means provided by the Directive’.63 As a result, it regarded the employer’s reliance on a national rule, which limited damages to losses arising no more than two years before the date on which the proceedings were instituted, as ‘manifestly incompatible with the principle of effectiveness’.64 In Courage, on the other hand, the Court of Justice justified the imposition of liability on a private defendant for a competition law violation by emphasising the fact that liability in damages would make a ‘substantial contribution to the maintenance of the effective competition in the Community’.65 Effectiveness as a justification for the involvement of the Court of Justice in private law liability is of course very problematic. It is impossible to determine its limits and therefore also the limits of the Court’s involvement in a particular issue. It could be also argued that effectiveness is devoid of any normative content. Its normative potency stems only from the rule or policy which it makes effective.66 It follows that it is this rule or policy which should be invoked by the Court as a justification for an intrusion. Effectiveness should play the role of connecting the assessment of national rules with a relevant EU law policy. The principle of equivalence is another justificatory concept used by the Court of Justice.67 It appears only in the context of cases concerning compatibility with 61 For more discussion of the role of the principle of effectiveness, see M Ross, ‘Effectiveness in the European Legal Order(s): Beyond Supremacy and Constitutional Proportionality?’ (2006) 31 European Law Review 476. 62 Case C-326/96 BS Levez v TH Jennings (Harlow Pools) Ltd [1998] ECR I-7835 and Case C-453/99 Courage (n 21). 63 Case C-326/96 Levez (n 62) para 31. 64 Ibid, para 32. 65 Case C-453/99 Courage (n 21) para 27. 66 S van den Bogaert, ‘Horizontality: The Court Attacks?’ in C Barnard and J Scott (eds), The Law of the Single European Market. Unpacking the Premises (Oxford, Hart Publishing, 2002) 123, 136; Ross (n 64) 498. 67 Case 33/76 Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland [1976] ECR 1989, para 5; Joined Cases C-114/95 and C-115/95  Texaco and Olieselskabet

The Constitutional Dimension of Private Law Liability Rules in the EU 213 EU law of national remedies and procedures. It is used to justify the interference with national procedural autonomy. The underlying rationale is quite convincing; claimants who base their claims on EU law should be treated the same as claimants who brought purely domestic claims. In this way, EU law can fully benefit from procedural and remedial structures existing in the laws of the Member States without undermining their independence from EU law. In fact, however, ‘equivalence’ can take away national procedural autonomy quite substantially. As the case law shows, it is capable of empowering the Court to select the domestic cause of action with which the cause of action in issue should be regarded as analogous.68 In this way, the Court is able to set the standard of protection offered to EU rights. The most powerful principle which justifies the involvement of EU law in private law liability is that of ‘effective judicial protection’. Contrary to ‘effectiveness’, this concept is legitimately referred to as a ‘principle’ of EU law,69 or even as a ‘fundamental right’.70 Despite its fundamental importance for EU constitutionalism, the principle of effective judicial protection is not free from structural defects. To start with, it is contentious what it actually means. Its narrower understanding presupposes only a prohibition; national measures must not render the exercise of Union rights virtually impossible or excessively difficult.71 A broader understanding of the principle of effective judicial protection entails that the principle goes so far as to demand that the protection of EU rights is ‘adequate’.72 On the broadest view of the principle of effective judicial protection, any impairment of the effectiveness of EU rights raises concerns as to the compatibility of national rules with EU law, which, to remain applicable,

Danmark [1997] ECR I-4263, para 41; Case C-62/00 Marks & Spencer plc v Commissioners of Customs & Excise [2002] ECR I-6325, para 34; Case C-432/05 Unibet (n 31) para 43; Case C-268/06 Impact v Minister for Agriculture and Food [2008] ECR I-2483, para 46; Case C-445/06 Danske Slagterier v Germany [2009] ECR  I-2119, para 31; Case C-246/09  Bulicke (n 31) para 25. 68 Case C-326/96 Levez (n 62); Joined Cases C-392/04 and C-422/04 i-21 and Arcor v Germany [2006] ECR I-8559; Case C-279/09 DEB (n 32). 69 Case 222/86 Heylens (n 26) para 14; Case C-50/00 P Unión de Pequeños Agricultores v Council of the European Union [2002] ECR I-6677, para 39; Case C-263/02 P Jégo-Quéré & Cie SA v Commission of the European Communities [2004] ECR I-3425 para 29; Case C-584/08 Unibet (n 31) para 37; Case C-268/06 Impact (n 67) para 43; Case C-12/08 Mono Car Styling SA v Dervis Odemis [2009] ECR I-6653, para 46. 70 Case C-275/06 Productores de Música de España (Promusicae) [2008] ECR I-271, para 62. The right to an effective judicial protection may be in itself treated as a right which requires effective judicial protection. See C-185/97 Belinda Jane Coote v Granada Hospitality Ltd [1998] ECR I-5199, paras 19–27. The Charter of Fundamental Rights in its Art 47 ‘recognises’ that ‘[e]veryone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article’. 71 Case 33/76 Rewe-Zentralfinanz eG and Rewe-Zentral AG (n 67) para 5; Case 199/82 Amministrazione delle Finanze dello Stato v SpA San Giorgio [1983] ECR 3595, para 14. 72 W van Gerven, ‘Of Rights, Remedies and Procedures’ (2000) 37 Common Market Law Review 501, 503. This view has now received additional support in a new provision in the Treaties which concerns national obligations with respect to the provision of remedies. Art 19(1) of the TEU: ‘Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law.’

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must be justified by one of the legitimate objectives, such as the concern for legal certainty.73 The Court’s use of the principle of effective judicial protection is also not free from controversy. One could even argue that effective judicial protection is used by the Court to forestall discussion of other constitutional principles which may play a role in the involvement of EU law in private law liability. Despite competence-conferring limitations of ‘general principles’ in EU law, ‘effective judicial protection’ is used by the Court to justify the judicial harmonisation of remedies.74 The principle is used to protect not only a claimant’s substantive rights but also a pure right to rely upon a particular provision of EU law (a procedural right, sometimes regarded as a corollary of direct effect),75 a practice which, if at all justified, should be limited to a public law context only. This brings me to the final deficiency of the principle of effective judicial protection—its tendency to blur the distinction between the public and the private law of remedies in the EU. The division between private and public law, while obfuscatory and redundant in certain contexts, may play an important constitutional role in others. To the latter category of situations belongs the EU law of remedies. The insistence on the existence of a division between the public and the private law of remedies performs the function of protecting private actors from subjecting them to standards that bind public actors, and thus protects the autonomy of private actors.76 The principle of effective judicial protection was first used in EU law to strengthen the position of individuals against the Member States and EU institutions. It played a role in developing the system of judicial review in EU law and safeguarding access to a court in situations where national authorities failed to comply with the requirements of EU law. It led to the creation of the Francovich and San Giorgio remedies,77 an action for reparation against the 73 M Hoskins, ‘Tilting the Balance: Supremacy and National Procedural Rules’ (1996) 21 European Law Review 365, 372. Case C-312/93 Peterbroeck, Van Campenhout & Cie SCS v Belgian State Peterbroeck [1995] ECR I-4599, para 14; Case C-327/00 Santex SpA v Unità Socio Sanitaria Locale n 42 di Pavia, and Sca Mölnlycke SpA, Artsana SpA and Fater SpA [2003] ECR I-1877, paras 50 and 56. 74 Case C-213/89 The Queen v Secretary of State for Transport, ex parte Factortame Ltd [1990] ECR I-2433, [20]; C-185/97 Coote (n 70) paras 19–27; Joined Cases C-6/90 and C-9/90 Francovich (n 35) paras 32–33. 75 G Anagnostaras, ‘State Liability and Alternative Courses of Action: How Independent Can an Autonomous Remedy Be?’ (2001–02) 21 Yearbook of European Law 355, 360. Cf R Caranta, ‘Judicial Protection against Member States: A New Jus Commune Takes Shape’ (1995) 32 Common Market Law Review 703, who argues that ‘effective judicial protection’ should be ‘no more than an implication of the principle of full effects of Community law’ (725). However, his argument refers to liability of Member States and is based on the idea that exacting obedience from Member States is justified by the (general) need to protect citizens. 76 This is a reverse of Dicey’s argument according to which the state and its officials should be subject to the jurisdiction of ordinary courts and the Constitution is regular ‘private’ law of the land. This ensures equal treatment of individuals and the State before the law. AV Dicey, An Introduction to the Study of the Law of the Constitution, 10th edn (London, MacMillan, 1987). 77 Case  199/82 San Giorgio (n 71), para 12: ‘entitlement to the repayment of charges levied by a Member State contrary to the rules of Community law is a consequence of, and an adjunct to, the rights conferred on individuals by the Community provisions prohibiting charges having an effect equivalent to customs duties or, as the case may be, the discriminatory application of internal taxes’; Joined Cases C-192/95 to C-218/95 Société Comateb v Directeur général des douanes et droits indirects

The Constitutional Dimension of Private Law Liability Rules in the EU 215 Member State for a breach of EU law and an action for the recovery of unlawfully levied charges, respectively. As a result, when an action is brought against a public defendant (the EU or a Member State) it is EU law that determines which remedy (compensatory or restitutionary) is the right one. Moreover, EU law lays down the conditions of these remedies even if they are sought in national courts. National courts effectively have no discretion in action for recovery of unlawfully levied charges. In Francovich actions, discretion is left to national courts only with respect to such issues as the existence of harm, the directness of causal relationship,78 and, in certain contexts, the seriousness of breach.79 Within this public law of remedies, EU law even goes so far as to regulate the relationship between the availability of remedies and the principle of res judicata.80 It would be inappropriate if the principle of effective judicial protection applied with the same intrusive force to private disputes. In actions against private defendants it is the Member States that should remain competent to choose the type of remedy. So far the Court has respected this entitlement even where the EU has enacted legislation demanding from the Member States the provision of effective remedies.81 In cases where Treaty provisions were found to be horizontally applicable, the Court has refrained from specifying the precise legal consequences flowing from the applicant’s reliance upon the free movement provision against a nonstate actor.82 Courage and Manfredi show, however, that the employment of the [1997] ECR I-165, para 20; Joined Cases C-397/98 and C-410/98 Metallgesellschaft Ltd v Commissioners of Inland Revenue and HM Attorney General [2001] ECR I-1727, para 84; Case C-446/04 Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue [2006] I-11753, para 202: ‘according to established case-law, the right to a refund of charges levied in a Member State in breach of rules of Community law is the consequence and complement of the rights conferred on individuals by Community provisions as interpreted by the Court. The Member State is therefore required in principle to repay charges levied in breach of Community’. 78 But see Case C-319/96 Brinkmann Tabakfabriken GmbH v Skatteministeriet [1998] ECR I-05255, para 29 and Case C-140/97 Walter Rechberger v Austria [1999] ECR I-3499, paras 73–77. 79 Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur SA v Germany [1996] ECR I-1029, paras 59 and 65; Case C-302/97 Klaus Konle v Austria [1999] ECR I-3099, para 58; Case C-424/97 Salomone Haim v Kassenzahnärztliche Vereinigung Nordrhein [2000] ECR I-5123, para 48. In particular, see Case C-63/01 Samuel Sidney Evans v Secretary of State for the Environment, Transport and the Regions and Motors Insurers’ Bureau [2003] ECR I-14447, paras 84–88. See also case C-173/03 Traghetti del Mediterraneo SpA v Italy [2006] ECR I-5177, para 45, where the Court held that ‘it remains possible for national law to define the criteria relating to the nature or degree of infringement which must be met before State liability can be incurred for an infringement of Community law attributable to a national court adjudicating at the last instance’, but ‘under no circumstances may such criteria impose requirements stricter than that of a manifest infringement of the applicable law’. 80 Case C-224/01  Gerhard Köbler v Austria [2003] ECR I-10239, para 40; Case C-119/05 Ministero dell’Industria, del Commercio e dell’Artigianato v Lucchini SpA [2007] ECR I-6199, para 63; Case C-2/08 Amministrazione dell’Economia e delle Finanze and Agenzia delle Entrate v Fallimento Olimpiclub Srl [2009] ECR I-7501, para 30. 81 Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1997] OJ L39/40. Case 14/83 Von Colson (n 16) para 23; Case C-177/88 Dekker (n 19) para 23. 82 Case 36/74 Walrave and Koch (n 37) para 30-34; Case C-415/83 Bosman (n 37) para 114; Case C-281/98 Angonese (n 37) para 46; Case C-438/05 Viking Line (n 37) para 74; Case C-341/05 Laval (n 37) para 111.

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principle of effective judicial protection may lead to the unwarranted extension of a public law doctrine to a private law context, without any discussion of the restraints existing in the private law context and flowing from the principles of conferral, separation of powers, and legality. As a result, private autonomy in private law liability cases involving an application of the principle of effective judicial protection has effectively not been discussed. This is problematic in the light of the fact that the principle of effective judicial protection in its radical form presupposes the existence of strict liability for violation of any right guaranteed by EU law. Instead of the three principles of clear constitutional significance which I discussed above (the principles of conferral, separation of powers, and legality), the case law of the Court of Justice relating to private law liability mentions other principles, such as legal certainty, equality between parties to the dispute, and protection of the right to defence.83 It is in this way that the Court makes allowance for the fact that national rules which impair effectiveness of EU rights might play an important role in a national legal system. For a similar reason, ‘general principles of civil law’ have been recently recognised to possess the capacity to outweigh the concern for effectiveness.84 When a consumer exercises the right to withdraw from the contract, national law may require the payment of fair compensation for the use made of the subsequently rejected product, even though it impairs the effectiveness of the right of withdrawal. In this situation the Court considers the obligation to compensate justified by the general principles of civil law, such as good faith and unjust enrichment.85 Apart perhaps from legal certainty, the concerns recognised by the Court as capable of restricting effectiveness do not seem to be on par with the principles of conferral, legality and separation of powers. This suggests that the current case law does not deliver a conceptual framework within which these and possibly other important constitutional considerations could be taken into account.

83 Case C-312/93 Peterbroeck (n 73) para 14; Joined Cases C-430/93 and C-431/93 Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705, para 19; Case C-63/01 Evans (n 79) para 46; Joined Cases C-222/05 to C-225/05 van der Weerd (n 31) paras 35–36; Case C-426/05 Tele2 Telecommunication GmbH v Telecom-ControlKommission [2008] ECR I-685, para 55; Case C-2/08 Fallimento Olimpiclub (n 80) para 27; Case C-40/08 Asturcom Telecomunicaciones SL v Cristina Rodríguez Nogueira [2009] ECR I-9579, para 39; Case C-63/08 Virgin Pontin v T-Comalux SA [2009] ECR I-10467, para 47. 84 Case C-412/06 Annelore Hamilton v Volksbank Filder eG [2008] ECR I-2383, para 42; Case C-489/07 Pia Messner (n 13) paras 26–29; Case C-215/08 E  Friz (n 13) para 48. See S Weatherill, ‘The “Principles of Civil Law” as a Basis of Interpreting the Legislative Acquis’ [2010] European Review of Contract Law 74. 85 Case C-489/07 Pia Messner (n 13) para 26. See MW Hesselink, ‘The General Principles of Civil Law: Their Nature, Role and Legitimacy’ in this volume.

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VI. Conditions of Private Law Liability in the EU The discussion of relevant concepts of EU law and principles which the Court uses to justify an intrusion into private law relationships and its law-making power in the field of remedies has shown that EU law does not possess the necessary instruments adequately to tackle the question of private law liability. In the final part of the paper, I would like to connect the concern for the protection of private autonomy with the question of the appropriate conditions of private law liability in EU law. I will argue that the correct development of conditions of liability is of particular importance when neither the concepts responsible for regulating justiciability nor the concepts which should regulate the limits of EU law’s development are capable of performing the function of protecting private autonomy in the liability context. The general framework of liability rules, which I explained in the first part of this chapter, is inherent in them. EU law follows this inescapable framework, for example in the way in which it structures conditions of liability of Members States and EU institutions. The claimant in an action for damages against a Member State or the EU has to show that the rule of law infringed intended to confer rights on him; the breach was sufficiently serious; and that there was a direct causal link between the breach of the obligation resting on the state and the damage sustained by the injured.86 What is interesting about this set of conditions is the fact that the breached duty forming the basis of liability does not have to be correlative of the claimant’s right, whose existence the claimant is required to show.87 As a consequence, a Member State’s breach may be constituted by a failure to implement a Directive,88 but also by a failure to refer a preliminary ruling question,89 and a failure to interpret national law consistently with EU law.90 On the other hand, however, these subsidiary procedural obligations protect primary substantive rights, such as the right to 86 Joined Cases C-46/93 and 48/93 Brasserie du Pêcheur (n 79) para 51; Case C-392/93 British Telecommunications [1996] ECR I-1631, [39]; Case C-5/94  The Queen v Ministry of Agriculture, Fisheries and Food, ex parte: Hedley Lomas (Ireland) Ltd [1996] ECR I-6297, para 25; Joined cases C-178-179/94, 188-190/94 Erich Dillenkofer, Christian Erdmann, Hans-Jürgen Schulte, Anke Heuer, Werner, Ursula and Trosten Knor v Germany [1996] ECR I-1531, para 21; Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291, paras 41–44. 87 In Köbler the norm breached was a judicial duty to refer and maintain a request for a preliminary ruling under Art 234 EC (now Art 267 TFEU) in a situation where a national court was not entitled to take the view that resolution of the point of law at issue was clear from the settled case law of the Court or left no room for any reasonable doubt. Case C-224/01 Köbler (n 80) para 118. The norm which vested rights in the applicant was that guaranteeing workers free movement within the Community. In Francovich and Dillenkofer the norm which the Member State breached was the duty to implement the directive, which stems from Arts 10 and 249 EC (now Art 4 TEU and Art 288 TFEU). It was the Directive in question which granted rights to individuals. 88 Case 6 & 9/90 Francovich (n 35); Joined Cases C-178-179/94, 188-190/9 Dillenkofer (n 86). 89 Case C-224/01 Köbler (n 80) para 118. Given the factual circumstances of the case the breach of the aforementioned norm was not considered ‘serious’ (para 123). 90 Case C-173/03 Traghetti del Mediterraneo SpA, in liquidation v Italy [2006] ECR I-5177, para 35.

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financial protection in the event of the employer’s insolvency, the right to free movement, and the right to equal treatment. Thus, the Member States’ breach of a procedural obligation may be seen as a violation of the primary substantive rights, and hence an indirect correlation between the breach and the violated right can be established. Another important feature of the EU regime of public liability is that it imposes the requirement of ‘sufficient seriousness’ on the breach triggering liability. Mere incompatibility of the Union’s or Member State’s act with EU law is not sufficient. The conduct of a Member State or the EU can be incorrect in the light of EU law, but it does not follow that if it causes damage to an individual, the Member State in question or the EU will be liable. I think this is an important feature of the EU law regime of liability. It shows that the question of liability is seen by EU law as semi-autonomous and should not immediately follow the finding of breach. This can be explained by the need to protect the exercise of legislative or executive discretion and the fact that EU institutions and national authorities often have to make difficult choices in the implementation of EU policies.91 It is one thing to strike down illegal legislation or an administrative act, and quite another to ask public bodies to pay compensation when the standards to which they were held accountable in the legality review are in fact vague and leave those bodies a broad range of policy choices. It is possible to argue that there is a parallel between the need to protect legislative and executive discretion and the need to protect private autonomy. Given the fact that private conduct could relatively easily be regarded as incompatible with EU law and that individuals also need to balance many conflicting values and interests when they form decisions about how to act, private defendants should also expect some form of protection from excessive liability. It means that there exists a need for an additional condition of liability, by which national courts will be able to filter out instances of incompatibility which should not lead to private law liability. In this way the law will perform its educational function, it will clarify prospectively which conduct is incorrect, but it will not subject individuals to liability where, due to the unclear nature of the EU standard, the defendant could simply be regarded to have been exercising the permitted scope of autonomy. Applying additional conditions of liability, such as the seriousness of breach, is one way of protecting private autonomy. Another way is the use of a specially devised condition of liability, such as that of intention to cause harm, negligence or recklessness. The application of such an additional condition of liability would enable the Court of Justice, on the one hand, to declare the defendant’s conduct as incompatible with EU law, but on the other, to protect them from liability in the absence of an objectively ascertained element of ‘fault’. Furthermore, the introduction of the concept of fault would give judges another 91 C Hilson, ‘Liability of Member States in Damages: The Place of Discretion’ (1997) 46 International and Comparative Law Quarterly 941.

The Constitutional Dimension of Private Law Liability Rules in the EU 219 instrument by which they can balance conflicting rights, a common occurrence in the context of EU law. Consumer or employee rights restrict traders’ freedom to pursue economic activity. Exercise by employees of the right to strike may interfere with free movement of services and freedom of establishment. Private autonomy surfaces in both EU economic and social rights. Ideally, the proportionality review should supply a satisfactory balancing mechanism. Yet, there is an argument to be made that the balance which is struck for the purpose of an action for an injunctive relief may seem unfair where the defendant is facing an obligation fully to compensate the claimant’s loss.92 It is the full compensation principle which explains why breach, damage and causation would not be sufficient as conditions of private law liability. For example, an individual’s conduct may constitute a disproportionate intrusion of an interest protected by a social right, but it would be a disproportionate response to such an infringement to hold the defendant liable to the full extent of damage. Because the principle of full compensation cannot be departed from, the question of proportionality of sanction has to be taken into account at the imposition of liability stage. Given how the concept of causation was used by the Court of Justice in the past, we cannot expect this condition of liability to perform the necessary limiting function. The best way to achieve a fair system is to have a fault-based liability regime. The presence of fault would justify the obligation to compensate the claimant in full. No-fault liability should only be allowed in the situation where the defendant benefited from the activity, so a failure to impose liability on him would mean that externalities of his activity are being borne by victims, which would enrich the defendant at their expense. The construction of a general regime of private party liability, and one which meets the concerns expressed above, is not a straightforward task. As explained above, in Francovich the subtlety of the approach is located in the concept of the ‘sufficient seriousness’ of the breach. It covers different considerations—among these are the institutional ones (the ease with which a court is able to determine that a breach actually took place); those concerning the wording of the norm breached (how clear and unambiguous it was in what it demanded from the Member State); those that account for the necessary element of discretion in the implementation and application of EU norms (the greater the scope of discretion, the smaller the likelihood that the breach will be regarded as sufficiently serious); those that incorporate notions of fault in the enquiry into whether the state defendant intended to ignore the requirements of EU law; and finally, those considerations that centre on the level of concretisation of Member States’ obligations already achieved in the case law of the Court of Justice. An argument has been made that the same concept of the ‘sufficient seriousness of the breach’ could be used to structure liability of a private party in EU law.93 In my view such a solution could be accepted if it was clear that the criteria 92 93

Case 14/83 Von Colson (n 16) para 23. N Reich, ‘The Interrelation between Rights and Duties in EU Law’ (2010) 29 Yearbook of

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to be taken into account when deciding this issue should differ when the case concerned private defendants. Moreover, much greater clarity would have to be achieved with respect to the notion of ‘breach’. The Court would have to determine whether breach could be found in the event of mere incompatibility with EU law, such as in the case of conduct which jeopardises the effective implementation of Union policies or the effective achievement of Union goals, or whether it is a narrower concept restricted only to conduct which violates a clear obligation imposed by EU law, addressed to private actors and correlated with a claim-right on the part of the claimant. If the more restrictive understanding was chosen, we would not need the concept of ‘serious breach’ or fault in private law liability. Mere breach would be enough, because EU law would define very narrowly what it means to owe a private law duty in EU law. If, however, EU law adopts the approach advocated by the Swedish court in Laval,94 on the basis of which breach could be established if a right was clearly vested in the claimant, but no clear obligation for a private party stemmed from the wording of the provision, or by the Court of Justice in Courage, where a breach was established on the basis of a provision which imposed a clear obligation on a private party, but the obligation was owed to the public at large, rather than to specific claimants, and no corresponding right was expressly vested in the claimant, there will be a need to introduce another condition or a set of conditions to ensure that private autonomy is adequately protected. I would suggest that the issue of breach should also cover the question of proportionality for cases where the defendant’s conduct was pursued in the exercise of a right protected by EU law, eg a right to strike. In such circumstances the defendant’s intrusion into the claimant’s rights should be seen as prima facie immune from liability, unless it is shown that it disproportionately interfered with the claimant’s right. To summarise my argument, let me enumerate the factors that I think are relevant for the question of private liability in EU law. They include: clarity with which the obligation was imposed on the defendant by an EU norm; the ease with which a correlative right in the claimant can be found (whether the duty was a private law duty); the content of national law; and the question of whether the claimant’s right is a claim-right or a mere freedom to pursue some activity, such as the freedom to work in another Member State, the freedom to provide services, to establish a business in another Member State (freedom of trade), or more broadly a freedom to take up activity in another Member State which provides income. If the EU norm in question guarantees the claimant a claim-right, rather than a mere freedom, such as in the case of a properly implemented consumer Directive, the defendant could be liable for ‘pure’ breach. Looking from another perspective, we could say that the breach in such circumEuropean Law 112. See also, N Reich, ‘Horizontal Liability in EC Law: Hybridization of Remedies for Compensation in Case of Breaches of EC Rights’ (2007) 44 Common Market Law Review 705, 714. 94 U Bernitz and N Reich, ‘Case No A 268/04, The Labour Court, Sweden (Arbetsdomstolen) Judgment No 89/09 of 2 December 2009, Laval un Partneri Ltd v Svenska Bygggnadsarbetareförbundet et al’ (2011) 48 Common Market Law Review 603.

The Constitutional Dimension of Private Law Liability Rules in the EU 221 stances automatically becomes sufficiently serious because of the clear nature of the obligation imposed on the defendant and its unquestionable private law character. If the EU norm in question gives rise only to a freedom, rather than a claim-right, the defendant should only be subjected to liability if he made the claimant’s exercise of this freedom excessively difficult.95 It should be noted that in this situation the existence of a private law duty would be a result of the Court’s expansive interpretation of EU law, rather than the wording of the provision itself. Therefore, violation of such a duty should only lead to liability if it was sufficiently serious, which would entail an enquiry into whether the defendant’s conduct made the exercise of the freedom excessively difficult. The defendant’s conduct should be regarded as making the exercise of a freedom excessively difficult if protecting the defendant’s autonomy would be manifestly disproportionate. The emphasis on ‘excessive difficulty’ in exercising an EU freedom will ensure that even when the defendant cannot invoke any right which could serve as a justification for his conduct, such as the right to strike, the right to dignity or the freedom of expression, which are balanced against an internal market freedom,96 his private autonomy will still be taken into account and balanced against the claimant’s EU law entitlement. This approach would protect, for example, traders who have refused to buy and distribute products imported from another Member State, or service providers who have refused to supply services to recipients in other Member States.97 If the EU norm in question does not vest the claimant with either a right or a freedom and the defendant’s obligation is not imposed on him with clarity and precision, so that effectively his misconduct is constituted by jeopardisation of a Union objective, the defendant should be liable only if it had shown a reckless disregard towards the Union policy. In any event, he should not be liable if his conduct complied with national law by which he was bound. Finally, it is my view that private defendants should never be held liable for a pure failure to promote Union objectives—such conduct should not constitute a breach, or such a breach should not be regarded as sufficiently serious to trigger liability.

95 In his Opinion in Case C-438/05 Viking Line (n 37) AG Maduro argued that ‘the provisions on freedom of movement protect the rights of market participants, not just by limiting the powers of the authorities of the Member States, but also by limiting the autonomy of others’ (para 36). According to him, the liability of an individual should be based upon the idea of ‘preventing others from enjoying their rights to freedom of movement’. Private actions have to be ‘capable of effectively restricting others from exercising their right of freedom of movement’ to attract applicability of the relevant Treaty provisions. 96 Case C-112/00 Eugen Schmidberger, Internationale Transporte und Planzüge v Austria [2003]  ECR  I-5659; Case C-36/02 Omega Spielhallen- und Automatenaufstellungs-GmbH v Oberbürgermeisterin der Bundesstadt Bonn [2004] ECR I-9609; Case C-244/06 Dynamic Medien Vertriebs GmbH v Avides Media A [2008] ECR I-505; Case C-341/05 Laval (n 37); Case C-438/05 Viking Line (n 37). 97 For more on this point, see D Wyatt, ‘Horizontal Effect of Fundamental Freedoms and the Right to Equality after Viking and Mangold, and the Implications for Community Competence’ (2008) 4 Croatian Yearbook of European Law & Policy 1.

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VII. Conclusion The purpose of this chapter was to explore the constitutional dimension of private law liability rules in the EU. The functions of a constitution are generally regarded to include the protection of individual autonomy by limiting the powers of government, the maintenance of separation of tasks and competences between different branches of government, and the safeguarding of the rule of law. Naturally, constitutions are also entrusted with the task of protecting individual rights, so it is a constitutional requirement for a legal system to possess a body of law which deals with violations of individual rights. Citizens should also have the right of access to an impartial court and to procedures by which their harms may be redressed. I have discussed how the involvement of EU law in private law liability rules could take account of concerns which flow from the principles of constitutionalism. Developing a conceptual structure for private law liability in EU law should be seen as a constitutionally significant task.

10 Social Dumping, Multi-level Governance and Private Law in Employment Relationships HUGH COLLINS

I. Introduction WHAT IMPACT DOES THE European Union have on ordinary employment relationships? My answer to that question will be depressingly negative: insofar as there is an impact of EU law on employment relationships, it will be suggested that the effect tends to be the opposite of what is intended. The regulation is often dysfunctional—for the most part it achieves the reverse of what was the professed policy aim. Moreover, this assessment suggests that this perverse outcome springs from structural features of EU regulation of employment relations connected to the system of multi-level governance. That structural flaw in the current legal framework for employment relationships unfortunately makes it extremely hard to identify ways in which to fix the problem. These general claims cannot be properly substantiated in the course of a single chapter. It is probable that exceptions to this thesis will have to be acknowledged, though it will not be possible to do so here. In particular, the law regarding equal pay for men and women is probably a prime candidate for illustrating a rather more successful intervention by the EU, though even there some reservations would have to be noted. In the introductory section of the chapter, some general remarks will be made regarding employment law as an aspect of private law, following which the steps in the argument will be outlined. The policies and laws of the EU probably have many different kinds of effects on contracts for the personal performance of work. At a macroeconomic level, the EU may assist growth in the number of jobs in the labour market through its co-ordination of macroeconomic policies, especially within the eurozone. Equally, controls on trade with non-EU countries may have an indirect impact on the prospects for jobs in the EU. The EU also uses funds to help with structural adjustment for such purposes as to cushion the effects on particular regions of internal market competition or pressures arising from the globalisation of product markets. As well as the number of jobs in the labour market, the EU

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may also affect the quality of those jobs. Any tendencies in the functioning of the labour market to drive down the quality of available jobs in the direction of low pay, precariousness, and the absence of career opportunities for advancement through training and experience might be combated at the EU level through financial incentives or regulation. The enquiry here focuses on the contribution of the EU to the quality of jobs in the Member States through regulation. It therefore concentrates on the legal relation between employer and employee, which in European countries is generally understood by reference to the legal institution of the contract of employment. The contract of employment has its historical and doctrinal roots in the general law of contract governing private market relations. The personal work relation is generally regarded as a type of market relation: an exchange of labour performed under the direction of another in return for payment. In every national jurisdiction, however, the legal framework governing the contract of employment has evolved a considerable degree of autonomy from the general principles of private law. It is treated as a special kind of contract that is analysed and regulated in a different way from other types of market contracts. The distinctive characteristics of national legal regulation of employment contracts are likely to include several features. The content of the agreement will often involve the incorporation or determination of terms by collective agreements between employers and trade union representatives of the employees. An important part of labour law must regulate those collective relations between unions and employers on topics such as recognition of unions, the procedures for collective bargaining, and the available sanctions including industrial action and labour injunctions. Furthermore, in most European legal systems, though not all, there is extensive and detailed legislative regulation of the employment relation, either through the imposition of mandatory terms in the contract or through the construction of independent self-standing statutory rights. Another important distinctive feature of employment relationships concerns the allocation of disputes arising between employer and employees to specialised labour courts and alternative dispute resolution (ADR) mechanisms, which are created by governments both for their superior accessibility for workers and for the benefits derived from their policy expertise in the dynamics of employment relations. As a result of these distinctive characteristics of the legal framework, employment law is usually regarded as a special category of the law, even though at its foundation lays a contractual relationship like many other private law relationships. In comparison to other aspects of the law governing market relationships, such as the law governing consumer transactions for the purchase of goods and services, employment law is probably more separate or autonomous from the general law of contract than other types of special contracts. It is true, of course, that consumer law employs extensive regulations to protect the weaker party, just as employment law often confers legal rights on workers for their protection. Nevertheless, the level and detail of regulation in employment relations is

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arguably of much greater intensity. For instance, although consumer protection against unfair prices informs the role of regulators when they regulate utilities or services of general public interest, direct price regulation is rare in the consumer field. Conversely, a minimum wage law is common in Europe, and in many countries there are legal mechanisms for extending standard wage rates fixed in a collective agreement to a whole economic sector. Similarly, whilst disputes arising from consumer transactions are often channelled into small claims courts by reason of their accessibility to consumers, the role of labour courts extends beyond securing accessibility to workers to using a particular kind of policy expertise with respect to industrial relations and human resources management. For these reasons, in comparison to other branches of the law regulating market transactions, employment law is relatively autonomous from the general rules of contract law and laws governing market transactions. This relative autonomy of employment law in national legal systems becomes important when we contemplate the potential significance of the involvement of the European Union. For commercial transactions within Europe, both domestic and cross-border, there is considerable common ground in the legal frameworks provided by the general rules of contract law of each national legal system. It has been possible, for instance, for most members of the EU to agree to apply the Vienna Sales Convention to cross-border sales transactions, because those rules can rely upon much common ground in the national legal systems. Oddly, even in the UK, which has not signed up to the Convention, the rules applicable through its law of sales based on the Sale of Goods Act 1979 are almost identical to those applicable under the Convention. In contrast, when we examine the different employment law systems found around the Member States of Europe, though we find the common element of the basic institution of a contract of employment, we also discover considerable diversity in the other important rules governing individual and collective employment relations. This diversity concerns not only the content of the regulation but also its source. At one end of the spectrum, in some Nordic countries there is very little legal regulation since most of the important issues such as wages and hours are settled by national or sectoral collective bargaining, often with governments acting as a third party involved in the agreement. In other countries, such as France and Italy, legislation provides detailed regulation of almost every aspect of the employment relation, though in Italy many workers find jobs in an informal sector outside the scope of regulation. As for the content of this regulation, in some countries it is highly prescriptive, fixing almost every detail of the contractual relation, whereas in other countries, notably the UK, apart from some minimum standards, employment law permits considerable flexibility in work arrangements. In short, what is most striking about a comparison of the employment law systems of the Member States is their sheer diversity of methods and styles of regulation. The national labour markets therefore present extremely hostile terrain for European attempts to implement internal market ambitions to

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open up markets by removing local regulatory barriers and to harmonise laws. Idiosyncratic national regimes present obstacles to ambitions for harmonisation. In assessing the impact of the EU on the quality of employment relations, the most significant effect is likely to occur through the use of law. It will be the Treaty provisions, Regulations and Directives that will provide the vehicle for implementing European measures. As with other typical market contracts, such as consumer purchases of goods and services, under the Treaties the competence to legislate is shared between the EU and the Member States. The basic rules governing these contracts are still set by national law, but the EU has entered the field through harmonising Directives and some directly effective Regulations that address particular issues. Consumer contracts and employment contracts, in particular, are, broadly speaking, fields of shared competence between the EU and Member States. In these two fields, though, as time passes, the EU seems to be acquiring incrementally an ever-larger share of regulatory competence. In the field of consumer protection, with the Consumer Rights Directive,1 the Sales Directive,2 the Unfair Commercial Practices Directive3 and other sector-specific Directives, EU law arguably occupies most of the field of consumer protection legislation. This occupation of legislative territory appears permanent, which is perhaps why it is known as ‘the acquis’—not an occupation but an acquisition. In the field of employment law, the Treaty divides the fields of legislative competence quite carefully between the Union and national levels,4 though it also contains more general aspirational clauses,5 much like the one concerning the promotion of a high level of consumer protection, which encourage the Commission to press for the expansion of EU competence. In practice, therefore, in these fields of shared competence between the EU and national legal systems, the European measures will have to be layered onto the existing national laws, sometimes replacing them, sometimes supplementing them, most frequently by introducing minor tweaks. As a consequence of the emergence of this multilevel mix of the oil of national private law and the vinegar of the European acquis, it becomes ever harder to work out in practice what final blend of law is applicable to contracts of employment and consumer contracts. The presence of EU law in consumer law has been criticised for being patchy and unsystematic, or ‘pointilliste’ in its approach,6 because it tackles particular 1 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights [2011] OJ L304/64. 2 Directive 1999/94/EC of the European Parliament and of the Council of 13 December 1999 relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars [1999] OJ L12/16. 3 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market [2005] OJ L149/22. 4 Art 153 TFEU. 5 Arts 151 and 156 TFEU. 6 J Basedow, ‘Codification of Private Law in the European Union: The Making of a Hybrid’ (2001) 5 European Review of Private Law 35, 38; W-H Roth, ‘Transposing “Pointillist” EC Guidelines into Systematic National Codes—Problems and Consequences’ (2002) 6 European Review of Private Law 761.

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issues rather than providing a comprehensive legal framework for transactions. As time goes by, however, this criticism becomes weaker as legislation like the Unfair Commercial Practices Directive becomes more comprehensive. But this kind of criticism of the unsystematic nature of EU interventions is still undoubtedly true in the field of employment law. The Treaty seeks to exclude the competence of the EU to legislate on many important issues in employment law, such as collective industrial relations, industrial action and wages. As a result, the European measures represent islands in the wide sea of national regulation of contracts of employment. But the differences between the scope and intensity of European employment law, in contrast to other fields of market regulation in the internal market, go far deeper than a simple comparison between the number of measures applicable to a particular type of contract. The first section of this chapter explores the reasons why the EU seeks to regulate the content of the employment contract and contrasts those reasons with more common motives for regulation as found in the field of consumer law. This exploration of the purposes of EU regulation reveals, in brief, a sharp contrast between the ambition of market building in consumer law and the prevention of social dumping in employment law. The following section of the chapter seeks to draw another contrast between consumer law and employment law with respect to the method of regulation. The principal method of EU legislation in both fields has been the use of Directives. Not only do the characteristics of these Directives differ significantly according the field of application, but more importantly, their very use as the method of regulation has profoundly different implications according to the field of application. Here we encounter the issue of juridification: the problems arising from the introduction of a legal mode of regulation as opposed to other kinds of non-legal regulation and self-regulation, usually taking the form of collective agreements. The next section of the chapter then introduces a third, though related, contrast between EU employment law and the national laws that it affects. Here the contrast concerns the very object of the regulation. European measures tend to focus primarily on the individual transaction, a contract of purchase of goods or services by a consumer or a contract of employment of a worker. The EU regulation has its effect by adjusting the content of that individual contract. This individualisation of the regulation does raise concerns in consumer law, where at least in some countries there has been a tradition of collective action to protect consumers. Although the possibility of collective action has been transposed to European law through the use of injunctions,7 that collective perspective appears more as an add-on enforcement mechanism than a core element in the regulatory scheme. In labour law, however, a collective approach to employment issues was the normal perspective in national law throughout the twentieth century,

7 Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests [2009] OJ L110/30.

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so the emphasis on the individual contract of employment in EU law in a sense changes the object of regulation. The final section of the chapter draws together these observations and examines their full implications with the example of the Working Time Directive.8 If the earlier arguments are accepted, the Working Time Directive emerges as a paradigm of European measures designed to affect the content of employment relations. It displays the strengths and flaws of European legislation in this field and vividly illustrates the central argument to be developed here, which is that EU law systematically and inevitably fails to achieve its aims in employment law. This investigation reveals very little impact on the private law relation of employment, and what impact is detected may be mostly classified as unintended and deleterious.

II. Market Building and Social Dumping Although the legal regulation of consumer contracts and employment contracts share a common pattern of partial harmonisation through EU law and a growing body of acquis, the motivation behind the EU’s entry into these two fields is rather different. This contrast in the aims of legal regulation entails the use of differing criteria for any evaluation of these initiatives.

A. Consumer Contracts For consumer contracts, the general policy behind European regulation, as declared by the European Commission and in the preambles to the legislative measures, is to encourage the confident consumer to purchase goods and services across borders throughout the Single Market. It is said that consumer confidence can be strengthened by establishing minimum standards of consumer protection applicable throughout the internal market; or, preferably, to achieve complete confidence, full harmonisation or unified federal law for all consumer purchases. The suggestion is that consumers will be more willing to engage in cross-border transactions if they can be confident that the protective rules will be much the same wherever they choose to shop, whether on Oxford Street, Rue de Rivoli, or on the Internet. Ultimately, the test of the success of this EU regulation must be whether or not it contributes to the growth in cross-border shopping, either physically when consumers travel to other Member States, or virtually through mechanisms of selling remotely such as on the Internet. Within this guiding framework for consumer law, the precise level of protec8 Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time [2003] OJ L299/9.

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tion that should be afforded to consumers is controversial. There are two main issues: should consumers receive a high standard of protection, and should the standard be uniform across the single market of the EU? According to the criterion of efficiency, EU law should seek an efficient level of consumer protection, which would be defined by a cost/benefit calculus. This cost/benefit calculation differs, however, from that applicable within a single state. The normal domestic assessment of the efficiency of consumer law involves a trade-off between the benefits to consumers of higher standards, such as safer and more reliable products, against the cost imposed on businesses in having to comply with those standards and the consequent higher cost of goods and services to consumers. The domestic law’s analysis can be simplified to an examination of whether consumers are prepared to pay higher prices for goods and services in return for better guarantees of quality. Within the framework of EU multi-level governance, however, the cost/benefit analysis assumes a different logic. The costs to be measured are still those imposed on businesses in having to comply with the regulatory standards throughout the single market. The benefits would be measured primarily in the single market context by reference to increases in the volume of cross-border trade and improvements in competitiveness. Some of these benefits might be lower prices for consumers if cross-border trade serves to drive down prices in domestic markets. Uniform standards or full harmonisation has the further benefit, in theory, of reducing costs to businesses because they will only have to comply with one set of standards rather than the diverse standards of Member States. In contrast, a minimum level of harmonisation secures a degree of consumer confidence that may be sufficient to promote cross-border trade, but does not address the problem for businesses that, when engaging in cross-border trade, they still have to comply with a variety of more protective standards applied in some Member States. As a consequence, an efficiency criterion for policy probably indicates that the EU should impose a uniform standard of protection so that businesses do not incur the costs of complying with a variety of standards which may be passed on to consumers. Advocates of improvements to consumer protection, however, are likely to favour minimum harmonisation at EU level, thereby leaving Member States free to enact ever higher standards of consumer protection should they so wish. In national legal systems, consumers, through their elected representatives, have to make the choice for higher standards with higher prices. In contrast, within the EU, provided that a minimum threshold has been achieved that secures increases in cross-border trade, the cost/benefit calculus for an enactment of a uniform standard does not seem to favour either a high or low standard of consumer protection. In practice, it seems likely that the legislative institutions will adopt a compromise measure that represents some kind of median level of protection, one that is lower than the one found in some Member States but higher than in others. Such a median level of protection will minimise the costs of compliance for businesses viewed as a whole across the EU. If correct, this analysis suggests

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that for the foreseeable future there will be a battle between, on the one side, consumer groups arguing for the highest levels of protection and directives that merely establish minimum standards, against, on the other side, the legislative institutions of the EU that will be seeking uniform standards at an average level. The logic of EU consumer law integration, therefore, measured from the perspective of economic efficiency, seems to point to three conclusions: (1) a preference in EU institutions for uniform laws rather than minimum harmonisation; and (2) the enactment of a median standard that minimises adjustment costs to business, provided that (3) the median standard increases confidence on the part of consumers to engage in cross-border trade, even though consumers might be prepared to pay for higher standards in many markets. Added to that mix based upon the economic analysis of interests should be the political or symbolic desire to present legislation as enacting a ‘high level of consumer protection’, as stated in the EU Treaties,9 which political representatives are likely to want to endorse, at least in word, if not in deed.

B. Employment Contracts European employment law has also been concerned with encouraging crossborder movement of labour in the internal market under the Treaty provision regarding free movement of workers.10 Economic migration within the EU has generally been perceived as an economic advantage in order to meet temporary labour shortages, though the costs of providing the normal measures of social support for these migrants, such as education, housing and healthcare, present considerable challenges to national governments that they often fail to meet satisfactorily. Within the framework of negative integration, the EU has battled to remove all formal and bureaucratic barriers to labour migration.11 The parallel policy of positive integration lies behind European attempts to provide mechanisms for recognition of foreign qualifications and standardisation of the meaning of educational qualifications.12 But these measures, which are ultimately meant to implement the fundamental principle of the free movement of labour, are not expected to achieve a borderless labour market because most people are likely to stay within their home country for reasons of language, family and social attachments, cultural roots, and their repertoire of skills. Unlike consumer markets, where it is seen as desirable for all consumers to shop abroad from time to time, in labour markets economic migration seems to be best done at 9

Art 169 TFEU. Art 45 TFEU. Eg Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community  [1968] OJ L257/2 and Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community  [1971] OJ L149/2. 12 Eg Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three years’ duration [1988] OJ L19/16. 10 11

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the margins on a temporary basis. Of far greater concern to the European legislator (and to national legislators and representatives of organisations of workers) is the potential negative consequence of the opening up of a European market that is called ‘social dumping’. This concept of social dumping has a variety of meanings in different contexts, though the common thread concerns the potential adverse effects on the living standards of workers caused by the opening up of a single market in Europe. One perceived problem—the regulatory competition problem—is that in order to attract inward investment and to create employment and economic growth, countries will be tempted to minimise costs to actual and potential employers. To the extent that employment laws impose compliance and additional labour costs on employers, governments will be tempted to eliminate or reduce the impact of these laws with a view to making the economy more competitive and to attract inward investment and growth in the number of jobs. One idea of social dumping refers to a trajectory of government policies aimed at economic growth and higher levels of employment, which is likely to be achieved at the price of creating jobs that are likely to be poorly remunerated, insecure and have low standards of regulatory protection. The opening up of the European Single Market created the risk that Member States would try to achieve a competitive advantage for their domestic employers and the employment prospects of their labour force by reducing labour standards, which has the effect of encouraging social dumping. It seemed that this risk could only be countered by the enactment of European-level mandatory standards applicable in all labour markets. The crude economic model of regulatory competition is no doubt flawed in many respects. It leaves out of the picture the probable benefits to overall wealth generated by the opening up of the Single Market, which may outweigh the detrimental effects of regulatory competition on wages and job security. Furthermore, the costs of compliance with labour laws are relatively small compared to other costs for employers, such as tax, so that deregulation of employment contracts is unlikely to have a significant impact on balance sheets and serve the goal of promoting capital investment. Moreover, at the sharp end of competition between rival firms in different jurisdictions, the key competitive factors are likely to be productivity and innovation. These factors will probably not be affected significantly by employment law. Finally, it is worth observing that many employment laws may contribute to rather than harm competitiveness.13 Such a claim can be made, for instance, about anti-discrimination laws, which try to impose a merit criterion on the operation of the labour market, thereby opening the economy to its whole variety of talents and skills. Whatever the exact truth about the theory of regulatory competition, however, it undoubtedly constitutes a central concern in the context of the EU’s regulation of employment law. A second meaning of social dumping—the migrant employer version— concerns a business’s use of cheaper labour from one Member State to obtain 13

H Collins, ‘Regulating Employment for Competitiveness’ (2001) 30 Industrial Law Journal 17.

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business in another. If the host state is not permitted to enforce its existing labour standards against the visiting employer and its workforce, those labour standards will be put at risk because employers in the host country will be forced to challenge those standards in order to avoid being put at a competitive disadvantage vis-à-vis foreign competitors. The enlargement of the EU to include Eastern Europe was perceived to elevate the risk of this kind of social dumping. Blocking this form of social dumping is more legally complex because any limitation on the freedom to provide services across borders guaranteed by the EU Treaties would require a strong justification. European-level mandatory standards would not be sufficient to address the problem because those minimum standards would not protect the disintegration of established and higher domestic standards under pressures from competition. Member States are likely to be reluctant to transfer the power to regulate employment to the EU precisely because they want to preserve the option of improving competitiveness by means of deregulation of employment. Furthermore, labour legislation is likely to be politically sensitive on a domestic level, so politicians may avoid appearing to endorse European rules that undercut existing labour standards. As a result of concerns about competitiveness and domestic political controversies, the precise scope of sharing competence with the EU to regulate employment matters is hotly contested. European intervention initially only proved attractive to Member States when it imposed costs on the businesses of other Member States which were commensurate with those already incurred by a country’s domestic industries with a view to preventing unfair competition. It was on this ground that the original Treaty of Rome contained a provision on equal pay for women. The early EU initiatives in employment law in the 1970s— namely the three Directives on economic dismissals, transfers of undertakings, and social guarantees in the event of insolvency—also fit into this analysis for they had the intended effect of equalising the costs of restructuring across the Member States.14 Their primary aim was not employment protection or guaranteeing minimum labour standards, but rather the equalisation of costs for capital investment (and disinvestment) across the single market. Legislation since the 1990s has, however, been more focused on the problem of social dumping and the need for minimum labour standards. The European institutions promote legislation on the ground that it secures minimum standards of protection throughout the single market. Minimum standards constitute an appropriate instrument for achieving economic and social convergence gradually while respecting the economic capabilities of the individual Member States. They also meet the expectation of workers in the European Union and calm fears about social dismantling and social dumping in the Union.15

14 H Collins ‘Justifying European Employment Law’ in S Grundmann, W Kerber, and S Weatherill (eds), Party Autonomy and the Role of Information in the Internal Market (Berlin, Walter de Gruyter, 2001) 205. 15 Council Resolution of 6 December 1994 on certain aspects for a European Union Social Policy: a contribution to economic and social convergence in the Union [1994] OJ C368/6.

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This policy aim can also be expressed in terms of the protection of fundamental social rights, such as those contained in the EU Charter of Fundamental Rights. The securing of fundamental rights, such as health and safety at work, is described as a fundamental objective of the EU that should not be subordinated to purely economic considerations. The aim of EU employment law, when focused on the problem of social dumping, does not require uniform law, but it does necessitate minimum standards. These standards have to be mandatory and uniform in order to serve the purpose of providing a defence against social dumping. It should not be possible in general to opt out of or derogate from these rules. But there is no objection from the perspective of social dumping to a Member State opting for higher protective standards for its own workforce. No sooner was it established than the policy of preventing social dumping through mandatory minimum employment standards was itself questioned in the light of the European Employment Strategy that was developed following the Lisbon summit meeting of 2000.16 In order to address problems of persistent, high levels of unemployment in Europe, it was recognised that to become more competitive in world markets the European labour market had to become more flexible, adaptable and innovative. The new policy framework was given the name ‘flexicurity’.17 The amalgamated word tried to combine the ideas of flexibility in labour markets with employment security (rather than job security). The aims of flexicurity are hard to reconcile with the objective of preventing social dumping: mandatory minimum standards will almost certainly reduce the flexibility of employers to use labour in the most efficient manner possible. The policy of flexibility might suggest, for instance, that employers should be permitted to engage workers on a series of short fixed-term contracts in response to current levels of demand rather than offer contracts for indefinite employment. The security offered to these workers with fixed-term contracts would not be a permanent job but would rather help in finding another job, for example by placing the employer under an obligation to give such workers priority for other jobs within the same organisation.18 Yet this kind of short-term casual work amounts to precisely the kind of disadvantageous precarious work that the policy aim regarding social dumping desires to prevent. From one perspective on policy, therefore, fixed-term work appears to be a desirable innovation for the sake of flexibility, but from the alternative perspective of social dumping it represents a good example of the EU’s Single Market damaging working conditions. How can the policies of preventing social dumping whilst enhancing flexicurity be reconciled in practice? The answer must be: only with great difficulty, if at all. The policy of flexicurity tends to favour the absence of EU formal intervention, 16 Council Decision 2010/707/EU of 21 October 2010 on guidelines for the employment policies of the Member States [2010] OJ L308/46. 17 European Commission, Towards Common Principles of Flexicurity: more and better jobs through flexibility and security COM(2007) 359 final. 18 Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixedterm work concluded by ETUC, UNICE and CEEP [1999] OJ L175/43, clause 6.

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leaving Member States to devise their own regulatory scheme for labour law. Member States can certainly share ideas and learn from each other’s mistakes, a process that is central to the Open Method of Coordination used for the discussion of employment policies and social inclusion policies. However, the policy of flexicurity does not encourage rigid EU hard law measures. What may be possible as a technique for reconciling the policy objectives is for the EU to adopt more porous legislative standards in the sense that the standards permit exceptions, derogations and a wide margin of appreciation in their implementation by Member States. On this approach, Directives that use porous measures would merely set a framework, provide various options for different styles of implementation, and even offer opt-outs to Member States. Of course, the more loopholes in the legislation, the less it serves as protection against social dumping. But, it may be argued, even porous legislation is better than the complete absence of minimum transnational standards. Another technique used in some EU legislation for reconciling the policies of social dumping and flexicurity is to provide a non-regression clause that requires Member States, when implementing a Directive, not to worsen the existing position of the protected workers under national law.19 In the Directive on fixed-term work, for instance, Clause 8.3 provides that ‘[i]mplementation of this agreement shall not constitute valid ground for reducing the general level of protection afforded to workers in the field of the agreement’. In some national legal systems, fixed-term work had been prohibited or confined to particular economic sectors, so there was an evident risk that the limited target of the Directive to prevent the abusive use of a succession of fixed-term contracts rather than a permanent job could be used as an excuse for Member States to facilitate their wider use in the labour market. In that way, a measure intended to protect against social dumping would in fact be used to promote flexibility and reduce protection. The European Court of Justice has tried to insist that the non-regression clause requires Member States to preserve all existing protections for the vulnerable group of workers, in this case fixed-term employees,20 but it seems easy for governments to avoid that restriction either by declaring that the measure in favour of flexibility was not purporting to implement the Directive,21 or by asserting that the non-regression clause is not directly enforceable.22 There is good evidence that some Member States, eg Italy, have in fact chosen to loosen the protections afforded to fixed-term employees in the course

19 Eg Directive 2003/88/EC (n 8) Art 23: ‘Without prejudice to the right of Member States to develop, in the light of changing circumstances, different legislative, regulatory or contractual provisions in the field of working time, as long as the minimum requirements provided for in this Directive are complied with, implementation of this Directive shall not constitute valid grounds for reducing the general level of protection afforded to workers.’ 20 Joined Cases C-378/07 to C-380/07 Angelidaki v Organismos Nomarkhiaki Aftodiikisi Rethimnis [2009] ECR I-3071. 21 Case C-144/04 Mangold v Helm [2005] ECR I-9981. 22 Case C-98/09 Sorge, Judgment of 24 June 2010.

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of revising their laws to conform to the Directive.23 Similarly, in the case of the Directive on working time, the Italian government has tried to rely on the possibility contained in the Directive of derogations from rest days by collective agreements to justify a denial of a day of rest to police officers, even though that derogation was not permitted under the national law.24 The non-regression clauses therefore seem to fail to achieve the intended protection against social dumping, and indeed are sufficiently porous that the Directive may be used by Member States as an excuse to weaken existing national measures. To sum up this assessment of the objectives of European employment law, we can say that it aims at (1) minimum standards Directives, not full harmonisation of laws, (2) in which the standards are located at the low end of the spectrum of labour standards, and (3), except where employment law is perceived to improve competitiveness, these minimum standards must have the paradoxical quality of being both mandatory to prevent social dumping and sufficiently porous to enable policies of flexicurity to be implemented at a national level.

II. Juridification Employment relationships can be regulated at a national level through a variety of mechanisms. Statutes may directly confer rights and obligations on employers and employees. However, it has long been appreciated that legal frameworks for employment law may create rigidities that lead either to inefficiency or avoidance of the regulation. Labour law therefore often prefers the use of mechanisms that promote self-regulation and self-enforcement. This self-regulation can take many forms, though the predominant mechanisms are collective bargaining with organised trade unions and elected works councils. The rules set by these mechanisms offer many attractions. In particular, it is worth emphasising the following points. Rules can be tailored to the needs of a particular business sector or a particular firm. Since different business sectors may have variable patterns of labour demand, the rules can be adapted to handle this variety of needs. Legislation encounters difficulties in achieving this reflexive quality because it typically attempts to find a single rule that will fit all situations. For instance, to implement a national minimum wage, legislation must create the fiction that workers who are paid by reference to the tasks completed, as in piece-work, receive a rate of pay per hour. Similarly, workers who rely on receiving tips to supplement a meagre salary create the twofold legislative problem of determining whether or not those tips count as salary and assessing their value given their fluctuation. 23 L Corazza, ‘Hard Times for Hard Bans: Fixed-term Work and So-called Non-regression Clauses in the Era of Flexicurity’ (2011) 17 European Law Journal 385. 24 Case C-227/09 Accardo v Commune di Torino, Judgment of 21 October 2010.

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A collective agreement can simply dispense with these fictions and determine a piece-rate or a mechanism for allocating tips. Rules can be fixed by agreement between management and representatives of the workforce. Although there may be friction during the negotiations for the rules, once they have been agreed, there is likely to be a high level of compliance on both sides during the term of the agreement. Unlike the case of statutory national minimum wage, where there are incentives on both sides to ignore the standard (for the employer to save on labour costs and for the worker to obtain a job), a collective agreement is likely to be self-enforcing. Rules reflect the balance of bargaining power between the employer and the employees. Sometimes this feature of self-regulation will prove worrying, especially where the rules concern issues that might be regarded as fundamental rights of workers, such as the right not to be discriminated against on the ground of immutable characteristics, such as race, sex or age. But on the whole, the advantage of tying the rules to bargaining power is that the rules will emphasise the priorities voiced by the parties and set realistic standards that both sides can live with. The minimum wage set for each job by a collective agreement will represent a practical compromise between the value of the work to the employer and considerations of equity within the workforce. The collective agreement will avoid the risk posed by a statutory national minimum wage of pricing some workers involuntarily out of jobs. Finally, rules set through collective agreements will avoid the need for the legislator to determine directly the desired standards of social justice in the sense of the distribution of wealth in society. A statutory minimum wage necessarily envisions a minimum standard of living for employees working full-time. In contrast, the legislature can avoid this controversial judgment by permitting or encouraging collective bargaining. Indirectly, of course, the legislature promotes a view of social justice through laws that encourage collective bargaining, but it need not venture into specifics. Strong support for collective bargaining is likely to improve the position of employees at the expense of shareholders, though probably only marginally, but it does not guarantee any particular outcome. The EU, however, cannot easily take advantage of these reflexive qualities of collective bargaining. In order to implement its goals, the EU has to rely primarily on legislation such as Directives. The regulation of collective bargaining is outside its competence under the Treaties. It therefore must promote legislative standards, such as maximum hours of work. This legislation can, of course, permit derogations from its standards that are produced as outcomes of collective bargaining. Furthermore, a Directive can permit Member States to implement its requirements through national-level collective agreements, provided that such agreements conform to the required standards. Nevertheless, the general pattern adopted by EU interventions is to impose regulatory standards that will need to be implemented by law in the Member States. This emphasis on law as the method of implementation of EU standards then creates a pressure within Member States to juridify their industrial rela-

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tions system. In other words, the need to comply with EU law places pressure on Member States to implement those standards by imposing domestic legislation, even though those matters have previously been regulated by alternative mechanisms such as collective bargaining. It is true that many Directives in the field of labour law permit the implementation of that law through national-level collective agreements, so in those cases the pressure to juridify the industrial relations system is diminished. However, there will always be questions about whether a national-level collective agreement is sufficiently comprehensive in its coverage and specific in its requirements to amount to a full implementation of the Directive. It is usually a lot easier for governments of Member States to point to national legislation as proof of implementation. As an example of this pressure towards juridification, consider the application of the Posted Workers Directive.25 The Directive requires that employees who are temporarily sent or ‘posted’ by the employer to another Member State should receive the minimum standards of protection of the host state regarding working conditions, pay, safety and anti-discrimination. The objective of this Directive is to prevent the migrant employer form of social dumping in which foreign workers are brought into a host state by a foreign employer and receive less than the minimum wages and other core terms received by workers normally resident in the host state. The question that has arisen in cases such as Laval centres on which standards of the host state are applicable to the posted workers.26 In the Directive, it describes the relevant standards as ‘a nucleus of mandatory rules for minimum protection’.27 It further specifies that the standards should be set either by legislation or by collective agreements that have legal force across a whole industrial sector, ie collective agreements that must be observed by undertakings in the geographical area and in the profession or industry concerned.28 In Sweden at that time, however, the workers in the construction sector only had a sectoral agreement to fix standard wage rates. This collective agreement was not a legally mandated minimum standard. The union tried and failed to negotiate a collective agreement with the foreign employer to persuade it to observe the same terms as those laid down in the existing sectoral collective agreement. The union mounted effective industrial action against the foreign employer, which was lawful under Swedish law. The Court of Justice of the EU decided, however, that the industrial action amounted to an unlawful interference with the foreign employer’s freedom of services protected under the Treaty and remitted the case to the Swedish courts to award damages against the union.29 The legality of the industrial action could not be established by reference to the Posted Workers Directive because the relevant collective agreement was not legally binding on 25 Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services [1996] OJ L18/1. 26 Case C-341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet [2007] ECR I-11767. 27 Directive 96/71/EC (n 25) Recital 13. 28 Ibid, Arts 3(1) and 3(8). 29 Art 56 TFEU.

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all employers in the sector and nor was it confined to rules on minimum standards regarding a narrow range of topics such as wages. The question facing the Swedish government then became whether it needed to introduce a statutory minimum wage or create a mechanism for the legally enforceable extension of collective agreements to all employers in the industrial sector. Either of these choices would have required a major reorientation of Swedish labour relations practice. The Swedish system of autonomous collective agreements used national-level sectoral collective agreements to determine pay and other terms and conditions, but these were enforced by the threat of industrial action, not legal machinery.30 Unwilling to disturb this pattern, the solution adopted by the Swedish government was to leave that system in place but to create a narrow exception for lawful industrial action in the case of posted workers. Industrial action to enforce the terms of a collective agreement against a foreign employer would only be lawful if the demands made by the union referred solely to minimum conditions on the nucleus of mandatory topics.31 The effect of this legislation is nevertheless likely to disturb the pattern of autonomous collective agreements in Sweden. Those agreements strive to establish standard rates of pay at a high level rather than laying down minimum standards. Unions will have to ensure that the collective agreements are presented as establishing minimum standards and will have to confine their demands to enforce the collective agreement against a foreign employer to the narrow range of protected subjects. In this particular story, the EU measures did not ultimately compel the Swedish government to juridify industrial relations through the introduction of legally mandated minimum standards. The need for unions to comply with EU law will, however, compel them to adopt some different patterns of collective bargaining. The aim of Swedish unions to secure good wages throughout the construction sector through collective agreements, backed up by threats of industrial action, cannot be achieved. Foreign employers will be able to undercut those standard rates unless they are established as minimum rates of pay and other core conditions of employment. This solution may prove fragile and full of pitfalls, resulting eventually in the need to introduce clearer legal protection for the nucleus of minimum standards. The presence of foreign employers paying their foreign employees at lower than the standard rate, though still complying with minimum conditions, will certainly weaken the bargaining position of the unions and may drive down wages for all workers in the sector. In this way, the EU measure, though ostensibly seeking to combat social dumping, in practice is likely to facilitate it. This effect is partly due to the method of implementation of EU policies through legislation. 30 J Malmberg and T Sigeman, ‘Industrial Action and EU Economic Freedoms—The Autonomous Collective Bargaining Model Curtailed by the European Court of Justice’ (2008) 45 Common Market Law Review 1115. 31 M Ronnmar, ‘Laval Returns to Sweden: The Final Judgment of the Swedish Labour Court and Swedish Legislative Reforms’ (2010) 39 Industrial Law Journal 280, 285.

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III. Individualisation The method of EU intervention in employment law also tends to focus on the individual relation of employment rather than the collective institutions that have customarily governed the employment relationship. To pursue the policy of guarding against social dumping, the EU is driven towards the enactment of mandatory minimum standards that, in turn, have to become legally enforceable rights. Employees can then protect themselves against social dumping by enforcing their individual rights against their employer. The employment law produced by the EU therefore usually takes the form of enacting rights for individual workers. As well as contributing to the juridification of labour law, these laws also tend to present issues in the form of individual disputes between the worker and employer, rather than as matters for collective determination. This trajectory of EU labour can be illustrated by two examples that concern (1) derogations from individual legal rights and (2) justificatory defences for exceptions to equal pay.

A. Derogations The mandatory standards of EU employment law need to be protected against derogations by contractual agreement for fear that workers, either individually or collectively, may be induced by employers to bargain away their minimum rights. Although this risk of reduction in standards is less likely to occur through collective bargaining than by individual agreement, given the stronger bargaining power of collective organisations of workers, the minimum standards may need to be secured against any kind of derogation in order to prove effective against the market pressures for social dumping. The Working Time Directive provides for the possibility of various kinds of derogations, some of which may be done collectively.32 But these derogations are carefully circumscribed in order to prevent evasion of the minimum standards. In Pfeiffer33 seven employees of the German Red Cross claimed that they were required to work in excess of the maximum 48-hour week set by the Working Time Directive.34 Under their contracts of employment, the terms of which had been set by a collective agreement, the workers were required to be available for work for 49 hours per week. The Directive does permit straightforward derogations from the 48-hour week, but only by means of an individual agreement by the worker, not a collective agreement. The Court of Justice insisted that this basic right was an individual right, which could only be relinquished by the individual worker under conditions when the worker was fully informed and free to 32

Directive 2003/88/EC (n 8). Joined Cases C-397/01 to C403/01 Bernhard Pfeiffer v Deutsches Rotes Kreuz [2004] ECR I-8835. 34 Council Directive 93/104/EC of 23 November 1993 concerning certain aspects of the organisation of working time [1993] OJ L307/18. 33

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reject the proposal. The derogation by a collective agreement was therefore not permitted in this case because the worker, on signing the contract of employment governed by the collective agreement, may not have been fully aware of the restriction of his right to a maximum 48-hour week. This decision, following the tenor of the Directive, emphasises the importance of the individual contract of employment and the legal rights of the individual at the expense of the more reflexive regulation provided by the collective agreement. These workers provided emergency services. Much of their time at work was spent ‘on-call’ until such emergencies arose. What was important to the employer was to have staff available all the time, seven days a week. Its shift system, as set by a collective agreement, provided this coverage, but to do so had fixed the formal hours of work at 49 hours per week. It is unlikely that the additional hour imperilled the health and safety of the workers concerned, because most of the time at work they were probably not active but merely ‘on-call’. The collective agreement probably represented a reasonable compromise of interests in this context. Nevertheless, the Court of Justice permitted the individual worker to breach the collective agreement by insisting on his right to a maximum 48-hour week as provided in the Directive.

B. Defences to Equal Pay Claims The law governing equal pay for men and women includes both intentional discrimination and indirect discrimination. Indirect discrimination occurs when an apparently neutral pay system has the effect of disadvantaging women as a group in comparison to another group, predominantly populated by men, who are doing like work or work of equal value. The employer may, however, justify this difference in pay by reference to objective considerations according to a test of proportionality. These objective considerations can include market forces concerning the employer’s need to recruit and retain staff. The question arose in Enderby v Frenchay Health Authority as to whether a difference in pay could be justified by reference to collective agreements.35 In this case, the comparison was drawn between speech therapists, who were predominantly women, and hospital pharmacists, who were predominantly men. There was a significant difference in levels of pay between the two groups. The employer relied on the fact that the difference in pay resulted from the separate collective bargaining arrangements for these two groups of workers. The collective agreements were not discriminatory in themselves. It was rather the different outcomes that caused the indirect discriminatory effect. The Court of Justice rejected the employer’s defence: The fact that the rates of pay at issue are decided by collective bargaining processes conducted separately for each of the two professional groups concerned, without any 35

Case C-127/92 Enderby v Frenchay Health Authority [1993] ECR I-5535.

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discriminatory effect within each group, does not preclude a finding of prima facie discrimination where the results of those processes show that two groups with the same employer and the same trade union are treated differently. If the employer could rely on the absence of discrimination within each of the collective bargaining processes taken separately as sufficient justification for the difference in pay, he could, as the German Government pointed out, easily circumvent the principle of equal pay by using separate bargaining processes.

It is possible in this particular case that the trade union that represented both groups had not used its bargaining power effectively to support the claims of the speech therapists on the ground of some kind of unconscious discrimination against ‘women’s work’. But the reasoning in favour of upholding the claim for equal pay did not rely on this hypothesis. It was used rather to reject the employer’s attempt to rely upon the difference between the collective agreements as a justification for the disparity in pay. The mere possibility that the collective agreement had been tainted by sex discrimination was treated as a sufficient reason to ignore the collective agreement entirely as a possible justification for the difference in pay. This decision therefore protects the individual right to equal pay at the expense of contrary collective agreements, even if those agreements cannot be shown to be tainted by any kind of sex discrimination. The decision puts the individual right to equal pay ahead of any considerations of collective industrial relations and self-regulation through collective agreements.

IV. Working Time Directive The above analysis has produced a number of conclusions. The first was that in the field of employment law the EU pursues two central policies, namely the prevention of social dumping and the promotion of flexicurity, which combine extremely uneasily, resulting in legislation that strives to impose mandatory minimum standards whilst preserving a porous quality that enables flexibility and adaptability in labour markets. The second contention was that EU interventions have generally promoted the juridification of employment relations. The third observation was that EU law tends to grant rights to individuals so that it excludes from consideration or weakens traditional forms of collective regulation of the workplace. This section combines these points through an examination of the Working Time Directive. The central argument in this section is that once these tendencies are combined, it becomes evident that EU intervention in the quality of employment relations tends to become dysfunctional. In other words, the effect of EU law seems to be to achieve both the facilitation of social dumping and at the same time a reduction in flexibility or flexicurity.

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A. The Significance of Working Time For people who have a job, working time matters immensely. It has profound effects on nearly everything else in their lives. The length of time they work determines how much time and energy they can devote to their other interests and commitments. The hours of the day and night during which they work constrains what other interests and commitments they can undertake. Working time shapes how an individual determines a personal work/life balance, such as spending time with the family and looking after dependants. The amount of time spent working also affects how much take-home pay they receive, since wages are normally a multiple of the hours actually worked. Last, but by no means least, working time also influences an individual’s health: too much work can lead to stress and exhaustion; too little work may lead to depression and anomie. An individual chooses working time on taking a job. The contract of employment fixes the hours of work or at least determines the parameters of working time. Because working time is so significant to individuals, it is governed by contractual agreement. The absence of such a choice would render work into something like forced labour or servitude. It is true that an individual may not find market opportunities to work the precise hours that he or she desires. The hours of work for each job available may be offered by employers on a take-it-orleave-it basis. Employers, on the other side of the wage/work bargain, may also sometimes claim the personal significance of the choice to determine hours of work. The owner of a corner store needs staff to help only when he or she wants to open the store. But even if an employer’s claim to personal autonomy seems spurious in the context of larger employer organisations, efficiency considerations support the employer’s power to determine hours of work. Labour power needs to be used efficiently in order to obtain productivity and profits. Employers must be permitted to determine their needs for workers, for otherwise businesses will become inefficient as a result of the employment of surplus labour. For these reasons, the determination of working time must be a matter of choice, of contractual agreement, which should be governed primarily by private law. Notwithstanding the importance attached to choice by private law, working time has been one of the prime topics of labour regulation since the Industrial Revolution. In Britain, the early legislation tried to place limits on the working hours of children and women. Some of the motives behind this legislation were religious and moral: to respect the sabbath and to prevent women from being away from their homes and patriarchal control at night. Later, trade unions campaigned unsuccessfully for a limit of a 10-hour day for all workers. Many Western governments enacted legislation that placed limits on working hours or at least provided incentives for employers to limit the working day by making highly paid overtime wages compulsory. The first convention of the International Labour Office (later, Organization) concerned the 48-hour maximum working

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week.36 In Britain, however, apart from the exceptions for women and children, no legislation interfered with freedom of contract. The matter of hours of work was left to individual negotiation or more commonly in the twentieth century, to collective bargaining.

B. The Directive That legislative abstention in the United Kingdom ended abruptly with the Working Time Regulations 1998.37 The Regulations were required by the European Community’s Directive of 23 November 1993 concerning certain aspects of the organisation of working time, which was subsequently amended and consolidated on 4 November 2003 by the European Parliament and Council’s Directive of the same name.38 In broad terms, the Directive sought to impose a maximum of 48 hours working time per week, required at least one day off work each week, and required rest breaks and an annual paid holiday. Exceptions were made for certain kinds of work: managing executives or other persons with autonomous decision-making powers, care workers, offshore workers, services connected with transport, television, emergency services, junior hospital doctors, etc. Certain kinds of derogations from the rules were also permitted by collective agreements. Finally, the Directive permitted Member States to enact an opt-out for individual workers from the maximum 48-hour working week, provided that the national law ensured that the employer had first obtained the worker’s written agreement to work longer hours. The Directive on Working Time fits into the strategy for EU employment law described above. It is a minimum standards Directive, permitting Member States to preserve higher domestic standards. The standards set are towards the low end of the spectrum. That view may not be so apparent to a British audience where a limit on the working week to 48 hours heralded a significant challenge to the widespread practice of long hours and overtime work. Similarly, in Britain the right to a paid holiday was only enjoyed in the primary labour market, whereas in the secondary labour market of casual work, fixed-term contracts, part-time work, etc, a paid holiday entitlement was rare. In comparison with France, however, where the right to a paid holiday was well established and the government had even tried to impose a maximum 38-hour week, the standards in the Directive were certainly at the lowest level possible. They closely track the international standards of the International Labour Organization (ILO), which are supposed to be applicable to all countries, including developing economies. Any lower standards would have required some Member States to withdraw from the relevant ILO conventions. 36 C1 Hours of Work (Industry) Convention 1919; C30 Hours of Work (Commerce and Offices) 1930; C13 Weekly Rest (Industry) Convention 1921; C 106 Weekly Rest (Commerce and Offices) Convention 1957. 37 SI 1998/1833. 38 Above n 8 and 34.

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Yet the Directive is also porous, both creating many exceptions in its personal scope and permitting derogations by collective or individual agreement. These exceptions and derogations are in part responses to practical problems arising from the uniform application of general standards to the wide variety of workplaces and types of jobs. However, these exceptions and derogations also serve to enable employers to acquire labour power flexibility in order to meet their needs efficiently. To mention only two examples of the porous quality of the legislation. Article 18 permits derogations by collective and workforce agreements from the rights to a daily rest period of 11 hours, to a rest break after 6 hours of work, a weekly day of rest, and to limits on night work to an average of 8 hours a day. More subtly, in calculating limits and averages, the legislation creates a reference period for each right granted, and these reference periods can be extended to 12 months by collective agreement where there are ‘objective’ reasons for doing so, which in effect permits an annualised hours system under which workers may work much more than 48 hours a week for large portions of the year. More generally, the Directive excludes from its scope workers for whom, ‘on account of the specific characteristics of the activity concerned, the duration of the working time is not measured and/or predetermined or can be determined by the workers themselves’.39 This general though opaque exclusion probably applies to most professionals, managers and others who have considerable control over the hours actually worked. These groups of workers often coincide with the segment of the workforce that typically exceeds the 48-hour week. Notice that the greater the flexibility inherent in the job description—so that it grants the worker more discretion over task definition and the time that needs to be devoted to work—the less likely that the Directive will be applicable to that job. The promotion of flexicurity as the best model of a contract of employment that will maximise the competitiveness of a business has the potential effect of excluding the worker from the protections of the minimum standards announced in the Directive. This aspect of the legislation provides a clear example of the inevitable tensions between the policies of the prevention of social dumping and the promotion of flexicurity. The competitive benefits of flexibility in contracts of employment are bought at the price of incentives for social dumping. The most controversial derogation permitted under the legislation is the one that permits an individual worker to agree to waive the maximum 48 hours of working time per week. Initially, only the United Kingdom exercised the option to not apply the maximum of 48 hours through an individual agreement with the worker. It rapidly became normal practice for British employers who needed any flexibility at all with respect to working hours to insert into standard form contracts of employment a term that excluded the mandatory limit on working

39

Art 17(1).

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hours.40 The impact of the Directive on this aspect of the private relationship between employer and employee in the UK was merely to require the additional formality that a written opt-out had to be signed by the employee. The derogation seemed to significantly undercut the policy aim of preventing social dumping. British employers could respond to the enhanced pressure of market competition arising from the creation of the single market by extending contractual hours of work. Another way that British employers sought to resist the application of minimum standards required by the Directive was to avoid the requirement to grant employees a period of paid holiday. Employers in Britain responded with the device of ‘rolled-up’ holiday pay. In other words, the contract was redesigned so that the remuneration payable was divided into two categories, pay for work and pay for a holiday. The holiday itself, however, was not expected to take place until after the termination of the employment relationship. Some workers did receive an additional holiday entitlement and others received a pay increase to represent the rolled-up holiday pay, but for many workers, especially those on temporary and part-time work, the effect of the Regulations was again purely formal: a redesign of the contract of employment.41 Employers could defend their practices on the basis of the need for flexibility in their use of labour. If the job involved harvesting some crops over a period of a few months, for instance, the employer could argue that it was efficient for the worker to take a paid holiday once the harvest was brought in and not before. To achieve efficient use of labour power, the employer required the workers to take their holidays once the job was completed. Rolled-up holiday pay served that goal of efficiency through flexibility, though of course it rather undermined the point of the measure viewed from a social dumping perspective, which was to ensure that workers enjoyed proper periods of rest for the sake of their health and safety. In sum, it is evident that the Directive points in both directions of EU employment law policy. On the one hand, with a view to the prevention of social dumping that might damage the health and safety of workers, it tries to lay down minimum standards concerning maximum hours, rest breaks and paid holidays. In this respect, it seeks to put some detail on the basic right articulated in the Charter of Fundamental Rights of the EU in Article 31(2), which says that ‘[e]very worker has a right to limitation of maximum working hours, to daily and weekly rest periods and to an annual period of paid leave’. On the other hand, taking into account the need for flexibility and adaptability, the Directive includes many derogations. The danger presented by these derogations and exclusions is evidently that any worker who actually needs the guarantees of the minimum standards will be deprived of those protections by national law and practice. The precise scope of both the protections of the fundamental rights 40 C Barnard, S Deakin, and R Hobbs, ‘Opting Out of the 48 Hour Week: Employer Necessity or Individual Choice’ (2003) 32 Industrial Law Journal 223. 41 Joined Cases C-131/04 and C-257/04 CD Robinson-Steele v RD Retail Services Ltd [2006] ECR I-2531.

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and the looseness of the permitted exceptions has been considered extensively by the Court of Justice of the EU.

C. The Impact of the Court of Justice Rather unfairly, the Court of Justice of the EU has sometimes been blamed for failures of the Working Time Directive. It is said that the decisions of the Court have been rather rigid, forcing employers and governments to adopt more formal derogations from the minimum standards of the Directive. Consider, for instance, the Court’s decisions concerning ‘on-call’ time. When workers are ‘on-call’, they are not actually doing any work, but must be available to perform work on the instruction of the employer. Workers may be ‘on-call’ either in their place of work or on standby outside the workplace and at home. The question for the Court of Justice in a number of cases was whether ‘on-call’ time was to be regarded as ‘working time’ for the purposes of calculating the number of hours worked by an individual worker. The Court decided that time ‘on-call’ only counts towards the total of working time when the employee is physically at the place of employment, not when the employee is permitted to be elsewhere, such as at home.42 But all on-call time spent at the employer’s place of work counts towards the maximum, even if the employee is permitted to sleep on the employer’s premises.43 Periods when the employee was in fact resting, though still at the employer’s premises, could not be regarded as a period of rest that might satisfy the Directive’s requirement of 11 consecutive hours of rest per 24-hour period. The full implications of these interpretations of the Directive were revealed in Jaeger.44 The reference to the Court of Justice of the EU concerned a hospital doctor who carried out about six periods of on-call duty at the hospital each month, often on days when he had already worked an 8-hour day. These periods of on-call work were typically 16 hours long and even longer during weekends, but the doctor could sleep in a room at the hospital, except when needed, and received extra pay for these duties and some additional leave. The applicable German law permitted various derogations from its application of an 8-hour working day, including one by collective agreement. In this case, a complex collective agreement regulated the position of on-call hospital doctors. The agreement drew distinctions between the levels of work that were actually required during on-call, so that when more work was required, there would be fewer occasions on which the hospital could demand on-call duty. Once the work actually needed during the on-call time reached, on average over a period of a month, half of that time, it was regarded as ordinary working time. These 42 Case C-303/98 Sindicato de Medicos de Asistencia Publica (Simap) v Conselleria de Sanidad y Consumo de la Generalidad Valenciana [2000] ECR I-7963. 43 Case C-151/02 Landeshaupstadt Kiel v Jaeger [2003] ECR I-8389; McCartney v Oversel House Management [2006] ICR 510. 44 Case C-151/02 Jaeger (n 43).

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provisions were closely adapted to the needs of the public health service by the collective agreement. The implication of these fine gradations of the regulation of on-call time by the collective agreement was that on-call periods at the hospital when the doctor was not actually working were partly regarded in the agreement as a period of rest. The Court of Justice insisted, however, that all the time that the doctor was at the hospital should be regarded as ‘working time’, even those periods when the doctor was fast asleep. It justified this conclusion on the ground that it accorded with what we have called the anti-social dumping objective of the Directive. The Court cites the Community Charter of the Fundamental Social Rights of Workers, and the statement in the preamble to the Working Time Directive to the effect that the health and safety objective should not be subordinated to purely economic considerations. Furthermore, even though the Directive permitted some flexibility with regard to the continuous provision of services in hospitals, it neither permitted the total hours worked to exceed 48 hours per week nor for the employer to neglect their duty to give an employee a substantial period of complete rest. It was unacceptable, therefore, for the doctor to perform two day shifts followed by a period of on-time call, because the doctor had not been immediately given, on completing the on-call time, an 11-hour break from work. By reference to decisions such as Jaeger, can the Court of Justice be charged with having adopted an overly rigid interpretation of the Directive? Or is that charge simply treating the Court as the scapegoat when there are deeper problems with the EU intervention? The Court of Justice treats the Directive as fixing minimum standards in order to protect workers against social dumping. In line with this perspective, it interprets exceptions and derogations narrowly. For instance, Article 17(2) permits derogations from the requirement for a daily rest period in fairly general terms. It states that derogations are permitted in the context of hospitals ‘provided that the workers concerned are afforded equivalent periods of compensatory rest’. The doctor was given additional days off as well as payments for the on-call duties. But the Court of Justice held that this arrangement was not sufficient. Considering the health and safety objectives of the legislation, the Court insisted that after a period of on-call, the worker must immediately be given a period of rest so that he could recover from his exertions. This requirement of an immediate rest was applicable, according to the Court, even if the doctor had passed a restful night in bed without being disturbed. This decision can be supported as an appropriate interpretation of a law designed to protect workers against social dumping. Given the centrality of EU policy against social dumping, it is right for the Court to ensure that these minimal standards set out in the Directive are observed. If the Court started creating exceptions or interpretations that granted employers more leeway, it would begin to undermine the aim of the transnational law to secure basic standards throughout Europe. So the decisions of the Court, though certainly rigid, are defensible. But it is clear that the Member States and employers wanted

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more flexibility in the interpretation of the Directive and were disappointed that the Court of Justice did not approach the legislation as providing merely a framework that could be modified according to circumstances. The decision cuts a swathe through the relevant collective agreement and its detailed provisions regarding on-call cover in the health service. The legal rights outlined in the Directive are used to reject the careful and nuanced self-regulation agreed between the employers and workers. The result is both juridification and individualisation of the rules governing working time. Furthermore, the insistence on a strict interpretation of the Directive reduces the flexibility available to the employers to manage the labour force. The requirement for an immediate rest break after a period of on-call duty will necessitate an increase in the number of doctors employed and a complete reconsideration of the rota system. It is hardly surprising, therefore, that as a consequence of decisions like the one found in Jaeger, employers have sought routes around the legislative constraints, and governments have been willing to create flexible opt-out mechanisms in domestic law.

D. The Commission’s Assessment In 2010, the European Commission published an assessment of the Working Time Directive and its implementation by the Member States.45 In addition to the normal concern for checking that the Directive had been properly implemented by the Member States, it sought to examine whether or not the risk had materialised that the derogations might be exploited by the Member States and employers in order to remove the basic protections provided in the Directive. The assessment of the state of the law in the Member States and its level of compliance with the Directive, as interpreted by the Court of Justice, revealed many areas where there were weaknesses in the protections afforded for workers. As examples of these weaknesses, we can examine the reference period, compensatory rest periods, and the opt-out of the 48-hour week.

(i) Reference Period Under the Directive, normally the reference period during which the average of hours worked is calculated should not exceed 4 months. The Directive provides that, with respect to certain kinds of jobs, national legislation may extend the reference period to 6 months, and the period may be extended further for any kind of job by collective bargaining to a whole year.46 The Commission found that Germany, Hungary, Poland and Spain permit a 12-month reference period 45 Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on implementation by Member States of Directive 2003/88/EC (‘The Working Time Directive’) COM(2010) 802 final. 46 Directive 2003/88/EC (n 8) Art 19.

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without a collective agreement.47 These countries are therefore affording their employers the flexibility of contracts with annualised hours, though the effect might be that at certain times of the year the workers will be working in excess of 48 hours a week for many weeks in a row, provided that there is a compensating reduction in hours at some other period during the year. Although such arrangements do not comply with the Directive, the Commission has supported contracts with annualised hours in the past as part of the policy on flexicurity, so it is doubtful whether these aspects of national laws are really a matter of concern.48

(ii) Compensatory Rest Contrary to the Jaeger judgment, in nine Member States, there seems to be no general legally binding norm about the timing of compensatory rest, so that it does not have to be taken immediately following the extended period of work.49 Of course, in practice, either by virtue of collective agreement or individual contract, the worker may enjoy considerable compensatory rest periods. In France, it is common for sectoral collective agreements to provide for équivalence, which means that periods of on-call time where the worker is inactive will only be counted in part in the calculation of working time.50 The Commission is concerned, however, that the worker has no legally guaranteed right to an immediate period of rest following a long period of work. In these nine Member States, there is, from the point of view of the Commission, insufficient juridification of individual rights with regard to the entitlement of the worker to compensatory rest.

(iii) Opt-out of the 48-hour Maximum The European Commission had been reluctant to concede to Britain the opt-out of the 48-hour week by individual agreement and had provided in the Directive that its continuation would be reviewed before long. Despite the many attempts by the Commission to secure political agreement to remove or revise the opt-out, it is still there. Indeed, perhaps to the consternation of the Commission, what has happened instead is that now 16, or a majority of the Member States, have signed up to the opt-out. Many of these opt-outs in national legislation are limited to sectors where there is extensive on-call time. The introduction of the opt-out is the way in which these states have responded to the Jaeger judgment on the treat47 European Commission, Modernizing Work Organisation (2002) EMCO/28/060602/ENREV 1, para 3.1. 48 Ibid; C Barnard, S Deakin, and R Hobbs, ‘“Fog in the Channel, Continent Isolated”: Britain as a Model for EU Social and Economic Policy?’ (2003) Industrial Relations Journal 345, 462. 49 Report from the Commission (n 47) para 3.3. 50 Ibid, para 3.2.

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ment of on-call working time. Furthermore, few of the states require employers to keep records of the hours actually worked, so it becomes well nigh impossible to determine how often and by how much the hours exceed the 48-hour maximum. Other Member States, such as Germany, while not subscribing to the individual opt-out, have achieved the same result by using an expansive interpretation of the permitted derogations through collective bargaining. As the Commission observes in its report, there is ‘cause for concern that, in some Member States, the health and safety objectives of the Directive may not be respected, and the requirement of the worker’s advance voluntary consent to opt out may not be properly applied’.51 Although no one in Brussels likes to admit this publicly, the maximum 48-hour week seems to be a dead letter in practice. It is, of course, possible that the Commission may not regret this development except insofar as it represents disobedience to the supreme authority of EU law, because flexibility regarding maximum weekly hours clearly fits into the policy of flexicurity.52

V. Conclusion The EU preaches the benefits of competitiveness arising from flexibility, but at the same time seeks to impose inflexible regulations on labour markets. These laws merely seek to establish minimum standards, thereby leaving considerable flexibility for collective bargaining and domestic legislation to improve on those standards. However, the rigidities of even these minimum legal standards from the EU appear to create problems that provoke avoidance, evasion or even calculated breach of the Directives on grounds of efficiency. The particular example we have examined, the Working Time Directive, may differ in some respects from other pieces of EU legislation. Nevertheless, it has been argued that in many respects it is a paradigmatic piece of EU employment law. It tries to prevent social dumping in the form of driving down labour standards in the Member States as a result of the intensification of competition. At the same time, it acknowledges the importance of flexibility and adaptability by permitting numerous types of derogations. When we ask, however, what effect this law has had on the position of workers in Europe, it is hard to detect either of these intended benefits having been realised. It is apparent from the history of the application of this Directive in the Court of Justice and the Member States that much of its effect has been formal rather than substantive. A rewriting of the terms of employment contracts can often satisfy the demands of the legislation. Sometimes more elaborate arrangements 51

Ibid, para 3.7. BP Ter Haar and P Copeland, ‘What Are the Future Prospects for the European Social Model? An Analysis of EU Equal Opportunities and Employment Policy’ (2010) 16 European Law Journal 273. 52

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have to be undertaken, such as collective agreements or workforce agreements, in order to ensure that the working patterns of a particular employer are not disturbed. These arrangements and contractual modifications add to the transaction and administrative costs of employers, but do not serve to fulfil either of the purposes of the legislation—they neither prevent social dumping nor assist in generating flexibility and adaptability in the workplace. Furthermore, the legal form and the individualisation of EU regulation permit individual workers to put their own interests at odds with collective arrangements. As in Pfeiffer and Jaeger the individual worker can insist upon his or her legal rights regardless of whether the working conditions have been settled through collective bargaining. This ability to insist upon individual rights is taken so far as to prevent opt-outs of the 48-hour week through the collective bargaining mechanism. The law seems to think that an individual worker is better able to protect himself against pressure from an employer to concede long working hours than an organised trade union. Ultimately, we reach the ironic moment when the rigidity of the laws forces the Member States to exploit every possible derogation within the Directive. As a consequence, many countries now have what they did not have before the EU intervention: an opt-out of the 48-hour week or its functional equivalents, such as excluding various categories of workers, changing reference periods, and using collective agreements to provide for equivalent rest periods that are neither immediate nor equivalent. The unintended effect of the Directive on the national laws on working time has almost certainly been to reduce the legal protections of employees against social dumping. For instance, workers may now be confronted with opt-outs from the 48-hour week when previously they were protected from long hours by either national law or collective bargaining. The conclusion of this study of a paradigm piece of EU labour legislation, the Working Time Directive, is that, contrary to the professed aim of preventing social dumping whilst encouraging flexicurity, the effects of the legislation have been the dysfunctional ones of facilitating social dumping whilst impeding or discouraging flexicurity. We can see evidence of this malfunction in the official statistics of the EU. For instance, it is reported that workers in involuntary temporary and part-time work have increased from 53.7% and 18% in 2001 respectively, to 60.3% and 25.6% in 2009. Wages have tended to grow below productivity in most Member States, and in-work poverty is persistent: employed people living under the poverty threshold have remained stable at around 8% since 2005.53

Average working time per week has fallen in the EU as a whole, but only as an effect of the increase in part-time work to nearly 20% of the working population. It is hardly surprising, therefore, that the European Commission has recently 53 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions—An Agenda for new skills and jobs: A European contribution towards full employment COM(2010) 682 final, 14.

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announced that it plans to carry out a large-scale, step-by-step evaluation of the present legislative acquis, with a view to devising ‘[a] smarter EU legal framework for employment and health and safety at work’.54 My argument has been, in effect, that it is hard to see how European regulation can be that smart. Even leaving aside the insoluble conundrum of discovering a coherent policy that marries the largely irreconcilable goals of preventing social dumping whilst promoting flexicurity, this smart regulation must find a way of regulating the employment relation that forgoes the EU’s standard regulatory techniques of juridification and individualisation. And if the main alternative to those techniques is used, namely soft law and the promotion of collective bargaining, the EU will in effect be deciding to renationalise labour law, because those methods can only be made operational at the local level. If a solution can be found, it probably must begin with a rethinking of the respective competence of the EU and national governments in labour law matters. With respect to the aspect of the problem of social dumping described as regulatory competition leading to a dismantling of labour standards, the EU should try to implement comprehensive minimum standards, but these need to be stated at the level of principle or rights, which can be implemented by legislation or suitably comprehensive binding collective agreements. Derogation from those rights should be permitted on the basis of the normal kind of proportionality test except that in the context of labour law the existence of a binding collective agreement should normally be assumed to provide a sufficient justification of the derogation. More detailed regulation should be avoided, both because, as I have argued, it is probably ineffective, and because it will force the introduction of an increasing number of detailed exceptions to the rules, which will, as at present, provoke opportunism, conflict and litigation. With respect to the aspect of social dumping arising from freedom to provide services with posted workers by the migrant employers the EU needs to reconsider the priority accorded to the fundamental freedoms in the Treaty in the light of the labour rights protected in the Charter of Fundamental Rights. Such reconsideration should lead to the conclusion that the existing exception for the minimum core of labour standards protected by law contained in the Posted Workers Directive is in reality an invitation for social dumping. Freedom to provide services can be satisfied adequately by disallowing discrimination in the award of contracts on the basis of nationality, without the need to give the foreign employer the additional advantage of being able to undercut labour standards established by collective agreements and legislation. To a considerable extent these proposals involve the renationalisation of labour law, with the EU performing a more limited role of guaranteeing basic labour rights and free movement.

54

Ibid, 15 and 23.

11 The Impact of the Non-Discrimination Principle on Private Autonomy NORBERT REICH

I. Introduction The concept of non-discrimination, also called ‘equal treatment’, plays an important role in Union law, and the Court of Justice of the EU has described it in many judgments as a general constitutional principle.1 With regard to the economic law of the Union, market subjects should be treated as equals if they are in a comparable situation, or conversely, law should not impose equal treatment on them if they are in different situations unless such differentiation is objectively justified.2 The Codorniú case provides us with an example.3 The Court invalidated a Community regulation forbidding Spanish producers from using the traditional term crémant by reserving it for French and Luxembourg producers of sparkling wine. The measure was held to violate the principle of non-discrimination because Spanish producers were put on an unequal basis relative to other producers without justification. Over time EU non-discrimination law, apart from the distinctly marketorientated approach, has also taken on a social dimension by including within its ambit the struggle against discrimination based on gender, race, ethnic origin, age, disability or sexual orientation. This development is part of a more general trend concerned with fundamental rights in the EU. Article 21 on ‘non-discrim1 Certain ‘general principles’ of EU law are regarded to possess an importance that elevates them to ‘constitutional status’. For this view, see K Lenaerts and J Gutiérrez-Fons, ‘The Constitutional Allocation of Powers and General Principles of EU Law’ (2010) 47 Common Market Law Review 1629, 1647. For an overview of general principles of EU law, see T Tridimas, The General Principles of EU Law, 2nd edn (Oxford, Oxford University Press, 2006) 59–64; N Reich et al, Understanding EU Internal Market Law, 3rd edn (Antwerpen, Intersentia, 2012), para 12.2; J Basedow, ‘Grundsatz der Nichtdiskriminierung’ [2008] Zeitschrift für Europäisches Privatrecht (ZEuP) 230, 232; P Mazière, Le principe d’égalité en droit privé (Aix-Marseille, Presses Universitaires d’Aix-Marseille, 2003)  429. 2 Joined Cases 117/76 and 16/77 Ruckdeschel [1977] ECR 1753 para 7; Case C-15/95, EARL de Kerlast [1997] ECR I-1961, para 35; Case C-127/07 Societé Arcelor Atlantique et Lorraine [2008] ECR  I-9835, para 23. 3 Case C-309/89 Codorniú SA v Council of the European Union [1994] ECR I-1853.

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ination’ of the Charter of Fundamental Rights, which formally became part of EU law after the Lisbon Treaty was ratified, but which had guided the Court of Justice in its interpretation and application of Community law beforehand,4 reads: 1. Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation shall be prohibited. 2. Within the scope of application of the Treaty  … and without prejudice to the special provisions … any discrimination on grounds of nationality shall be prohibited.

Article 23 of the Charter contains a specific provision on ‘equality between men and women’, including but not limited to employment relations: Equality between men and women must be ensured in all areas, including employment, work and pay. The principle of equality shall not prevent the maintenance or adoption of measures providing for specific advantages in favour of the under-represented sex.

These are obviously broad formulations that need to be transformed into legal ‘rights’ by EU-legislation and court practice. They are addressed to the Union itself and, according to the general clause of Article 51 of the Charter, to the Member States ‘only when they are implementing Union law’, which must be read as meaning ‘acting within the scope of EU law’. The more extensive understanding of the Charter’s scope of application corresponds to the existing case law of the Court of Justice on the application of general principles of fundamental rights.5 What can be seen both in the pre-existing case law of the Court of Justice on the principle of non-discrimination, as well as its Charter manifestation, is that the rights it gives rise to have a ‘vertical direction’ in relation to the Union or the Member States, the latter including any body or institution governed by public law. In this chapter I would like to discuss another dimension of the principle of non-discrimination in EU law. I will focus my analysis on private law rela4 For the general approach of the Court of Justice of the EU in applying the Charter even before its formal enactment, see Case C-540/03 EP v Council [2006] ECR I-5769; for a specific example, see Case C-272/06 Productores de Música de Espana (Promusicae) v Telefónica de Espana SAU [2008] ECR I-271, paras 62–63, on the need to balance between the right to effective protection of property (copyright) and the right of protection of personal data and hence of private life in civil litigation between a rights management society and internet providers concerning disclosure of user data of copyrighted music. 5 See Case 5/88 Wachauf v Bundesamt für Ernährung [1989] ECR I-2609, para 19, and now Case C-279/09 DEB Deutsche Energiehandels- und Beratungsgesellschaft mbH v Germany, Judgment of 22 December 2010; K Lenaerts and J Gutiérrez-Fons (n 1) 1660; a more restrictive opinion has been taken by M Borowsky ‘Artikel 51’ in J Meyer, Kommentar zur Charta der Grundrechte der Europäischen Union, 3rd e-book edn (Baden-Baden Nomos 2011) para 14; a narrower reading has been suggested by W Cremer, ‘Grundrechtsverpflichtete und Grundrechtsdimensionen nach der Charta der Grundrechte in der EU’ [2011] Europäische Grundrechte Zeitschrift (EuGRZ) 545, strictly distinguishing between ‘Durchführung’ (implementation) and ‘Anwendungsbereich’ (scope of application) of Union law, in the case of acts of the Member States.

The Impact of the Non-Discrimination Principle on Private Autonomy 255 tions which in all Member States,6 and in Union law itself,7 are subjected to the principle of private autonomy. The significance of the principle of private autonomy has recently been confirmed in Article 1 of Annex I of the Commission Proposal of a Common European Contract Law (CESL) of 11 October 2011.8 However, an inevitable clash exists between the rationale behind the principle of non-discrimination and the logic of private law fuelled by the concern for economic efficiency. Private law allows ‘discrimination’—or rather differentiation—of parties, in particular on grounds of economic efficiency. This entitlement to differentiate is protected by the fundamentals of private law relations, namely freedom of contract and party autonomy, which the application of the principle of non-discrimination would contradict. This explains why in the context of company law, the Court of Justice, drawing on a thorough opinion of Advocate General Trstenjak, rejected the existence of an equality principle of ‘constitutional status’.9 In doing so the Court agreed with the prevalent academic opinion expressed, for example, in an article authored by a prominent German scholar, Basedow: The principles of equality or the prohibition of discrimination are not part of the traditional principles of private law. He who concludes a contract does this in his own interest and not in order to do justice to others. She who has to choose a contract partner among several candidates has according to a German saying the ‘pain of choice’ because there usually exist several selection criteria, the relative value of which can only be assessed with reference to subjective preferences.10

In his article, Basedow undertakes a detailed and critical analysis of primary and secondary EU law, as well as of the practice of the Court of Justice, and comes to the conclusion that ‘there are only limited and selective prohibitions of discrimination, usually aimed at creating balance in situations of power, and not a general prohibition of discrimination in the conclusion of contracts’.11 The purpose of this chapter is to challenge the traditional conception of private law whereby non-discrimination is not one of its constituting principles.

6 See the overview of the development of contract law under aspects of ‘social justice’ in England, France and Germany by H-W Micklitz, The Many Concepts of Social Justice in European Private Law (Cheltenham, Edward Elgar Publishing, 2011) 8. 7 Case C-277/05 Sociéte thermale d’Eugénie-les-Bains v Ministère de l’Economie, des Finances et d’Industrie [2007] ECR I-6415, para 28: ‘parties are at liberty—subject to the mandatory rules of public policy—to define the terms of their relationship’. 8 Commission Proposal of 11 October 2011 for a Regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final. 9 Case C-101/08 Audiolux SA v Groupe Bruxelles Lambert SA (GBL) [2009] ECR I-9823, para 63; J Basedow, ‘Mangold, Audiolux und die allgemeinen Grundsätze des europäischen Privatrechts’ in S Grundmann at al, Festschrift für Klaus J. Hopt zum 70 Geburtstag am 24 August 2010. Unternehmen, Markt und Verantwortung (Berlin/New York, De Gruyter, 2010) 27. For a broader discussion, see MW Hesselink, ‘The General Principles of Civil law: Their Nature, Role and Legitimacy’ in this volume. 10 Basedow (n 1) 230 (my translation). 11 Ibid, 250.

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Drawing on an argument that I presented elsewhere,12 I will show that the traditional distinction between public and private law that is so dear to continental lawyers does not exist in EU law. For this reason, it cannot be used to ‘shield’ private law against provisions and concepts of non-discrimination. This does not imply that party autonomy should not be recognised as one of the ‘fundamental pillars’ of EU law.13 It is finding its place in the ‘freedom to conduct a business’ under Article 16 and the ‘right to property’ under Article 17 of the Charter. My view, however, is that private autonomy should balanced against other ‘constitutional principles’, such as the protection of the weaker party and the ordre public of the European Union, as recognised by Article 52(1).14 It will be shown in this chapter that this balancing between the seemingly conflicting principles of autonomy and non-discrimination is relative with respect to two factors. First, the location of balance will depend on the area of law in the context of which the non-discrimination principle is invoked. There will be different rules in employment law, consumer law, services in the general public interest on the one hand, and in genuine commercial relations which are only subject to the competition rules on the other. Secondly, only those characteristics on the basis of which discrimination occurs can be taken into account in EU law (the ‘legally incriminated grounds of discrimination’).15 The EU prohibition of discrimination is typically based on such personal characteristics as gender, ethnic origin, nationality, age and sexual orientation, all of which are part of the identity of a person (askriptive Perönlichkeitsmerkmale), as explained by Schiek,16 but not so much on economic grounds such as income, social or family status and similar characteristics. The question of ‘equal treatment’ implies a value judgement on a ‘limited list of characteristics that are considered to be so delicate as to lead to every differentiation which is made on the basis of such characteristics to be considered discriminatory’.17 Articles 21 and 23 of the Charter contain such (long) lists of ‘incriminated’ characteristics. The following sections will discuss non-discrimination law in the EU with 12 For details, see N Reich, ‘The Public/Private Divide in European Law’ in F Cafaggi and H-W Micklitz (eds), After the Common Frame of Reference (Cheltenham, Edward Elgar Publishing, 2010) 56. See also N Reich, ‘Pluralism and Private Law in the Union: Some Thoughts on the Impact of the Non-Discrimination Policy on Private Autonomy’ in L Niglia (ed), Pluralism and European Private Law (Oxford, Hart Publishing, 2013) 73–94. 13 For a discussion, see MW Hesselink, ‘If You Don’t Like Our Principles We Have Others: On Core Values and Underlying Principles in European Private Law: A Critical Discussion of the New “Principles” Section in the Draft Common Frame of Reference’ in R Brownsword, H-W Micklitz, L Niglia and S Weatherill (eds), The Foundations of European Private Law (Oxford, Hart Publishing, 2011) 59, with critical reference to the so-called ‘underlying principles’ of the Outline Edition of the Draft Common Frame of Reference of 2009. 14 N Reich, ‘Balancing in Private Law and the Imperatives of the Public Interest: National Experiences and (Missed?) European Opportunities’ in Brownsword et al (n 13) 221. 15 H Cousy, ‘Discrimination in Insurance Laws’ in R Schulze (ed), Non-Discrimination in European Private Law (Tübingen, Mohr Siebeck, 2011) 81, 83. 16 For a broader discussion, see D Schiek, Differenzierte Gerechtigkeit (Baden Baden, Nomos, 2000) 27ff. 17 Cousy (n 15) 84.

The Impact of the Non-Discrimination Principle on Private Autonomy 257 regard to both the area concerned and the characteristics applied. It will be shown that a differentiated answer is necessary to understand adequately the impact of the non-discrimination principle on private law in the Union.

II. Non-Discrimination in Employment Law Relations The first context in which the principle of non-discrimination was pronounced in EU law was that of employment. The principle of equal treatment between men and women with regard to pay for work of the same value had been part of the original EEC Treaty. The well-known Defrenne II judgment18 insisted on the horizontal direct effect of the principle of equal pay in what was then Article 119 EEC (now Article 157 TFEU). Equal access to employment and equality in working conditions were not part of primary Community law, as was firmly established by the Court in its Defrenne III judgment,19 and therefore had to be introduced by secondary law, namely Directive 76/207,20 which through the extensive case law of the Court of Justice has acquired constitutional status.21 The Directive has also given rise to a long-standing debate about its horizontal effect, a theme to which I will return later. A bold new ‘constitutional approach’ was taken by the Court of Justice in the context of age discrimination in employment law in the Mangold litigation.22 The main question in that case was whether Germany, though not yet formally bound by the Framework Directive 2000/78/EC prohibiting any discrimination on the basis of age under certain circumstances,23 violated a general principle of discrimination in lowering the age limit for fixed-term contacts. In his opinion of 30 June 2005, Advocate General Tizzano wrote: It may also be recalled that, even before the adoption of Directive 2000/78 and the specific provisions it contains, the Court had recognised the existence of a general principle of equality which is binding on Member States ‘when they implement Community rules’ and which can therefore be used by the Court to review national 18 Case 43/75 Gabrielle Defrenne v SABENA, [1976] ECR 455. For details, see N Reich, ‘The Social, Political and Cultural Dimension of EU Private Law’ in R Schulze and H Schulte-Nölke (eds), European Private Law—Current Status and Perspectives (Munich, Sellier, 2011) 57. 19 Case 149/77 Gabrielle Defrenne v Société anonyme belge de navigation aérienne Sabena [1978] ECR 1365. 20 Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L39/40. 21 The Court of Justice had recognised the extension of the general principle of non-discrimination as a fundamental right of the Community, as it then was, with regard to sex in its seminal Case C-25/02 Katharina Rinke v Ärztekammer Hamburg [2003] ECR I-8349. 22 Case C-144/04 Werner Mangold v Rüdiger Helm [2005] ECR I-9981. 23 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L303/16.

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rules which ‘fall within the scope of Community law’. That principle requires that ‘comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified’ by the pursuit of a legitimate aim and provided that it ‘is appropriate and necessary in order to achieve’ that aim.24

The Court largely adopted this argument, thereby de facto eliminating the special délai de grâce afforded to Germany for implementation: The principle of non-discrimination on grounds of age must thus be regarded as a general principle of Community law. Where national rules fall within the scope of Community law  … and reference is made to the Court for a preliminary ruling, the Court must provide all the criteria of interpretation needed by the national court to determine whether those rules are compatible with such a principle.25

This proclamation of a general principle of non-discrimination on grounds of age has given rise to an intense and mostly critical discussion amongst legal scholars.26 It was also criticised in a subsequent opinion of Advocate General Mazak in Palacios de la Villa,27 which noted that the international instruments and constitutional traditions referred to in Mangold enshrined the general principle of equal treatment, but it had been a bold proposition and a significant step to infer from that the existence of a specific principle prohibiting age discrimination. The Advocate General also referred to the Grant case,28 where the Court of Justice held that Community law, as it stood, did not cover discrimination based on sexual orientation. The Court remained unimpressed by the criticism that its judgment in Mangold received. In Kücükdevici29 it repeated its broad approach to the non-discrimination principle (in respect to age in employment relations). To the surprise of many observers who read the Lisbon judgment of the German Constitutional Court (Bundesverfassungsgericht (BVerfG)) of 30 June 24

Case C-144/04 Mangold (n 22) Opinion of AG Tizzano, para 82. Ibid, para 75 of the judgment. For an overall discussion, see A Metzger, Extra legem, intra ius: Allgemeine Rechtsgrundsätze im Europäischen Privatrecht (Tübingen, Mohr Siebeck, 2009) 344–46; Basedow (n 9) and J Basedow, ‘The Court of Justice and Private Law: Vacillations, General Principles and the Architecture of the European Judiciary’ (2010) 18 European Review of Private Law 443, 463; E Spaventa, ‘The Horizontal Application of Fundamental Rights as General Principles of Union Law’ in A Arnull et al (eds), A Constitutional Order of States—Essays in Honour of Alan Dashwood (Oxford, Hart Publishing, 2011) 199. An interesting methodological argument combining primary EU law, general principles and secondary law has been advanced by M Dougan, ‘In Defence of Mangold?’ in Arnull et al, ibid, 219. Further references in the opinion of AG Sharpston in Case C-427/06 B Bartsch v Bosch and Siemens (BSH) Altersfürsorge] [2008] ECR I-7245, which concerned the compatibility of the so-called ‘agegap’ clause in a pension scheme with primary (Article 13 EC) and secondary (Directive 2000/78 (n 23)) Community law. 27 Case C-411/05 Palacios de la Villa [2007] ECR I-8531. 28 Case C-249/96 Lisa Jacqueline Grant v South-West trains [1998] ECR I-621, to which the EU legislator reacted by means of Directive 2000/78 (n 23). Despite the adoption of the Directive, it remains possible that today Grant would not be decided differently. 29 Case C-555/07 Seda Kücükdevici Swedex GmbH [2010] ECR I-365, recently confirmed by Case C-447/09 R. Prigge v Lufthansa, Judgement of 13 September 2011, para 38. The broad approach of the Court has been criticised by Dougan (n 26) 238ff. 25 26

The Impact of the Non-Discrimination Principle on Private Autonomy 259 2009,30 referring to the earlier Maastricht judgment of the same court of 12 October 1993 as a challenge to the supremacy doctrine of the Court of Justice of the EU, the so-called Honeywell order of 6 July 2010 basically endorsed the Mangold case law.31 Strict limits were put on the ultra vires control of judgments of the Court of Justice of the EU under German constitutional law. The Bundesverfassungsgericht held that it would use its powers only in cases of a ‘sufficiently serious’ (hinreichend qualifiziert) violation of competences: This requires that the action of a Union authority be regarded as manifest and that the attacked act leads to a structurally important modification of competences to the detriment of Member states in the EU (headnote 1).

In Honeywell, the Bundesverfassungsgericht expressly recognised the power of the Court of Justice of the EU to create law (Rechtsfortbildung) by ‘methodologically constrained case law [methodisch gebundene Rechtsprechung] based on primary and secondary law, as well as on unwritten general principles of the constitutional traditions of the Member states’. It also put strict procedural restrictions on any ultra vires control; only the Bundesverfassungsgericht was held to have the power to declare Union acts non-applicable in Germany, and the Court of Justice of the EU was recognised as having the prerogative to clarify its position before decisions of non-applicability are taken. This meant that in order for the plea for setting aside the Union act (including the judgment of the Court of Justice) could be successful, a German court other than the Bundesverfassungsgericht would have to first make reference to the Court of Justice of the EU. The practical result of this ruling was a recognition by the Bundesverfassungsgericht of the precedence of judgments of the Court of Justice insofar as they concern interpretation of EU law and fall within the Court’s mandate under Article 19 (1) TEU to ‘ensure that  … the law is observed’ (emphasis added), which includes the further development and application of general constitutional principles, such as the principle of non-discrimination.32 Following the Honeywell ruling, the Federal Labour Court (Bundesarbeitsgericht) in the judgment of 9 September 2010 disapplied the contested German provision (§ 622(2) para 2 BGB), which discriminated against young employees with regard to the notice period for termination of employment by excluding from calculation the employment period accrued before the age of 25.33 Instead the court simply used the general rule contained in § 622(2) para 1 on the calculation of the length of employment. A debate similar to Mangold occurred in another case decided by Court 30

BVerfG, 30 June 2009, BVerfGE 123, 267; English translation [2010] 3 CMLR 13. BVerfG, 6 July 2010, BVerfGE 126, 286, with a dissenting opinion from Judge Landau (318, at 324), referring to the Lisbon judgment and criticising the Mangold judgment of the Court of Justice of the EU (n 22). 32 For a discussion on the importance of the ‘Honeywell’ order of the BVerfG, see M Payandeh, ‘Constitutional  Review  of EU  Law  after Honeywell: Contextualizing the Relationship between the German Constitutional Court and the EU Court of Justice’ (2011) 48 Common Market Law Review 9. 33 BAG, 9 September 2010, 2 AZR 714/08, Zeitschrift für Wirtschaftsrecht (ZIP) 2011, 444 31

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of Justice of the EU. Römer34 concerned an alleged discrimination of registered same-sex couples, in comparison to regularly married persons, in the (German) system of supplementary retirement pensions for former employees of local authorities. In a strong but controversial opinion of 15 July 2010, Advocate General Jääskinen, referring to Mangold and Kücükdevidci, found acts of discrimination with regard to tax and related benefits to have already been committed from 2001 onwards, the time of the registration of the partnership, and not from 2003, when the Member States were meant to implement Directive 2000/78/EC. This finding was supported by the view that the principle of non-discrimination on grounds of sexual orientation was in effect even before the transposition deadline for the Directive had expired. Its status as a ‘general principle’ was evidenced by Article 21 of the Charter and European human rights law. In its judgment of 10 May 2011 the Court of Justice decided not to follow its Mangold-type approach to discrimination. The Court followed the Advocate General only insofar as he condemned the discrimination of registered same-sex couples concerning their exclusion from the pension scheme. However, Germany was not held to have been bound by the principle of non-discrimination on grounds of sexual orientation before the date of implementation of the Directive. Discrimination suffered by the couple after their partnership was registered but before the Directive’s transposition deadline remained outside the scope of EU law. The Court of Justice thereby, without expressly distinguishing Mangold, implicitly denied the existence in EU law of a general principle of non-discrimination of same-sex partners predating the coming into effect of the Charter of Fundamental Rights.

III. EU Citizenship—Extending the Scope of the Principle of NonDiscrimination By Primary Law Primary EU law has extended the principle of non-discrimination to private law situations, under specific circumstances, beyond employment. An example of this trend is the use of the concept of citizenship in Article 17 EC (now Article 20 TFEU) to expand the scope of the prohibition of discrimination based on nationality, which applies only ‘within the scope of application of the Treaty’ (Article 18 TFEU, ex Article 12 EC). The application of the non-discrimination principle is seen as a step towards guaranteeing the autonomy of persons as EU citizens to enjoy a bundle of rights, in particular the right to free movement in a broader sense. In the exercise of their free movement rights, EU citizens 34 Case C-147/08 Jürgen Römer v Freie und Hansestadt Hamburg, Judgment of 10 May 2011, which posits a critique of the Opinion of AG Jääskinen.

The Impact of the Non-Discrimination Principle on Private Autonomy 261 should not be unduly restricted by relations normally coming under the regime of private law. Although there has yet to be a case concerning discrimination in private law relations, the arguments developed by the Court of Justice with regard to fundamental freedoms can also be used to attack nationality clauses in standard contract forms, namely those relating to the existence of a ‘collective regulation’ (or an employment contract in the sense used by the Court in Raccanelli).35 Fundamental freedoms arguments could also find application in the case of by-laws of private associations such as boarding schools or private universities concerning admission, tuition or employment. This ‘constitutional approach’ to non-discrimination, which perceives equality as a necessary attribute of the position of individuals as EU citizens, has also been used by the Court in cases involving challenges to national legislation on surnames, usually a matter of (non-harmonised) private international law. In Garcia Avello36 the Court had to decide whether the Belgian law on names of children, which, unlike Spanish law, excluded the use of both parents’ surnames, could be applied to children of Belgian citizens who also held Spanish citizenship. The Court relied on the ‘second limb’ of the non-discrimination principle, namely that ‘different situations should not be treated alike, unless this is objectively justified’. It held: In contrast to persons having only Belgian nationality, Belgian nationals who also hold Spanish nationality have different surnames under the two legal systems concerned. More specifically, in a situation such as that in issue in the main proceedings, the children concerned are refused the right to bear the surname which results from application of the legislation of the Member State which determined the surname of their father.37

The Court did not find any justification for applying the strict Belgian law on names to the Avello children to the effect that they were unable to use their double-barrelled surnames. In a later case, Grunkin and Paul,38 the Court of Justice adopted reasoning that was different from Garcia Avello, although the case also concerned autonomy 35

Case C-94/07 Raccanelli [2008] ECR I-5939. Case C-148/02 Carlos Garcia Avello v Belgium [2003] ECR I-11613. For an explanation of the importance of fundamental rights protection of economically inactive citizens, see M Elsmore and P Starup, ‘Union Citizenship—Background, Jurisprudence, and Perspective’ (2007) 26 Yearbook of European Law 57, 92. 37 Case C-148/02 Garcia Avello (n 36) para 35. 38 Case C-353/06 Stefan Grunkin and Dorothee Regina Paul [2008] ECR I-7639; see already the Opinion of AG Jacobs of 30 June 2005 in the preceding Case C-96/04 Criminal proceedings against Standesamt Stadt Niebüll [2006] I-3561, where the Court of Justice, however, regarded the reference as inadmissible. In an earlier opinion of 9 December 1992 in Case C-168/01 Konstantinidis [1993] ECR I-1191, brought before the inclusion of citizenship provision in the Treaty, AG Jacobs pointed to the fundamental right of a person to their name as part of European citizenship: ‘civis Europeus sum’ (para 46). The Court did not follow this reasoning and instead used somewhat artificially the fact that distorting the spelling of a name might create confusion with potential clients of Mr Konstantinidis, and therefore non-proportionally restricted his right to establishment. 36

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in the choice of surname format. The Grunkin and Paul case was brought by a German citizen born in Denmark, where his name was determined according to the ius soli, which allowed him to take the last name of both of his father and mother, while under the German ius sanguinis and lex nationalitis his parents were forced to choose between the last name of the father or mother. When he settled in Germany he applied to maintain his double-barrelled Danish name, but the competent German authority refused the request. In its judgment of 13 October 2008, the Court regarded German legislation on names as unjustified and disproportional interference with the free movement rights of a Union citizen, a point that differs from the reasoning in Garcia Avello, where nondiscrimination was cited as the relevant principle. Interestingly, in both Garcia Avello and Grunkin and Paul the litigation concerned a ‘vertical’ conflict between an EU citizen and a Member State, namely a national agency or a court that adjudicated issues related to surnames. However, the substance of the cases concerned a private law question—the name of a citizen—which in trans-border situations is determined by the rules of private international law.39 This particular aspect of private international law is not harmonised by primary or secondary EU law. Yet Member States are still asked to avoid discrimination of citizens of other Member States, as in Garcia Avello, or refrain from creating unjustified restrictions on free movement, as in Grunkin and Paul.

IV. Extension of the Non-Discrimination Principle To Business Consumer (B2C) Relations by EU Secondary Law Secondary law has extended the discrimination prohibitions onto private law relationships beyond employment40 with reference to grounds such as ethnic and racial origin (Article 3(1)(h) of Directive 2000/43/EC),41 sex (Article 5(1) 39

P Lagarde, ‘Droit international privé’ in Schulze and Schulte-Nölke (n 18) 249, 257. For an overview, see D Schiek and V Chege (eds), European Union Non-Discrimination Law: Comparative Perspectives on Multidimensional Equality Law (Oxford, Routledge-Cavendish, 2009) 11–14. See also Reich (n 1) para 12.19, and Basedow (n 1) 238, who differentiates between a genuine ‘prohibition of discrimination’, which is not a formulation used in the relevant Directives, and the need to ‘combat discrimination’, used for example in Art 1 of Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin [2000] OJ L180/22. See especially, Art 2(1) of this Directive: ‘there shall be no direct or indirect discrimination based on race or ethnic origin’. A question may be asked whether this formula strictly speaking ‘prohibits’ discrimination. If it did not, the requirement imposed on the Member States to provide for effective sanctions would be difficult to understand. Obviously, even if Art 2(1) is interpreted as a prohibition, the Member States retain a certain amount of discretion as to how to implement the obligation of providing effective sanctions. 41 Council Directive 2000/43/EC (n 40). 40

The Impact of the Non-Discrimination Principle on Private Autonomy 263 of Directive 2004/113/EC)42 and legal residence (Article 11(1)(f) of the Longterm Resident Directive 2003/109/EC).43 The situations in which individuals are protected by EU law cover the ‘access to and supply of goods and services available to the public’. ‘Housing’ is mentioned only in Directive 2000/43, not in Directive 2004/113; Directive 2003/109 is limited to ‘procedures for obtaining housing’. Therefore, not every differentiation in the selection of contract partners is a violation of EU law; there must already be an initial availability of certain goods and services to the public, eg via advertising or marketing.44 Article 3(2) of Directive 2004/113 and its recital 14 expressly guarantee the freedom to choose a contractual partner, so long as it is not based on the person’s sex. Special rules apply to insurance contracts (see below, Section V). Both intentional and indirect discrimination is prohibited, the latter situation being those in which seemingly neutral provisions create unjustified negative effects.45 On 2 July 2008 the Commission proposed also to extend the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation to private law relations outside the labour market, in particular to consumer markets where ‘access to and supply of goods and services available to the public, including housing’ are concerned. The proposal has been met with a strong resistance from Member States.46 While allowing some exceptions, the German Allgemeine Gleichbehandlungsgesetz (AGG) of 14 August 2006 already contains a similar provision in its § 19.

42 Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services [2004] OJ L373/37. 43 Council Directive 2003/109/EC of 25 November 2003 concerning the status of third-country nationals who are long-term residents [2004] OJ L16/44. 44 Reich (n 1) para 12.29; M Schreier, ‘Das Allgemeine Gleichbehandlungsgesetz—wirklich ein Eingriff in die Vertragsfreiheit?’ [2007] Kritische Justiz 278, 285, referring to the somewhat misleading term of ‘Massengeschäft’ in the implementing German legislation, which should be contrasted with ‘individual transactions’, where personal characteristics of the contracting party are obviously important. See also K Riesenhuber, ‘Das Verbot der Diskriminierung aufgrund der Rasse und der ethnischen Herkunft sowie aufgrund des Geschlechts beim Zugang zu und der Versorgung mit Gütern und Dienstleistungen’ in S Leible and M Schlachter (eds), Diskriminierungsschutz durch Privatrecht (München, Sellier, 2007) 124, 129, insisting on the objectivity of the relevant criteria. 45 Riesenhuber (n 44) 133; Cousy (n 15) 85. 46 Proposal for a Council Directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation COM(2008) 426 final. For a discussion of the proposal, see A-S Vandenberghe, ‘Proposal for a New Directive on Nondiscrimination’ [2011] Zeitschrift für Europäisches Privatrecht (ZEuP) 235.

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V. A Recent Controversy: Unisex Tariffs in Insurance and Conflicts with Private Autonomy A. A ‘Monist’ Reading of the Non-Discrimination Principle by the Court of Justice? A more recent debate concerns the problem of whether the EU legislator may restrict the non-discrimination principle in a Directive aimed at combating discrimination. This question arose in an action brought by the Belgian consumer association Test-Achats before its Constitutional Court, which then referred the matter to the Court of Justice, the only judicial authority with the competence to invalidate EU acts.47 The Belgian Constitutional Court’s question concerned the validity of Article 5(2) of Directive 2004/113/EC,48 which reads: Notwithstanding paragraph 1, Member States may decide before 21  December 2007 to permit proportionate differences in individuals’ premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. The Member States concerned shall inform the Commission and ensure that accurate data relevant to the use of sex as a determining actuarial factor are compiled, published and regularly updated. These Member States shall review their decision five years after 21 December 2007, taking into account the Commission report referred to in Article 16, and shall forward the results of this review to the Commission.

Could this exception relating to an autonomous mode of insurers’ calculation of rates be upheld against the general principle of non-discrimination with regard to sex, which is enshrined in Article 21(1) and 23 of the Charter of Fundamental Rights (binding since 1 December 2009 on all EU institutions)? The opinion of Advocate General Kokott of 30 September 2010 strongly condemns this exception in secondary law as violating the higher-ranking EU non-discrimination principle itself.49 She writes: [W]ith Directive 2004/113, particularly with Article 5, the Council made a conscious decision to adopt anti-discrimination legislation in the field of insurance. Such provisions must, without restriction, withstand examination against the yardstick of higher-ranking European Union law, in particular against the yardstick of the fundamental rights recognised by the Union. They must, to use the words of Article 13(1) EC (now Article 19(1) TFEU), be ‘appropriate’ for combating discrimination;

47 Case C-236/09 Association Belge Test-Achats, Judgment of 1 March 2011. For a detailed explanation of the Belgian legislation, see Cousy (n 15) 99. 48 Above n 42. 49 The opinion of AG Kokott is criticised by U Karpenstein, ‘Harmonie durch die Hintertür? Geschlechtsspezifisch kalkulierte Versicherungstarife und das Diskriminierungsverbot’ [2010] Europäische Zeitschrift für Wirtschaftsrecht (EuZW) 885

The Impact of the Non-Discrimination Principle on Private Autonomy 265 they may not themselves lead to discrimination. The Council cannot evade that examination by simply arguing that it could also have taken no action.50

Advocate General Kokott also rejects the argument that gender is one of the actuarial factors which could be taken into account for risk assessment in life, health and motor insurance: In view of social change and the accompanying loss of meaning of traditional role models, the effects of behavioural factors on a person’s health and life expectancy can no longer clearly be linked with his sex. To refer once again to a few of the examples just mentioned: both women and men nowadays engage in demanding and sometimes extremely stressful professional activities, members of both sexes consume a not inconsiderable amount of stimulants and even the kind and extent of sporting activities practised by people cannot from the outset be linked to one or other of the sexes.51

On 1 March 2011 the Court of Justice condemned the exemption from the nondiscrimination principle in insurance contracts by ruling that Article 5(2) of Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services is invalid with effect from 21  December 2012.

The judgment is surprisingly short, in contrast to the lengthy opinion given by Advocate General Kokott.52 The Court of Justice shows willingness to control strictly the conformity of EU provisions with the human rights regime to which the EU subscribes in a number of documents, the latest one being the ‘elevated’ Charter of Fundament Rights, which from 1 December 2009 has the same value as EU Treaties. The Court’s ruling is based on several arguments. First, the Charter is not used directly to assess conformity of Article 5(2) of Directive 2004/113 because the Charter was not yet a binding document at the time when the non-discrimination directive was adopted (13 December 2004), or when the transposition deadline for the Directive expired (21 December 2007). Instead, the Charter had relevance only through an ‘auto-reference’—the Directive referred to Articles 21 and 23 of the Charter as a document expressing the political will of the Union (then the Community) to protect and promote fundamental rights, including the equality of sexes.53 The Court also refers to the fact 50

Case C-236/09 Association Belge Test-Achats (n 47) Opinion AG Kokott, para 35. Ibid, para 63. 52 See N Reich, ‘Some Thoughts after the “Test Achats” Judgment’ (2011) 2 European Journal of Risk Regulation 283; K Purnhagen, ‘Kommentar zum Tests Achats Urteil des EuGH’ [2011] Europarecht (EuR) 690; D Effer-Uhe, ‘Gleichbehandlung in Versicherungsverträgen’ in R Schulze and H Schulte-Nölke (eds), European Private Law—Current Status and Perspectives (Munich, Sellier, 2011) 109; C Tobler, ‘Case C-236/09,  Association belge des Consommateurs Test-Achats ASBL, Yann van Vugt, Charles Basselier  v  Conseil des ministres, Judgment of the Court of Justice (Grand Chamber) of 1 March 2011’ (2011) 48 Common Market Law Review 2041. 53 Case C-236/09 Association Belge Test-Achats (n 47) para 17 of the judgment. See also V Kosta, ‘Internal Market Legislation and the Private Law of the Member States—The Impact of Fundamental Rights’ (2010) 6 European Review of Contract Law 409. 51

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that ‘the right to equal treatment for men and women is the subject of (several) provisions of the FEU Treaty’.54 Secondly, the Court recognises that such equality cannot simply be produced by ‘legal fiat’, but contains an evolutionary element which must be ‘progressively achieved’.55 The EU non-discrimination directives do not immediately forbid discrimination but contain a (mandatory!) political programme that will be elaborated and implemented over time. The Union (via legislation), the Member States and private actors (insurance companies doing business in the EU according to the relevant legislation), to which the equality regime is addressed, must co-operate in this task—for example, by offering ‘unisex’ tariffs from a date to be determined by legislation. In order to fulfil this dynamic element of non-discrimination, legislative action ‘must contribute, in a coherent manner, to the achievement of the intended objective, without prejudice of providing for transitional periods or derogations of limited scope’.56 This ‘inner-legislative’ coherence requires that such periods be limited in time. They cannot last ‘eternally’ or give Member States or companies unfettered discretion on how to achieve this objective. Since such a limited period was missing from the directive, the Court invalidated it, but only with ex nunc consequences, beginning after five years of the Directive’s entry into force. This is a courageous step, but well known of the case law of the Bundesverfassungsgericht, which frequently invalidates legislation held to violate fundamental rights, though only with ex nunc effect (this is in order to give the legislator time to remedy the complex political, economic or legal situations). The Court of Justice expressly condemned the exemption in Article 5(2) as a violation of the equality principle, which was (and remains) the basis for legislative action under Article 13 EC (now Article 19 TFEU). Under consistent case law, the Court of Justice defines the principle of equal treatment as requiring that ‘comparable situations must not be treated differently, and that different situations must not be treated in the same way, unless such treatment is objectively justified’.57 Despite the different risk profiles of sexes in certain types of insurance (such as the third party liability of car drivers, where men seem to take more risks and are responsible for more accidents) and life and health insurance (where women have a higher and more costly risk profile according to relevant statistics) these differences were expressly ruled out as relevant by Article 5(1) of Directive 2004/113. Men and women, despite the difference in life expectancy, have to be treated as ‘normatively comparable’ even though they are ‘empirically different’.58 The Court of Justice did not find any justification for this differentiation to continue without a time limit. It amounted to

54

Case C-236/09 Association Belge Test-Achats (n 47) para 18. Ibid, para 20. Ibid, para 21 (emphasis added). 57 Ibid, para 28. 58 Ibid, para 30. 55 56

The Impact of the Non-Discrimination Principle on Private Autonomy 267 discrimination ‘pure and simple’ to persist indefinitely.59 To rectify the situation, the Court took the position of legislator and imposed a time limit on applicability of unequal tariffs, without taking the more radical step of invalidating the entirety of the legislative act. As a consequence, existing insurance contracts with different premiums, tariffs and benefits for men and women that are not overtly inconsistent with Article 5(2), eg those allowed by § 20(2) of the German Allgemeine Gleichbehandlungsgesetz,60 can be maintained until 20 December 2012, but will not be able to be offered from 21 December 2012 onwards, when the ‘unisex’ tariffs become mandatory. This means that premiums charged after 20 December 2012 will have to be recalculated, which may result in general premium increases.61 The new premium tariffs will only be legal under EU law if they do not (overtly or indirectly) discriminate but only differentiate on the basis of accepted actuarial techniques. The Court of Justice does not seem to require, contrary to what was suggested by Advocate General Kokott,62 to readapt existing tariffs, premiums, and benefits, even for contracts of long durations that violated the principle of non-discrimination. The ‘dynamic’ reasoning of the Court clearly suggests that, despite doubts, the Member State exemption of Article 5(2) was perfectly legal for a period of five years, and would only lose its justifying force for tariffs based on sex-discrimination on 21 December 2012. Therefore, there is no retroactive effect of the Court’s judgment on the existing tariffs that were used before that date.63 Insurers will appreciate this solution, while clients may regret that they will not profit from the judgment, neither for the past nor, in all probability, in the future. Non-discrimination comes at a price and is not likely to be a ‘consumer-friendly’ measure because cautious women drivers will have to subsidise their more risky male drivers, and insured male persons will have to pay for the additional costs of female medical treatment and longer life expectancy.

59

Ibid, para 33. Concerning the constitutionality of this exception under German law, see F Rödl, ‘§ 20’ in U Rust and J Falke (eds), AGG—Allgemeines Gleichbehandlungsgesetz mit weiterführenden Vorschriften, Kommentar (Berlin, Erich-Schmidt-Verlag, 2007) para 37, who argues that a differentiation in insurance tariffs is justified by objective reasons. This argument can no longer be maintained in the light of the Court’s judgment and due to the primacy of EU law. 61 This is feared by many observers, see the editorial in Süddeutsche Zeitung, 19 March 2011, 32. 62 Case C-236/09 Association Belge Test-Achats (n 47) Opinion of AG Kokott, para 81. 63 Cf Tobler (n 52) 2057. For a restrictive interpretation of the concept of ‘new contracts’ in Art 5(1) of Directive 2004/113 (n 42), see now the Commission’s Guidelines on the application of Council Directive 2004/113/EC to insurance, in the light of the judgment of the Court of Justice of the European Union in Case C-236/09 (Test-Achats) [2012] OJ C11/1, which excludes automatic extensions, unilateral premium adjustments and follow-on policies agreed before 21 December 2012 from the concept of a ‘new contractual agreement’, Point 13. 60

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B. A Possible Critique of the Judgment: Too Much Equal Treatment, Too Little Autonomy Left? The main criticism of the Court’s judgment in Test-Achats concerned the consequence that the Court decided to sacrifice private autonomy (including calculation of premiums by insurers according to their business models) on the ‘altar of non-discrimination’, despite the assurance in Article 3(2) of Directive 2004/113 that the measure would not prejudice the freedom of choosing a contractual partner, with a somewhat obscure exception ‘so long as an individual’s choice is not based on that person’s sex’.64 Indeed, there seem to be three fundamental weaknesses in the Court’s argument. First, the yardstick for measuring ‘equal treatment’ is a formal one as written into Directive 2004/113, not a substantive one based on a value judgment inherent in the concept of ‘discrimination’ itself. Following this argument to its end, the EU legislator should not even be entitled to impose a transition period, unlike the grace period of five years allowed by the Court to the EU legislator. Secondly, as pointed out by Effer-Uhe,65 the Court invalidated the optional provision of Article 5(2) of Directive 2004/113 even though it was the very point which enabled a unanimous adoption of the Directive, as required by Article 19 TFEU (then Article 13 EC). It could be argued that by invalidating the provision the Court rendered the requirement of ‘unanimity’ nugatory. I find this argument unconvincing because there can be no exemption from the fundamental rights control by the Court for optional EU-law provisions the application of which would allow Member States to maintain ‘unconstitutional’ provisions. And thirdly, while according to Article 23 of the Charter ‘equality between men and women must be ensured in all areas’ (my emphasis), it is also subject to proportionate limitations by law under Article 52(1) of the Charter. As Lüttringhaus observed, the Court did not seriously consider possible justifications of ‘discriminations’—or, rather, differentiations—between men and women in calculating insurance tariffs.66 Following the detailed socio-legal argumentation of Advocate General Kokott, such a strict proportionality test could have resulted in condemning higher tariffs for men in third party liability car insurance, and for women in health insurance because of fragmented and inconclusive statistical evidence that did not take into account different risk profiles and lifestyles of insured persons (where sex is no longer a determining factor). But bonus/malus schemes could have been found to be a more flexible and therefore a more proportionate instrument to avoid the ‘moral hazard’ on part of the insured persons. Under these circumstances, sex was a rather ‘crude’ and therefore discriminatory method of risk determination. On the other hand, one might argue that premiums for life insurance should be allowed to be calculated differently for the simple fact that the average life 64 J Lüttringhaus, ‘Europaweit Unisex-Tarife für Versicherungen’ [2011] Europäische Zeitschrift für Wirtschaftsrecht (EuZW) 296. 65 Effer-Uhe (n 52) 113. On the compromise in Art 5(2), see Cousy (n 15) 99. 66 Lüttringhaus (n 64) 298.

The Impact of the Non-Discrimination Principle on Private Autonomy 269 expectancy of women in the EU is longer than that of men, and therefore women pay more and for a longer time before they start enjoying the benefits. Reference to publicly available statistics that determine different risk profiles of men and women has nothing to do with ‘discrimination’ or ‘unequal treatment’, but simply takes differences in life expectancies at face value in order to avoid a policy where men with a shorter average life expectancy subsidise longer-living women. It follows that it is possible to argue that the Court of Justice failed to carry out the necessary balancing between ‘party autonomy’ and ‘equal treatment’ in the insurance market, which is a basic pillar of pluralism in private law as understood in this context.

VI. Non-Discrimination of Access to and Treatment in Services of General Economic Interest and in Network Services Services of general economic interest, eg communication, energy and transport, have only recently come within the scope of Union law, in line with trends of deregulation and privatisation affecting these sectors. In the ‘old days’ these services were highly regulated by public law, where the principles of nondiscrimination could be applied without dogmatic problems relating to party autonomy. The new regime is, by contrast, more concerned with competition and choice. Accordingly, it has had to develop standards of its own, in particular by transposing (somewhat hesitantly) the idea of solidarity alongside the more economic and competition-orientated understanding of public services, and thus including questions of consumer (or rather user) access and equality.67 The EU Commission has proposed including these services in its work on consumer protection.68 Because the provision of these services requires a contract, EU law that regulates services of general economic interest could be seen as belonging also to ‘private law’ and concerning horizontal situations, albeit extensively regulated by economic law. The most important elements of EU regulation of services of general economic interest have been, on the one hand, the internal market approach, and on the 67 M Ross, ‘Promoting Solidarity: From Public Services to a European Model of Competition?’ (2007) 44 Common Market Law Review 1057, 1070, insisting on the applicability of the general norm of Art 16 EC (now Art 14 TFEU) in competition litigation concerning services general economic interest. 68 Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions—Consumer Policy Strategy 2002—2006 COM(2002) 208 final, para 3.1.5. See also Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee—EU Consumer Policy strategy 2007–2013: Empowering consumers, enhancing their welfare, effectively protecting them COM(2007) 99 final, 12.

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other, the so-called ‘universal service obligation’ of providers.69 Their impact on free choice lies in access to services and on obligations of non-discriminatory treatment without distinguishing between consumers in the traditional sense and other users. For example, under the Universal Services Directive70 and the revised Electricity Directive71 ‘household customers’ should not be prevented from switching to another provider through direct or indirect impediments.72 On 17 July 2009 the European Parliament and the Council adopted Directive 2009/72/EC concerning common rules for the internal market of electricity and repealing Directive 2003/54/EC.73 Article 3(7) of the Directive contains general obligations of Member States to protect final, in particular vulnerable, consumers in markets with universal service obligations: ‘In this context, each Member State shall define the concept of vulnerable customer which may refer to energy poverty and, inter alia, to the prohibition of disconnection of electricity to such customer in critical times.’ These provisions try to improve the position of consumers—particularly vulnerable ones—against the old Directive mentioned above, although only half-heartedly. They are too unspecific to take direct effect. Much more specific are the transparency requirements of Annex I concerning the contract with the universal service supplier. These principles are extended to other network services such as banking. Access rules are contained in the Directive on payment services in the internal market.74 Article 28 contains detailed provisions protecting the ‘recipient of services’ against discrimination, not limited to the traditional consumer, but also including commercial clients. This right of ‘access’ to payment services without discrimination seems to have the effect of transforming payment systems in the EU, despite their heterogeneity, into a ‘service of general economic interest’ based on private law (without,

69 P Rott, ‘Consumers and Services of General Interest: Is EC Consumer Law the Future?’ (2007) 30 Journal of Consumer Policy 53; N Reich, ‘Crisis or Future of European Consumer Law?’ [2009] Yearbook of Consumer law 3, 20; H-W Micklitz, ‘The Visible Hand of European Regulatory Private Law—The Transformation of European Private Law from Autonomy to Functionalism in Competition and Regulation’ (2009) 28 Yearbook of European Law 3, 22. 70 Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users’ rights relating to electronic communications, networks and services (Universal Services Directive) [2002] OJ L108/51, amended by Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 [2009] OJ L337/11. 71 Directive 2003/54/EC of the European Parliament and the Council of 26 June 2003 concerning common rules for the internal market in electricity [2003] OJ L176/32. 72 Rott (n 69) 56; H-W Micklitz, ‘The Concept of Competitive Contract Law’ (2005) 23 Pennsylvania State International Law Journal 549, 576; C Willet, ‘General Clauses on Fairness and the Promotion of Values important in Services of General Interest’ [2008] Yearbook of Consumer Law 67, 95–100. 73 Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC [2009] OJ L211/55. 74 Directive 2007/64/EC of the European Parliament and of the Council of 13 December 2007 on payment services in the internal market [2007] OJ L319/1. S Grundmann and C Hofmann, ‘EC Financial Services and Contract Law—Developments 2007–2010’ (2010) 6 European Review of Contract Law 467, 472.

The Impact of the Non-Discrimination Principle on Private Autonomy 271 however, a ‘universal service obligation’), and subjected to special rules which go beyond the traditional concepts of private autonomy and freedom of contract. Quite surprisingly, the impact of this encroachment of regulation on private law has hardly been discussed in the literature. The non-discrimination principle has a special role to play in this context and yet the area seems to be, as Micklitz correctly observes,75 a blind spot in the eyes of private law scholars, who believe that this highly regulated sector still follows the principle of party autonomy. As Micklitz writes: The network law develops, within the boundaries of universal services, concepts and devices whose reach must be tested with regard to their potential for general application beyond the narrow subject matter. Just one example may be mentioned: despite privatisation, network industries have to guarantee the accessibility and the affordability of their services. What is at stake here is the obligation to contract (Kontrahierungszwang) and the duty to continue delivery even in cases of late payment.

As a result of these developments, the principle of non-discrimination is ‘creeping’ into European contract law. It has the potential of expanding its scope of application beyond the areas and grounds recognised so far in EU law, and briefly mentioned in this chapter. Its impact on citizens and consumers may, however, be double-headed, as the recent Tests-Achats case shows. Equal treatment comes at a cost. Somebody has to bear the financial consequences of the principle’s expansion!

VII. Effective Remedies and Sanctions in Cases of Discrimination Despite the limitations of the non-discrimination principle in private law matters, discussed for example by Basedow,76 the principle is not and should not be conceptualised as ‘an incomplete legal norm’. On the contrary, Member States are under an obligation to sanction non-justified discriminations in private law relations, whether or not they provide for private law remedies.77 Private law, as emphasised by Steindorff,78 performs the task of providing sanctions. They must be effective, the requirement highlighted by Advocate General Poiares Maduro in his opinion of 12 March 2008 in the Belgian Feryn case.79 The case concerned ethnic discrimination by a producer and installer of ‘up-and-over doors’, who 75

Micklitz (n 69) 23. Basedow (n 1) 240. 77 N Reich, ‘The Interrelation between Rights and Duties in EU Law: Reflections on the State of Liability Law in the Multilevel Governance System of the Union: Is There a Need for a More Coherent Approach in European Private Law?’ (2010) 30 Yearbook of European Law 112, 141. 78 E Steindorff, EWG-Vertrag und Privatrecht (Baden Baden, Nomos, 1996) 303ff. 79 Case C-54/07 Centrum voor gelijkheid van kansen en voor racismebestrijding (CGKR) v Firma Feryn NV [2008] ECR I-5187; Lüttringhaus (n 64) 365. 76

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publicly declared that he did not employ immigrants (in the circumstances, mostly persons of Arabic origin) in order to attract clients who, suspicious of theft, were unwilling to employ the defendant. Advocate General Poiares Maduro pointed out that: On the issue of sanctions, Article 15 of the Directive [2000/43] provides that ‘Member States shall lay down the rules on sanctions applicable to infringements of the national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that they are applied’. The sanctions, which may comprise the payment of compensation to the victim, must be effective, proportionate and dissuasive  … Moreover  … national courts have a duty to take all appropriate measures to ensure fulfilment of the Member States’ obligation to achieve the result envisaged by the Directive.  It is for the referring court to determine, in accordance with the relevant rules of domestic law, which remedy would be appropriate in the circumstances of the present case. However  … purely token sanctions are not sufficiently dissuasive to enforce the prohibition of discrimination.  Therefore, it would seem that a court order prohibiting such behaviour would constitute a more appropriate remedy.    In sum, if the national court finds that there has been a breach of the principle of equal treatment, it must grant remedies that are effective, proportionate and dissuasive.80

In the judgment of 10 July 2008 the Court of Justice largely followed Advocate General Poiares Maduro’s opinion, while allowing the employer to prove that in his actual recruitment policy he did not discriminate (a somewhat problematic defence since it does not eliminate the effect of his public statements which were clearly discriminatory). With regard to remedies, the Court allowed the national jurisdiction a wide range of alternatives, provided that the principles of effectiveness, proportionality and dissuasiveness were respected: If it appears appropriate to the situation at issue in the main proceedings, those sanctions may, where necessary, include a finding of discrimination by the court or the competent administrative authority in conjunction with an adequate level of publicity, the cost of which is to be borne by the defendant. They may also take the form of a prohibitory injunction, in accordance with the rules of national law, ordering the employer to cease the discriminatory practice, and, where appropriate, a fine. They may, moreover, take the form of the award of damages to the body bringing the proceedings.81

This judgment follows the earlier approach of the Court, adopted ever since von Colson,82 where the Court of Justice has insisted on the principle of effectiveness in the provision of a remedy: [Compensation must] be such as to guarantee real and effective judicial protection, … have a real deterrent effect on the employer [and] must in any event be adequate in relation to the damages sustained  … purely nominal [compensation] eg the reimbursement of expenses incurred by them [the candidates] in submitting their

80

Case C-54/07 Firma Feryn (n 79) paras 27–29. Ibid, para 39. 82 Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891. 81

The Impact of the Non-Discrimination Principle on Private Autonomy 273 application, would not satisfy the requirement of an effective transposition of the directive.83

In this still very important judgment the Court rejected a merely symbolic compensation as incompatible with the principle of effectiveness. It is not quite clear on what legal principle the Court based its principle of full compensation since the Directive was silent on this point, especially as the Court held at the same time that Mrs von Colson did not have the right to a contract. In this light, it would be difficult to explain the claimant’s right to full compensation on the basis of a contract theory. In my opinion, the damage which the Court strove to remedy by its ruling was primarily ‘moral’. This raises the question of whether EU law should require non-material damages to be awarded more generally for breaches of EU sex discrimination prohibitions. The principle of compensation for non-material damage found its first overt recognition in Leitner,84 a case involving a claim for lost holidays. This judgment could be taken to apply to all types of liability based on EU law, which would bring private liability in line with the case law on Article 288(2) EC (now Article 340 TFEU) concerning Community/Union liability for non-material damage incurred by employees due to ‘sufficiently serious breaches’ of obligations towards them.85 In this way, persons who have been subjected to discriminatory treatment should not be treated in EU law any different from frustrated holiday tourists.86 I think a constitutional argument could be put forward to allow also for compensation of non-material damage in discrimination cases—since discrimination violates fundamental personality rights,87 and moreover has been expressly included in the Charter of Fundamental Rights (Articles 21 and 23), it must be adequately protected. In addition, the principle of compensation for moral damage in cases of discrimination improves the ‘deterrent effect’ of the compensatory remedy and on this ground can be easily regarded as necessary under the existing doctrines of EU law.88 As for ‘collective remedies’, which are sought by NGOs (associations, organisations or other legal entities, which have, in accordance with national law, a legitimate interest in ensuring that the provisions (on non-discrimination) are complied with), these are foreseen in Article 7(2) of Directive 2000/43 and Article 8(3) of Directive 2004/113. However, these NGOs may only bring actions in limited circumstances, exclusively in order to support individuals who 83

Ibid, paras 23–24. Case C-168/00 Leitner v TUI Deutschland [2002] ECR I-2631. 85 Case C-308/87 Grifoni II [1994] ECR I-341, para 37; Case T-59/92 Caronna [1993] ECR II-1129, para 106. 86 I have explained elsewhere that the case-law of the Court of Justice in its insistence on the ‘effectiveness’ argument has developed a rule under which compensation for non-material damage is required for violations of EU rights. See Reich (n 77) 148. 87 A Masselot, ‘The State of Gender Equality Law in the European Union’ (2007) 13 European Law Journal 152, 154. 88 N Reich, ‘Diskriminierungsverbote im Gemeinschaftsrecht’ [2005] Jahrbuch Junger Zivilrechtswissenschaftler 9, 23–24. 84

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have suffered from discrimination and such actions require their approval, ie cannot be taken against their will. Injunctions, unlike in consumer cases, are not expressly foreseen—a regrettable lacuna of non-discrimination law. However, since the Directive imposes only a minimum requirement also in the area of remedial protection, Member States may go beyond what is envisaged in it and allow ‘independent’ actions and injunctions by NGOs, a possibility regrettably not taken up by German law.

VIII. Conclusion: From an ‘Individualistic’ Concept of Discrimination to an Understanding of its Collective Dimension The discussion in private law literature has predominantly concentrated on either the tension between a general principle of private autonomy as the fundamental pillar of private law in the EU, or the principle of equal treatment, understood as a rather limited exception restricted to such grounds as sex, ethnic origin, nationality (the personal characteristics), and perhaps extended also onto such characteristics as age, disability or sexual orientation. Some German authors have, however, been more radical. Säcker criticises non-discrimination law as ‘the virtue-republic of the new Jacobins’ (‘Tugendrepublik der neuen Jakobiner’).89 Repgen, on the other hand, hears in the recent developments ‘the death knell of private law’ (‘Totenglocke des Privatrechts’).90 There seems to be an agreement among the cited authors that, as a general rule, private autonomy should prevail over ‘equal treatment’ in most conflict situations in private law. The prevalent literature in private law scholarship does not seem adequately to acknowledge that new tendencies are emerging and that they will require judicial recognition. The developments in EU law described in this chapter explicitly impose equal treatment obligations on contract partners in the context of employment relations and in the supply of goods or services available to the public, such as insurance, and services of general economic interest, such as energy, transport, communication and payment services. However, what seems to be underdeveloped in the discussion so far is the collective effect of discrimination and the corresponding collective perspective of the law of nondiscrimination. This narrow individualistic perspective of the current debate is to some extent provoked by the characteristics of the cases referred to the 89 F-J Säcker, ‘“Vernunft statt Freiheit”—Die Tugenrepublik der neuen Jakobiner—Referentenentwurf eines privatrechlichen Diskriminierungsgesetzes’ [2002] Zeitschrift für Rechtspolitk (ZRP) 286. 90 T Repgen, ‘Anti-Diskriminierung—die Totenglocke des Privatrechts läutet’ in T Isensee (ed), Vertragsfreiheit und Diskriminierung (Berlin, Dunker & Humbolt, 2007) 11. A similar critical view has also been taken by T Lobinger, ‘Vertragsfreiheit und Diskriminierungsverbote—Privatautonomie im modernen Zivil- und  Arbeitsrecht’ in ibid, 99.

The Impact of the Non-Discrimination Principle on Private Autonomy 275 Court of Justice. Those usually concern a dispute between an individual allegedly discriminated against because of his or her sex, nationality, race, and now also age, disability and sexual orientation in employment or a business–consumer relation, on the one hand, and an employer, a business or a professional, on the other. The very structure of the reference proceedings before the Court allows only a limited input from organisations representing the collective interests of citizens, NGOs, trade associations or labour unions.91 These organisations have the ability to present arguments before the Court of Justice only when they initiate the original litigation before the national court, as in the Belgian Feryn and Test-Achats cases.92 In his seminal publication, Micklitz has shown that many English employment discrimination cases, though couched in the form of an individual complaint, in reality were public interest litigations sponsored by a special government office (the Equal Opportunities Commission), by other NGOs or, less frequently, by trade unions.93 A similar study does not seem exist to my knowledge with respect to other countries.94 The non-discrimination directives themselves contain provisions on public interest litigation; however, they are rather weak, leave details to Member State laws and subject proceedings to the requirement of approval by injured persons, thus still taking an individualistic starting point. The collective dimension of EU non-discrimination law has already been pointed out by other authors. Collins, for instance,95 writes: A second strand of justification, however, should interest us more, because it is more directly aimed at explaining the aim of anti-discrimination laws. This element of the official discourse refers to the notion of social inclusion as a key justification for antidiscrimination law.96

The German author Lauber argues for a human rights approach to discrimination law, including elements of both individual and group justice.97 She points out that ‘distributive, group-oriented measures have their place in contract law and are not in opposition to it’.98 She goes on: Both contractual freedom and the right to non-discrimination enjoy the position of 91 The deficiencies in public interest litigation before the European Courts have already been pointed out in the contributions to H-W Micklitz and N Reich (eds), Public Interest Litigation before European Courts (Baden-Baden, Nomos, 1996). 92 Lüttringhaus (n 64) 400. 93 H-W Micklitz, The Politics of Judicial Co-operation in the EU (Cambridge, Cambridge University Press 2005) 116. 94 D Schiek, L Waddington and M Bell (eds), Cases, Materials and Text on National, Supranational and International Non-Discrimination Law—Ius Commune Casebooks for the Common Law of Europe (Oxford, Hart Publishing, 2007) 871, contains a chapter on sanctions, but it does not discuss the importance of private litigation for enforcement. 95 H Collins, ‘Discrimination, Equality and Social Inclusion’ (2003) 66 Modern Law Review 16. 96 Ibid, 21 (emphasis added). 97 AV Lauber, Paritätische Vertragsfreiheit durch reflexiven Diskriminierungsschutz: Autonomie, Freiheit und Gerechtigkeit im Vertragsrecht Englands, Deutschlands und der Europäischen Union (Baden-Baden, Nomos, 2010). 98 Ibid, 234.

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fundamental rights, but contractual freedom should be understood as a substantive concept with limits, which only in certain aspects must be regarded as a general principle, while the equal treatment principle is expressly protected by the Charter of Fundamental Rights.99

In a recent paper on ‘The Social, Political and Cultural Dimension of EU Private Law’,100 based on earlier reflections by Wilhelmsson,101 I argued for a welfarist objective in non-discrimination law which is concerned with ‘regulation aimed at redistributing benefits in favour of the disadvantaged within a group of contract parties in similar situations’, even though it seems to be ‘only emerging in the case law of the Court of Justice, in particular with regard to effective enforcement’.102 This collective, welfarist element in non-discrimination law certainly needs a more thorough examination, a task which lies beyond the remit of this chapter. It is true that this collective dimension of non-discrimination law may conflict with a purely individualistic concept of contractual freedom, which is still the dominant position in German (and perhaps English) private law. However, the Charter of Fundamental Rights may indeed require a reorientation of this view. In order to preserve the autonomy of private law and the role of its structural principles, I suggest that the following distinction should be introduced. Direct discriminations based on sex, race and other incriminated factors, even if seemingly justified by the principle of contractual freedom, should be seen as violating an individual’s rights under Articles 21 and 23 of the Charter of Fundamental Rights, expressed in specific EU acts, and must be sanctioned by effective remedies as developed in the case law of the Court of Justice. In particular, compensation of non-pecuniary damages should be demanded as a matter of EU law. A recent example of a boundary case which would still fall within this category is Coleman,103 which extended the discrimination concept against disabled persons onto those discriminated ‘by association’. The case concerned a female employee, whose child was born handicapped and who was allegedly harassed into a ‘constructive dismissal’ by her employer, an English law firm. Similar cases in consumer contracts continue to be rare, although the study conducted by Schiek on German practices has reported some instances of racist treatment in leisure activities, discriminatory credit scoring by banks and rejections of disabled persons in tourism.104 Indirect discriminations, on the other hand, which are likely to relate more directly to a collective dimension of discrimination, should still be regarded as prima facie violations of funda99

Ibid (my translation). Reich (n 18). 101 T Wilhelmsson, ‘Varieties of Welfarism in European Contract Law’ (2004) 10 European Law Journal 172. 102 Reich (n 18) 58 and 77. 103 Case C-303/06 S. Coleman v Attridge Law and Steve Law [2008] ECR I-5603. The case before the national court was settled out of court! 104 Schiek (n 16) 198. Schiek’s study concerned discriminations in consumer relations in German insurance, banking, recreation, and tourism businesses, and was written before the enactment of the relevant EU Directives. 100

The Impact of the Non-Discrimination Principle on Private Autonomy 277 mental rights, but in this context the concern for equality should necessarily be balanced against other legitimate interests under the proportionality test. These interests should include the freedom of contract. Unjustified indirect discrimination should be combated by adequate sanctions. If an individualistic remedy, such as compensation, is used by national law, it must fulfil the von Colson criteria described above, including that of a ‘real deterrent effect’. Private law is used—some incorrectly say ‘abused’—as a means of public interest enforcement and should be shaped by national law also with a view of fulfilling this function. The standing of anti-discrimination NGOs should be extended beyond the limits of the existing equal treatment Directives and should not require approval of the injured persons.

12 The Involvement of EU Law in Personal Work Relations: A Defining Issue for European Private Law? MARK FREEDLAND

I. Introduction IN THIS CHAPTER, I argue that one of the key locations for the understanding of a set of tensions or incipient conflicts about the involvement of EU law in private law relationships is to be found in the area in which labour or employment law extends beyond its traditional and accepted province of the dependent or subordinate employment relationship into a wider category of personal work relations. This I shall suggest is an area in which both European employment law and European private law have to (re)define themselves if each of them is to combine its historical legitimacy with a present-day functionality. This argument is developed in three stages. A first section sets the stage, setting up the idea that there is an incipient normative fault-line between ‘EU law’ and ‘private law’, upon which the interventions of EU law in the sphere of personal work relations find themselves dangerously located. This section will describe the way in which the architects of ‘EU private law’ have, consciously or unconsciously, generally sought to maintain EU employment law as a specialised enclave set apart and insulated from that underlying tension. A second section argues that this attempted separation tends to break down at some crucial points, and that one such point is the one at which EU employment law in general, and EU employment equality law in particular, has enlarged its ‘personal scope’ beyond its traditional sphere of the dependent or subordinate employment contract. A third section examines, as a fascinating case study on this contested frontier, the very recent decision of the UK Supreme Court in Jivraj v Hashwani1 and concludes by suggesting that this decision manifests the extent to which the tensions about ‘the involvement of EU law in private law relationships’ are unresolved. It is important for me to be open from the outset about my assumptions as to the function of private law and the goals of employment law. Each of those 1

Jivraj v Hashwani [2011] UKSC 40.

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two questions is of course the subject of intense and unresolved and evolving debate, so it is perhaps best to concentrate on the relatively uncontroversial point that employment law has a certain specialised set of goals, whatever those may be taken to be, whereas private law would generally be regarded as having a much broader, more general function, however contested the specification of that function might be. The debate about the special functions of employment or labour law currently takes the form of a contestation between (1) that of redressing the inequality of bargaining power, which is regarded as inherent in the contract of employment when individually negotiated; (2) that of protecting and vindicating the fundamental social rights of workers; and (3) that of maximising the efficient and productive functioning of the labour market. In recent work Nicola Kountouris and I have sought to advance a notion of ‘personality in work’ as a possible alternative rationale for the construction and regulation of personal work relations.2 It is uncontroversial to say that none of the above would be seen as expressing the function of private law. In this regard, there is a real variety of views as to how far a general function of upholding freedom of contract and giving effect to the intentions of parties to contracts is qualified by, or combined with, elements of social balancing or redistribution or controlling the abuse of contractual power, but my assumption is that even the advocates of those more socially oriented positions would not express them in the normative discourse of labour or employment law. With those preliminary reflections I embark upon a fuller enquiry into the interface between EU employment law and ‘European private law’.

II. EU Employment Law and Private Law Relationships: A Difficult Equilibrium In this section I suggest that the whole question of ‘the involvement of EU law in private law relationships’ is fraught with a particular kind of tension, and that this tension is particularly evident in the relationship between the general private law of contract and EU employment law. This tension is, accurately and helpfully in my view, identified in the intellectual design of this collection and the symposium from which it evolved; Dorota Leczykiewicz and Stephen Weatherill have located the discussion within the sphere traditionally governed by ‘private law’, and hint at the fact that the involvement of EU law in relationships falling within that sphere—the ‘private law relationships’ which are the focus of our

2 M Freedland and N Kountouris, The Legal Construction of Personal Work Relations (Oxford, Hart Publishing, 2011).

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discussions—is widely felt to require special normative justification, sufficient to legitimise the European Union’s restriction of private autonomy.3 This claim to ‘private autonomy’ against the intrusion of EU law is real enough in the sense that it is widely and strongly entertained,4 but it is actually quite elusive and difficult to pin down. It is often located with ‘private actors’, perceived as ‘individuals’ and as ‘citizens’, though that perception may mask the extent to which it is a claim to freedom to do business or engage in an occupation as one (human one or corporate one) wishes. As such, it is quite closely tied up with a general claim to ‘freedom of contract’, and also with a certain associated perception that the Member States had historically each managed to embody an appropriately apolitical version of that general claim in their own civil codes or set of common-law-based principles of private law. The protagonists of ‘private law’ as the vehicle for and guarantor of ‘private autonomy’ might therefore be inclined to be suspicious of EU law both because they can view it as intermittently or even as generically encroaching upon private autonomy and because they can also view it as doing so by way of supranational intrusion upon the ordering of private law and by the private law at which the Member States have each in their several ways arrived. Having arrived at that view at the time of the colloquium at which the initial version of this chapter was delivered, I have since derived immense benefit from reading the chapter of Professor Ralf Michaels in the recently published volume on The Foundations of European Private Law.5 That chapter offers us the following way of understanding why there should be this anxiety about ‘the involvement of EU Law in private law relationships’. In Michaels’ argument, we can discern two contrasting or competing ‘rationalities’ for European private law (using ‘European private law’ to mean private law as it has developed in the European region). On the one hand, there is a ‘juridical’ rationality, according to which private law is derived from specifically legal sources, that is to say from legal texts or legal precedents—in short, from doctrine. On the other hand, there is an ‘instrumental’ rationality whereby private law is based upon or shaped by policy goals not primarily derived from or implicit in—or even necessarily consistent with—the principles which emerge from specifically legal sources. I derive from that chapter—in what I hope represents an accurate synthesis from his admirably constructed argument—the idea that these two ‘rationalities’ represent alternative and competing ways of characterising particular bodies of private law so as to assign certain kinds and degrees of legitimacy to them. In particular, we encounter perceptions that private law with a juridical ration3 See their introductory chapter of this volume, especially Section III on ‘Private Autonomy and EU Law’. 4 It is a claim which is extensively canvassed and explored in many of the contributions to R Brownsword, H-W Micklitz, L Niglia and S Weatherill (eds), The Foundations of European Private Law (Oxford, Hart Publishing, 2011), perhaps most directly in the chapter by R Brownsword, ‘The Theoretical Foundations of European Private Law: A Time to Stand and Stare’, 159. 5 R Michaels, ‘Of Islands and the Ocean: The Two Rationalities of European Private Law’ in Brownsword et al (n 4) 139.

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ality has a special legitimacy which is superior to that of private law with an instrumental rationality. Such perceptions tend to be that ‘juridical private law’ has that special legitimacy over ‘instrumental private law’ precisely because the former is by definition more purely grounded in an objectivity of legal science which is often conceived of as having a universal quality. Moreover, and this is a most important point, such perceptions generally accord greater legitimacy to ‘juridical private law’ because it is normally seen as in its nature more respectful of private autonomy than ‘instrumental private law’. Professor Michaels’ argument about these ‘two rationalities of European Private Law’ goes on to show, most crucially for our present purpose, how in the course of the evolution of private law in the European region, the locations of ‘juridical private law’ and ‘instrumental private law’ have shifted between the national and transnational levels. These shifts are complex ones, but a central historical dynamic has been the movement of ‘juridical private law’, during the nineteenth and early to mid twentieth centuries, from its primary location in the universalist discourses of civilian ius commune and Anglo-Saxon common law to the essentially national locations of continental European civil codes and the versions of English common law which evolved in the particular legal systems based upon it. The culmination of this historical analysis is in the current state of affairs in which, for the protagonists of ‘juridical private law’, the mantle of legitimacy had passed to the Member States of the EU. It was not available to sit upon the shoulders of the makers of EU law, who have in that sense tended to be regarded as intruding upon the coherence of ‘European private law’ with their Directives which have, for those protagonists, created isolated islands of essentially instrumental legal intervention—amounting to ius communitatis rather than a more profoundly legitimate ius commune.6 So we have here a construction of and an explanation for a generalised tension between private law, primarily located in the national legal systems of the Member States, and EU law, whose interventions into ‘private law relationships’ are therefore apt to be viewed as instrumental intrusions into a domain from which it should normally be excluded. That tension has infused the thinking and the deliberations of those who in recent years have had the project of formulating a transnational body of European private law in general and European contract law in particular—a project which we can regard for our present purpose as having culminated in the publication in 2009 of the Draft Common Frame of Reference for European Private Law (DCFR).7 The DCFR can be seen, with regard to contract law in particular, as having the ambition of bringing about a 6 Cf ibid, 141: ‘the ius commune seams to have difficulties integrating existing EU contract law: the existing ius communitatis seams to defeat efforts at systematization without losing its own character’, citing N Reich, ‘A European Contract Law: Ghost or Host for Integration?’ (2004) 24 Wisconsin International Law Journal 425, 449. Cf, more generally, N Jansen and R Zimmerman, ‘Restating the Acquis Communautaire? A Critical Examination of the “Principles of the Existing EC Contract Law”’ (2008) 71 Modern Law Review 505. 7 C von Bar, E Clive, H Schulte-Nölke et al (eds), Principles, Definitions and Model Rules of European Private Law—Draft Common Frame of Reference (DCFR) (Munich, Sellier, 2009).

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grand reconciliation between EU law and the private law systems of the Member States, and hence of resolving the tension between them that we have depicted. It represents an integration of the thinking and the articulations which had emerged from two earlier projects which were fed into the DCFR, ie the projects of the Commission of European Contract Law and of the Research Group on the Existing EC Private Law, which respectively gave rise to the publication of the ‘Principles of European Contract Law’ (PECL) in 2000,8 and of the ‘Draft Acquis Principles’ between 2007 and 2009.9 The two feeder projects try to resolve the perceived tension between national private law and EU law in very different—one might almost say diametrically opposite—ways. The architects of the PECL take their starting points almost entirely from the private law systems of the Member States, while the framers of the Acquis Principles take theirs very largely from an expansive vision of EU law itself. If those are very different points of departure, those who start from them nevertheless converge upon the common purpose of delineating a sphere within which those national bodies of law and those aspects of EU law which bear upon private contractual relations can be integrated with each other into a new version of ‘juridical private law’. This brings us to the central argument of this chapter, for we find that the members of those two schools of thought can, in the common pursuit of their initially diverse aims, very readily agree upon a certain shared approach to the proper role and treatment of employment law in the framework of European contract law which they are seeking to devise. The point made here is that the theorists and groups of theorists who contributed to the DCFR project shared a concern to establish a basis for a ‘juridical’ genre of European private law in general and European contract law in particular, and in order to integrate EU law into that vision, they needed to minimise the prominence and impact of those elements in EU law which could be regarded as purely instrumental to the less ‘juridically’ grounded policies of the EU legislators. In this respect two significantly though by no means completely intersecting aspects of EU law presented themselves as inherently sensitive in the sense that they represented areas where the regulation of EU law (and for that matter the regulation of national legal systems) seemed to be of an instrumentally policydriven character. The two intersecting areas in question are those of employment law and equality or non-discrimination law. In a paper written jointly with Professor Matthias Lehmann, I have considered the role of non-discrimination law in the European contract law project.10 In this chapter we consider much the same set of issues primarily from the perspective of employment law, while

8 O Lando and H Beale (eds), Principles of European Contract Law—Parts I and II (The Hague, Kluwer Law International, 2000). 9 Research Group on the Existing EC Private Law, Principles of the Existing EC Contract Law (Acquis Principles)—Contract I, II and III (Munich, Sellier, 2007–09). 10 M Freedland and M Lehmann, ‘Non-discrimination and the “Constitutionalisation of Contract Law”’ in G Dannemann and S Vogenauer (eds), The Common Frame of Reference in Context [provisional title] (2012, forthcoming).

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emphasising that the two sets of concerns in any case considerably overlap with each other, as will become manifest in the subsequent sections. From this perspective, we can make the highly significant observation that the architects of the DCFR took a crucial decision to regard the contract or relation of employment as being excluded from their remit, a decision prefigured both in PECL and in the Acquis Principles, where the same exclusion had been effected. This was an operation of isolating labour or employment law into its own enclave in which it is accepted that ‘general private law’ does not rule, and in which a general notion of freedom of contract is specially subordinated to the need to redress the inequality of bargaining power inherent in the dependent employment relationship, by means of interventions which are essentially ‘political’ or policy-driven in a way that general private law is thought not to be. Hence, one thing that the factions in the DCFR project are agreed upon is that the contract of employment was outside their sphere of interest and concern.11 By means of this particular separation, the law of and about the contract of employment is thus located in a special place, as it were in private law but not of private law. This serves to create an area of operation for EU employment law within which, however contentious they may be, the regulatory activities of the EU are, at least, not directly confronting the particular sensibilities about EU encroachment upon national ‘private law’; and, contrariwise, it also helps to maintain the ‘juridical’ and non-instrumental character of the body of European contract law from which EU employment law has thus been excluded. Professor Lehmann and I have argued that the exclusion of the contract of employment from the scope of the DCFR facilitated a rather narrow approach in the DCFR to the role and scope of the principle or the rules of non-discrimination, since much of the gravamen of EU non-discrimination law falls within the sphere of employment relations.12 However, if this dispensation creates a particular kind of equilibrium between EU employment law and an emergent body of ‘European private law’, that equilibrium must be regarded as decidedly fragile; after all, the employment relationship is still primarily a ‘private law relationship’ even if it is regulated in a distinctive way. The following sections of this chapter explore one aspect of that fragility.

11 It is, however, quite hard to find a declared justification for this position. In the Commentary on the DCFR or its various travaux préparatoires, the nearest we seem to get to an overt justification is the following comment in the Principles of European Law on Service Contracts on the scope of application of the part of the principles of European law which deals with service contracts under the head of ‘Interests at State and Policy Considerations’: ‘An issue that might be raised is whether or not particular types of contract should be covered by the rules of this Part. One might think of contracts for the supply of financial services and financial products, transportation contracts, and employment contracts. Such contracts are of great importance to practice, but they either have their own particularities (employment contracts) or are presently subject to initiatives at EU level (financial services, transportation) and are thus not included in this Part.’ M Barendrecht et al, Service Contracts (PEL ServCon) (Oxford, Oxford University Press, 2007) 142. 12 Freedland and Lehmann (n 10).

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III. EU Employment Law and Private Law Relationships: The Issue of ‘Personal Scope’ One particular kind of danger to the equilibrium that I have thus identified arises from the fact that it depends on there being a clear separation of EU employment law from the general sphere of private law ratione personae, that is to say, in terms of the ‘personal scope’ of EU employment law, which means the kinds of relationships to which it extends. Those who, as protagonists of the autonomy of ‘private law’, seek to separate off EU employment law into its own enclave— for example, when designing the DCFR—seem to imagine that this separation can be surgically accomplished by excising a sphere of ‘personal scope’ consisting of dependent or subordinate contractual employment relationships, designated by reference to the contract of employment. The notion that such a separation can be neatly made is a grand illusion, both as a matter of technical law and wider legislative public policy. As a matter of technical law, the specification of a distinct zone for the personal scope of EU employment law by reference to the contract of employment is vulnerable by reason of the notorious difficulty of maintaining any clear distinction between the contract of employment and the contract for services, that is to say, between contractual relations of employment on the one hand and self-employment on the other. That difficulty, which besets every national legal system, is aggravated when it comes to trying to maintain that distinction in and via EU employment law. As Kountouris and I have argued at length,13 even if we could assume that there was complete and continuing agreement among the makers of EU employment law that their proper and intended sphere of activity was that of the dependent or subordinate contractual employment relationship, it would still be very far from clear that there was a uniform notion of ‘the contract of employment’ to be derived from the national legal systems of the Member States, in which that perception of a proper and intended sphere of activity could be embodied. Moreover—and this is really the central point of this chapter—this fragile separation of EU employment law from the generality of private law relationships is rendered even more tenuous by wider considerations of EU legislative policy which cause EU employment law to break the bounds of dependent contractual employment relations with regard to the ‘personal scope’—that is to say, as I prefer to regard it, the relational scope—of some of its interventions. In this respect, EU employment law in part follows and in part leads developments of this kind in the national employment law systems of Member States. This breaking of the bounds of dependent contractual employment relations occurs in different ways in a multiplicity of legislative contexts within the sphere of EU employment law, but these occurrences can be grouped into two loose categories, 13

Freedland and Kountouris (n 2).

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those of (1) partial extension into a sphere of semi-dependent employment relations which is intermediate between dependent employment and independent employment otherwise known as self-employment; and (2) fuller extension into the sphere of self-employment. The first type of extension consists of pushing the boundaries of EU legislation affecting personal work relations slightly or somewhat outwards into the grey area between relations of fully dependent employment and those of self-employment, an area variously characterised as that of semi-dependent employment or, increasingly, as ‘disguised employment’. We cannot regard the EU legislators as having made anything like a concerted push of EU employment law into this zone, but it is probably right to see them as having made tentative forays into it. Such moves have arguably been effected (but unreliably) by the use of the concepts of the ‘worker’ rather than that of the ‘employee’,14 and by including the employment ‘relation’ as well as the employment ‘contract’.15 The uncertainty as to how far these are intended to be deliberate extensions beyond the sphere of dependent or subordinate employment has, however, left the matter open to interpretation by courts whose disposition towards an expansive view of these concepts has been an ambivalent one.16 The second and more complete degree of extension of EU employment law into the sphere of self-employment occurs especially in one area or aspect of EU employment law, namely that of employment equality law. It seems to me very clear that, in the course of the conspicuously vigorous development of the body of law which we identify as ‘EU employment equality law’, the EU legislators have arrived at and have implemented a policy of extending the scope of this body of law beyond that of subordinate or dependent employment relations into a wider domain which embraces the relations of working persons, engaged in an ‘occupation’, with the purchasers or recipients of the services which the working persons provide and which unequivocally includes relations of ‘self-employment’.17 This legislative policy is quite distinct from the more tentative partial extensions of other aspects of EU employment law; it has its own autonomous antecedents in similar normative formulations on the part of the International Labour Organization,18 and on the part of the Council of Europe in the European Social Charter.19 The effect of that extension of personal scope—which applies, in various technical formulations, to EU employment equality law in respect of discrimination on the grounds of gender, race, religion or belief, sexual orientation, or age—is 14

Eg Art 157 TFEU. Eg Council Directive  91/533/EEC  of 14  October 1991  on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L288/32. 16 See Case C-256/01 Allonby v Accrington & Rossendale College & Ors [2004] ECR I-873. 17 Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation [2000] OJ L303/16, Art 3. See also Art 157(3) TFEU. 18 C111 Discrimination (Employment and Occupation) Convention, 1958, Art 1(3); also C143 Migrant Workers (Supplementary Provisions), 1975, Art 14. 19 European Social Charter (Revised), 3 May 1996, ETS 163, Art 20. 15

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therefore to take ‘EU employment law’ into a set of ‘private law relationships’ from which the protagonists of the autonomy of private law had assumed that it had been axiomatically excluded, and from which they tend to believe that it had been rightly and appropriately excluded. However, I suggest that the normative debate, which this extension might have been expected to produce, has yet to happen in any open or transparent way—for reasons that are indicated by the case study which forms the fourth and concluding section of this chapter.

IV. EU Employment Law and Private Law Relationships: The Decision in Jivraj v Hashwani The argument of this paper as it has so far developed gives rise to a tentative hypothesis that the actors in the development of private law in the Member States of the EU might, for the reasons we have suggested, be resistant to the extension of employment law in general, and EU employment law in particular, beyond the sphere of the dependent or subordinate employment relation into a wider set of personal work contracts or relations which include those of self-employment. In this section I suggest that the Justices of the UK Supreme Court, in their recent decision in the case of Jivraj v Hashwani,20 have provided a startlingly vivid realisation of this hypothesis; in effect they proceeded as if the extension of EU employment equality law into the sphere of relations of ‘occupation’ in general and self-employment in particular had not really taken place at all, either as a matter of EU law itself or as a matter of UK domestic law in its implementation of EU law. The decision has been extensively analysed and evaluated in a learned article by Professor McCrudden, who is broadly supportive of the decision,21 and in a rejoinder article by Kountouris and myself, where we are very critical of the decision,22 so that it is unnecessary to rehearse the facts of the case or the arguments about the case in full detail here. The essential issue in the case was whether an arbitration clause in a commercial agreement was void for contravention of UK and EU employment equality law in respect of its provision that the arbitrator(s) must be appointed from among the members of a particular religious community, namely the Ismaili community comprised of Shia Imami Ismaili Muslims (a community to which the parties of the commercial agreement belonged). The decision of the UK Supreme Court, overturning that of the 20

Jivraj v Hashwani [2011] UKSC 40. JC McCrudden, ‘Two Views of Subordination: The Personal Scope of Employment Discrimination Law in Jivraj v Hashwani’ (2012) 41 Industrial Law Journal 30. 22 M Freedland and N Kountouris, ‘Employment Equality and Personal Work Relations—A Critique of Jivraj v Hashwani’ (2012) 41 Industrial Law Journal 56. 21

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Court of Appeal,23 was that there was no such contravention because neither at EU nor national level did the relevant employment equality legislation apply to the selection of a self-employed arbitrator. In our rejoinder article, Kountouris and I have argued in detail that the contrary decision of the Court of Appeal was the correct one both in terms of UK legislation and in terms of the EU Directive 2000/78/EC which was in question. In this chapter, I briefly reiterate our arguments with regard to the EU law element in particular. We suggest that the Directive had made it abundantly clear that it applied to the kind of selection for self-employment which was at issue in the case when it provided in Article 1 that: Purpose The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.

and in Article 3 that: Scope (1) Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to: (a) conditions for access to employment, to selfemployment or to occupation, including selection criteria and recruitment conditions, whatever the branch of activity and at all levels of the professional hierarchy, including promotion.

In our rejoinder article, we contend that the Supreme Court in Jivraj v Hashwani took an overly narrow view of Article 3(1), in effect confining it to the regulation of the conditions for setting-up as a self-employed person and excluding it from the regulation of selection for a particular engagement as a self-employed person. We further contend that it was inappropriate to arrive at that construction of Article 3(1)—and indeed to regard that construction as acte claire on the part of the Court of Justice of the European Union—largely by reference to case law of the Court of Justice which in fact related not to the construction of that Article and that set of concepts but, to the, in our view very different, question of how the concept of ‘worker’ should be construed in the body of EU law that relates to equal pay between men and women rather than to equal treatment more generally. It would be impossible to read Professor McCrudden’s article without concluding that our contentions should be regarded as open to debate, and our rejoinder article accepts that this is the case. However, it can be quite confidently stated for the purpose of my present argument that a particularly interesting feature of the decision of the Supreme Court is the extent to which that decision reflects a lack of awareness that there ever was or currently is an underlying policy on the part of the EU legislators to effect an extension of the scope of EU employment equality law into the sphere of ‘occupation’ in general and 23

Jivraj v Hashwani [2010] EWCA Civ 712, [2011] 1 All ER 50.

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‘self-employment’ in particular—despite the existence of what amounts, in my perception, to quite compelling evidence to the contrary. How did such an apparently curious decision come about, and why was it that such an apparently restricted vision of the Directive prevailed? I pose the suggestion that, although the decision of the Supreme Court discloses no overt normative stance, it may nevertheless have been in part driven by an unspoken normative perception that it would be inappropriate for EU employment equality law, or for the national legislation which was meant to implement its requirements, to venture into this domain of private law relationships lying beyond the scope of the subordinate contractual employment relationship, that being the traditional and proper province of employment law. I would admit that the particular set of contractual relations which were involved in the case of Jivraj v Hashwani were ones specially likely to evoke a judicial protectiveness from the invasion of employment law. The Supreme Court seems to have been specially sensible of the need to ensure that international men (and one hopes women) of business would regard English law as providing a forum in which they could make their contracts confident of being able, if necessary, to secure arbitration arrangements which would accord with their preferences.24 However, even if this was in that sense a specially ‘hard’ case, it still provides eloquent testimony to the sensitivity of the perceived frontier between national private law and EU employment law, and the strength of the impulse to separate and protect the former from the latter. In the conclusion to this chapter I express my concern about the larger consequences of too strictly maintaining—or attempting to maintain—such a frontier.

V. Conclusion In the course of this chapter, I have endeavoured to show that there is a proclivity among the protagonists of ‘European private law’—in the sense of private law in 24 Thus it is worth here quoting in full para 61 of the judgment of Lord Clarke, which deals with the question of whether, if this arbitration clause had been within the scope of application of the Directive and the Regulations, its stipulation for an Ismaili arbitrator might nevertheless have been justified as a ‘genuine occupational requirement’: One of the distinguishing features of arbitration that sets it apart from proceedings in national courts is the breadth of discretion left to the parties and the arbitrator to structure the process for resolution of the dispute. This is reflected in section 1 of the 1996 [Arbitration] Act which provides that: ‘the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest’. The stipulation that an arbitrator be of a particular religion or belief can be relevant to this aspect of arbitration. As the ICC puts in its written argument: ‘The raison d’être of arbitration is that it provides for final and binding dispute resolution by a tribunal with a procedure that is acceptable to all parties, in circumstances where other fora (in particular national courts) are deemed inappropriate (eg because neither party will submit to the courts or their counterpart; or because the available courts are considered insufficiently expert for the particular dispute, or insufficiently sensitive to the parties’ positions, culture, or perspectives) subject only to such safeguards as are necessary in the public interest’.

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the European region—to promote and favour its development as a body of law which is firmly based upon the private law of the national legal systems of the Member States of the European Union, and which is to be insulated from undue encroachment from EU law in general and EU employment law in particular. I have provided as illustrations of this proclivity the exclusion of employment law from the scope and purview of the DCFR, and, in a very different sense, the decision of the UK Supreme Court in Jivraj v Hashwani. The illustrations are admittedly rather eclectic, but I hope that they are nevertheless sufficiently telling to sustain my hypothesis. If so, I think the picture which all this paints of attitudes towards ‘the involvement of EU law in private law relationships’ is a slightly disquieting one for the following reason. The picture that has thus been painted is one in which the protagonists of ‘European private law’ seek to maintain it as a rather doctrinally ‘pure’ zone infused with a spirit of liberal contractualism—and therefore as a zone upon which the encroachments of EU law in general are somewhat suspect, and upon which EU employment law in particular tends to be seen as a decidedly unwanted intrusion. My concern is that too vigorous a pursuit of such an approach tends towards a vision of ‘European private law’ which is overly compartmentalised, both from the analytical and the normative perspective. It is overly compartmentalised from an analytical perspective in the sense that the ‘relationships of private law’ overlap and intersect with each other to create complex patterns of actors and roles—for example, as between ‘consumers’ and ‘producers’ and ‘workers’ and ‘entrepreneurs’. I think it follows from this that the vision of ‘European private law’ which has been under scrutiny in this paper is also overly compartmentalised from a normative perspective, particularly, in my view, when it tends to treat the concerns and preoccupations of EU employment law as quite distinct from those that animate the regulation of the generality of ‘private law relationships’. I suggest that there is an impoverishment of ‘European private law’ which may be brought about by certain kinds of exclusionary reasoning in relation to it, and a corresponding enrichment which may be obtained from a more inclusive disciplinary approach. At what is by any measure a time of crisis for EU law, debate about questions of this kind, even if they are apparently specialised and rarefied ones, assume a special importance and become defining ones, not only for the relational scope of EU employment law, but for the much larger question of the involvement of EU law in private law relationships as a whole.

13 Black Lists and Private Autonomy in EU Contract Law DANIELA CARUSO

I. Introduction European Union law is a triumph of balancing acts. Its defining mission is to strike a balance between countervailing goals and values often at odds with one another. Over the past sixty years, EU institutions have striven to balance market freedom with social protection, growth with sustainability, comparative advantage with territorial cohesion, free movement with dignity, and so on. Balancing, practically and rhetorically, lends legitimacy to the discretionary choices EU courts and administrative bodies make on a daily basis. If a decision results from correct deliberative practices and from explicit consideration of opposing arguments, it meets the discursive canon of EU justice; and because balancing is normalised as an exquisitely legal process, decisions find themselves somewhat sheltered from political contestation. The normalisation of balancing is therefore an essential ingredient of what continues to be a process of ‘integration through law’, powered by internal logic and capable of forging ahead even in times of political impasse.1 If balancing is the norm, black lists in EU contract law stand out as exceptions. They consist of specifically defined contractual clauses that are void per se and will not be enforced in court.2 In form, a black list of unfair contract terms epitomises constraint.3 When compared to the sprinkling of isolated prohibitions in various statutes,4 the adoption of a list, as a legislative technique, 1

JHH Weiler, ‘The Transformation of Europe’ (1991) 100 Yale Law Journal 2403. The black list of unfair trade practices, codified by Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market [2005] OJ L149/22, exceeds the scope of this chapter, as it mostly relates to pre-contractual behaviour rather than contractual content and is therefore, in form, less intrusive upon private autonomy. This chapter focuses on substantive rather than procedural control. 3 D Kennedy, ‘Freedom and Constraint in Adjudication: A Critical Phenomenology’ (1986) 36 Journal of Legal Education 518. 4 See Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12, Art 7(1), for an example of secondary legislation that identifies as unlawful certain clauses without resorting to the formal device of a black list. 2

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carries an altogether stronger message of authority. A catalogue of commands in thou-shalt-not form evokes, conceptually and discursively, an image of ultimate authority. In principle, black lists are the nemesis of discretion and call for no balancing whatsoever. They are meant to tie the hands of judges, enforcement agencies and, most importantly, private parties. If intended as instruments of full harmonisation, black lists also tie the hands of implementing legislators in the various Member States. Aesthetically, they conflict with the prevailing legal culture of the EU enterprise. They are to the rest of contract law what the maximum inflation rate in the eurozone is to economic policy: a non-negotiable line in the sand—at least in principle. Visually, the use of black lists as a regulatory tool for consumer protection represents the highest point in a linear progression: from no supranational control upon consumer contracts, to soft control (by means of judiciable standards such as ‘significant imbalance’ or ‘good faith’), to the outright prohibition of specific terms. The progression implies an increasing degree of interference (from minimal to pervasive) both with the private autonomy of EU citizens and with Member States’ legislative prerogatives in private law matters. The presence of black lists also implies a crescendo in the protection of weaker parties. There is, of course, much hyperbole in this characterisation. The particular black lists examined in this paper (supranational enumerations of contract clauses, identified as void per se) are no more than a footnote in EU consumer protection law and remain, at the time of writing, relatively inconsequential.5 As a matter of positive law, black lists of unfair contract terms only appear in an EC directive’s optional annex, are binding law in only some Member States6 and are, in large part, grey at best;7 moreover, even the blackest of terms are bound to coexist with general clauses,8 and consumers often find better protection in judicial discretion than in supranational fiat.9 The fact remains, however, that as a legislative technique black lists constitute an extreme form of interference with private autonomy, a peak from which 5 This chapter focuses, in particular, on the black list annexed to Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1995] OJ L95/29 (Directive 93/13 or the Unfair Contract Terms Directive); on the black list attached to the Commission’s Proposal of for a Directive of the European Parliament and of the Council on consumer rights COM(2008) 614 final; on the black list resulting from the Feasibility Study of 2011 delivered by the Expert Group on 3 May 2011 (‘Draft Feasibility Study’), Art 83, available at http://ec.europa.eu/justice/contract/ expert-group/index_en.htm; and on Art 84 of the Commission’s Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final. 6 H Schulte-Nölke, C Twigg-Flesner and M Ebers (eds), ‘EC Consumer Law Compendium’, available at www.eu-consumer-law.org (‘Compendium 2010’), 341ff. 7 H-W Micklitz, ‘Reforming European Unfair Terms Legislation in Consumer Contracts’ (2010) 6 European Review of Contract Law 347. Many of the clauses exemplified in the annex of Directive 93/13 do not truly qualify as hard. Determining whether certain of the listed terms are unfair in any given circumstance requires the exercise of judicial discretion. Some other clauses address what common lawyers would call lack of mutuality: these are clauses whose unfairness can be easily cured by redrafting them in symmetrical terms, ie imposing on the trader a burden that is identical (in form but not in substance) to the one imposed upon the consumer. 8 Ibid, 373. 9 Compendium 2010 (n 6) 433.

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the impact of supranational law upon contractual freedom is especially visible. They are, therefore, a case study on maximum harmonisation—a convenient, if underwhelming, place for thought experiments, and for gauging things to come. This paper adopts black lists as a point of departure for three lines of reflection of broader scope. The first strand of reflection lies in pointing out the salience of the rhetoric that usually accompanies black lists, as opposed to the lists themselves, and the practical impact of this rhetoric upon transnational contract drafting. Section II demonstrates how transatlantic observers hold an inflated perception of the EU’s regulatory capacity in matters of contract law, and posits that black lists in EU documents somehow reinforce this perception. The presence of true black lists in some corners of the EU system allows for the impression that enforcement of consumer protection law is much sharper and more coherent than it really is. In the dynamics of consumer law globalisation, black lists play a role that is independent of their actual power within the internal market. The second element of reflection has to do with the possibility that the straight ascending line of maximum harmonisation (from freedom to supranational constraint) might slowly bend into a circle, bringing black lists much closer to contractual freedom than they seem to be at first glance. To illustrate this point, Section III highlights the analogy between black lists in consumer law and other early forms of European interference with autonomy. The analogy is meant to show that heavily regulatory black lists, depending on circumstances, are just as likely to lead to an opposite, and paradoxical, deregulatory result in the long term. The third strand of enquiry has to do with revisiting the description of black lists as social legislation. Black lists are conventionally portrayed as ‘drops of social oil’, aimed at correcting the injustices that result from unleashed private autonomy, particularly when the bargaining power of the parties is uneven. This portrayal may be partially accurate, but it fails to capture the role that black lists play in the uneven socioeconomic context of the EU. Section IV therefore recasts black lists as just one among many types of regulatory constraints imposed upon business actors of the socioeconomic ‘periphery’ of the Union in order to prevent social dumping. Some of these constraints, such as safety in the workplace, fulfil basic existential needs of the EU polity. The higher costs that they impose upon peripheral traders are therefore justified. Not all constraints, however, respond to such imperatives. Black lists in contract law must be understood as rules with real redistributive consequences, capable not only of enhancing consumer welfare but also of burdening structurally weaker traders. The paper concludes with comments on the regulatory and distributive ambiguity of black lists and on the difficulty of assessing their impact in normative terms without a broader analysis of the role of Europeanisation in matters of social justice.

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II. Black Lists in Transatlantic Trade A. The Impact of Black Lists on US Private Autonomy The supranational sanctioning of unfair contract terms may or may not have been a revolution in Europe,10 but it certainly made an impression on US traders operating in European markets.11 Until the early 1990s, such traders had been at liberty to insert into their standard forms anything that was not contrary to the law of the Member State(s) where they were doing business. The consumer policy of the Commission, while long supported by an ad hoc legal basis in the EC Treaty,12 had not yet interfered with the content of business-to-consumer (B2C) forms. Then the Unfair Contract Terms Directive made its appearance, variously implemented and applied by national courts with some interpretive guidance by the European Court of Justice. As a result, the freedom to determine the content of B2C contracts—whatever its extent in the light of state law—came to be significantly controlled by EU legislature. This Directive mandated a substantive enquiry into potentially unfair contracts, and focused on terms that caused a ‘significant imbalance’ of exchange, ‘contrary to the requirement of good faith’. The reach of the Directive was troublingly broad given the omnipresence of contracts of adhesion in US-based commerce. Even more worrisome was the fact that the Directive’s mandate was utterly generic, as it failed to explain the distinction between ‘significant’ and insignificant imbalances, and also left ‘good faith’ undefined. Yet the Directive also seemed to be highly regulatory, requiring both courts and agencies at the national level to take a close look at the exchanges in question and to purge whichever contractual terms tilted the scales in favour of sellers or suppliers. In the eyes of US observers, it was as if a new form of unconscionability review had been inserted by congressional fiat in the contract law of all states, formally equivalent to Section 302 of the Uniform Commercial Code, but substantively much more powerful: the supranational mandate of giving the doctrine real efficacy would prevent it from becoming—as it had in many US jurisdictions—virtually dead letter.13 10 P Nebbia, Unfair Contract Terms in European Law: A Study in Comparative and EC Law (Oxford, Hart Publishing, 2007), documenting the continuity of state-based practices of enforcement even after the implementation of Directive 93/13. 11 J Delisle and E Trujillo, ‘Consumer Protection in Transnational Contexts’ (2010) 58 American Journal of Comparative Law 135; ME Budnitz, ‘The Federalization and Privatization of Public Consumer Protection Law in the United States: Their Effect on Litigation and Enforcement’ (2008) 24 Georgia State University Law Review 663, 665; PJ Quinn, ‘A Click Too Far: The Difficulty in Using Adhesive American Law License Agreements to Govern Global Virtual Worlds’ (2010) 27 Wisconsin International Law Journal 757; JR Maxeiner, ‘Standard-terms Contracting in the Global Electronic Age: European Alternatives’ (2003) 28 Yale Journal of International Law 109. 12 S Weatherill, EU Consumer Law and Policy (Cheltenham, Edward Elgar Publishing, 2005). 13 Case C-168/05 Mostaza Claro v Centro Móvil Milenium SL [2006] ECR I-10421 (the Court of Justice of the EU emphasised the essential and mandatory character of Directive 93/13).

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The Directive also contained in its annex an optional list of terms that national legislators could consider outlawing, either completely or presumptively. The fact that some Member States did not even bother enacting any portion of the list, seeing it as a potential vehicle for the dilution of local consumer protection standards, did not make any waves across the Atlantic.14 Rather, the annex gave the impression of having real bite: when several prominent US firms were caught engaging in unfair dealings and subsequently subjected to meaningful sanctions in Europe, US traders and their lawyers suffered the practical and tangible consequence of having to revise their boilerplate clauses.15 To be sure, such transatlantic incidents could also take place in the absence of a supranational black list. The sanctioning of AOL’s unfair practices, for instance, happened by virtue of French law only, and France, as is well known, had not formally adopted any of the terms identified in the annex. However, US commentators made much of the fact that French law reflected the Unfair Contract Terms Directive, and that the Directive did enumerate specific contract clauses.16 The merely suggestive annex was understood by many to be binding, and France’s dealings with AOL came across as determined from above. It also seemed that, thanks to the presence of pre-identified unfair terms in a statutory instrument, consumer groups could directly and effectively challenge a number of abusive trade practices. The preconception that collective redress was a uniquely American option, luckily not available to plaintiffs in the Old Continent, was definitely shaken by the fact that a French consumer association, as opposed to an agency or an individual plaintiff, had triggered the AOL litigation.17 In the aftermath of AOL, business lawyers based in the US began warning their clients of the dangers of supranational EU contract terms regulation and spreading news of regrettable incidents.18 In Germany, for instance, three large corporations (AOL, Compuserve and Microsoft) were forced to purge from their German contractual dealings a number of terms that would have been legal in the US.19 A similar fate befell Dell Corporation in the UK.20 The presence of a finite list of unfair terms at the supranational level certainly generated the impression that Europe had become quite serious about enforce14 Some states have continued to perceive black lists as far too soft an instrument of regulation— an unduly safe harbour for business and a constraint upon proactive courts. Others have adopted black lists, albeit customising them carefully to avoid hyper-regulatory results. 15 See Budnitz, Quinn and Maxeiner, all cited in n 11 above. 16 JK Winn and M Webber, ‘The Impact of EU Unfair Contract Terms on US Business-toConsumer Internet Merchants’ (2006) 62 Business Lawyer 209. 17 D Naylor and C Ritter, ‘French Judgment Condemning AOL Illustrates EU Consumer Protection Issues Facing US Businesses Operating in Europe’ (2005) 1 New York University Journal of Law and Business 881; Winn and Webber (n 16). See also Quinn (n 11) 782 (describing the German Verbandsklage as ‘a ferocious legal entity that would offend US concepts of standing’). 18 D Naylor and C Ritter, ‘B2C in Europe and Avoiding Contractual Liability: Why Businesses with European Operations Should Review their Customer Contracts Now’ (2004) available at www. droit-technologie.org/actuality-805/b2c-in-europe-and-avoiding-contractual-liability-why-businesses-with.html. 19 Maxeiner (n 11) 164–65. 20 Winn and Webber (n 16).

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ment, and that the shift in attitude would truly change drafting practices on the ground. At the same time, however, the finite list also came across as a well-defined and therefore manageable obstacle. The appeal of a black list lies, indeed, in what it does not say. A contract term that is carefully drafted so as not to resemble, in form or substance, any of the blacklisted clauses might still be caught by lingering general clauses. However, the very presence of a black list reduces the enforcer’s realm of discretion. The dark silhouette of the list highlights, by visual contrast, all that is presumptively fair game, and the centralised enumeration of prohibitions might carry the allure of a safe harbour in the eyes of sellers and suppliers of all nationalities.21 After all, the enforcement of EU privacy laws had proven that a clearly marked safe harbour was all the guidance US companies needed to evade the ire of European regulators.22 Black lists might or might not boost the confidence of European consumers,23 but they could certainly enhance the confidence of US-based traders by providing them with a clean set of centralised prohibitions and perhaps, in time, with formal preapproval of standard forms.

B. Discourse Matters It is good analytical practice, in this and many other contexts, to take into account the role of US-based reactions in the political calculations of the European Commission.24 The Commission is clearly fond of black lists. Notwithstanding the uneven reception of the 1993 annex in Member State legislation, and in spite of sheer opposition in some quarters,25 black lists reappeared with a vengeance in the Commission’s proposal for a Directive on consumer rights in 2008. The proposal was meant to heighten the level of supranational control over unfair terms and to promote, for the first time in the consumer protection sector, maximum harmonisation: a number of unfair contract terms would simply be taken away from the discretion of national judges or agencies and be branded, directly from Brussels, as unlawful.26 It is well known that the Commission has since had to downsize its plans, deleting the black list and limiting the Directive’s scope to long-distance and 21 CP Gillette, ‘Pre-approved Contracts for Internet Commerce’ (2005) 42 Houston Law Review 975, 985 (‘The European Union’s Directive on Unfair Terms in Consumer Contracts … bears some of the features of a pre-approval system’). 22 T DiLascio, ‘How Safe Is the Safe Harbor? US and EU Data Privacy Law and the Enforcement of the FTC’s Safe Harbor Program’ (2004) 22 Boston University International Law Journal 399. 23 T Wilhelmsson, ‘The Abuse of the “Confident Consumer” as Justification for EC Consumer Law’ (2004) 27 Journal of Consumer Policy 317. 24 F Nicola, ‘Transatlanticisms: Constitutional Asymmetry and Selective Reception of US Law and Economics in the Formation of European Private Law’ (2008) 16 Cardozo Journal of International and Comparative Law 101. 25 Finland, Denmark and Norway have never implemented the annex. 26 L Tichý, ‘Unfair Terms in Consumer Contracts’ in H Schulte-Nölke and L Tichý (eds), Perspectives for European Consumer Law: Towards a Directive on Consumer Rights and Beyond (Munich, Sellier, 2010) 59.

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off-premises contracts only. It is easy to see how such a drastic move at the supranational level would fail to survive the legislative process in Brussels.27 A centralised black list would seem despotic, indifferent to the trendy logic of self- or co-regulation,28 hardly compatible with the subsidiarity principle, overinclusive, and altogether hyper-regulatory. Member States’ legislatures, agencies and courts would obviously cling to their own perceptions of what should be deemed unfair and to their own preferred methods for fairness control.29 The 2008 annex, with its maximally harmonised list, is unsurprisingly off the legislative table. However, in a form more respectful of both private autonomy and national legal traditions, the Commission has recently reintroduced a similar catalogue: the 2011 proposal for a Common Sales Law—an optional instrument which the parties to a sale might voluntarily adopt as the law governing their contract—contains a finite list of definitely unfair terms.30 The remarkable resilience of black lists in the Commission’s agenda may be due, at least in part, to the transatlantic perception of this particular regulatory technique. The Commission had reason to believe that traders of all nationalities (not just EU business associations) would support the development of black lists, given the increase in legal certainty that it would imply. Abroad, a black list might be just as well liked as the EU trade mark, centralised and equally enforceable in all Member States.31 At the same time, the Commission’s black list might also win the hearts of consumer-friendly constituencies due to its stark regulatory rhetoric. The shift from the 1993 soft standard of ‘significant imbalance’ to the rigid prohibition of certain terms would seem to epitomise a policy of zero tolerance towards corporate abuse of consumer weaknesses. In form, this shift embodies the European ‘hard code’ auspicated by some as the only possible antidote against the on-going dilution of social protection.32 More generally, black lists nicely reinforce the image that Europe has thus far projected abroad: a polity committed not so much to the economic wellbeing of its consumers (through broad choice and low prices, as in the US), but rather to their safety from merchants’ fraudulent schemes and other demeaning treatment in the marketplace.33 This image may not be simply a token of political currency inside the EU, but—as it has authoritatively been suggested—may also be a source of comparative advantage 27 H-W Micklitz and N Reich, ‘Crónica de una muerte anunciada: The Commission Proposal for a Directive on Consumer Rights’ (2009) 46 Common Market Law Review 471. 28 F Cafaggi, ‘Self-regulation in European Contract Law’, EUI Working Paper 2006/43 (2006). 29 Nebbia (n 10) 165. 30 Commission Proposal for a Regulation on a Common European Sales Law (n 5) Art 84. 31 G Bermann et al, Cases and Materials on European Union Law (Eagan, West, 2010) 791 (noting the large share of US applications in the wake of the EU trade mark regulation). 32 U Mattei, ‘Hard Code Now!’ (2002) 2 Global Jurist Frontiers, available at www.works.bepress. com/ugo_mattei/5. 33 JQ Whitman, ‘Consumerism versus Producerism: A Study in Comparative Law’ (2007) 117 Yale Law Journal 340, 366–68, discussing the ‘ambiguities of consumer interests’ and explaining that consumerism may refer equally to the consumers’ economic interests as to their protection and safety interests. See also ibid, 380–81, commenting on Germany’s particular attention to consumers’ dignity.

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in world trade.34 Just as Europe specialises in high-end tourism, it also boasts relatively expensive products that are thought to be completely comforting in all their aspects: manufacturing, style, marketing and even post-sale remedies.35 Underscoring the seriousness of control over contract terms appears to bolster the uniqueness of the European product. Black lists do just that.36 In trade as well as in other geopolitical battles, the rhetorical assertion of European exceptionalism may simply be a matter of self-promotion.37

C. Blacklists as Sonderweg38 The European Union often does things differently, and even when it does not, it says it does.39 Everything about the EU, from the Preamble in the Treaty of Lisbon to each and every Commission policy, is cast in a peculiar language, so as to assert, in HLA Hart’s terms, ‘the internal viewpoint’ of its legal system.40 Examples of this pattern abound. Borrowing from the field of competition law, one cannot help but notice the colourful recasting of antitrust policies in welfarestate language: ‘Free competition’ is not an end in itself—it is a means to an end.  … Competitive markets provide the right conditions for companies to innovate and prosper, and so to increase overall European wealth. More wealth means more money for governments to use to sustain the fabric of our societies and to guarantee social justice.41

This rhetoric, which puzzles many US observers, contrasts sharply with the ongoing Americanisation of antitrust policies within the DG IV. It is as if the substantive convergence of the systems had to be aesthetically corrected by assertions of ideological self-determination and political distinctiveness. Analogously, in matters of federal/supranational regulation of private autonomy, we are witnessing a considerable transatlantic convergence in terms of substance.

34

Ibid, 403. Ibid, 404. 36 See Quinn (n 11) 783–84 (analysing the black list of the proposed Consumer Rights Directive and finding in it ‘very strong evidence that the European Union has no intention of backing off its stance on maximum consumer protection’). 37 On EU exceptionalism, see P Eleftheriadis, ‘The Moral Distinctiveness of the European Union’ (2011) 9 International Journal of Constitutional Law 695. 38 The expression ‘Europe’s Sonderweg’ comes from a well-known reflection on the particular constitutional itinerary of the EU. See JHH Weiler, ‘In Defence of the Status Quo: Europe’s Constitutional Sonderweg’ in JHH Weiler and M Wind (eds), European Constitutionalism Beyond the State (Cambridge, Cambridge University Press, 2003) 7. 39 G de Búrca, ‘The EU, the European Court of Justice and the International Legal Order after Kadi’ (2010) 51 Harvard International Law Journal 1. 40 On the ‘internal viewpoint’ (in HLA Hart’s terms) of EU law, see F Bignami, ‘Comparative Law and the Rise of the European Court of Justice’ (European Union Studies Association biennial meeting, Boston, 3–6 March 2011) (on file with author). 41 Commission, ‘Report on Competition Policy 2006’, Foreword, available at www.ec.europa.eu/ competition/publications/annual_report/2006/en.pdf. 35

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Clinging to the legal form of black lists may therefore be an important gesture of discursive divergence. The idea that centralised (or supranational or federal) consumer contract regulation performs an important expressive function finds validation across the globe. The recent reform of consumer contract law in China, for instance, seems crafted in such a way as to make its own singular statement: enforcement of fairness is firmly placed in the hands of administrative agencies, armed with the power to impose hefty fines on traders who include blacklisted terms in their standard forms.42 In the Chinese context, this regulatory design allows the ongoing expansion of private autonomy to be formally subjugated to governmental control. The discursive salience of such a move in a country that is slowly but surely continuing to open its markets is enormous.43 By the same token, the fact that the regulation of consumer contracts in the EU comes with a black list in tow is, first and foremost, a rhetorical bulwark against the substantive globalisation of market practices. The need for discursive divergence in matters of contract fairness is obvious in the US as well. Keeping an explicit and emphatic distance from the EU’s blacklisting habit,44 current American Law Institute (ALI) proposals for the regulation of online software licenses do not contain any outright prohibitions of specific terms. Rather, the ALI proposals emphasise the importance of pre-contractual disclosure: insofar as the licensee knows, or has reason to know, what he or she is getting into at the time of assent, there is no need to protect him or her from any unfair aspects of the contract. Note that, in the US context, disclosure duties placed upon traders are already perceived as an aggressive form of consumer protection.45 Business entities resist the very idea of mandatory disclosure and deem it an overly generous concession to the demands of consumer associations. From this perspective, the fact that a trading bloc of the size and importance of the EU actually bothered to pre-define as unfair a given set of contract terms seems to be a radical approach—one that signals an altogether different philosophy of governance and a much lower degree of respect for private autonomy. By the same token, the lightness of regulatory interference with consumer contracts in the US is largely exaggerated in the literature. The current, widespread antipathy towards Washington-based regulation in the US leads many Americans to downplay centralised intervention and to emphasise the fact that the glass of private autonomy is, even in the worst-case scenario, at least halffull. To name just one example: contracts teachers in the US commonly assign 42 HLT Chen  and S Fei, ‘Chinese Government Publishes New Measures on Illegal Contractual Acts: Standard Contractual Clauses May Cause Administrative Liability’, McDermott Newsletters 22 October 2010, available at www.mwe.com/index.cfm/fuseaction/publications.nldetail/object_ id/4e3886e4-66e0-4862-bd7a-3197937bf3fd.cfm. 43 M Zhang, ‘Freedom of Contract with Chinese Legal Characteristics: A Closer Look at China’s New Contract Law’ (2000) 14 Temple International and Comparative Law Journal 237. 44 RA Hillman and M O’Rourke, ‘Defending Disclosure in Software Licensing’ (2011) 78 University of Chicago Law Review 95, fn 73. 45 Ibid, 96 (citing sources of criticism of disclosure duties).

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Williams v Walker-Thomas, a path-breaking case on unconscionability.46 In that case, the object of dispute was a cross-collateralisation clause embedded in a standardised consumer contract. The clause, struck down as unconscionable by the Second Circuit, allowed a seller to repossess all items ever sold to the plaintiff in the event she defaulted on her latest purchase, a piece of musical equipment. The picture of a stay-at-home mom with seven children, a brand-new stereo set and no refrigerator is intriguing, and lends itself to interesting classroom work on the pros and cons of judicial intervention. Casebook authors, however, juxtapose the case to more recent court decisions that show how rarely and lightly the tool of unconscionability curbs unfair terms in America.47 By contrast, the fact that the infamous cross-collateralisation clause at issue in Williams v WalkerThomas was blacklisted by federal regulation during the Reagan administration has gone mostly unmentioned.48 Distinctive rhetoric aside, the transatlantic convergence of consumer law can be observed in a variety of areas, and has indeed become a massive phenomenon.49 In matters of marketing practices, a combination of federal agency intervention and statutory enactments in all fifty states has had the practical effect of proscribing a number of deceptive devices, often enumerated in lists which closely resemble, at least in style, the one attached to the EC Directive on unfair commercial practices.50 The legislation on consumer credit, promoted simultaneously by Washington and Brussels in the aftermath of the 2008 financial crisis, is firmly rooted in a paradigm of information asymmetries. The regulatory emphasis of President Obama’s Credit Card Act of 2009 is on educating consumers via pre-contractual disclosure, not on sheltering them from their own improvidence after they have entered a bad deal. By the same token, the EU Consumer Credit Directive aims at promoting transparency and informed decisions.51 Both texts are meant to empower consumer autonomy, and both downplay the well-established fact that borrowing behaviour is consistently ‘lessthan-rational and cognitively distorted’.52 46

Willliams v Walker-Thomas Furniture Co, 340 F 2d 445 (C A DC 1965). I have attempted, by contrast, to highlight the persistent vitality of judicial control in many US jurisdictions. D Caruso, ‘Contract Law and Distribution in the Age of Welfare Reform’ (2007) 49 Arizona Law Review 665. 48 FTC Credit Practices Rules, 16 CFR §§  444.1(i), 444.2(a)(4) (2005). See also DG Baird, ‘The Boilerplate Puzzle’ (2006) 104 Michigan Law Review 933. 49 Convergence does not necessarily mean Americanisation, as the EU also influences global trends. See F Bignami, ‘Cooperative Legalism and the Non-Americanization of European Regulatory Styles: The Case of Data Privacy’ (2011) 59 American Journal of Comparative Law 411, 457–58 (noting that ‘Convergence on cooperative legalism is evident in a number of other policy areas’ including consumer protection). 50 Directive 2005/29 (n 2). See also Budnitz (n 11) 674. 51 Compare the Credit Card Accountability Responsibility and Disclosure Act of 2009, Pub L No 111–24, 123 Stat 1734–66, to Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers [2008] OJ L133/66. 52 C Garcia and WH Van Boom, ‘Information Disclosure in the EU Consumer Credit Directive: Opportunities and Limitations’ (2009) Erasmus School of Law Working Paper Series, available at http://ssrn.com/abstract=1538111. 47

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To be sure, there are a number of areas in which regulatory divergence between the US and the EU is real. Notorious examples are to be found in the fields of product safety, food and drug standards, corporate mergers, and personal data privacy—all fields, incidentally, where divergence functions more or less as a trade barrier.53 Fairness control over contract terms is indeed more pervasive in Europe than it is in the US, and the European regime does bar clauses that would be deemed legitimate in many US jurisdictions.54 The point is simply that regulatory discrepancies between the US and the EU are constantly overblown in discourse, while points of convergence remain in the background. The existing transatlantic differences in the treatment of one-sided contract terms do find tremendous amplification in the European drafting of a supranational black list, even one that falls short of maximum harmonisation.

III. Black Lists over Time A. From Constraint to Freedom? The above-mentioned assumption that a supranational black list might enjoy favour among both businesses and consumers and that, more generally, black lists are effectively ambiguous as a regulatory instrument, deserves further investigation. Among the reasons commonly invoked to oppose the supranational imposition of black lists is the fact that in many member states a black list would prompt a net decrease of consumer protection: long as it is, the list may not match the pervasive level of control that exists, through courts and/or agencies armed with general clauses, in certain states’ laws.55 Another, and perhaps more important, reason to fear supranational lists is that they have a natural propensity to shrink. Writing down a firm list of prohibitions may look like a tough regulatory act, setting in stone the limits of contractual autonomy. But it may also be the beginning of deregulation: the stone is of finite dimensions, and can be filed down. In the medium or long term, black lists in consumer contracts could be not a departure from autonomy but rather a return to it. To see this point, one must recall the itinerary of other another type of black list—the type that bans so-called ‘hardcore restrictions’ in anti-competitive vertical agreements. Reduced to its archetype, the early story of hardcore restrictions resembles the ongoing evolution of black lists in consumer contracts. A glance at the current status of vertical restraints in competition law may allow

53

Bignami (n 49). Maxeiner (n 11) 164–65; Quinn (n 11) 784–86. With regard to arbitration clauses see Delisle and Trujillo (n 11) 157. 55 Wilhelmsson (n 23). 54

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us, therefore, to understand the paradoxical deregulatory force of black lists in EU consumer contracts.

B. Blacklists and Hardcore Restrictions When Article 85 was inserted into the EEC Treaty, its reference to ‘agreements’ seemed obviously related to cartels, ie horizontal arrangements among two or more manufacturers of a relatively undifferentiated product (cement, sugar, etc). Article 85, now Article 101 of the Treaty on the Functioning of the European Union (TFEU), was initially intended to prevent any single party from crushing competitors by unilaterally lowering prices. That competition had to be sheltered from the perverse effects of multinational cartels seemed an obvious proposition to the jurists and economists of the 1950s. The model for Article 85 was Article I of the Sherman Act, filtered through the conceptual lens of German ordoliberal thought.56 This statute had notoriously been used to dismantle cartels in the US, and that was indeed the intended purpose of Article 85. When the Commission began to investigate anti-competitive conduct, however, vertical restraints emerged as an additional target. Beginning with the Grundig and Pioneer disputes, Article 85 became just as much a tool for regulating vertical distribution contracts as it was an anti-cartel device.57 As a regulatory instrument, it was of the soft variety, insofar as the guidelines it provided to enforcers were drafted in the style of standards rather than rules. Did the obligations imposed upon the distributor have any redeeming quality, so as to be saved by the last lines of Article 85? The room for discretionary manoeuvre on the part of competition law enforcers (mostly DG IV personnel and EU courts) was just as ample as the one embodied in the ‘significant imbalance’ standard in matters of unfair terms. It is against this background of highly discretionary control that the idea of blacklisting certain terms in specific types of vertical agreements (eg franchising) came to life. In the wake of the ECJ’s holding in Pronuptia, the Commission issued a first generation of exempting regulations, each equipped with a black list of outright prohibited clauses.58 Predictably, the initial black lists were soon attacked as over-inclusive and unduly restrictive of business needs and creativity.59 As a consequence, in the mid-1990s, the Commission’s attitude towards 56 D Gerber, Law and Competition in Twentieth Century Europe: Protecting Prometheus (Oxford, Clarendon Press, 1998). 57 Joined Cases 56/64 and 58/64 Consten and Grundig-Verkaufs-GmbH v Commission [1966] ECR 299; Joined Cases C-100-103/80 Musique Diffusion Française v Commission (Pioneer) [1983] ECR 1825. 58 Case 161/84 Pronuptia de Paris GmbH v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353. See eg Commission Regulation EEC No 4087/88 of 30 November 1988 on the application of Article 85(3) of the Treaty to categories of franchise agreements [1988] OJ L359/46, Art 5. 59 G Monti, EC Competition Law (Cambridge, Cambridge University Press, 2007) 358: ‘the black lists were very extensive and they restricted the ability of parties to draft vertical restraints according to their commercial needs’.

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vertical restraints began to change.60 Black lists did not disappear as a regulatory technique.61 The new approach, however, promoted the liberalisation of restraints whenever market shares were small and inter-brand competition lively, with the result of rescuing from per se illegality a number of previously outlawed clauses.62 This shift did not happen in a cultural vacuum. In transatlantic dialogue, vertical restrictions were considered an oddity of the European approach to antitrust law. For decades, US-based lawyers and economists, mostly informed by the teachings of the Chicago School, found it bizarre at best that the Commission would bar intra-brand vertical restraints. In their view, actual or potential inter-brand competition ensured that each vertical chain of production and/ or distribution would remain as lean and consumer friendly as possible. In that light, outlawing most producer–distributor agreements appeared pointless, economically myopic and ultimately inefficient. To be sure, certain context-sensitive US observers did point out the peculiarities of European market structures, still rigidly separated along the lines of national boundaries. In these contributions, the Commission’s tough line on vertical restraints was justified as necessary to enable out-of-state economic actors to compete with incumbents.63 The prevalent assessment of US scholars remained, however, profoundly critical. With time, the thinking of the Commission evolved along the lines of dominant US-based theories. Vertical restraints were increasingly freed from the yoke of nullity per se. The bundle of hardcore restrictions shrank to a nutshell,64 and is expected to shrink even further.65 The supranational dimension of EU competition law further enhances the relaxation of vertical restraints: since the enactment of Regulation 1/2003, agreements that are permitted by EU standards must be deemed legal under state law as well.66 This means that, in the area of 60

Ibid, 359. R van den Bergh and PD Camesasca, European Competition Law and Economics: A Comparative Perspective (Antwerpen, Intersentia-Hart, 2001) 237. The authors discuss the ‘black list’ contained in Block Exemption Regulation 2790/99, Art 4, which included minimum resale price maintenance and market partitioning by territory, and also ‘a number of combinations of vertical restraints: territorial sales restrictions combined with selective distribution at the same level of distribution, exclusive distribution combined with exclusive purchasing, and selective distribution combined with exclusive purchasing’. 62 R Whish, ‘Regulation 2790/99: The Commission’s ‘New styLe’ Block Exemption for Vertical Agreements’ (2000) 37 Common Market Law Review 887. 63 EM Fox, ‘US and EU Competition Law: A Comparison’ in EM Graham and JD Richardson (eds), Global Competition Policy (Washington DC, Peterson Institute, 1997) 339. 64 R Whish and D Bailey, ‘Regulation 330/2010: The Commission’s New Block Exemption for Vertical Agreements’ (2010) 47 Common Market Law Review 1757. See also AM El-Agraa, The European Union: Economics and Policies, 9th edn (Cambridge, Cambridge University Press, 2011) 209, noting that ‘The block exemption for vertical restraints is based on a general exemption, subject only to a limited number of blacklisted clause … leaving broader freedom for commercial contracts.’ 65 M Velez, ‘Recent Developments in Selective Distribution’ (2011) 32 European Competition Law Review 242. See also El-Agraa (n 64) 209: ‘The vertical block exemption is now under review, especially its prohibition of retail price maintenance.’ The US Supreme Court has liberalised its approach to such clauses (since Leegin v PSKS, Inc, (2006) 127 SCt 763), and this development is likely to have repercussions in Europe. 66 Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition 61

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vertical restraints, no harsher restrictions of contractual freedoms are possible than the ones allowed for by supranational law. The EU regime is now, in this important area of private autonomy, one of maximum harmonisation. As we shall see, the liberalisation of vertical restraints in response to transatlantic pressure finds important parallels in the Commission’s ongoing attempt to replace the soft but pervasive test of unfairness with a maximally harmonised list of prohibitions. Once articulated, this list is equally likely to become a target of efficiency-based critiques, and to be accordingly eroded over time.

C. The US Critique of Black Lists Analogies between the EU’s hardcore restrictions and its black lists in consumer contracts abound. Their legal destiny—nullity—is the same, and the reputation they enjoy on the other side of the Atlantic Ocean is just as meagre. In the view of mainstream US scholars, black lists in B2C contracts are typical expressions of European paternalism and altogether undesirable. As observed above, disclosure duties are by contrast tolerated as less intrusive upon private autonomy. In US legal scholarship, the arguments for discarding black lists as a regulatory option are multiple, and some are more persuasive than others. A recurring theme in the literature is that black lists involve an excessive interference with the principle of freedom of contract. Disclosure duties, on the other hand, make it possible for fully informed consumers to make intelligent decisions and, when appropriate, to opt for products that are ultimately desirable despite contract terms that are in no way consumer friendly. Another commonly invoked reason for avoiding black lists is that, if sellers or suppliers are barred from adopting certain selfserving marketing practices, they will have to raise the prices of their goods, and by so doing will deprive low-income shoppers of otherwise affordable products. This argument has routinely been put forth to oppose contractual regulation of all kinds, including, most recently, in the area of consumer credit: mandatory terms, or outright prohibitions of certain contract clauses, are viewed as hurting the very people they are supposed to protect.67 Besides these known argumentative hurdles—the principled protection of freedom of contract and the belief that paternalistic regulation hurts the poor—black lists encounter stark opposition in the literature specifically related to standardised (or adhesive ‘boilerplate’) contracts. Gone are the days when standard forms drafted unilaterally by sellers or suppliers bore, in the eyes of laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1, Art 3(2): ‘The application of national competition law may not lead to the prohibition of agreements  … which may affect trade between Member States but which do not restrict competition within the meaning of Article 81(1) of the Treaty, or which fulfil the conditions of Article 81(3) of the Treaty or which are covered by a Regulation for the application of Article 81(3) of the Treaty.’ 67 E Moore, ‘Credit Card Companies Exploit EU law’, Financial Times, 31 May 2011 (‘Banks had warned in 2007 that if the rules were put into practice the number of borrowers struggling to obtain a loan would rise’).

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scholars and courts, the stigma of presumptive one-sidedness.68 The presence of standard forms in B2C contracting has been entirely normalised. It is common, and generally legal, to include in such forms certain hair-raising lines, such as highly restrictive arbitration clauses,69 or terms that allow ex ante the unilateral modification of core obligations.70 Reputational concerns are said to play a significant role in the self-regulation of businesses practices with respect to standardised terms.71 Sellers and suppliers, the argument goes, are repeat-players, and consumer associations, along with spontaneous monitors such as TripAdvisor.com, take note of their misbehaviours. By contrast, opportunistic consumers—those who hold on to merchandise longer than necessary before withdrawing from a purchase, those who pay belatedly or never, etc— are protected by virtual anonymity in the market and are hard to pin down. Self-help measures built into boilerplates (in the form of guarantees, forum selection, default charges, etc) are the only way for sellers or suppliers to protect themselves from such opportunistic consumers. It is also the case, the argument continues, that business actors abstain from enforcing unfair clauses except in the most egregious cases of consumer breach. Because it is in their interests to maintain reputations as fair players, they tend to forgive consumer defaults in the large majority of cases, and unfair clauses remain mostly dead letter. Indeed, it seems to be true that businesses avoid certain marketing practices even under regimes that would authorise them. To see this point, one need only think of withdrawal rights—a subject of capillary regulation at EU level.72 In the US, retailers are free to impose no-return policies, and occasionally they do just that by affixing a conspicuous ‘final sale’ label on discrete items. But, as a matter of course, a consumer’s ability to return just about any saleable product—shoes, clothes, appliances—is the rule. Such extremely liberal cancellation policies obviously stem not from the kindness of sellers, but rather from the wisdom of enabling careless and copious buying: shoppers who rely on generous withdrawal rights are sure to purchase more items than shoppers whose jus poenitendi is restrained. The overarching theoretical premise of these arguments is that the moralisation of the marketplace occurs spontaneously as a result of competition among business actors. When incumbents and new entrants compete for consumers’ 68 TD Rakoff, ‘Contracts of Adhesion: An Essay in Reconstruction’ (1982) 96 Harvard Law Review 1174. 69 AT&T Mobility LLC v Concepcion (2011) 131 SCt 1740. 70 Gillette (n 21) explains why such clauses should not be presumptively void: ‘Boilerplate incantations that the terms of a clickware contract are “subject to change without notice” may be exploitative or not, depending on whether the risks are priced and perhaps on the propriety of the supplementary terms that are ultimately inserted.’ 71 LA Bebchuk and RA Posner, ‘One-Sided Contracts in Competitive Consumer Markets’ (2006) 104 Michigan Law Review 827. 72 R Schulze, ‘The Right of Withdrawal’ in H Schulte-Nölke and L Tichý (eds), Perspectives for European Consumer Law: Towards a Directive on Consumer Rights and Beyond (Munich, Sellier, 2010) 13.

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favour, standardised terms will be efficient. Sellers and suppliers will compete not only over the quality and price of their products, but also over the attractiveness of the terms they offer. If the insertion of a seemingly unfair clause (eg a dramatic exclusion of warranties) allows the manufacturer some savings, he will pass a portion of those savings on to the consumer (eg as price reduction or quality upgrade), thereby restoring the overall fairness of the transaction. Of course, this optimistic portrayal of standardised contracting is not without critics. The persistence of clauses that allow for mass exploitation of customers’ artlessness is a well-known fact. The finding that sellers are more generous in practice than their pre-drafted forms would lead us to believe is correct, but it is confined to cases in which consumers have the wherewithal to beg for the suspension of suppliers’ self-help clauses.73 More generally, the presumed natural efficiency of boilerplate terms presupposes conditions of competition, openness and transparency that few markets can truly satisfy. Nevertheless, the US trend is seemingly in favour of upholding boilerplates, and certainly against blacklisting any particular terms ex ante. In a recent volume of collected essays dedicated entirely to boilerplate terms, only one author proposed blacklisting as a regulatory technique.74 Against this argumentative background, it is no surprise that US courts review unfair standard terms only very seldom, and are quite light-handed when they do. Vehicles for judicial vetting are to be found in the doctrine of unconscionability—codified, in matters of sales of goods, in section 302 of the Uniform Commercial Code—and in the vaguely enforceable principle that terms exceeding reasonable expectations in pre-drafted forms will not be binding (Restatement Second of Contracts section 211). Together, the two doctrines cast a very wide net and allow for thorough revisions of contractual fairness. The mesh of the net, however, is so wide that the actual catch is negligible.75 Unsurprisingly, the system meets with the widespread approval of business associations: relatively recent attempts to revise Article 2 of the Uniform Commercial Code foundered on the rocks of business opposition.76 Max Weber’s prediction that the entrepreneurial class would crave certainty and predictability is, at first sight, difficult to square with the preference of US business players for this open-ended, ex-post judicial review. Upon closer inspection, however, the existing case law on unconscionability gives US business players relative confidence that scrutiny is both rare and undemanding.77 73 See TD Rakoff, ‘The Law and Sociology of Boilerplate’ (2006) 104 Michigan Law Review 1235 (noting that one-sided clauses turn consumers into supplicants). 74 RJ Mann, ‘“Contracting” for Credit’ (2006) 104 Michigan Law Review 899. Mann considers the regulatory option of outlawing, or blacklisting, certain particularly one-sided terms, in the context of standard forms drafted by credit-card issuers. Mann argues in favour of a total ban of universal default clauses (terms by which card-holders can be charged higher fees by Bank A even when they only default on another account with Bank B). 75 JM Feinman, Un-making Law: The Conservative Campaign to Roll Back the Common Law (Boston, Beacon Press, 2004) 4–5. 76 Maxeiner (n 11). 77 Budnitz (n 11) 682.

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D. A Thought Experiment In source, tone and abundance, the US disapproval of black lists—and of all regulatory purging of mass consumer contracts—closely tracks the critique of the Commission’s early policy in matters of vertical restraints. As is well known, the Commission slowly internalised this critique, loosened its grip on distribution agreements, and ended up conceding almost complete autonomy to vertically contracting parties. The amorphous logic of EEC Article 85 had seemed impervious to analytical deconstruction, but the blacklisted restrictions, clearly spelled out in decisions, regulations and judgments, were easier targets of criticism and could be taken apart one by one, with only sparse exceptions. If the parallelism is correct, the following scenario is at least plausible: Black lists become a pervasive regulatory technique in Europe, and are centralised in the hands of a supranational agency (the ‘Unfair Terms Committee’ foreseen in the 2008 proposal). Subsequently, with or without planning on anybody’s part, efficiencybased arguments erode the list and make it as lean as possible at the next round of revisions. In order to appease pro-consumer forces, mandatory terms are replaced by pre-contractual duties of disclosure, according to US practices. The net outcome is a gain in contractual autonomy for sellers and suppliers, and a concomitant reduction in either central or peripheral scrutiny. Paradoxically, the tough regulatory tone of the black lists facilitates the relaxation of regulation in matters of consumer contracts. The fairness of transactions is left—as in the US—to the policing force of competition among business actors.

Arbitration clauses provide an apt illustration for this thought experiment. In the 2008 proposal for a consumer rights Directive, the Commission darkened—from grey to black—the shade of arbitration clauses. The proposal proclaimed ‘unfair in all circumstances’ clauses ‘requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions’.78 Such terms, identified as simply suspect in the Unfair Contract Terms Directive (lit q of the Annex), would be now subjected to outright prohibition. Arbitration clauses, more precisely defined, also appear in the black list of the pending proposal for a Regulation on Common Sales Law.79 The Commission’s blacklisting of arbitration clauses deserves close attention, as it may lead, in the long term, to paradoxical results. Since 1993, Member States have displayed a wide variety of attitudes towards arbitral clauses. To name a few: in Italy, where lit q of the 1993 Annex is greylisted, forum selection clauses in consumer contracts have been the object of considerable litigation, with courts usually asserting the consumer’s right to sue

78 Annex II, lit c: ‘excluding or hindering the consumer’s right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions’. 79 Art 84(d) of the Commission Proposal for a Regulation on a Common European Sales Law (n 5) blacklists terms that choose as exclusive forum ‘an arbitration system not foreseen generally in legal provisions that apply to contracts between a trader and a consumer’.

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in his natural forum.80 In the UK, a conclusive presumption of unfairness applies to arbitration clauses, but only with regard to disputes whose value is ‘modest’ (less than £5,000).81 In Germany, the code of civil procedure imposes specific form requirements on consumer arbitration agreements, but it does not sanction their substance.82 In Belgium, the Trade Practices Act simply does not prohibit arbitration clauses.83 The ECJ has proclaimed the public-policy nature of fairness control over consumer contracts containing arbitration clauses.84 In the absence of a centralised black list, however, the fate of arbitration clauses has remained diverse throughout the EU territory, and is unlikely to congeal into a single regulatory platform. Had the Commission’s black list been adopted as proposed, its choice to ban a wide range of arbitration clauses would have certainly attracted criticism on grounds of efficiency. Here is how a prominent US scholar explains why such clauses should not be presumptively void: [W]hether arbitration clauses or forum selection clauses, which are the target of many of the concerns about consumer exploitation, disfavor buyers as a class depends significantly on whether the reduced litigation costs that one would anticipate from such terms are passed on to nonlitigating buyers. … Buyers who would not arbitrate or litigate defects that caused minimal harms may prefer an ex ante price reduction to the possibility of an ex post recovery to be shared with a class action attorney.85

In US courts, such arguments have often allowed for the enforcement of terms that seriously restrict the rights and remedies of weaker contracting parties. By means of arbitration clauses, medical malpractice claims against abortion clinics have been funnelled into arbitral panels staffed exclusively by gynaecologists,86 employees have been deprived of Title VII rights,87 and consumers have been only given recourse to prohibitively expensive and remotely located arbitrators. The typical tool for purging abusive arbitration clauses from consumer 80

See eg Cassazione No 19591/2004, Credito Emiliano SpA v Pugliese, Giust Civ Mass 2004, no 9. Arbitration Act 1996, s 91(1) (repealing the previously complete prohibition of all domestic pre-dispute arbitration clauses in consumer contracts) and Unfair Arbitration Agreements (Specified Amounts) Order 1999/2167, Art 3. See also J Hörnle, ‘Legal Controls on the Use of Arbitration Clause in B2C E-commerce Contracts’ (2008) 2 Masaryk University Journal of Law and Technology 23 (‘up to this amount it may be better for the consumer to choose the statutory small claims procedure, whereas for larger amounts in dispute, arbitration may actually be in the consumer’s interest’). 82 Zivilprocessordnung, § 1031(5): arbitration agreements must be contained in a separate signed document or have certification by a notary public. See also Hörnle (n 81). 83 Compendium 2010 (n 6), explaining that the TPA blacklisted lit q only in part. 84 In Case C-168/05 Mostaza Claro v Centro Móvil Milenium SL [2006] ECR I-10421, the Court of Justice held that Directive 93/13 on unfair terms in consumer contracts provides a defence against arbitral awards in an action for annulment, even when the consumer has failed to plead the invalidity of the arbitration agreement containing an unfair term during the arbitration proceeding. In Case C-40/08 Asturcom Telecom v Nogueira [2009] ECR I-9579 the Court clarified the public policy effects of Directive 93/13. 85 Gillette (n 21) 979. 86 Broemmer v Abortion Services of Phoenix, 840 P2d 1013 (Ariz 1992). 87 Ragone v Atlantic Video, 595 F3d 115 (2d Cir 2010). 81

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contracts in the US legal landscape is the above-mentioned doctrine of unconscionability, but this doctrine, as observed, has produced quite uneven results in court. Most recently, the US Supreme Court has allowed arbitration clauses—‘a matter of contract’—to foreclose a major avenue of consumer protection against unfair terms, namely collective actions, 88 in sharp contrast with the increasing popularity of aggregated redress for consumers in the EU.89 Any party with a stake in multiplying forum selection options in the EU would find much argumentative support in recent transatlantic developments. When revising its black list, the committee envisaged in the 2008 proposal would likely have been under tremendous pressure to narrow down the scope of the prohibitions and to expand contractual autonomy in this regard. A supranational black list of unfair terms would start with a bang, but its very enactment might be the beginning of its end. The enforcement of state-mandated black lists currently relies on national courts, whose diverse holdings remain moving targets,90 structurally immune from the aforementioned libertarian critiques. By contrast, the adoption of black lists in a supranational and maximally harmonised law of contracts could yield profoundly deregulatory outcomes, not only because (from a Scandinavian perspective)91 it would constrain the monitoring role of national courts and agencies, but also because it would trigger an entire arsenal of well-rehearsed arguments, which would destroy the list’s legitimacy.

IV. Uniform Lists and Structural Asymetries A. A View from the Periphery Section III.C above summarised a number of classical law-and-economics arguments against the regulation of standardised terms. Those arguments typically focus on the alleged impropriety of transferring contractual entitlements from traders to consumers.92 In the view of this author and many others, however, such transfers are often highly desirable: first, the regulation of standardised terms may respond to compelling reasons of social justice;93 second, the argument that burdened sellers will ultimately pass their costs onto consumers, thereby hurting consumers no less, and perhaps more, than in unregulated regimes, 88

AT&T Mobility LLC v Concepcion (2011) 131 SCt 1740. See eg Italian Codice del Consumo, Art 140bis. 90 See eg Case C-243/08 Pannon GSM Zrt v Győrfi [2009] ECR I-4713 (emphasising the discretion of national courts under the current regime of fairness control). 91 Compendium 2010 (n 6) 358. 92 In general, scholars who believe in the primacy of efficiency among policymaking considerations also assume the existence of a functioning system for wealth redistribution, which is at present dramatically absent in the EU legal system. 93 Study Group on Social Justice, ‘Social Justice in European Contract Law: A Manifesto’ (2004) 6 European Law Journal 653. 89

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has been proven incorrect in many circumstances; and third, there is ample literature questioning the alleged inefficiency of pro-consumer regulation, and positing that, under certain market conditions, distributive goals and efficiency gains may actually coincide.94 The traditional efficiency-based critique of black lists is ultimately unpersuasive. On the other hand, much can be gained from exploring one basic intuition of that school of thought—namely that regulatory constraints placed upon traders may unnecessarily hamper their productivity, their ability to compete and their overall efficiency. This part of the chapter borrows that intuition and wonders whether improper transfers of wealth and power may be occurring as a result of regulatory interference with contractual autonomy, not between traders and consumers, but among traders situated at different points on a centre-periphery spectrum. Curiously, a number of scholars have discussed the uneven distributive impact of substantive fairness control, but have done so mostly from the consumer’s viewpoint. It has been duly emphasised that the Commission’s ‘average consumer’ is only an abstraction, 95 that consumer preferences remain ‘parochial’,96 and that the protection of the consumer is best achieved by taking into account local characteristics.97 Much less work has been devoted, in the context of consumer protection, to deconstructing and defining the abstract category of EU traders. The conflicts and cleavages within that category, however, have emerged prominently in other areas of EU law. In 2007–08, a series of famous decisions of the Court of Justice of the EU— most notably Viking, Laval and Rüffert—displayed in stark terms the situational divide between business players located, respectively, in pre- and post-2004 Member States.98 Among critics of these rulings, the issue was soon phrased in terms of social dumping: with the triumph of free movement in Luxembourg, businesses based in Central and Eastern Europe (CEE) would undermine their competitors by virtue of being subject to milder labour laws and, in turn, lower operating costs. The social rights of the north and west of Europe, gained so

94 See eg B Ackerman, ‘Regulating Slum Housing Markets on Behalf of the Poor: Of Housing Codes, Housing Subsidies and Income Redistribution Policy’ (1971) 80 Yale Law Journal 1093; D Kennedy, ‘Distributive and Paternalist Motives in Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal Bargaining Power’ (1982) 41 Maryland Law Review 563; R Craswell, ‘Passing On the Costs of Legal Rules: Efficiency and Distribution in Buyer–Seller Relationships’ (1991) 43 Stanford Law Review 361. 95 F Trentmann, The Making of the Consumer: Knowledge, Power and Identity in the Modern World (Oxford, Berg, 2006). 96 T Wilhelmsson, ‘The Average European Consumer—A Legal Fiction?’ in T Wilhelmsson (ed), Private Law and the Many Cultures of Europe (The Hague, Kluwer Law International, 2007) 243. 97 T Wilhelmsson, ‘Consumer Images in East and West’ in H-W Micklitz (ed), Rechtseinheit oder Rechtsvielfalt in Europa? Rolle und Funktion des Verbraucherrechts in der EG und den MOE-staaten (Baden-Baden, Nomos, 1996) 53. 98 Case C-438/05 Transport Workers’ Federation v Viking Line ABP [2007] ECR I-10779; Case C-341/05 Laval un Partneri Ltd v Byggnadsarbetareforbundet [2007] ECR I-11767; Case C-346/06 Rüffert v Land Niedersachsen [2008] ECR I-1989.

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painstakingly over so many years, would be sacrificed at the altar of economic rights. On the opposite side of the argument, and in relative praise of the Court of Justice’s holdings, two strands emerged: a liberalist one, touting economic rights as obvious priorities in the age of globalisation; and a leftist one, critiquing the ‘social dumping’ rhetoric, and positing that the only comparative advantage enjoyed by CEE businesses is indeed that of low wages.99 In general, according to the leftist strand, allowing employers on the economic periphery to use the advantage of low wages is the only way for them to catch up with the centre and to boost, in the long term, the social rights of their workers. This strand emphasises the structural weaknesses of the new Member States, and denounces the paradoxical injustice that would stem from exporting fully fledged social regulation from wealthier Member States in the north and west to the rest of Europe. It is a line of argument deeply rooted in world systems analysis,100 in dependency theory, and in the belief that entrenched wealth disparities will not be cured by the fuzzy logic of third-way capitalism. The following section explores the relevance of this literature to the debate on consumer law harmonisation. When the control of contract fairness is soft, decentralised and left to the ad hoc enforcement of general clauses, it is hard to see how close it is in substance to minimum wages or similar regulatory constraints; but when fairness control takes the shape of a black list, the analogy leaps out and calls for analysis. In a design of maximum harmonisation, black lists become enforceable law for all EU traders—including those based in structurally poorer areas. To those traders, the black list is yet another regulatory layer to comply with, next to product standards, labour legislation, and so on. It is, in other words, another unavoidable operational cost imposed by the EU as a precondition to market access. The redistributive consequences of such impositions may not always be warranted, and deserve close scrutiny.

B. The Political Stakes of Black Lists101 The Treaty of Rome came into force in 1957, outlawing, among many other things, gender discrimination in employment. EEC Article 119 (also known as ‘the French clause’) had many soft parts, but its kernel, equal pay for equal work, was soon found to be hard and directly effective.102 There was no avant-garde 99 D Kukovec, ‘Whose Social Europe? The Laval/Viking Judgments and the Prosperity Gap’ (Developing Europe Conference, Harvard Law School, April 2010) available at www.ssrn.com/ abstract=1800922. 100 I Wallerstein, The Modern World-System I: Capitalist Agriculture and the Origins of the European World Economy in the Sixteenth Century (London, Academic Press, 1974). 101 This heading is a nod to D Kennedy’s ‘The Political Stakes in Merely Technical Issues of Contract Law’ (2001) 1 European Review of Private Law 7. Here, however, the argument is that in a Europe of twenty-seven, black lists can have a much more direct distributive role than the one Kennedy attributes, in general, to the technicalities of private law. 102 Case C-43/75 Defrenne v Sabena [1976] ECR 455.

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feminist pressure group behind the provision. Fairness to women in the workplace was not yet a driving concern in Europe, and a general gender policy would not appear on the Commission’s agenda until the 1970s. Instead, in the 1950s, the point was simply the equalisation of labour costs throughout the Community. Firms operating in states with properly regulated labour markets were the intended and actual beneficiaries of Article 119. No employer would be able to gain from hiring cheap female labour in states where pay discrimination had previously been the norm. The flat prohibition of certain terms in consumer contracts is, in boldness and substance, equivalent to the French clause of the EEC Treaty. Enhanced fairness for the consumer may be a desirable side effect of the prohibition, but its main regulatory goal is to prevent certain firms from cutting costs by operating in jurisdictions where they would be allowed to limit consumer remedies. In this light, the confidence of ‘European consumers’ (a questionable concept in itself)103 becomes no more than a projection for the confidence of well-established European traders: even in the remotest corners of the internal market, all of their competitors will have to use equally pro-consumer contract terms. No trader will be able to cut costs on that front. It comes as no surprise, then, that in some parts of the EU the blacklisting of many clauses is not welcome. The ‘confidence’ that traders acquire is no asset; rather, it is the foreclosure of comparative advantage. This is how a scholar certainly familiar with the issue of social dumping describes the impact of European contract terms regulation upon budding CEE entrepreneurs: On the one hand, there is an ambition to regulate in too great detail. … On the other hand, the level of protection is exceedingly high.  … The costs imposed in particular on small businesses by complying with these often excessive and sometimes unclear standards and rules should not be underestimated. If assiduously applied, the results may be devastating for both employment and business. However, such concerns are apparently not shared by the Commission. The Regular Progress reports generally follow formal indicators of enforcement, and praise high numbers of checks and penalties.104

Interestingly, the Commission is not alone in showing indifference to such concerns. In the Czech Republic, for example, the Ministry of Industry and Trade has flaunted a ‘highly positive attitude’ towards the full harmonisation of consumer law.105 This does not necessarily mean, however, that the costs associated with maximal consumer contract regulation are risible or irrelevant. More probably, signing up to a uniform degree of consumer protection performs a 103 R Goode, ‘Contract and Commercial Law: The Logic and Limits of Harmonization’ (2003) 7 Electronic Journal of Comparative Law 2. 104 AB Engelbrekt, ‘The Impact of EU Enlargement on Private Law Governance in Central and Eastern Europe: The Case of Consumer Protection’ in F Cafaggi and H Muir-Watt (eds), Making European Private Law: Governance Design (Cheltenham, Edward Elgar Publishing, 2010) 98. 105 T Břicháček, ‘Some Remarks on the Proposal of a Directive on Consumer Rights’ in H SchulteNölke and L Tichý (eds), Perspectives for European Consumer Law: Towards a Directive on Consumer Rights and Beyond (Munich, Sellier, 2010) 97.

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necessary signalling function: it conveys familiarity with contemporary business practices, comfort with the state of the art, and willingness to compete on a level playing field. A country busy catching up with old Member States must signal its readiness, and has no choice but to jump onto a regulatory bandwagon already moving at full speed. It is well documented, by the same token, that developing nations rush to sign international human rights treaties so as to notify foreign investors of their eagerness to play by developed-world rules. Moral hazard leads governments to overestimate their ability to comply with the new obligations. Actual compliance, however, is a different story: it is either not there or very painful.106 In matters of private law, CEE governments have good reasons to favour the shift to fully harmonised rules, fortified by an EU-wide blacklist.107 Small businesses, however, will have to foot the bill.108 Let us revisit, now, the analogy between supranational blacklisting in consumer contracts and the supranational outlawing of gender discrimination. With time, it has become clear that gender equality is a fundamental value of the Union, worth pursuing for its own sake and not for its equalising effect on labour costs. The same applies to many other regulatory features of the EU legal system, such as product safety or health standards. The EU should not be a place where the work of women is degraded, nor where children are allowed to play with unsafe toys, nor where the workplace itself is a hazard. But does the fairness of contractual practices rise to that same level of moral salience? If not, then the one-sized black list serves no superior cause. All we have, as a reason to interfere with private autonomy, is the desire to level the competitive playing field in a way that does not hurt incumbents. This is not always a lofty goal, and we should not pursue it uncritically. The gain in consumer confidence brought about by centralised black lists may come at a particularly high cost for the periphery of the Union. Within the periphery itself, the added cost resulting from heightened contract regulation may produce regressive wealth transfers. Such effects must be pondered at length before agreeing on maximally harmonised consumer protection. A nuanced and differentiated enforcement of fairness—one that would leave more room for the consideration of structural asymmetries—might be preferable to sheer uniformity.109 Supranational black lists are the epitome of a one-size-fits-all approach, indifferent to wealth disparities on the ground. They are also the hallmark of a Union that adopted a common currency without budgeting for structural redistribution,110 and that still formally outlaws macroeconomic corrections to 106

O Hathaway, ‘Do Human Rights Treaties Make a Difference?’ (2002) 111 Yale Law Journal 1870. Compendium 2010 (n 6) 347, noting that in Estonia the black list of unfair terms contains more clauses than the annex to Directive 93/13. 108 Costs might be minimal and/or offset by reputational gains in some circumstances, but the problem (disparate impact of uniform regulation) persists at a systemic level. 109 C Joerges and F Rödl, ‘On De-formalisation in European Politics and Formalism in European Jurisprudence in Response to the “Social Deficit” of the European Integration Project’ (2009) 15 European Law Journal 1. 110 For an early critique of this feature of the Euro-zone, see M Feldstein, ‘The Case against EMU’, The Economist 13 June 1992. 107

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asymmetrical crises.111 In a Europe that is so ill equipped to deal with tragic prosperity gaps within its borders, the obsession with a uniform degree of fairness in each and every consumer contract is the proverbial tail that wags the dog. One cannot, of course, blame the EU for all the structural inequalities that plague the internal market, nor can one expect the reform of private law to take into account an infinite number of socioeconomic variables. One can, however, highlight the fact that the complete harmonisation of consumer contract law ignores by design the socioeconomic diversity of the internal market. And one can point out the irony of the EU having revived, under the guise of Europeanisation, the nineteenth-century habit of insulating the law of private autonomy from the larger question of systemic inequality.112

V. Conclusions To one basic question raised by this volume—how the operation of EU law affects individuals—the singular topic of this paper has at least provided one clear answer: the impact of black lists upon private autonomy is real and farreaching when it comes to foreign traders doing business in Europe today. The very existence of black lists, no matter how unevenly enforced on the ground, strengthens the message that the EU is serious about consumer protection and will not let global forces dilute its policies. As observed in Section II, this message has already brought about consumer-friendly revisions of the boilerplate terms that US traders employ when dealing with EU customers. Black lists seem capable of stemming, at least discursively, the Americanisation of European consumer law. Insofar as this is a normatively desirable goal, it makes sense to keep black lists of contract terms in the mix of supranational techniques, even if only as an optional instrument. Within the internal market and beyond the short term, however, clarity vanishes and ambivalence abounds. The thought experiment conducted in Section III mapped blacklisted contract terms onto the trajectory of hardcore restrictions in competition law, and showed how enumerated prohibitions can be both highly regulatory and deeply vulnerable to deregulatory critiques. This long-term perspective reveals the fragile core of supranational black lists and evokes the spectre of implosion. Black lists also bear traits of distributive ambivalence. Section IV shifted the focus of enquiry from inequities in B2C relations to inequities among traders along a centre-periphery dimension. The interfer111 VA Schmidt, ‘The European Union’s Eurozone Crisis and What (not) to Do About It’ [2010] Brown Journal of World Affairs 199 (discussing ‘the built-in obstacles to EU action’ in relation to the sovereign debt crisis of Greece and other Member States). 112 F Rödl, ‘Private Law, Democracy, Codification. A Critique of the European Law Project’, in C Joerges and T Ralli (eds), European Constitutionalism without Private Law. Private Law without Democracy, RECON Report No 14, ARENA Report 3/11 (Oslo, 2011) 141, 151.

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ence with private autonomy that accompanies the blacklisting of multiple terms is generally meant to redress the relative weakness of consumers, but it may in turn exacerbate the structural disadvantage of small businesses in economically weaker regions. In sum, apart from their resounding effect on transatlantic discourse, black lists remain ultimately ambiguous as regulatory and distributive mechanisms. The point is not only that lists could lower the level of consumer protection in states with a strong consumerist tradition.113 More generally, and across the spectrum of the various state regimes, their impact on private autonomy could constitute either constraint or (in due time) empowerment; their impact on wealth disparities could be mitigating in some aspects but worsening in others. In the recipe of EU contract law, black lists are a composite ingredient, which can taste either sweet or sour depending on what else is in the mix. To be sure, ambiguity can be an asset. The idea of a supranational list of unfair terms was politically defeated and discredited by many legal scholars in the wake of the Commission’s proposal for a consumer rights Directive. Yet, the Expert Group that delivered the Feasibility Study in 2011 took the trouble to refine it, and the Commission revived it in its currently pending proposal for a Common Sales Law.114 Ambiguity is a notorious tool of political survival and may explain the vitality of the black list in an ideologically composite environment. Ambiguity is of no help, however, when it comes to normativity, which is the overarching theme of this volume. The lines of reflection that run through the foregoing pages do not congeal into one particular normative stance on black lists. If anything, they contribute to the finding that a normative assessment of private law harmonisation is truly impossible without a simultaneous evaluation of many other (re)distributive practices triggered by the process of Europeanisation. The most trenchant critiques of the project of contract law harmonisation are those that point out the hiatus between EU contract law and national remedies, procedures, enforcement mechanisms and private law cultures, which remain radically distinct in each Member State. This chapter, through the narrow lens of typified unfair terms, has explored yet another feature of that disconnect.115 Promoting fairness in consumer contracts is an aspect of private law which by design cannot be reduced to the liberal matrix of formal equality. It is, openly and unapologetically, a matter of social justice. But to this day, sixty years and mountains of acquis after the Treaty of Paris, there is no consensus whatsoever on what social justice means in EU law. The only place of coherence for the whole EU enterprise is still to be found in Ricardo’s elliptic creed—namely that prosperity for all will flow naturally from the exploit 113

Compendium 2010 (n 6) 347. Draft Feasibility Study (n 5) Art 83; Commission Proposal for a Common Sales Law (n 5) Art 84. 115 See C Schmidt, Die Instrumentalisierung des Privatrechts durch die Europäische Union (BadenBaden, Nomos, 2010) 25ff (analysing the embeddedness of certain private law relationships in policies aimed at satisfying individuals’ basic needs). 114

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of everyone’s comparative advantage. The rest is still a nest of contradictions, channelled, but certainly not solved, by the balancing acts EU law still requires at every step. We wish the devil were in the details. Alas, the devil looms large in the big picture.

14 EU Law and Consumer Transactions without an Internal Market Dimension CHRISTIAN TWIGG-FLESNER

I. Introduction Any consideration of the involvement of EU law in private relationships would be incomplete without a discussion of the effect EU law has had on transactions between consumers and business (or ‘traders’). However, rather than analysing the impact of the various EU Directives affecting consumer transactions on national laws, the focus of this chapter is to question whether EU law should affect consumer transactions at all, and if so, whether this should extend to all consumer transactions, or be limited to those that have an internal market dimension, ie ‘cross-border’ transactions. The concern of this contribution is therefore to offer one response to the question of the appropriateness of EU law’s involvement in private relationships, in this case those between a consumer and trader which do not have an internal market dimension (‘domestic consumer transactions’).1 It is clearly the case that EU law has had a not insignificant impact on domestic consumer transactions, and the next section will provide a short summary of this. As the development of EU consumer law is covered extensively elsewhere, there is no need to go into too much detail. It will then be considered just how strong the EU’s constitutional basis for the regulation of domestic consumer transactions is. While there clearly is a reasonably strong basis, it will be argued that it is not as wide-ranging as the EU’s power to regulate crossborder consumer transactions. This will then lead to a consideration of the wider question of whether EU law should affect domestic consumer transactions at all.

1 This contribution relates to other papers by the present author focusing more sharply on the case for a cross-border-only regulation for consumer transactions: see C Twigg-Flesner, ‘Time to Do the Job Properly—The Case for a New Approach to EU Consumer Legislation’ (2010) 33 Journal of Consumer Policy 355; ‘Good-bye Harmonization by Directives, Hello Cross-border only Regulation?—A Way Forward for EU Consumer Contract Law’ (2011) 7 European Review of Contract Law 235; and A Cross-border-only Regulation for Consumer Transactions in the EU—A New Approach to EU Consumer Law (New York, Springer, 2012).

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II. EU Consumer Law to Date This chapter asks whether EU law should affect domestic consumer transactions, and to some, raising this question might be redundant—the fact is that EU law has already had quite a significant impact on domestic consumer transactions.2 This is seen most clearly in the number of measures adopted by the EU which regulate various aspects of consumer transactions. Over the years, we have seen the adoption of measures on doorstep selling,3 consumer credit,4 package travel,5 unfair terms,6 timesharing,7 distance selling,8 the sale of consumer goods and guarantees,9 the distance marketing of financial services,10 and unfair commercial practices.11 Most recently, the Directive on consumer rights12 replaces and extends the Directives on doorstep and distance selling, and supplements the provisions of the consumer sales Directive. All of the measures are ‘Directives’, which are ‘binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave

2 See eg S Weatherill, EU Consumer Law and Policy (Cheltenham, Edward Elgar, 2005) or H Micklitz, N Reich and P Rott, Understanding European Consumer Law (Antwerp, Intersentia, 2008). 3 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 (‘Doorstep Selling Directive’). 4 Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1986] OJ L42/48 (‘Consumer Credit Directive’), since replaced by Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC [2008] OJ L133/66. 5 Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours [1990] OJ L158/59. 6 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29 (‘Unfair Contract Terms Directive’). 7 Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis [1994] OJ L280/83; since replaced by Directive 2008/122/EC of the European Parliament and of the Council of 14 January 2009 on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts Text with EEA relevance [2008] OJ L33/10. 8 Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts [1997] OJ L144/19 (‘Distance Selling Directive’). 9 Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12. 10 Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC [2002] OJ L271/16. 11 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council [2005] OJ L149/22 (‘Unfair Commercial Practices Directive’). 12 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council [2011] OJ L304/64 (‘Consumer Rights Directive’).

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to the national authorities the choice of form and methods’.13 This means the national legislatures of the EU Member States have to adopt or amend legislation to ensure that the requirements of these Directives are transposed effectively into domestic law. All of these Directives are designed to apply to all consumer transactions, ie no distinction is made between domestic and cross-border transactions. EU law therefore does affect consumer transactions that do not have an internal market dimension. The reasons for this approach will be considered shortly. First, however, we must note that most of these Directives are based on what is known as a ‘minimum harmonisation’ standard, which means that they specify a minimum level of consumer protection that must be attained in the national laws of all the Member States, while retaining the possibility that national law may be more protective. Some of the more recent Directives are based on a ‘full harmonisation’ standard which removes that possibility; however, as the experience of agreeing on the recent Consumer Rights Directive shows, there appears to be significant political reluctance to accept a broad fullharmonisation approach affecting all aspects of consumer law. The proposal for the Consumer Rights Directive was considerably broader and would also have encompassed reforms to the Directives on unfair terms and consumer sales, but ultimately, Member States were unwilling to support a shift to full harmonisation in these areas. This might suggest that while Member States are willing to accept a degree of involvement of EU law in the regulation of consumer transaction, there are at least some who would like this involvement to be restricted. One might ask why we have Directives which apply to all types of consumer transactions without distinguishing between domestic and cross-border transactions. For now, we can leave aside the difficulties of establishing just where the dividing line between these two types of transactions should be, although this is a matter we need to return to later. For present purposes, there are two broad reasons why EU law covers both domestic and cross-border transactions: the first is a technical legal reason, and the second perhaps more sociopolitical. The technical legal reason arises because of the difficulties created by transactions which involve parties from more than one jurisdiction, eg a consumer from France and a trader based in Germany. In this situation, the consumer will expect to be protected by the rules of French law, whereas the trader will assume that he is required to comply with German law. This creates a conflict between two legal systems and a solution has to be found as to which rules should apply—those from French law or those from German law. Thus, the question arises which law should be applicable to the transaction. Within the EU, the answer to this question is found in the provisions of the Rome I Regulation on the law applicable to contractual obligations.14 The basic position is that the parties to a contract can choose the law applicable to their contract.15 There 13

Art 288 TFEU. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L177/6 (‘Rome I Regulation’). 15 Art 3(1) Rome I Regulation. 14

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are several restrictions on this basic freedom of choice, primarily with regard to so-called ‘mandatory rules’, ie rules of law which cannot be displaced by appropriate terms in the contract. So if the parties choose one particular law, but ‘all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen’, then the rules of law of the country where ‘all the other elements are located’, and which cannot be derogated from by agreement between the parties, will continue to apply.16 Similarly, the choice of the law of a non-EU Member State cannot preclude the application of ‘mandatory rules’ of EU law where ‘all other elements relevant to the situation  … are located in one or more Member States’.17 Domestic consumer law rules are generally mandatory rules and any choice of law by a trader and a consumer would be subject to these. Moreover, Article 6 of the Rome I Regulation contains a specific provision for the law applicable to consumer contracts. According to this, the applicable law is that of the country where the consumer has his habitual residence,18 provided that (i) The trader pursues his commercial or professional activities in the country where the consumer has his habitual residence; or (ii) The trader by any means directs such activities to that country or to several countries including that country; and in either case the contract which has been concluded falls within the scope of the traders commercial or professional activities.

There has been some debate as to when precisely a trader might be directing his activities to a consumer’s country of habitual residence, particularly in the context of online transactions, but the detail is beyond the scope of this chapter.19 If the conditions of Article 6 are not satisfied, and the parties have not chosen a law in accordance with Article 3, then Article 4(1) of the Rome I Regulation contains a number of default rules. With regard to contracts for the sale of goods and supply of services, the applicable law would be the law where the seller or service provider has his habitual residence. The crucial point is that the Rome I Regulation identifies which law applies. However, in order to become familiar with the substantive rules of the relevant law, traders and consumers will still have to study the provisions of that law. This means that traders contracting with consumers from other Member States will need to be aware of the mandatory consumer protection rules applicable under the law of the consumer’s habitual residence. Traders operating throughout the EU therefore need to be aware of the mandatory rules of each of the Member States. This invariably creates additional costs for a trader, and this might deter 16

Art 3(3) Rome I Regulation. Art 3(4) Rome I Regulation. 18 See, further, P Cachia, ‘Consumer Contracts in European Private International Law: The Sphere of Operation of the Consumer Contract Rules in the Brussels I and Rome I Regulations’ (2009) 34 European Law Review 476. 19 See the discussion in Joined Cases C-585/08 and 144/09 Peter Pammer v Reederei Karl Schlüter GmBH & Co KG; Hotel Alpenhof GesmbH v Oliver Heller, Judgment of 7 December 2010. 17

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many traders from dealing with consumers from other jurisdictions, unless they can be sure that their own law continues to apply. The solution to this problem pursued by the EU so far has been to harmonise core aspects of consumer law in order to reduce, if not eliminate, the differences between the various national laws so as to encourage both traders and consumers to engage in cross-border contracting. Thus, the objective pursued by the Directives mentioned above is to harmonise the national laws in particular areas to such an extent that it would make no practical difference whether the law of the consumer’s or trader’s habitual residence applied. This objective seems convincing enough but the practical experience has been a rather different one. For a start, the use of ‘minimum harmonisation’ Directives has meant that there continued to be a not unnoticeable degree of variation in the level of consumer protection between the Member States in the areas subject to harmonisation.20 Moreover, Directives need to be transposed into national law but Member States need not do so verbatim via a ‘copy-out’ approach.21 A Member State can determine how best to achieve the outcomes prescribed by a Directive, using whichever legal concepts and terminology it deems most appropriate.22 Additionally, directives deal only with certain aspects of consumer law, with other rules of national law having to ‘fill in the gaps’, which means that the 27 consumer law regimes are a fairly complex mix of EU-derived rules and provisions of national law. Hence the practical result to date is that there has been a degree of approximation between the various national laws but no real harmonisation of consumer law. Crucially for the present discussion, the effect is that domestic consumer transactions are now subject to not inconsiderable regulation derived from EU law, which had the clear purpose of encouraging more cross-border trading but seems to have largely failed to produce this. The reason why EU law is involved in both domestic and cross-border consumer transactions alike seems, in part at least, to be due to the approach taken in identifying the law applicable to such a transaction, which always leads to a particular domestic law. A second reason for the harmonisation approach is perhaps best described as a sociopolitical one. This relates to the fact that consumer law is, at least historically, regarded as an aspect of social policy at the domestic level. However, the extent to which Member States prioritise consumer law within their own domestic legislative agendas has varied for all sorts of reasons, and prior to the EU’s efforts to adopt consumer law measures there was considerable variation at the national level. By adopting a set of common rules, albeit at a minimum level, the EU has managed to establish a baseline level of consumer protection. This might further explain why no distinction has been drawn between domestic and cross-border transactions—if there was a desire to improve the position of 20 See H Schulte-Nölke, C Twigg-Flesner and M Ebers, EC Consumer Law Compendium (Munich, Sellier, 2008). 21 Eg Case C-59/89 Commission v Germany [1991] ECR I-2607, para 18. 22 Eg Case 363/85 Commission v Italy [1987] ECR 1733.

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consumers generally, then limiting this to transactions with an internal market dimension would have made little sense. This is certainly not an insignificant consideration, and is something to be considered further below. A final reason which explains the current approach has yet to be explored, and that is the constitutional basis within the EU Treaties for adopting legislation in the consumer field. It will be suggested below that while the EU clearly has the power to adopt such legislation, there are constitutional restraints that, if taken seriously, limit the scope for comprehensive legislation. The constitutional argument is therefore considered in the following section.

III. The Constitutional Case It is well known that the powers of the EU to do anything are laid down in its Treaties, and its competence to take action to intervene in regulating consumer transactions has to have a specific legal basis. As originally drafted, the EC Treaty (now the Treaty on the Functioning of the European Union (TFEU)) did not contain a specific basis for action in the field of consumer law—this was not added until the Maastricht Treaty in 1992. However, consumer law measures were being adopted well before then, and the legal basis that was utilised initially was the then Article 100 (now Article 115 TFEU), and subsequently what was Article 100a (inserted by the Single European Act, now Article 114 TFEU). The latter provides for the adoption of measures approximating national rules which have as their object the establishment and functioning of the internal market. Consequently, consumer law became firmly tied to the pursuit of the internal market objective. Article 114 TFEU does not grant the EU a general regulatory power for the internal market, and the Court of Justice of the EU has held that a clear link between a measure adopted on the basis of Article 114 TFEU and the establishment/operation of the internal market has to be shown,23 a position clarified in subsequent rulings.24 If action in the field of consumer law can be justified on this basis, a high level of protection should be pursued (Article 114(3) TFEU). Utilising these provisions in adopting legislation in the consumer law field meant that each measure would require the approximation of aspects of national law, and so EU-derived rules would have to be transposed into domestic law, which would then apply to all types of consumer transactions, domestic as well as cross-border. 23

Case C-376/98 Germany v Parliament and Council (‘Tobacco Advertising’) [2000] ECR I-8419. See eg Case C-491/01 The Queen v Secretary of State for Health ex parte British American Tobacco (Investment) Ltd and others [2002] ECR I-11543; Case C-210/03 Swedish Match AB, Swedish Match UK Ltd v Secretary of State for Health [2004] ECR I-11983, and Case C-380/03 Germany v Parliament and Council [2006] ECR-I11573. See also K Gutman, ‘The Commission’s 2010 Green Paper on European Contract Law: Reflections on Union Competence in Light of the Proposed Options’ (2011) 7 European Review of Contract Law 151. 24

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The alternative legal basis for regulating consumer transactions, first introduced by the Maastricht Treaty, is Article 169 TFEU (ex Article 153 EC), but this applies only to ‘measures which support, supplement and monitor the policy pursued by the Member States’ (Article 169(2)(b) TFEU), and has not been used widely. Article 169(2)(a) TFEU confirms that Article 114 TFEU is the main legal basis for adopting measures in the field of consumer policy. The constitutional framework of the EU Treaties therefore appears to favour harmonisation of national laws as the preferred means of regulating consumer transactions, which in turn suggests that EU involvement should not be limited to transactions that have an internal market dimension. However, within the broader constitutional framework, there are constraints on how the EU can exercise its powers of action, in particular the principles of proportionality and subsidiarity (Article 5 TEU). In areas of shared competence (which includes both consumer protection and the internal market),25 the principle of subsidiarity operates. Article 5(3) TEU provides that Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.

This should mean that, in the area of consumer protection, the EU should only intervene where the ‘objectives of the proposed action’ cannot be achieved at the domestic level by Member States acting individually. However, it clearly has not, so far, been regarded as a serious obstacle to the EU’s involvement in domestic consumer transactions, although there has not been a direct challenge to any of the EU’s Directives in the field of consumer law on the grounds that these violate the subsidiarity principle, perhaps because Member States have been able to use the legislative process to limit the scope of EU legislation to what is acceptable. Indeed, the relative failure of the Consumer Rights Directive, if compared to the much broader proposal presented by the Commission, might suggest that Member States are able to resist too much intrusion by EU law without having to raise a subsidiarity-based challenge before the Court of Justice of the EU. It is nevertheless useful to consider whether subsidiarity restricts the EU’s involvement in domestic consumer transaction and, indeed, whether the EU should have been less involved than it has to date. When it comes to the regulation of consumer transactions that are of a purely domestic nature, there can be little doubt that the Member States are perfectly capable of legislating to provide adequate consumer protection within their respective borders. They can therefore ‘sufficiently achieve’ the particular objective of protecting consumers in a domestic context. The ability of the Member States is limited, though, when it comes to consumer transactions that involve a cross-border or internal market dimension—no single Member State can adopt legislation to deal with the 25

Art 4(2)(f) and (a) TFEU, respectively.

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multi-jurisdictional issues created by cross-border consumer transactions. Any consumer transaction with an internal market dimension therefore could not only better be achieved at Union level, but only at this level. Now, on this very basic reading of the subsidiarity principle, it seems possible to argue that EU involvement in domestic consumer transactions should be much more restricted. Admittedly, this might not be an understanding of the principle that is widely shared; indeed, it has been argued that subsidiarity is more of a procedural, and therefore political, issue than about the proper distribution of competences between EU and Member States.26 Seen in this light, it would be more about ensuring the appropriate involvement of the national level in the EU’s legislative process. However, the difficulty now is how one might reconcile the potentially limiting factor of the subsidiarity principle with the wider internal market problem which the harmonisation approach is trying to alleviate. As explained earlier, one of the drivers behind harmonisation is the fact that legal diversity makes it more costly for traders and consumers to operate in a cross-border context. By reducing differences between the national laws, the practical effects of having to transact under a law that is different from the trader’s domestic law should be reduced. If that were the only solution to this particular problem, then clearly any constraints imposed by the subsidiarity principle would be overridden by the demands of the internal market. Indeed, it is on this issue that the main tension between the pursuit of consumer protection and the internal market becomes most obvious: while consumer protection is primarily a matter for the Member States, the regulation of the internal market is for the EU, and within the constitutional framework of the EU, the balance is tilted in favour of the internal market. As a result, if the only way of making the internal market work better is to harmonise national consumer laws, then that would entail that there has to be EU involvement in the regulation of domestic consumer transactions. However, that would only be so in the absence of a viable alternative to the harmonisation of national laws—and such an alternative exists within the overall constitutional structure of the EU. The EU is a supranational body, with its own legal system which effectively operates as an additional layer above the domestic legal systems of the Member States. In addition to adopting legislation by directives (which have to be transposed and take effect as measures of national law), it can also adopt legislation in the form of regulations, which are directly applicable before the national courts of the Member States. The scope of such a regulation could easily be confined to consumer transactions that have a cross-border dimension. All of this is uncontroversial as a matter of principle, but would it be workable in practice? There would be a number of matters to be considered: (i) is it possible to distinguish clearly between cross-border and domestic transactions; (ii) how 26 R Schütze, ‘Subsidiarity after Lisbon: Reinforcing the Safeguards of Federalism?’ (2009) 68 Cambridge Law Journal 525.

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would such an approach interact with the provisions of private international law; and (iii) would a regulation be a suitable regulatory tool? Taking these questions in reverse order, the least difficult one is the use of a regulation in favour of a Directive. The Commission has long accepted that ‘replacing directives with regulations can, when legally possible and politically acceptable, offer simplification as they enable immediate application and can be directly invoked before courts by interested parties’.27 One cannot think of any reason why the use of a regulation would not be ‘legally possible’, so the only real concern might be whether it would be politically acceptable. At present, the use of Directives means consumer legislation is still a matter for national law, albeit with a strong EU colouring. Politically, it might be easier to justify the adoption of national legislation in this area, and it would also in some instances be good publicity for a national government when new consumer measures are adopted—even if this was mandated by EU law. A shift to a regulation would inevitably mean that consumer law would be visibly European, which might not be as easy to defend at the national level, especially given the concern over the extent to which EU law encroaches upon matters that are regarded as falling within the proper remit of the national level. This would mean that a regulation which covered both domestic and cross-border transactions might be politically quite difficult to justify, even though it might have some advantages as far as legal clarity is concerned. After all, a regulation does not entail the problems associated with the transposition of Directives, where changes in terminology and a failure to correctly transpose a Directive could leave variations that a harmonising Directive should have removed. However, if such a regulation did not apply to domestic transactions but only to those that have an internal market dimension, then it would undoubtedly be more politically acceptable. It would mean that domestic transactions were covered by provisions of domestic law, and any transactions with a cross-border element would be covered by an EU regulation. Indeed, Professor Monti, in his report entitled ‘A New Strategy for the Single Market’,28 also recommended greater use of regulations in favour of Directives, particular if there were to be a so-called ‘28th regime’,29 ie a set of legal rules designed for application across the internal market for those who wish to enter into transactions that go beyond their domestic setting. There is

27 Communication from the Commission, A Europe of Results—Applying Community Law COM(2007) 502 final; cf Commission staff working document—Instruments for a modernised single market policy—Accompanying document to the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions—A single market for 21st century Europe SEC(2007) 1518 final. 28 M Monti, ‘A New Strategy for the Single Market—At the Service of Europe’s Economy and Society’ (2010) available at http://ec.europa.eu/bepa/pdf/monti_report_final_10_05_2010_en.pdf (last accessed 14 June 2011). 29 The idea of a ‘28th’ regime reflects the debate within the context of European contract law towards an optional instrument, something now proposed as a ‘Common European Sales Law’. See Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final.

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therefore no discernible reason why a regulation might not be an appropriate regulatory tool. Next, there is the question of private international law. As outlined earlier, in determining the law applicable to a particular contract that affects more than one jurisdiction, the Rome I Regulation is employed to identify the law applicable to such a contract. In its present form, the Regulation leads to the identification of a particular domestic law, ie one of the laws of the Member States. As suggested, this is one reason why EU consumer law has so far evolved through a number of Directives which harmonise domestic law. In order to tackle the problems caused by legal diversity, particularly with regard to mandatory rules, it was necessary to approximate relevant legal provisions so that the choice of a particular national law would have no significant effect on the respective rights and obligations of the parties to a consumer transaction. However, there seems to be no compelling reason why the rules of private international law should always have to point to one particular domestic law. Instead, in the case of a transaction classified as a ‘cross-border’ transaction private international law could apply an EU measure such as a regulation dealing with consumer transactions. On the other hand, if the transaction were of a purely domestic nature, the relevant domestic law would apply. Traditionally, private international law was concerned with identifying how to resolve the conflict caused by the potential applicability of two domestic legal systems, but in the age of supranational organisations such as the EU, a more refined approach to resolving such situations is not only appropriate but desirable. On this basis, the need for harmonising national laws would diminish, because situations involving more than one jurisdiction would not be considered under a domestic law, but under European law. This leaves the final question, one that is perhaps the most difficult to tackle: is it possible to come up with a workable distinction between ‘domestic’ and ‘cross-border’ transactions? As will become clear, this is not as straightforward a matter as might seem. The following situations illustrate how difficult it might be to establish whether a transaction is a domestic or a cross-border one:30 1. Consumer and trader are based in the same jurisdiction and the contract is concluded by whichever means (eg face-to-face, distance, online). 2. Consumer and trader are based in separate jurisdictions and the contract is concluded at a distance (eg online). 3. Consumer and trader are based in separate jurisdictions but in a border region and the consumer travels into the neighbouring country to conclude a contract face-to-face. 4. A variant on (3), but the consumer is on holiday in another country and concludes a contract face-to-face. 5. Consumer and trader are based in separate jurisdictions but the trader visits 30 For the sake of simplicity, the term ‘based’ is used. In the case of a consumer, this would be the place of the consumer’s habitual residence, and for the trader, the place of business. The nationality of either is irrelevant.

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the consumer’s jurisdiction and concludes a contract (eg doorstep selling, markets, exhibitions) With the exception of (1), all of the above have a cross-border element, but should all of these transactions be treated as ‘cross-border transactions’? The answer to this depends on the criterion (or criteria) to be employed in distinguishing between these two situations. This is obviously not a novel problem, and in another area of private law, transnational commercial law, it was necessary to identify a criterion to distinguish between ‘international’ and other types of commercial transactions. In the UN Convention on the International Sale of Goods 1980 (CISG) the criterion is simply to ask where the respective places of business of the parties to such a contract are. If they are in different states, then this is an international contract and the CISG applies (Article 1(1) CISG). If consumers do not have a ‘place of business’, the corresponding criterion could be the consumer’s place of (habitual) residence. So if one were to borrow the CISG definition, a transaction concluded in one Member State where both the consumer has his place of residence and the trader his place of business (ie situation (1) above) would be a domestic transaction, whereas a transaction concluded between a consumer with his place of residence in one Member State and the trader with his place of business in another, would be a cross-border contract (situations (2)–(5) above). On the other hand, would it really be right to regard situations (2)–(5) as cross-border transactions? The least difficult situation is the second one—a contract concluded at a distance, eg via online shopping. Things might be different with the face-to-face situations, as in situations (3)– (5). Although still a cross-border situation on the basis of the CISG definition, the consumer, by definition, is physically present in the trader’s jurisdiction, so does it seem appropriate to treat these as cross-border transactions? On the one hand, the consumer resides in one country, and the trader in another. On the other hand, both consumer and trader are physically present in the same jurisdiction when the contract is concluded. Would not both parties expect the contract to be subject to the domestic law where the transaction is entered into, rather than some other law? It is submitted that a consumer who is physically present in the trader’s jurisdiction and enters into a face-to-face transaction would assume that the trader’s domestic law applies if he gives any thought to this question at all. After all, presumably his main concern is simply to buy whichever goods he has chosen. So a bright-line similar to that of Article 1(1) of the CISG would be too simplistic and instead a better guiding criterion might be to consider the reasonable expectations of both parties as to which law would be applicable to a face-to-face transaction. That should lead to the conclusion that a face-to-face transaction would be subject to the law of the jurisdiction where it is concluded. What this would mean is that the kinds of consumer transactions which merit EU involvement would only be those concluded online or at a distance, with

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consumer and trader based in different jurisdictions. On this analysis, the role of EU law would be rather more limited compared to the current situation. An alternative approach to defining a transaction as a ‘cross-border’ transaction is taken in the proposal for a Common European Sales Law. Article 4(3) of the proposal states that: For the purposes of this Regulation, a contract between a trader and a consumer is a cross-border contract if (a) either the address indicated by the consumer, the delivery address for goods or the billing address are located in a country other than the country of the trader’s habitual residence; and (b) at least one of these countries is a Member State.

There are two elements to the definition of ‘cross-border’ in the proposal: (i) the trader’s habitual residence; and (ii) the address, the delivery address or the billing address indicated by the consumer. These must be in different countries. The CESL would therefore not be limited to distance or online transactions but would extend to face-to-face transactions. It needs to be borne in mind that the CESL is proposed as an optional alternative to the law otherwise applicable under the provisions of the Rome I Regulation—that is to say, where the transaction satisfied the definition of ‘cross-border’, the parties have a choice between using the CESL or the applicable domestic law. However, in a face-to-face context, the potential availability of the CESL would depend on the disclosure by the consumer of at least one of the three addresses mentioned in Article 4(3). Such a disclosure requirement would not be a problem with regard to distance or online transactions (indeed, it would be essential in such transactions). But in the face-to-face context, it seems to be rather uncertain as to when a transaction would be regarded as cross-border as it would ultimately depend on whether the consumer indicated an address which was in a different country from that of the trader’s place of business. The upshot of this discussion is that it is possible to find a criterion to distinguish between cross-border and domestic transactions. Admittedly, the criterion suggested above might not be uncontroversial, but this does not affect the general point that it is possible to come up with a workable criterion. The overall conclusion of the foregoing analysis is that the constitutional framework of the EU Treaties does not invariably and exclusively lead towards a legislative approach which has to cover both domestic and cross-border transactions. The legal basis currently utilised seems to favour harmonisation, but it could support an alternative approach such as the adoption of a regulation which only has a cross-border scope. It might face political obstacles, although perhaps fewer than the attempted further harmonisation of domestic laws by directives. And it would necessitate an amendment to the rules on the law applicable to consumer contracts in the Rome I Regulation. None of this is impossible, and while it might upset established practice, that in itself cannot be a good reason for reconsidering the extent to which EU law is involved in consumer trans-

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actions. From a constitutional perspective, a restriction to consumer transactions with an internal market dimension is entirely justifiable.

IV. Should EU Law Be Involved in Domestic Consumer Transactions? Moving beyond what the constitutional framework of the EU Treaties might tell us about the extent to which EU law can be involved in regulating domestic consumer transactions, this section will deal with the question of whether the EU should regulate such transactions at all. There is little doubt that the EU should have a role to play in laying down suitable legal rules to support consumers who wish to engage in cross-border shopping within the internal market. There is obviously room for argument as to the precise nature of such intervention, but this is not of concern here.31 The only pertinent observation is that the concern with the internal market invariably means that consumer issues are instrumentalised in pursuing the objective of making the internal market work better, and that consumer protection issues become secondary in this context. The EU is obliged to pursue a high standard of consumer protection under Article 114 TFEU, and in doing so will have to find some middle ground between domestic legal systems having an even higher standard of protection than the one pursued by the EU, and those with a lower standard. As long as the focus is exclusively on transactions which have an internal market dimension, this is not particularly problematic—consumers (and traders) who venture beyond the domestic context will surely be able to understand that different rules, and consequently a different level of protection, apply when buying goods or service in a crossborder setting.32 It is when the EU-determined level of protection extends to the domestic context that problems arise. The idea of an internal market for all the EU Member States entails that there is one single regulatory framework. This assumes that it is possible to have a single standard of consumer protection which is suitable for all of the Member States. However, it seems rather doubtful that there can be a ‘one-size-fits-all’ level of consumer protection which could sensibly be applicable to all consumer transactions, no matter where these occur within the EU. It is a trite observation that there will be national, regional and even local cultural variations in how consumers and traders deal with one another, but such diversity means that a single EU rule cannot be suitable for each and every one of these transactions. Moreover, such variations might well create a raft of consumer 31 There has already been extensive debate within the context of the EU contract law project about the nature and scope of the proposed ‘optional instrument’. 32 Assuming, of course, that a clear demarcation between domestic and cross-border transactions is possible.

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protection issues which need to be addressed in particular ways at domestic or local level, but for which a single EU measure would not be appropriate. So while the demands of an internal market point in the direction of EU involvement in all consumer transactions, this conflicts with the varying needs of consumers, and traders, across the Member States who are not interested, or indeed able, to get involved in cross-border shopping. The current involvement of EU law in all consumer transactions does have a disruptive effect in that it requires traders to adjust to new rules even if they do not ever enter into cross-border transactions. But one might question whether this is really necessary (and, indeed, in accordance with the proportionality principle in Article 5 TEU).33 Admittedly, EU involvement has produced improvements to consumer protection insofar as it required the adoption of measures in some Member States on matters which had previously not been the subject of regulation or perhaps only less extensive regulation.34 But in respect of areas in which there is established domestic law familiar to traders and (at least some) consumers, EU involvement might end up being more disruptive than helpful, and, ultimately, detrimental. There is a potential argument pointing towards some EU involvement in all consumer transactions. If there was serious concern that consumers in one or several Member States were not protected adequately, then it might be felt that the EU as a whole should be concerned and intervene. However, one would expect this to be a rather unusual instance. But even if this were the case and EU involvement became justified not because of concerns about the operation of the internal market, but rather because of real concerns about the position of consumers, then the nature of such involvement would still be up for debate. Thus, it would not necessarily have to be detailed legislation (as is currently the case), but instead there could be an agreement on fundamental principles of consumer protection which all the Member States should adhere to. Such statements of principle (perhaps akin to the UN Guidelines on Consumer Protection) would still leave significant room to individual states to determine how best to give effect to those through domestic legislation. A policy mechanism for such an approach exists already: the Open Method of Co-ordination (OMC).35 Under the OMC approach, Member States would agree broad policy objectives, with each Member State free to take appropriate action to give effect to these objectives at the domestic level.

33 H Schulte-Nölke, ‘The Way Forward in European Consumer Contract Law: Optional Instrument instead of further Deconstruction of National Private Laws’ in C Twigg-Flesner (ed), Cambridge Companion to European Union Private Law (Cambridge, Cambridge University Press, 2010) 131. 34 For example, in the UK, the Unfair Contract Terms Directive (93/13/EEC) significantly extended the scope for challenging unfair contract terms. The Unfair Contract Terms Act 1977, despite its name, has a much narrower scope. 35 Cf W van Gerven, ‘Bringing (Private) Laws Closer to Each Other at the European Level’ in F Cafaggi (ed), The Institutional Framework of European Private Law (Oxford, Oxford University Press, 2006) 37.

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V. Conclusion The purpose of this chapter has been not so much to provide a definitive answer to the question as to whether EU law should be involved in consumer transactions which do not have an internal market dimension. It has attempted to explore both the constitutional and wider cases for restricting EU involvement, and to suggest that if there is to be EU involvement in domestic consumer transactions, that this might better be based on agreeing shared principles rather than imposing a set of legal rules on national law. While it is clear that the constitutional structure of the EU Treaties does permit EU involvement in all types of consumer transactions, it has been argued that if consumer protection were regarded as the primary concern, there should be much less intervention with regard to domestic transactions. Furthermore, recognising cultural variations also suggests that there should be less involvement of EU law in such transactions. But even if the primary concern is the internal market, this does not inevitably mean that the harmonisation approach used so far is necessarily the best way forward; even a focus on the operation of the internal market could lead to the conclusion that the EU should only be involved in cross-border transactions.

15 The ‘Average Consumer’ of EU Law in Domestic and European Litigation VANESSA MAK

I. Introduction The involvement of EU law in business-to-consumer (B2C) private law relationships is bounded. On the one hand, the limited material scope of most measures of EU consumer law means that they normally cover only specifically designated areas, such as distance contracts or package travel.1 On the other hand, even in areas that are governed by EU law, the results achieved in national legal systems may diverge considerably. Directives aimed at minimum harmonisation explicitly enable Member States to maintain laws that offer a higher level of protection to consumers, a practice referred to as ‘goldplating’. Directives aimed at maximum or full harmonisation—despite the name—also do not achieve complete harmonisation. Although they lay down rules from which no divergence is allowed, neither upwards nor downwards, the scope of this harmonisation can still be limited in terms of its coverage and effects with regard to the subject matter. For example, Directive 2005/29 on unfair commercial practices2 primarily seeks to ensure enforcement through administrative sanctions rather than through private law.3 Legislation aimed at harmonisation therefore fails to address the problem of divergence of norms between the private laws of the Member States. In part, this is due to the fact that EU regulation, such as the UCPD, operates through public law and leaves private law mostly untouched. Hence, there is space for private law rules to diverge from public law norms, and for businesses to be held to stricter duties of care than the ones imposed by (public law) regulation. Furthermore, divergence in European consumer law is increased by the different 1 One reason for such limitation is that the EU has a shared competence with the Member States in the field of legislation the exercise of which is, moreover, regulated by the principles of subsidiarity and proportionality. On competence, see K Gutman, The Constitutional Foundations of European Contract Law: A Comparative Analysis (Oxford, Oxford University Press, forthcoming). 2 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market [2005] OJ L149/22 (the Unfair Commercial Practices Directive (UCPD)). 3 Although not exclusively: see n 47 below.

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approaches to ‘average consumers’ found in national laws and in EU law. The ‘average consumer’ concept of EU law, as developed in the free movement case law of the Court of Justice of the EU, relies on the ability of consumers to make rational decisions.4 In line with this notion of a ‘reasonably well-informed and reasonably observant and circumspect consumer’,5 protection through law is limited. Mostly it takes the shape of rights which aim to equip and to encourage consumers to navigate the consumer (financial) market.6 However, the average, informed and empowered consumer to which EU law tailors its protection is not the standard by which national private laws measure the need for protection. Instead, there are many situations in which national private laws adopt stricter information, advisory and warning duties. That is the case, for example, in consumer credit cases where consumers are normally vulnerable and have less expertise in comparison to credit providers. Although such differentiation may be justified on grounds of consumer protection,7 there is a risk that fragmentation of laws—different norms from different sources—leads to legal uncertainty. To counter this problem, this chapter aims to give a new perspective on the involvement of EU law in B2C private law relationships. Rather than focusing on the harmonisation of consumer rights in the EU,8 it searches for a more open way to co-ordinate the interaction between national laws and EU law through legislation and adjudication. The solution proposed here is to focus on central legal standards, such as the ‘average consumer’, and their potential to function as analytical tools that enable communication between different levels of regulation, and through this greater transparency in law-making. This approach may, as will be briefly discussed in the final part of the chapter, provide a basis also for new forms of so-called ‘post-national’ law-making that are not state-based

4 For an example, see AG Trstenjak in Case C-540/08 Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG v ‘Österreich’-Zeitungsverlag GmbH, 9 November 2010, para 103. 5 See Section II below. 6 Cf N Moloney, How to Protect Investors. Lessons from the EC and the UK (Cambridge, Cambridge University Press, 2010) 53; T Williams, ‘Empowerment of Whom and for What? Financial Literacy Education and the New Regulation of Consumer Financial Services’ (2007) 29 Law and Policy 226. Also, on the then proposed Consumer Rights Directive, V Reding, ‘Bringing Risk-free Shopping to Europe’, speech available at http://ec.europa.eu/commission_2010-2014/reding/pdf/news/consumer_ en.pdf; Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee—EU Consumer Policy Strategy 2007–2013 COM(2007) 99 final, 4. 7 EU law recognises consumer protection as a ground for justification of stricter national legislation, in any event for Directives aimed at minimum harmonisation and—as long as such measures do not fall within the scope of the instrument—also for Directives aimed at maximum harmonisation. The appropriate test for the justification of such measures should be the one used for the free movement of goods (in particular the Cassis de Dijon test), about which more is said below. 8 The consultation on the revision of the MiFID published by the European Commission in December 2010 suggests that a harmonised principle of private liability for investment service providers should be introduced; see European Commission, Public Consultation—Review of the Markets in Financial Instruments Directive (MiFID), 8 December 2010, para 7.2.6. However, differences in national laws suggest that it will not be easy to come up with a uniform principle that will satisfy all the Member States.

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(such as self-regulation by private actors) but that also impact upon private law relationships.9 To concretise this approach for European consumer law, this contribution focuses on the ‘average consumer’ as a reference point for law-making. First, sketching the structural framework within which the concept operates, it appears that EU law and national laws adopt different normative standards in relation to this ‘average consumer’, the first based on EU internal market policy and the latter grounded in national private law rules and principles. Nevertheless, the concept has also acquired a normative nature by being used as a reference point for the balancing of rights and duties between private parties to a legal relationship, and can therefore provide a means of communication between both levels of regulation. These two faces of the ‘average consumer’ will be discussed in Section II. Using the ‘average consumer’ of EU law as a benchmark for comparison, Section III will chart the rules of EU Directives in consumer credit and investment law and their application in domestic litigation.10 This section highlights the divergence of rules across the EU/national law divide, and the public/ private law divide. Finally, Section IV turns to law-making and the role that the ‘average consumer’ concept can fulfil in and in-between state-based and postnational law-making.

II. The Two Faces of the ‘Average Consumer’ The ‘average consumer’ is about as hard to pin down as ‘the man on the street’, ‘the man on the Clapham omnibus’,11 ‘average Joe’ or ‘the reasonable man’.12 All of these concepts are fictitious in the sense that they refer to a kind of person that does not exist in real life. Just as there is no such thing as the ‘average Englishman’ or the ‘average Dutch person’, one cannot point out an ‘average consumer’ in the street. At the same time, however, concepts like these can provide a very useful benchmark for normative choices in law-making or adjudication. A normative approach asks what the presumed expectations of an average consumer should be in a given context. Should, depending on the circumstances of the case, a consumer be expected to be able to look after his or her own inter9 Compare GP Calliess and P Zumbansen, Rough Consensus and Running Code. A Theory of Transnational Private Law (Oxford, Hart Publishing, 2010); F Cafaggi, Reframing Self-Regulation in European Private Law (The Hague, Kluwer Law International, 2006); R Michaels and N Jansen, ‘Private Law Beyond the State? Europeanization, Globalization, Privatization’ (2006) 54 American Journal of Comparative Law 843. 10 Including, amongst others, Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments [2004] OJ L145/1; Directive 2008/48/ EC of the European Parliament and of The Council of 23 April 2008 on credit agreements for consumers [2008] OJ L133/66 (the Consumer Credit Directive). 11 Greer LJ in Hall v Brooklands Auto-Racing Club (1933) 1 KB 205. 12 Cf Blyth v Birmingham Waterworks Company (1856) 11 Ex Ch 781.

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ests, or is there a need for protection? Used in this manner, the standard is used in a principled way and can be a point of reference for deciding which rights and what kind of protection the law should give to consumers. This normative benchmark function of the ‘average consumer’ appears in national private laws and in EU law. For a good understanding of its use as an analytical tool in post-national law-making, it is important to see how the courts use the standard and how its normative content is given shape. Two aspects can be discerned, the first relating to the function of the standard and the second to the way in which courts establish its normative context. First, in EU law the normative content of the standard is influenced by the function that the Court of Justice of the EU attaches to it in the broader context of the internal market. It is used as a mediating tool between national laws and EU law, which has the effect of filtering policy considerations into the normative, ‘principled’ use of the standard in private law. Second, there is a question of applying the standard: which information is required by the courts to establish what expectations an ‘average consumer’ is entitled to have in a given situation? Although there is a place for the use of empirical data, here we see that the standard is used by national courts and the Court as primarily based on the ‘presumed expectations’ that an average consumer is entitled to have. The standard, therefore, is used for normative evaluation rather than for factual measurement. These two perspectives on the use of the ‘average consumer’ highlight an interesting paradox. On the one hand, the use of the standard as an intermediating tool in the internal market results in two faces of the ‘average consumer’: one in EU law and one in national laws. This can explain the double standards that we find in modern-day consumer law, as explored for credit and investment law in Section III of this chapter. On the other hand, however, national courts and the Court of Justice of the EU share the normative evaluative approach through which they determine the content of the standard. That provides a basis for interaction between the norms attached to the ‘average consumer’ standard at the EU and the national level of regulation, and could therefore facilitate post-national law-making.

A. The Internal Market Function First, I turn then to the ‘average consumer’ as a central standard in EU consumer law. The concept was developed by the Court of Justice in its free movement case law as a standard by which to judge national measures constituting barriers to trade in the Internal Market.13 Such measures, as long as they are not directly discriminatory, can be justified if they are necessary for ensuring consumer protection.14 The function of the ‘average consumer’ standard, therefore, is typical 13

Art 34 TFEU (ex art 28 EC). Case 120/78 Rewe-Zentrale AG v Bundesmonopolverwaltung für Branntwein [1979] ECR 649 (‘Cassis de Dijon’). 14

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for the EU constitutional and institutional context: it is used as a tool to mediate policy conflicts between EU and Member States’ laws. One of the primary policies aiming to give effect to the internal market goals of the EU Treaty is the abolition of trade barriers. To this end, Article 34 TFEU prohibits quantitative restrictions and measures of equivalent effect. The latter category, measures of equivalent effect, encompasses ‘all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade’.15 It is apparent in Cassis de Dijon that this definition includes not only measures that are directly discriminatory but also ones that are indistinctly applicable to all goods regardless of country of origin if they create barriers to trade in the internal market. However, whereas directly discriminatory measures can only be justified on the grounds listed in Article 36 TFEU (ex Article 30 EC), indirectly discriminatory measures can also be justified on other grounds. Namely, they can be justified if they are necessary to secure public policy goals such as the protection of public health, the fairness of commercial transactions and consumer protection.16 It is with regard to the last justification, consumer protection, that the ‘average consumer’ concept was developed by the Court of Justice. This standard is used as a tool to assess whether indirectly discriminatory measures can be justified on grounds of consumer protection.17 Who is the ‘average consumer’ of EU law? After earlier judgments—eg Mars,18 where the Court referred to ‘reasonably circumspect consumers’ as the standard by which to judge consumer confusion in intellectual property law—the ‘average consumer’ has reached its current definition in the Gut Springenheide judgment. The case concerned the marketing of eggs to consumers. Whereas the label on the packaging of the eggs stated ‘6-grain—10 fresh eggs’, the manufacturer of the eggs admitted that the chickens producing the eggs were fed the six varieties of cereals in question as only 60 per cent of their diet. But would consumers understand this, or would they assume that the chickens were only fed these six special cereals and that the eggs consequently were of a certain quality? The German court handling the main dispute was in doubt as to the standard that should be adopted in the interpretation of Regulation 1907/90 and referred the question to the Court of Justice.19 The Court’s response that an average consumer is ‘reasonably well-informed and reasonably observant and circumspect’ opts for the empowered notion of a consumer.20 EU law does not seek to protect the ‘casual consumer’ but rather 15

Case 8/74 Procureur du Roi v Dassonville [1974] ECR 837, para 5. Cf Cassis de Dijon (n 14) para 8. See Case C-210/96 Gut Springenheide and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt [1998] ECR I-4657. 18 Case C-470/93 Verein gegen Unwesen in Handel and Gewerbe Köln eV v Mars GmbH [1995] ECR I-1923, para 24. 19 Art 10(2)(e) of Council Regulation (EEC) No 1907/90 of 26 June 1990 on certain marketing standards for eggs [1990] OJ L173/5. 20 Case C-210/96 Gut Springenheide (above n 17) para 31. 16 17

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regards consumers as responsible individuals. That view coincides with the neoliberal policies that are reflected in EU legislation, extending also into private law.21 It also fits with the aims of the internal market. By adopting a restrictive notion of the protection that an ‘average consumer’ deserves, the Member States’ possibilities for maintaining stricter rules of consumer protection become limited. From this perspective, it can be explained why the Court of Justice often objects to national legislation on the ground that the ‘average consumer’ does not need extra protection (cf Gut Springenheide) and is therefore disproportionate. The Court thereby gives preference to internal market objectives, taking away barriers to trade that arise from differences in national consumer laws.22 By contrast, the Court of Justice tends to take a very pro-consumer stance in cases where it is asked to interpret EU consumer law Directives. In other words, whereas negative harmonisation is promoted by the Court’s proactive objection to national legislation that may create barriers to trade, the positive harmonisation of national (private) laws through Directives is given a boost by interpreting them in a far-reaching and consumer-friendly manner. As noted by Unberath and Johnston, one wonders what the ‘average consumer’ of EU law would make of such cases.23 These cases confirm that the Court regards the concept as a mediating tool between EU law and national laws, not only in its free movements case law but also in the interpretation of Directives.

B. ‘Average Consumer’ as a Normative Standard The ‘average consumer’ also has a second function as a standard for normative evaluation. That can be seen in particular in national private laws, which are not directly influenced by the internal market problems discussed in Section II.A. In the national context, the standard functions as a normative reference point for the balancing of rights and duties between private parties. Here, it mediates between the general premise of autonomy of the parties and the protective duties owed by businesses to consumers—eg duties of care—that seek to counter the imbalance of power that is paradigmatic for consumer contracts. That does not mean that there is always a direct reference to the ‘average consumer’ standard in national legislation and case law, but its contours can often be made out in the balance that legislators and courts strike between the interests of businesses and consumers. Examples of this can be seen in domestic legislation in consumer credit and investment cases. 21 Compare MW Hesselink, ‘The Politics of a European Civil Code’ (2004) 10 European Law Journal 675, 687. 22 Note that the Court, on the other hand, also objects to national legislation where it appears that national legislators (ab)use the ‘average consumer’ to justify consumer protection laws that hamper competition. Cf Case C-315/92 Verband Sozialer Wettbewerb eV v Clinique Laboratoires SNC et Estée Lauder Cosmetics GmbH [1994] ERC I-317. 23 H Unberath and A Johnston, ‘The Double-Headed Approach of the ECJ Concerning Consumer Protection’ (2007) 44 Common Market Law Review 1237, 1282.

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The ‘average consumer’, therefore, functions as a benchmark or a normative standard against which the interests and responsibilities of businesses and consumers can be tested. That type of standard is common to national legal systems, in which a fictional ‘officious bystander’ or the ‘man on the Clapham omnibus’ can be used to determine whether or not there is ground for liability in contract or tort.24 Examples also exist in other areas of law, such as in social security law. To determine the level of unemployment benefits, reference can be made to the salary that a fictional ‘average employee’ would earn in a similar employment position as the claimant.25 In each case, a benchmark is sought on the basis of which concrete norms can be established. It should be noted that the EU law concept of the ‘average consumer’—besides its function as a mediating tool between EU and Member State laws—is also used for normative evaluation. That dimension can be gleaned from the judgment of the Court in Gut Springenheide from which, as seen above, the current definition of the average consumer stems. The test for misleading statements, read in full, is the following: [I]n order to determine whether the description, trade mark or promotional description or statement in question was liable to mislead the purchaser, the Court took into account the presumed expectations of an average consumer who is reasonably wellinformed and reasonably observant and circumspect, without ordering an expert’s report or commissioning a consumer research poll.26

The definition adopted by the Court therefore is in principle a normative standard on the basis of which the ‘presumed expectations’ of consumers are assessed. The fact that it is not necessary to order an expert’s report or to commission a research poll to establish if, and how many, consumers are misled by the statement emphasises the normative nature of the standard. It is possible, after all, that the facts of a case give sufficient information as to the context in which the statements were made to enable a court to deem it plausible that any reasonably well-informed and reasonably observant and circumspect consumer would have erred in interpreting a statement correctly. Thus, it is also not surprising that the Court feels competent to determine what standard of fairness was required and whether the contested statement was misleading or unfair. The normative legal standard expressed in the ‘average consumer’ notion of EU law can still have a factual component in cases where additional information is needed to determine whether a statement is misleading or a practice unfair. In that respect, the Court adheres to its general case law on the interaction of the European and national courts. In many instances, the interpretation 24 Both terms spring from English law. For the first, see Scrutton LJ in Reigate v Union Manufacturing Co (Ramsbottom) Ltd [1918] 1 KB 592, 605, and MacKinnon LJ in Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206, 227; for the second, Greer LJ in Hall v Brooklands AutoRacing Club (1933) 1 KB 205. 25 Compare the ‘maatman’ in Dutch social security law, Art 18(1) Wet op de arbeidsongeschiktheidsverzekering (WAO) and Art 1 Wet Werk en Inkomen naar Arbeidsvermogen (WIA). 26 Case C-210/96 Gut Springenheide (n 17) para 31.

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of EU legislation requires a court to refer to the national law context because the provisions of EU Directives and Regulations are interwoven with provisions of national law. For example, the unfairness of a term can hardly be assessed without taking account of the position on ‘good faith’ in the general private law of a Member State.27 Similarly, when it comes to the ‘average consumer’ it may be necessary to leave the determination of the dispute to the national court, because further information is necessary or because the solution is not clear from the information before the Court.28 Situations in which a factual component comes into the test can be cases in which the expectations of the ‘average consumer’ relate to ‘social, cultural and linguistic’ aspects which are particular to a Member State.29 A second category is constituted by situations in which the national court wishes to use additional information on the actual behaviour of consumers. The Court of Justice does not rule out such further testing.30 Moreover it adds that, in the absence of EU intervention on this point, [I]t is for the national court, which may find it necessary to order such a survey, to determine, in accordance with its own national law, the percentage of consumers misled by a promotional description or statement that, in its view, would be sufficiently significant in order to justify, where appropriate, banning its use.31

Therefore, it was possible for the German court in Gut Springenheide to hold the description of the ‘6-grain’ eggs unfair on the basis that 10–15 per cent of consumers would be misled. Not only may one think that this number is relatively low, even more surprising is that the surveys on which these numbers are based did not use the reasonably well-informed consumer of EU law as their benchmark but instead referred to a ‘casual consumer’.32 Besides its function as a mediating tool between EU and Member State laws, the ‘average consumer’ therefore is ultimately a normative standard against which the expectations of consumers can be measured. The fact that the Court of Justice tends to be reluctant in allowing national measures that give more protection than a ‘reasonably well-informed and reasonably observant and circumspect consumer’ would need somewhat obscures this aspect of the standard. The impression is given that the Court reasons from market policy rather than on the basis of private law norms. Yet the fact that it explicitly links the test to the expectations of an average consumer, not per se to be determined on the basis 27 Cf Case C-237/02 Freiburger Kommunalbauten GmbH Baugesellschaft & Co KG v Ulrike Hofstetter and Ludger Hofstetter [2004] ECR I-3403. 28 See Case C-210/96 Gut Springenheide (n 17) para 33. 29 Cf Case C-313/94 Fratelli Graffione SNC v Ditta Fransa [1996] ECR I-6039. See also Case C-220/98 Estée Lauder Cosmetics GmbH v Lancaster Group GmbH [2000] ECR I-0117. Compare UCPD, Recital 18. 30 Case C-210/96 Gut Springenheide (n 17) para 35. 31 Ibid, para 36. 32 See S Dittmer, ‘Misleading Advertising: An End to the “Cursory Average Consumer”?’ (1998) 20 European Intellectual Property Review 313, 316; C van Dam, ‘De gemiddelde Euroconsument— een pluriform fenomeen’ (2009) 57 Sociaal-economische wetgeving (SEW) 7.

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of factual evidence, indicates that this is indeed a normative standard linked to private law interests. It is up to the Court, or—if the Court has not been provided with sufficient information—to the national courts, to determine what an average consumer could and should expect in the circumstances of the case. That enables the Court to hold on to a restrictive notion of the expectations of an ‘average consumer’ in the interest of market integration, but it also enables a comparison between EU law and national standards, the point to which I now turn.

III. Multiplicity of Standards in Consumer Credit and Investment Law The fact that the ‘average consumer’ is a normative standard both in national private laws and in EU law makes it possible to see the standard as a connection, or a point of reference, between the two levels of regulation. Private law rules, after all, are developed at both levels and at each level the legislature and the courts can use normative guidance for the content that should be given to those rules.33 Preceding that discussion, we need to look at what may be called the dark side of the ‘average consumer’ standard: that is, the fact that it can give rise to double standards in EU law and in national private laws. As the cases will show, that is indeed what has happened in consumer credit and investment law. The double function of the ‘average consumer’ concept—on the one hand as a mediating tool between EU law and national legislation, and on the other hand as a normative legal standard—makes its content susceptible to policy influences that lean more towards the integration of the internal market, or more towards the protection of consumers as the weaker party in B2C transactions. In consequence, the expectations that ‘average consumers’ may have can diverge significantly. In the internal market context, they are determined on the basis of the idea of empowerment through information, whereas in domestic laws more room is given for consumer protection relationships between consumers and expert parties such as banks and investment firms.34 Further complications arise because rules aimed at consumer protection are laid down in regulation that spans not only the EU/national law divide, but also the public/private law divide. Although both types of norms influence B2C private law relationships, eg by imposing information duties on banks and investment firms, these rules do not have to coincide. In fact, such divergence can be justified because of the different functions that private law and public law fulfil in the regulation of B2C relationships. Public law, in this case regulation concerning the supervision of financial markets, serves a broader goal of public 33 The same is true for self-regulation; compare, with reference to lex mercatoria, Calliess and Zumbansen (n 10) 32. 34 See below.

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policy—namely ensuring the stability of the financial system—whereas private law is primarily concerned with the balancing of rights and duties between private parties.35 Those rights and duties in private law may go further than the minimum norms necessary for ensuring the stability of the financial system. Therefore, it is possible that private law imposes a duty of care on banks and investment firms that goes beyond the obligations that they owe to consumers on the basis of (public law) regulation.36 The test case that I will discuss in this contribution, consumer credit and investment services, illustrates the complications and the fragmentation that occurs when these different layers of regulation coincide in consumer law. The specific rules that govern B2C credit and investment transactions need to be distilled from a variety of sources, including a set of complex EU Directives, the TFEU internal market provisions discussed in the previous part of this chapter, and the general private laws of the Member States. In order to describe this legal framework in a ‘clear and comprehensible manner’,37 the ‘average consumer’ of EU law will be used as a touchstone for comparison. I will give a brief overview of the legislative basis, before discussing a number of representative cases from the Netherlands, the UK and Germany.

A. The Legislative Framework The EU law standard for the ‘average consumer’ has been copied into a number of EU Directives with important consequences for the regulation of B2C private law relationships. Amongst these Directives the UCPD is the instrument with the broadest and most general application in the field of consumer law.38 It is horizontally applicable to consumer transactions in the EU and sanctions unfair practices at every stage of the business–consumer relationship. In other words, it is relevant to every stage of that relationship, from advertising to pre-contractual negotiations, and to information given at later stages in a long-term B2C 35 The distinction may not always be this clear-cut, as private law and public law goals may overlap. See M Moran, ‘The Mutually Constitutive Nature of Public and Private Law’ in A Robertson and T Hang Wu (eds), The Goals of Private Law (Oxford, Hart Publishing, 2009) 17. In Dutch, A Scheltema and M Scheltema, Financieel toezicht in bestuursrecht en privaatrecht: Noodzakelijke veranderingen na de crisis (Deventer, Kluwer Law International, 2009). 36 The Dutch Supreme Court explicitly acknowledges and approves such divergence; see HR (Dutch Supreme Court), 5 June 2009, LJN BH2815 (De Treek v Dexia) para 4.10.3. 37 I apply, therefore, the general EU standard for the communication of terms and information to consumers as laid down, for example, in Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts [1997] OJ L144/19, Art 4(2); Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services [2002] OJ L271/16, Art 3; 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 3; Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours [1990] OJ L158/59, Art 3; and Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29, Art 5. 38 See Recital 18 and Art 5 UCPD.

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relationship (eg in an after-sales service relationship).39 Its regime—despite limitations of scope—therefore has an impact on a very broad range of consumer transactions, and business marketing to consumers, in Europe.40 More detailed rules for which the ‘reasonably well-informed and circumspect consumer’ of EU law sets the standard can be found in the area of financial services, in particular in Directives relating to credit and investment law. Directive 2004/39 on markets in financial instruments (MiFID)41 and Directive 2003/71 on prospectus liability42 both lay down rules that regulate the access for investment firms and banks to national markets, and the authorisation and supervision requirements that need to be fulfilled to obtain such access.43 Further, the contours of the ‘average consumer’ can be seen in Directive 2008/48 on consumer credit agreements.44

(i) Public and Private Law It is important to realise that the effect of these Directives on B2C private law relationships is achieved through different routes. The Consumer Credit Directive is the only instrument amongst the Directives listed here that lays down private law rights. The other three Directives prescribe regulatory norms, eg the MiFID standards, with which banks and investment firms should comply in the marketing of products to consumers. The background of this difference is that they are public law instruments which do not only seek to protect retail investors (or in case of the UCPD, more generally: consumers), but which also seek to regulate the (financial) market and to ensure its stability. The rules they prescribe are therefore aimed at guaranteeing the reliability of investment providers, for example through authorisation requirements that need to be complied with before a provider can enter the market. Further, they prescribe which minimum consumer protection—in the form of information rights—with which these providers need to comply in their advertising and other communications.45 39

Cf Art 3(1) UCPD. Art 3 (and also Recital 9) UCPD specify that the Directive is without prejudice to individual claims of consumers, and to Community and national rules on contract law, on intellectual property rights, on the health and safety aspects of products, on conditions of establishment and authorisation regimes, including rules which relate to gambling activities and to competition rules. Further, financial services and immovable property are excluded since, by reason of their complexity and inherent serious risks, detailed regulation is necessary in these areas. 41 Art 19(2). For an excellent discussion of the MiFID’s provisions on client protection, see M Kruithof, ‘A Differentiated Approach to Client Protection: The Example of MiFID’ in S Grundmann, YM Atamer (eds), Financial Services, Financial Crisis and General European Contract Law. Failure and Challenges of Contracting (Alphen aan den Rijn, Kluwer Law International, 2011) 105. 42 Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading [2003] OJ L345/64 (the Prospectus Liability Directive). 43 Cf MiFID, Recital 1; Prospectus Liability Directive, Recitals 4 and 10. 44 Directive 2008/48 (n 11) Recital 18. 45 See Art 19(2) and (3) MiFID, Arts 5–8, 10–11 and 15(3) Prospectus Liability Directive, Arts 6 and 7 UCPD. 40

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In principle, public law and private law rules can achieve similar results and it may not matter, from that perspective, whether norms are laid down in one or the other type of instrument. However, there are important differences on the enforcement side, in particular with regard to a consumer’s ability to take personal action against the non-compliance with public law information duties. Most significantly, although the regulatory rules of the MiFID, the UCPD and the Prospectus Liability Directive have an influence on private law relationships, for the enforcement of public law duties consumers do not automatically have an action in private law that can serve as a basis for compensation. If, for example, the information provided by an investment firm is misleading to consumers, or if it is not sufficient to enable consumers to ‘reasonably understand the nature and risks of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis’,46 then non-compliance with that norm does not automatically give rise to a claim in contract or tort law. It may be the case that a consumer who suffers loss as a result of misleading or unclear information has the right to sue in contract or in tort, but only if national law enables this and if the necessary conditions for liability (eg for misrepresentation) in national law are fulfilled.47 On occasion, national legislation in public law—such as the Dutch and English laws implementing the MiFID—makes reference to the private law effects of the breach of a public law norm. In Dutch law, Article 1:23 of the Financial Supervision Act (Wet op het financieel toezicht (Wft)) states that juridical acts completed in violation of the provisions of the Wft are not automatically void or voidable.48 The rationale behind this rule is that an automatic invalidity of such acts would harm legal certainty.49 A party may of course challenge such an act on the basis of the general Dutch private law rules on validity. In the UK, there is a more direct way to establish private law liability. On the basis of section 150 of the Financial Services and Markets Act 2000 (FSMA), the breach of a rule of the Act or of ancillary rules gives rise to a civil right of action, on the basis of which individuals can claim damages for loss suffered as a result of this breach.50 The provision, in other words, establishes that non-compliance with such a rule 46

Cf Art 19(3) MiFID. The UCPD in principle does not influence individual actions under national private laws— see Recital 9 and Art 3(2)—but it may indirectly provide individual claimants with a basis for an action in contract or tort. In addition, situations exist where national laws voluntarily expand the scope of EU Directives to areas which they are not obliged to harmonise (see A Johnston, ‘“Spillovers” from EU Law into National Law: (Un)intended Consequences for Private Law Relationships’ in this volume), in which case, for example, private law remedies may become available for the breach of public law norms. In Dutch law, for instance, the enforcement rules of the UCPD extend to individual actions in tort on the basis of Art 6:193b(1) of the Dutch Civil Code. Note that the Prospectus Liability Directive exceptionally provides that Member States shall ensure that their ‘laws, regulation and administrative provisions on private law liability’ apply to persons responsible for information given in a prospectus—see Art 6(2). 48 Although they may be in specific circumstances, see Art 1:23 Wft and Arts 1:76(6)(e), 3:104(2), 4:60(6), 4:74(4), 5:32(5) and 5:52(4)(d). 49 See Kamerstukken II 29 708, 2005–2006, nr 19. 50 The right can be extended, in limited circumstances, to non-private entities; see s 150(3) FSMA. 47

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constitutes a breach of a statutory duty. The advantage of that, in comparison to the general law of negligence, is that there is no need for claimants separately to establish a breach of a duty of care actionable in tort.51 At the same time, however, the other conditions for liability will still need to be fulfilled.52 Without specification by the legislator, the breach of public law norms does not have a direct effect on private law liability. It may have an indirect effect, for example in establishing a ground for liability in tort,53 or in cases where the legislator voluntarily extends EU regulatory provisions to national private law rules on liability.54 In other situations, however, the consumer can only challenge the non-compliance with the regulatory norms by means envisaged by public law. He can submit a complaint to a supervisory authority, or to a consumer organisation, both of which are authorised to seek an injunction to stop such misleading practices,55 or he can try his luck through an alternative dispute resolution route.56 Only the last option, however, can result in compensation for the loss suffered by the consumer. The alternative public law route falls short of the compensation that a private law action can secure for individual consumers. Since the EU Directives in the consumer credit and investment field are mostly concerned with regulation through public law, there is a gap in private law protection that can explain, and perhaps justify, why national legislators and judges would find it necessary to ensure greater consumer protection through private law. From that perspective, legislators and courts are simply trying to ensure that consumers are not only protected from further loss caused by unfair practices, but also that they receive compensation for loss already suffered. For that purpose, private law doctrines such as misrepresentation, breach of a duty of care, or perhaps even a fiduciary duty owed by a bank to a consumer, can provide a basis for individual claims.57 The public and private law routes, therefore, can be regarded as complementary. The ‘average consumer’ can expect public law to secure the goals of market integration and stability of the finan-

Also, agreements may be unenforceable if they are concluded by or through an unauthorised person, see ss 26 and 27. 51 Cf Financial Services Authority, Conduct of Business Source Book, FSA PS45, para 3.47; OO Cherednychenko, ‘Conceptualising Unconscionability in the Context of Risky Financial Transactions: How to Converge Public and Private Law Approaches?’ in M Kenny, J Devenney and L Fox O’Mahony (eds), Unconscionability in European Private Financial Transactions (Cambridge, Cambridge University Press, 2011) 246, 268. 52 Cf s 150(3) FSMA: ‘subject to the defences and other incidents applying to actions for breach of statutory duty’. 53 See above, text before n 47. 54 Cf Art 6:193 of the Dutch Civil Code, implementing the UCPD, which is presented as a lex specialis of the general provision on negligence laid down in Art 6:162 of the Dutch Civil Code. 55 See eg Art 11 UCPD. 56 In the UK, for example, many consumers rely on the Financial Ombudsman Service (FOS); see FIN-USE, Financial Services, Consumers and Small Businesses: A User Perspective on the Report of the Banking, Asset Management, Securities and Insurance of the Post FSAP Stocktaking Groups (2004) 12. Similar financial ombudsman services exist in other jurisdictions, for example in the Netherlands through the Kifid (see www.kifid.nl). 57 See in more detail the cases discussed in Section III.

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cial system, whereas private law caters for his or her expectations in individual transactions with banks and other credit or investment providers. At the same time, however, the coexistence of public law and private law regulation in financial consumer law may result in the divergence of standards. That also means that it is not a straightforward matter to determine in what circumstances consumers (should) receive protection and in what form. Should their expectations be limited to the information rights laid down in public law instruments, or can they derive broader protection from general private law rules? I will use the example of the MiFID in credit and investment cases to illustrate the way in which national courts have dealt with this interaction.58

(ii) In Search of the ‘Average Consumer’ of EU Law: The MiFID Framework In general, EU rules focus on the ‘average consumer’ who is ‘reasonably wellinformed and reasonably observant and circumspect’. That notion is reflected in the provisions of the MiFID and their further elaboration in the MiFID implementation Directive, which are all public law rules.59 It is important to note a differentiation between general investment services and several specific B2C investment relationships. The supervisory rules of the MiFID distinguish between the degree of protection that is required in both instances; a distinction that, as we will see, can be watered down by the imposition of duties of care for general investment services through private law. First let us look, however, at the differentiation in the MiFID’s public law regime. In relation to services that do not imply a determination of the investment decision by the service provider, such as services only helping the investor execute transactions he or she has decided to enter into without being advised to do so by the firm,60 investment service providers are obliged to ask the (potential) client to provide information regarding his or her knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded. The aim of this is to enable the provider to assess whether the investment service or product envisaged is appropriate for the client, and if not, to warn the client.61 The final responsibility lies with the client, however, because 58 Note that credit agreements with investment firms (Art 4(1) of the MiFID) are excluded from the scope of the Consumer Credit Directive (Art 2(2)(h) of that Directive). They are ‘ancillary services’ in the sense of Art 4(1)(3) of the MiFID, specified in section B of Annex I, and therefore governed by the MiFID regime. 59 Directive 2006/73EC implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive [2006] OJ L241/26. Note that the MiFID also distinguishes between consumer and professional investors; see Kruithof (n 42) in particular 123ff. 60 Cf Kruithof (n 42) 133. 61 See Art 19(5) MiFID. Note that the term ‘client’ applies not only to consumers but also to professional parties. Further discussion of this category of investors is outside the scope of this contribution. For a detailed discussion, see Kruithof (n 41) 116ff.

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appropriateness in this case refers to the ability of the client to decide independently on the suitability of the investment decision.62 The ‘average consumer’ to whom these rules refer is therefore the empowered consumer of EU law who should be able to make an appropriate decision on the basis of the information provided by the bank or investment firm. Exceptions are made for specific types of transactions or specific types of bank–client relationships, such as advice agreements or portfolio management under the MiFID.63 In these relationships the bank (or investment firm) is under an active duty to advise the client or to take investment decisions on his or her behalf. Investment service providers are more involved in the decision-making process in these cases and will actively have to assess the suitability of a product or service for their client. Obligations to that effect are laid down in Article 19(4) of the MiFID. On the basis of this provision, investment firms are obliged to obtain the necessary information regarding the (potential) client’s (i) knowledge and experience in the investment field relevant to the specific type of product or service, (ii) financial situation, and (iii) investment objectives, all with an eye to recommending products or services that are suitable to the (potential) client. For these relationships, therefore, an exception is made to the ‘average consumer’ standard and stricter duties are imposed on banks and investment firms in terms of information provision, advice duties and the assessment of suitability.64 The idea that closer involvement with a client’s investment decisions requires greater responsibility from banks and investment firms towards their clients is reinforced by the general conduct of the business rule on which Article 19 of the MiFID is based. That rule is reflected in Article 19(1): an investment service provider is obliged to ‘act honestly, fairly and professionally in accordance with the best interests of its clients’. This rule can be described as an ‘umbrella rule of conduct’,65 encompassing not only the duties specified in Article 19(2)–(8) of the MiFID, but also reflecting the general rule of care that exists in different manifestations in the contract and tort laws of Member States.66 It is a duty of care and loyalty, therefore, that encompasses not only all the duties relating to information gathering, advising or counselling which are accessory to the service provided to the client, but also the duty of the service provider to comply with the private law duties that follow from the contractual relationship with a client.67 Since the contractual relationship between an investment service provider and its client will require greater involvement of the provider in an advice relationship or in relation to portfolio management than it will in investment facilitating services, it is not surprising that the duty of care owed to a client is broader. The 62

Kruithof (n 41) 134. Cf Art 19(4) MiFID. 64 This is reflected also in the explanatory memorandum for the Dutch legislation implementing the MiFID, see Kamerstukken II 2005–06, 29 708, nr 19, 509 and Kamerstukken II 2003–04, 29 507, nr 3, 87. 65 Cf Kruithof (n 41) 147. 66 Ibid. 67 Ibid. Cf Cherednychenko (n 51) 262ff. 63

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service provider will be contractually bound to make decisions on investments on the basis of the interests of its client, particularly with a view to maximising the investment returns of the client.68 In short, therefore, the MiFID-based duties owed by an investment service provider towards an ‘average consumer’ can be stricter depending on the nature of the provider–client relationship. In general, duties of care are limited and consumers will have to rely on their own faculty of judgment, combined with the information provided on the basis of Article 19 of the MiFID. Not only is this limited duty in line with the idea of the rational, empowered consumer that is central to EU consumer law, it also leads to considerable cost-saving on advice and counselling, and is therefore in the public interest.69 However, exceptions exist. The closer the involvement of the bank or investment firm is in investment decisions, the greater their duty to act in the interests of their client and to adapt information, advice and counselling to that higher standard of care. The ‘average consumer’ of EU law, therefore, does not set the standard for specific relationships such as investment advice and portfolio management. In addition, exceptions may follow from private law rules in which protection follows from general duties of care owed by expert parties to consumers. Such fragmentation becomes apparent in domestic litigation concerning consumer credit and investment agreements, the issue to which I now turn. In these case, private law protection goes further than the standards adopted in EU (free movement) law.70 Double standards for the protection that an ‘average consumer’ should get are seen in Dutch cases,71 as well as in German case law.72 English law, on the other hand, stays closer to the standard of an ‘average consumer’ prevalent in EU internal market law.73

B. Dutch Law: Dexia The Dexia case concerned retail investment schemes that basically allowed consumers to invest in the stock market with borrowed money.74 These schemes were aimed to make the stock market accessible to the ‘man on the street’, and they were actively marketed in the late 1990s with promising names such as 68

See Kruithof (n 41) 148, with references there cited. Compare Kamerstukken II 2003–04, 29 507, nr 3, 86. Note that consumer law Directives that are implemented through private law, such as the Consumer Credit Directive, can also be applied in a pro-consumer manner. 71 Cf De Treek v Dexia (n 36); HR, 5 June 2009, LJN BH2811 (Levob); HR, 5 June 2009, LJN BH2822 (Aegon). 72 Cf Ille Papier v Deutsche Bank, BGH, 22 March 2011, XI ZR 33/10, in which the protected party was not even a consumer but a medium-sized business. 73 Cf Barnes v Black Horse Ltd [2011] EWHC 1416 (QB) and OFT v Ashbourne [2011] EWHC 1237 (Ch). 74 De Treek v Dexia (n 36). Similar judgments appeared with respect to two other investment firms, see Levob and Aegon (n 71). For a comprehensive analysis, see, in Dutch, WH van Boom and SD Lindenbergh, ‘Effectenlease: dwaling, zorgplicht en schadevergoeding’ (2010) 59 Ars Aequi 188. 69 70

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‘Triple Profit Scheme’ or ‘Sprintplan’.75 The schemes were in fact a combination of a credit and investment agreement: the consumer would borrow a certain amount of money that was then invested in stocks; these stocks, in turn, functioned as security for the repayment of the debt and the interest that accrued on it. This could be very lucrative when the stock market went up and the consumer was able make a profit over the entire portfolio. However, there was also a dark side to the scheme: if the stock market went down, the consumer could be left with a portfolio that was too low in value to repay the debt. In that event, the consumer would be left with a so-called restschuld, or ‘remaining debt’. This is indeed what happened to a large number of consumers when the stock market suffered a steep fall in 2000. The result was an explosion of litigation, part of which was settled in a collective settlement (the ‘Duisenberg-regeling’), and part of which continues until today.76 The question of whether investment firms such as Dexia could be liable for losses suffered by these consumers was addressed by the Dutch Supreme Court in its judgments of 9 June 2009, of which De Treek v Dexia can serve as a paradigm case. Three grounds for liability were proposed by the claimant: misleading advertising, misrepresentation (or dwaling in Dutch law) and a duty of care. I will leave aside the misrepresentation claim, since it is contested whether the Court was correct in its application of the law on this point,77 which is a question that pertains to dogmatic points of Dutch private law. What is more interesting, for our purposes, is to consider the relation between the misleading advertising claim, which is grounded in EU law, and the duty of care following from general private law. The Dutch Supreme Court held that there could be no claim on the basis of misleading advertising, referring to the ‘average consumer’ of EU law who is ‘reasonably well-informed and reasonably observant and circumspect’.78 This abstract consumer sets the standard for unfair commercial practices law,79 as well as for the information duties derived from the Consumer Credit Directive and the MiFID.80 For this type of consumer, the information provided by Dexia was deemed sufficient for the consumer to understand the product and its risks.81 This part of the judgment, therefore, confirms the prominence of the empowered consumer. However, the Court did not leave it at this. It held that under general Dutch private law the special relationship between a credit/investment provider and his client entailed a duty of care towards the client, based on the general prin75

Some 300 different varieties of these schemes existed. Cf van Boom and Lindenbergh (n 74) 188. Ibid. Ibid. 78 Cf Case C-210/96 Gut Springenheide (n 17). 79 Art 5 UCPD. 80 In Dutch law, compare Art 4:19 Wft, formerly Art 30 Wet op de financiële dienstverlening (Wfd). It is worth noting that the Consumer Credit Directive, on the basis of Art 5(6), leaves some discretion to the national legislator. 81 De Treek v Dexia (n 36) para 4.5.3. Also Aegon (n 71). 76 77

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ciple of ‘reasonableness and equity’ (or ‘good faith’).82 The provider, as the expert party, is obliged to take account of the interests of the consumer and to protect him against the risks associated with his lack of insight or his own rash decision-making. More specifically, this means that banks and investment firms are obliged to warn consumers about the specific risks of a product, to investigate the financial position of the client, and, if the circumstances demand it, even advise the client against purchase of the product.83 This judgment illustrates how national private law can go further than EU law in its protection of the ‘average consumer’. The MiFID, in accordance with the general approach to misleading advertising of the UCPD, places the responsibility with the consumer to act rationally on the basis of the information provided by the investment service provider. In the absence of a special relationship, such as an investment advice contract or portfolio management, it is left to the consumer to decide whether a specific product or service is appropriate for him.84 However, the Dutch ‘average consumer’ in financial services, as the Dexia case shows, can rely also on a much broader duty of care based on general private law. On that ground, a professional financial service provider is obliged not only to provide fair, clear and non-misleading information, and to check the consumer’s previous experience in the investment market,85 but also to assess the appropriateness of the specific product or service in light of the consumer’s financial position. If the consumer’s financial position does not warrant the risk, the investment service provider should advise him or her against purchasing the product. Such a wide-ranging duty of care is not foreign to Dutch investment law. Earlier case law in the area of option trade introduced an even broader duty of care, obliging investment service providers to deny a consumer the purchase of options if that consumer did not fulfil a minimum capital requirement (‘margin requirement’).86 That duty, subsequently codified in supervisory legislation, applies regardless of the consumer’s existing knowledge and experience of the options market.87

C. UK Law: Barnes v Black Horse and OFT v Ashbourne For English law, the situation is strikingly different. Here, a paradigm case is provided by so-called ‘PPIs’. A PPI, or payment protection insurance, is an insurance policy often sold in combination with credit agreements. It aims to cover repayments if the borrower suffers an insured event, such as an accident, sickness, 82

De Treek v Dexia (n 36) para 4.8.4. Ibid, para 4.8.1. Cf Levob (n 71) paras 4.5.4, 4.5.6 and 4.5.10. 84 See above, at 347. 85 Cf Art 19(2) and (5) of the MiFID, implemented by Arts 4:23 and 4:24 Wft. 86 See Cherednychenko (n 51) fn 30. 87 Art 86 Besluit gedragstoezicht financiële ondernemingen (Bgfo), which specifies the duties laid down in Art 4:25 Wft. See also Kruithof (n 41) 157; KJO Jansen, ‘De eigen verantwoordelijkheid van de financiële consument’ [2010] Weekblad voor privaatrecht, notariaat en registratie (WPNR) 623. 83

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unemployment or death.88 The fact that these policies are often sold secondary to the supply of credit creates a disadvantageous position for consumers, who will either not be inclined to shop around—which often also does not happen because these policies are sold to purchasers who are vulnerable and already unlikely to compare products—or who will purchase the product for other reasons, for example because they are concerned that they will otherwise not have access to the source of credit.89 Many consumers therefore end up with products that are not in their interest (eg products that are too expensive or not needed). Following complaints, the Financial Services Authority (FSA), which up until 2012 was responsible for the supervision of the UK retail financial market, tried to stop such practices by imposing fines and by developing behavioural guidelines for the industry.90 In the meantime, consumer claims with regard to PPIs have resulted in litigation, both before the common law courts and before the Financial Ombudsman Service (FOS). It is interesting to see that the assessment of liability leads to different results depending on the forum that is chosen. For the common law perspective, we can refer to a recent High Court judgment in the case of Barnes v Black Horse.91 The claimants were a husband and wife who had bought PPI policies in relation to three different loans with Black Horse Ltd. They complained on six grounds: (a) they were sold PPI policies when they already had sickness benefit; (b) the policies were very expensive; (c) Black Horse did not advise them to shop around for PPI policies; (d) they were told the policies were compulsory when they were not; (e) Black Horse did not establish that the policies were in their interest; and (d) Black Horse failed to follow the terms of certain documents.92 Their claim failed. According to Judge Waksman QC, neither a fiduciary duty nor a duty of care owed by Black Horse to the Barnes could be established.93 This is due to the limited circumstances in which English law acknowledges such duties, which requires that the defendant has assumed responsibility towards the claimant through its statements or actions.94 The words of Judge Waksman with regard to the duty of care illustrate this: What is conspicuously absent from the plea of a duty of care here is any factual basis relating to this particular case from which it could be drawn. It is not said, for example, that Black Horse assumed a responsibility here to give particular advice on the facts of the cases. Indeed … it is not suggested that Black Horse was either asked to, or was expected to or purported to, give advice of any kind.95

88

G Howells, ‘The Consumer Credit Litigation Explosion’ (2010) 126 Law Quarterly Review 617,

631. 89

Ibid, 631. Financial Services Authority, The Assessment and Redress of Payment Protection Insurance Complaints, CP 09/23. 91 Barnes v Black Horse Ltd [2011] EWHC 1416 (QB). 92 Ibid, para 10. 93 Ibid, paras 13ff and 32ff. 94 Cf Donoghue v Stevenson [1932] UKHL 100, [1932] AC 562; Caparo Industries plc v Dickman [1990] UKHL 2; [1990] 2 AC 605. 95 Barnes v Black Horse Ltd (n 91) para 34. 90

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That conclusion confirms that English law in general does not tend to protect weaker parties, barring specific circumstances, and therefore stays close to the protection of an ‘average consumer’ in EU internal market law. Illustrations of that attitude can be found in cases concerning undue influence in suretyship relationships,96 and more generally in the absence of a general principle of good faith in English law. For investment services, the result is that private law offers very little protection to consumers. The MiFID rules, implemented in English law through the FSMA, offer some protection, but, as seen above, that protection is limited in cases other than advice relationships or portfolio management. Since the court established that the Barneses did not have an advice relationship with Black Horse,97 the final decision on the appropriateness of the product was therefore their own responsibility. The Barneses would have perhaps done better to have made a claim before the FOS. Other consumers did, with the total amounting to 49,169 in 2009. Of these claims, 89 per cent were decided in favour of the consumer.98 The big advantage here is that the FOS is not obliged to decide on the basis of the common law: they can go beyond the law and decide cases on the basis of what is fair and reasonable, including good practice, voluntary industry standards and codes (even if superseded by legislation), and the FSA Handbook.99 This often leads to more consumer-friendly decisions than the common law routes of misrepresentation, breach of duty or breach of fiduciary duty. Despite the availability of this practical and fast route for consumers to obtain compensation, one may nevertheless wonder whether the common law should not also reflect stricter duties of care to achieve such protection. If the practical outcome of cases such as the PPI claims is that banks will have to pay compensation, there is something to be said for the common law to adapt to such developments. That requires a more paternalistic approach, which is at odds with existing attitudes to duties of care, good faith and fairness; but it does justice to the nature of the retail financial services market, in which the complexity of products and services and the limited knowledge and experience of many retail investors places this group of consumers in a vulnerable position.

D. German Law: Ille Papier-Service v Deutsche Bank German law, as a final example, is strong on duties of care owed by banks to their clients. Even before the implementation of the MiFID, information rights and the ‘know-your-client’ principle were recognised in German law.100 Hence, 96 Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44, [2002] 2 AC 773; Barclays Bank v O’Brien [1993] UKHL 6, [1994] 1 AC 180. 97 Barnes v Black Horse Ltd (n 91) para 34. 98 See Howells (n 88) 633; Financial Ombudsman Service, Annual Review 2009/2010, 34 and 51. 99 Howells (n 88) 634 and the references cited therein. 100 German law has been an inspiration for similar duties laid down in the MiFID. Cf Cherednychenko (n 51) 264.

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banks are generally obliged to disclose all relevant information in dealings with their (potential) clients. That duty, now laid down in §  31(2)–(4) of the Securities Trading Act (Wertpapierhandelsgesetz (WpHG)), was previously deduced from the general principle of good faith laid down in § 242 of the Civil Code (Bürgerliches Gesetzbuch (BGB)). Further, the duty to ‘know-your-client’ laid down in §  31(1) of the WpHG corresponds with earlier case law. According to a 1993 judgment from the Federal Court of Germany, the content and scope of investment providers’ duties to inform and advise is determined by the client’s knowledge in the investment field and the risks involved therein as well as by the client’s investment objectives.101 Those duties correspond to the MiFID’s general rules on information rights, which are adapted to the ‘average consumer’ standard of EU law, and also to the special rules on investment advice and portfolio management.102 They are rules of public law, and it can be argued that these have to some extent taken over the role that private law rules used to play before the introduction of these business conduct rules.103 They offer a standard of business that, although it does not automatically give rise to liability in private law, can be used to fill in private law grounds of liability in contract and tort.104 At the same time, as the Dutch and the English examples show, there can be circumstances in which stronger protection through private law is appropriate. Another question, illustrated by a recent judgment from the German Supreme Court (the Bundesgerichtshof (BGH)), is how far conduct of business rules or private law duties of care can and should be extended towards the protection of investors. The judgment is noteworthy not only because of the extensive duty of care that was adopted, but also because it applied this duty to the benefit of a professional party rather than a consumer client. If a professional client can expect this kind of protection, one wonders what the ‘average consumer’ may expect. Ille Papier-Service v Deutsche Bank concerned a medium-sized enterprise that on the advice of Deutsche Bank had entered into a complex ‘spread ladder swap’ agreement. The agreement entailed an interest-rate swap that basically amounted to a bet on the difference between two-year and ten-year Euribor interest rates.105 Deutsche Bank agreed to make fixed-rate interest payments to the company on the €2,000,000 that it had agreed to pay into the scheme over a five-year period. These payments were netted against Ille’s interest payments to the bank, which were based on the difference between the Euribor interest rates, spiced by a multiplier. If the interest rate spread widened, then the company gained on the 101

See BGH, 6 July 1993, XI ZR 12/93, BGHZ 123, 126, 129. Art 19 MiFID. 103 Cf Cherednychenko (n 51) 267. 104 See above, at 345. 105 Euribor is short for Euro Interbank Offered Rate. The Euribor rates are based on the average interest rates at which a panel of more than 50 European banks borrow funds from one another and are considered to be the most important reference rates in the European money market. See www.euribor-rates.eu. 102

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deal; but if the spread narrowed, or turned negative, its losses grew exponentially and were theoretically unlimited.106 In fact, that possibility turned out to be not just theoretical but real, resulting in extensive loss for the company. The BGH held that Deutsche Bank had breached its advice duties towards the company and hence was liable to pay €541,074 in damages. Those advice duties—the ones mentioned above, which were developed in earlier case law and are now codified in the Securities Trading Act—oblige the bank to investigate the client’s knowledge and experience with regard to the product, their willingness to take risks and their investment objectives.107 In the present case, Deutsche Bank could not presume to have fulfilled these duties merely on the ground that the company employed one certified economist (to account for the required knowledge) or on the ground that it deduced the client’s willingness for risk-taking and investment objectives from earlier dealings. With products as complex and high risk as the spread ladder swap agreement, banks are—according to the BGH— obliged to ensure that the client’s knowledge and experience equals that of the bank. Only in those circumstances is the client in a position to take a responsible decision on the purchase of such a product.108 An additional complication in this case, and surely in many other instances of investment services provision, is that the bank faced a conflict of interest. Deutsche Bank was not only advising the client, but was also in effect betting against it. Although it is common knowledge that banks aim to make profit and therefore may run into conflicts of interest with regard to the products they offer to their clients, the BGH was of the opinion that certain circumstances may require the bank to disclose the value that the deal has for the bank.109 In the case of the swap ladder agreement, the so-called negative market value of the deal amounted to 4 per cent of the capital paid into the scheme, or €80,000. This case raises important questions on the duties of care that banks and investment firms owe to their clients. The judgment from the BGH in Ille PapierService v Deutsche Bank implies that complex, high-risk products demand greater responsibility from investment service providers to ensure that their clients are aware of the risks involved in the product and are willing to take them. Moreover, the imposition of a disclosure duty prevents providers from actively marketing products to (potential) clients in which the bank itself has a vested interest for obtaining profit. Both elements indicate that the pre-financial crisis mentality that allowed all kinds of high-risk products to be marketed freely and to the profit of the provider may have had its day. Although new products are bound to keep emerging, and may in fact be profitable to investors and the market as a whole, this could be a step towards a safer market for investors—including

106 107 108 109

For a brief discussion of the case, see The Economist, 26 March 2011, 76. Ille Papier v Deutsche Bank (n 72) para 20. Ibid, paras 22ff. Ibid, paras 31ff.

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consumers. Whether this is indeed the trend will need to be confirmed by other similar cases that are currently pending before the BGH.110

IV. The ‘Average Consumer’ as a Point of Reference The overview of domestic litigation in consumer credit and investment cases confirms that the involvement of EU law in B2C relationships in the consumer credit and investment market is bounded. EU law may lay down a framework of protective rights, in the way that it has through the MiFID and other Directives, but this framework is complemented by national legislation which in many cases offers more protection to the ‘average consumer’ of EU law. With the legal framework cutting across both fields, moreover, no strong distinction can be made between public law and private law regulation. In general, law-making is becoming more complicated as modern-day consumer law in the retail financial services market is becoming more multifaceted. ‘Old’ law-making by national legislators is intertwined with EU regulation, and national case law adds yet another layer of private law rights and duties. Besides the traditional legal framework within which the legislator and courts are the main actors in law-making and interpretation, practice shows that regulation nowadays also often takes place through new, soft forms of lawmaking such as self-regulation. In the words of Kruithof, The resulting legal, legislative and regulatory landscape in the area of financial institutions, financial instruments and financial markets, where hard and soft rule-making and enforcing competences are spread over national, European and international public and private entities, is a multi-layered complicated system, in which comprehensive uniformity brought about by codification is complemented with soft modes of governance based on target setting, bench marking, good practices, mutual learning, reporting and monitoring.111

Where can rules be found and how do they connect in order to ensure greater transparency? In the pursuit of creating greater legal certainty, the ‘average consumer’ of EU law is put forward in this chapter as a possible reference point. Located at the boundary between EU law, and operating as a normative standard in public and private law, it is well placed to provide a connection between different legislative instruments, case law and instruments of self-regulation. In fact, I have deliberately used the ‘average consumer’ concept as a tool to compare the domestic litigation discussed above. That exercise shows how the use of

110 Judgment is awaited in a number of cases concerning the Lehman Brothers insolvency; see pending cases XI ZR 178/10 and XI ZR 182/10. 111 Kruithof (n 41) 105 and 110.

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such a reference point can clarify differences in consumer protection between different legal systems. Pulling together the three strands of litigation set out in Section III, the following overall conclusions emerge. First, the ‘average consumer’ of EU law sets the standard for general information duties under the MiFID, the Prospectus Liability Directive and, in a broader field, the UCPD. This prototype consumer is deemed to be capable of making rational decisions and so protection is not set at the highest level of care. That rationale fits the internal market policy of the EU and exemplifies how considerations of market policy can influence the normative content of a standard such as the ‘average consumer’. Second, however, divergence is possible in cases where the special nature of the B2C relationship or the complexity of the product or service demands it. The MiFID itself provides exceptions for two types of relationships, namely investment advice and portfolio management.112 In addition, national private laws can impose stricter duties of care on the basis of the special relationship between an expert service provider and a consumer client. Examples of this can be seen in the Dutch Dexia litigation and in recent German case law on advice duties. Third, the fact that duties of care are within the realm of private law, and therefore largely outside the public law framework laid down in the EU Directives, means that a lot of room remains for divergence between national systems. Although Dutch and German law lean towards stronger protection, English law stays close to the level of protection that is normally adopted for the ‘reasonably well-informed and reasonably observant and circumspect’ average consumer of EU law. Fourth, further rules may be introduced through alternative dispute resolution, eg through a financial ombudsman service. That adds yet another layer of norms, which in the UK, for example, has served as a counterweight to the common law rules, offering protection to consumers on the basis of fairness. Although this leads to a wide range of different rules for different cases, the ‘average consumer’ of EU law provides a standard for comparison. It can be referred to in order to make transparent which justifications for differentiation exist in specific instances, such as the complexity of products or the special nature of certain bank–client relationships. The illustration provided by the cases discussed in this chapter gives an example of how one can chart diverging rules in consumer credit and investment law and make transparent how and why they are different. If law-making actors can be encouraged to make clear reference to the ‘average consumer’ standard—eg in the explanatory notes that accompany legislation—the model can be extended to a wider field of consumer law. That way, a new platform for law-making is created which is open for every actor involved in the process, whether in the context of state-based or post-national law-making.

112

Cf Art 19(4) MiFID.

16 ‘Spillovers’ from EU Law into  National Law: (Un)intended Consequences for Private Law Relationships ANGUS JOHNSTON

I. Introduction The idea that European integration involves ‘spillover effects’ is almost as old as the EU Treaties themselves: the evolution of the Treaties from the narrow beginnings of the European Coal and Steel Community (ECSC) in 1952 was predicted by some contemporary sages to be the result of various political and economic spillovers from the operation of the ECSC, its policies and institutions.1 While this evolutionary road was not always as smooth as some might have liked,2 the advent of the European Economic Community and the European Atomic Energy Community Treaties in 1957 can be seen as at least in part a response to the growing economic and political interaction between states in Europe; and the subsequent evolution of EU law at the EU legislative and judicial level has often been effected by the use of Treaty bases to respond to social and economic developments precipitated by the application of the general rules of those Treaties over time. However, the sense in which this paper proposes to address the notion of a ‘spillover’ is in a rather more technical, legal form. In particular, it is suggested that a true ‘spillover’ involves an effect from EU law upon national law which does not occur by virtue of EU law’s claim to normative force, of itself, in the national legal order. Rather, spillover effects concern the impact of EU law by virtue merely of its presence within the national legal system, requiring the rules 1 Such as Jean Monnet: see eg F Duchêne, Jean Monnet: The First Statesman of Interdependence (New York, Norton, 1994) 239. 2 Witness the failure of the proposed European Defence Community, on which see DW Urwin, The Community of Europe—A History of European Integration Since 1945, 2nd edn (London, Longman, 1995) 60–68, and the complex and controversial negotiations surrounding the European Atomic Energy Community Treaty, on which see P Weilemann, Die Anfänge der Europäischen Atomgemeinschaft: Zur Gründungsgeschichte von EURATOM 1955–1957 (Baden-Baden, Nomos, 1983).

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and structures of that national system to react to EU law, albeit in areas not (intended to be) covered by EU law itself. The identification and mapping of such effects is both an interesting exercise and of potential practical significance for courts, legal advisers, individuals subject to these systems of legal rules and the Member State governments. Appreciating the likely incidence of spillover effects and their potential implications may guide national courts in the interpretation and application of the law, as well as warning the ‘users’ of the national legal system of such possibilities. Further, a realisation that such spillover effects may be the result of the presence of (new) EU law rules in the national legal order may have an impact upon how those EU law rules are proposed, negotiated and formulated: Member States’ governments may argue more carefully in Council about the content and wording of proposed EU legislation, and lobbyists and legal representatives may use spillover implications in their efforts to influence the law-making process on the EU and national levels. In what follows, a range of scenarios will be outlined in which EU law has an impact upon national law in one way or another (Section II). This serves as the precursor to a first, tentative attempt to identify categories of spillover effects created by EU law (Section III). The penultimate section makes a preliminary effort to identify some of the theoretical perspectives relevant to, and implications of, such spillover effects (Section IV) and then Section V provides some concluding observations.

II. Typology/Taxonomy I: The Impact of EU Law upon National Law As a first stage in the analysis, I will provide brief coverage which attempts to distinguish the relevant scenarios involved so as to acknowledge both the direct impact of EU law upon national private law (where EU law has that impact by virtue of its own normative force within the national legal order) and the more indirect impact and/or influence which the presence of EU law has upon the operation of the national legal order outside the scope of application of EU law per se. The following sub-sections thus lay out a series of situations where EU law instruments/principles have an impact upon national private law.

A. Direct, Hierarchically Superior Addition or Replacement/ Substitution by EU law of Substantive Rights (and Duties) on Some Subject Matter of National Private Law Various Treaty provisions (under what is now the TFEU) have been held to grant rights to and impose obligations upon private parties. These include sex

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equality rights in national employment law (see Defrenne,3 and what is now Article 157 TFEU (ex Article 141 EC)); and the freedom of movement for workers (see Angonese,4 and what is now Article 45 TFEU (ex Article 39 EC)).5 Similarly, a number of horizontally directly effective provisions can be found in secondary legislation, such as the recent passenger rights Regulations in air6 and rail transport,7 allowing the enforcement of rules by customers against transport service providers who are (in some fields increasingly) private parties (rather than state bodies à la Foster v British Gas)8 for EU law purposes. Where a total harmonisation Directive—the Unfair Commercial Practices Directive (UCPD) provides a strong recent example—covers a particular field, such replacement/ substitution is also clear.9

B. Subject Matter of EU Law is Focused Upon a Different Area, but that EU Law Rule has Clear and Direct Consequences for National Private Law by Virtue of a Direct, Superior EU Law Rule This category is very similar to the first, although its focus is rather more coincidental than direct in the impact of EU law. Thus, there is the perhaps unexpected 3

Case 43/75 Defrenne v Sabena (No 2) [1976] ECR 455. Case C-281/98 Angonese v Cassa di Risparmio di Bolzano [2000] ECR I-4139. 5 A similar practical effect can be achieved by the application of directly effective free movement provisions where Member States seek to impose restrictions going beyond the minimum standards laid down in EU Harmonising legislation (as discussed at sections II.C and D below), such as measures which are more protective of consumers than in the relevant Directives. For an outline in the consumer protection field, see H Unberath and A Johnston, ‘The Double-Headed Approach of the ECJ concerning Consumer Protection’ (2007) 44 Common Market Law Review 1237, 1245–52. Similarly, the application of vertically directly effective Treaty provisions, such as Art 34 TFEU, see eg Case 286/81 Oosthoek’s Uitgeversmaatschappij [1982] ECR 4575, may prevent the application of a national law rule which might otherwise have protected a consumer defendant from a particular commercial practice. 6 Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 [2004] OJ L46/1. 7 Regulation (EC) No 1371/2007 of the European Parliament and of the Council of 23 October 2007 on rail passengers’ rights and obligations [2007] OJ L315/14. 8 Case C-188/89 Foster v British Gas [1990] ECR I-3313. 9 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market [2005] OJ L149/22 (‘Unfair Commercial Practices Directive’ (UCPD)). For a vivid recent illustration with regard to German law, where a more consumer-protective national provision in the Unlauteren Wetbbewerbsgesetz (UWG) was held precluded by the UPCD, see Case C-304/08 Zentrale zur Bekämpfung unlauteren Wettbewerbs v Plus Wahrenhandelsgesellschaft [2010] ECR I-217. Henceforth, no blanket ban could be imposed on the relevant clause (which made the participation of consumers in a lottery conditional on the purchase of goods or the use of services); rather, its unfairness had to be assessed on a case-by-case basis. The earlier Joined Cases C-261 and 299/07 VTB-VAB and Galatea [2009] ECR I-2949 followed the same approach, because the relevant practices in all of these cases did not appear in the exhaustive list of 31 presumptively unfair practices in Annex I to the UCPD. 4

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example from the law of probate in the UK, concerning the status of the Bank of Ireland in being able to undertake business in England and Wales so as to prove in such probate proceedings. We can contrast the cases of HJ Barlow10 and Re Bigger:11 in the latter, the directly effective nature of what was then Article 52 EEC (now Article 49 TFEU) meant that the Bank of Ireland’s status under Irish law was sufficient to allow it so to act on English territory.

C. EU Harmonising Legislation (Typically Directives) Requiring Member State Implementation to Achieve Results on the Same Subject Matter as National Private Law There are, of course, numerous examples under this category,12 covering both substantive rights and obligations and, sometimes, specific procedures for 10 Re HJ Barlow (Deceased) [1933] P 184, which held that the Irish statute constituting the Bank of Ireland could not give it the power to undertake trust business in England and Wales, thus meaning that the Bank did not satisfy the Public Trustee Rules 1912. 11 Re Bigger (Deceased) [1977] Fam 203; [1977] 2 All ER 644, holding that the Irish legislation could enable the Bank to act in England and Wales, thus satisfying the terms of Art 30(1)(b) of the Public Trustee Rules 1912, which had been added by the Public Trustee (Custodian Trustee) Rules 1975, SI 1975, No 1189 when the UK had joined the EEC (and which were intended to implement the obligations arising under Art 52 EEC). I am indebted to J Usher, ‘Community Law and Private Law—A View from the United Kingdom’ in P-C Müller-Graff (ed), Gemeinsames Privatrecht in der Europäischen Gemeinschaft, 2nd edn (Baden-Baden, Nomos, 1999) 241, 254 for this example. 12 Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L95/29 (‘Unfair Terms in Consumer Contracts Directive’); Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts [1997] OJ L144/19 (‘Distance Selling Directive’); 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 (‘Doorstep Selling Directive’).; Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market [2000] OJ L178/16 (‘Directive on Electronic Commerce’); Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector [2002] OJ L201/37 (‘Directive on Privacy and Electronic Communications’); Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by Law, Regulation or Administrative Action in Member States concerning the pursuit of television broadcasting activities [1989] OJ L298/23 (‘TV Broadcasting Directive’); Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/ EC and 98/27/EC [2002] OJ L271/16 (‘Distance Marketing of Financial Services Directive’); Directive 94/47/EC of the European Parliament and the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis [1994] OJ L280/83 (‘Timeshare Directive’); Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours [1990] OJ L158/59 (‘Package Travel Directive’); Directive 98/27/EC of the European Parliament and of the Council of 19 May 1998 on injunctions for the protection of consumers’ interests [1998] OJ L166/51 (‘Consumer Injunctions Directive)’; Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC [2008] OJ L133/66 (‘Consumer Credit Directive); Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12 (‘Consumer Sales and Guarantees Directive’).

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enforcement and particular remedies (damages,13 injunctions,14 etc). It serves no purpose to address these in detail in the text here: specific examples will be referred to in the subsequent discussion where relevant.

D. Treaty Provisions or EU Harmonising Directives Covering Private Law Subject Matter, but Having Clear Consequences for National Private Law Concerning the EU Provision’s Implementation (Enforcement, Remedies, etc) Sometimes, this heading will grow from or overlap with the preceding type of situation, since particular rights and/or duties may be laid down by a harmonising Directive, yet the Directive might not specify details concerning procedures and remedies within the national legal order (or, if it does, it may do so only partially/incompletely). This can often be seen as a reflection of the influence of subsidiarity considerations within the EU legislative process. As a starting point, the Court’s jurisprudence on what is commonly referred to as ‘national procedural autonomy’, but which the present author prefers to describe as the ‘national legal environment’ (NLE), lays down some founding principles. Where EU law provides no particular procedures or remedies, then it is for national law to ensure that EU law rights are enforced, subject to two basic conditions.15 First, such national law must not provide for that enforcement of EU law rights on a basis less favourable than that afforded to comparable national law rights (the principle of ‘equivalence’ or ‘non-discrimination’). And, second, those national law rules must not render the enforcement of those EU law rights impossible or excessively difficult (often, and perhaps too readily, known as the ‘effectiveness’ criterion).16 While the operation of the principle 13

Consumer Sales and Guarantees Directive (n 12). Consumer Injunctions Directive (n 12). See Case 33/76 Rewe-Zentralfinanz v Landwirtschaftskammer für das Saarland [1976] ECR 1989; Case 45/76 Comet v Produktschap voor Siergewassen [1976] ECR 2043; Case 158/80 ReweHandelsgesellschaft Nord mbH v Hauptzollamt Kiel [1981] ECR 1805. 16 Because the Court of Justice of the EU only occasionally uses the positive notion of ‘effectiveness’ in its judgments in this sphere: these occur most regularly and consistently in the field of Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L39/40 (see now Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L204/23). In that case law, the Court has referred to the need for national law to provide that compensation provided for must be such as ‘to ensure that it is effective and  … has a deterrent effect’ (Case 14/83 Von Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891, para 28), leading to requiring the disapplication of national provisions, inter alia, capping the extent of damages recoverable, imposing fault requirements as a precondition to liability, and refusing to allow the award of interest on the damages payable. See eg Case 14/83 Von Colson, above; Case C-177/88 Dekker v Stichting VJV-Centrum [1990] ECR 3941 and Case C-271/91 Marshall v Southampton and SW Hampshire Area Health Authority (‘Marshall (No 2)’) [1993] ECR I-4367. Yet in other apparently comparable areas, the Court seems to have adopted a less interventionist approach. For example, 14 15

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of equivalence is not without its interesting elements,17 it is really the implications of the ‘practical possibility’ criterion which have been, and will be, of most significance for national private law. Located just beyond these basic principles are those cases where the Court of Justice has found that certain specific rights laid down in a given directive, or stemming from a directly effective Treaty provision, must entail particular procedural or remedial consequences, even in the absence of any detailed provisions in the relevant directive as to what such procedural or remedial outcomes must be. Thus, in the series of German cases on so-called ‘waste property’ (Schrottimmobilien) (such as Heininger,18 Schulte19 and Crailsheimer Volksbank),20 the Court has delivered far-reaching judgments that have made significant extensions to the practical protection afforded to consumers by the Doorstep Selling Directive,21 including: refusing to allow the application of national time-limits to claims to cancel a contract on the ground that the requisite information (concerning the right to cancel) had not been provided to the consumer (Heininger); and transferring the risks associated with the contract (which had been entered into by the consumer without such information) that had to be borne by the bank which had failed to inform the consumer of the right to cancel (Schulte and Crailsheimer Volksbank). This reading of the Directive will pose various challenges for national law, under which traditional national approaches to causation and fault as a prerequisite for liability may be threatened by this (over)expansive approach to the Doorstep Selling Directive.22 In a similar vein, the Court’s judgment in the Simone Leitner case addressed the types of loss recoverable by consumers exercising rights under the Package Travel Directive and found that the term ‘damage’ in Article 5(2) of that Directive did extend to ‘compensation for non-material damage arising from the loss of enjoyment of the holiday’.23 For those Member States in which such a head of damages would not ordinarily be recoverable,24 this interpretive extension of the Directive again raises difficult questions under national private law; but it is by no means impossible that this approach to what is encompassed by the notion of ‘damage’ may spread into other areas of EU law as and when they arrive at the Court of Justice for interpretation and determination. compare Marshall (No 2) with cases such as Case C-338/91 Steenhorst-Neerings [1993] ECR I-5475 and Case C-66/95 R v Secretary of State for Social Security ex parte Sutton [1997] ECR I-2163. 17 See eg Case C-261/95 Palmisani v Istituto Nazionale della Previdenza Sociale [1997] ECR I-4025; and see the discussion of Case C-453/99 Courage v Crehan [2001] ECR I-6297 below, text at nn 25ff. 18 Case C-481/99 Heininger v Bayerische Hypo- und Vereinsbank [2001] ECR I-9945. 19 Case C-350/03 Schulte v Bausparkasse Badenia [2005] ECR I-9215. 20 Case C-229/04 Crailsheimer Volksbank v Conrads [2005] ECR I-9273. 21 See above n 12. 22 See the more detailed discussion of these cases in Unberath and Johnston (n 5) 1258ff. 23 Case C-168/00 Simone Leitner v TUI Deutschland [2002] ECR I-2631. 24 And there are some where this poses no problem: see, in English law, the cases of Jarvis v Swan Tours [1973] QB 233; Jackson v Horizon Holidays [1975] 1 WLR 1468 and, in German law, § 651f(2) of the German Civil Code (referred to by AG  Tizzano in his Opinion in Case C-168/00 Leitner (n 23) paras 27–36).

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The development by the Court of Justice of the EU of various elements encouraging the private enforcement of competition law (potentially encompassing both damages and restitutionary claims)—in cases such as Courage v Crehan and Manfredi—shows a similar phenomenon in the effective enforcement of directly effective rights under a provision of the TFEU.25 Mr Crehan was the tenant of two pubs owned by Inntrepreneur. The leases included beer ties which required him to purchase his beer from Inntrepreneur at higher prices than other public houses, reducing his profitability to such an extent that his business failed. Mr Crehan brought a claim against Inntrepreneur that the beer ties were in breach of Article 101 TFEU (ex Article 81 EC) and claimed damages for breach of competition law to recover the higher prices charged to him as a tied publican for the beer supplied. During the course of these proceedings a reference was made by the English court to the Court of Justice of the EU asking whether, and in what circumstances, EU law would allow a person in Crehan’s position, who was himself party to the illegal agreement, to recover damages. The Court held that a party to an illegal (in breach of Article 101 TFEU) agreement can rely on that agreement and claim damages from the other party, to the extent that there is no equality of bargaining power between the parties and that the party claiming the damages did not bear significant responsibility for the distortion of competition.26 The Court also held that the full effectiveness of Article 101 would be put at risk if it were not open to any individual to claim damages for loss caused by a contract or conduct liable to restrict or distort competition. What, then, was the impact of this judgment of the Court of Justice of the EU upon English private law concerning the question of ‘illegality’? Traditionally, the basic position in English law was that neither party to an illegal contract could base any claim upon that illegal relationship—the result was that everything stood where it was at the time that the illegality was declared, and the law would not aid either party to alter that position.27 Thus, the so-called ‘illegality bar’ under English law seemed to stand in the way of Crehan’s claim. The Court’s judgment has been taken by some to require, as a matter of EU law, that damages claims must be available for such breaches of EU competition law (subject to the caveats listed previously).28 However, this interpretation is not consistent with the approach taken by the Court in the field of EU law’s impact upon national remedies law (as outlined above). Rather, the Court’s judgment is better understood as requiring that national law be interpreted so far as possible to use pre-existing national remedies to achieve the effective protection of the 25 Case C-453/99 Courage v Crehan [2001] ECR I-6297; Joined Cases C-295 to 298/04 Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] ECR I-6619. 26 Case C-453/99 Courage (n 25) para 33. 27 See eg Langton v Hughes (1813) 1 M&S 593 and the general discussion in E Peel, Treitel. The Law of Contract, 11th edn (London, Sweet and Maxwell, 2003) ch 11. 28 G Mäsch, ‘Private Ansprüche bei Verletzung des europäischen Kartellverbots—“Courage” und die Folgen’ [2003] Europarecht 825; G Cumming, ‘Courage v Crehan’ (2002) 23 European Competition Law Review 199.

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relevant EU law right. And, in English law, there is a relatively straightforward way of achieving this by interpretation: using a traditional exception to the illegality bar, any legal provision which intends to protect a party or interest by rendering an arrangement illegal should not be permitted to damage that very interest to be protected through rendering it illegal. This notion can be found in statutes protecting certain forms of tenancy/lease and the cases dealing with their application.29 Thus, the impact was, it is submitted, far subtler than some have suggested,30 simply requiring a contextual application of the pre-existing rules on illegality, developing the common law by way of interpretation, in response to changing forces and circumstances. Indeed, this can straightforwardly be characterised as an application of the NLE principle of equivalence or non-discrimination. The relevance of this example for our purposes here is that the impetus for this interpretive development in English law was provided by the existence of a directly effective EU law right (here, under Article 101 TFEU) which required a remedy to be made available in national law to ensure its effective enforcement. However, if one were to take the view that the Court’s judgments in Crehan and Manfredi actually indicate the existence of a right to damages as a matter of EU law (rather than the application of national remedies to enforce an EU law right),31 then this is an even clearer illustration of the impact of EU law upon established doctrines of national private law—here, with regard to the availability of damages (and, indeed, other remedies such as a claim in restitution).32 A cognate situation arises under the provisions of the Commercial Agents Directive concerning remedies for termination of the agency relationship, and the UK’s implementation of those remedies provisions leading to difficult questions of the appropriate interpretation and application of those principles in national law.33 Under Articles 17–19 of the Directive, compensation for, or the indemnification of, the commercial agent on termination of the agency agreement were modelled respectively upon the positions under French and German law; however, detailed definition of what ‘compensation’ or ‘indemnification’ involve is not provided in the Directive. Although it is open under the UK regulations for the parties to an agency contract to choose the indemnification option, the default position is that compensation will be payable to the agent: the relevant 29

See eg Kiriri Cotton v Dewani [1960] AC 192. Eg Mäsch (n 28) and Cumming (n 28). And, further, that UK law was not capable of accommodating such a claim within national law as it then stood, whether by flexible interpretation of pre-existing national law or otherwise. 32 See eg Scott v Brown [1892] 2 QB 724. On the impact of EU law in the area of restitution and disavowal under EU law of much of the defence of ‘passing on’, see the recent (and controversial) judgments of the Court of Justice of the EU in Case C-398/09 Lady & Kid and others v Skatteministeriet, Judgment of 6 September 2011, and Case C-310/09 Ministre du Budget et al v Accor, Judgment of 15 September 2011, analysed by R Williams, ‘Lady & Kid A/S and others v Skatteministeriet and Ministre du Budget, des Comptes publics et de la Fonction publique v Accor SA: Unjust Enrichment and the Court of Justice, a Loss of National Competence and Principle?’ [2011] British Tax Review 631. 33 Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17. 30 31

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UK provision is Regulation 17(6) of the Commercial Agents (Council Directive) Regulations 1993,34 which provides simply that ‘the commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with his principal’. The UK courts have faced considerable difficulty in grappling with what ‘compensation’ encompasses in this novel situation for national law (see Lonsdale v Howard & Hallam Ltd for discussion),35 but the point here is that the primary EU law rules under the Directive concerning the commercial agency relationship also present difficult questions for national law concerning the remedies available to enforce those rights.

E. EU Harmonising Directive Covering Other Subject Matter, but  Having Clear Consequences for National Private Law Concerning the Directive’s Implementation (Enforcement, Remedies, Etc) Under the Services Directive,36 obligations are imposed concerning the provision of information by service providers (typically at the pre-contractual stage: see its Article 22, concerning information which must be provided as a matter of course to service recipients37 and that which must only be provided on request).38 There are various relevant points under this heading for our purposes here.39 First, under Article 22(4), while generally the information must be provided ‘in good time before the conclusion of the contract’, where there is no written 34

SI 1993/3053, as amended by SI 1998/2868. Lonsdale v Howard & Hallam Ltd [2007] UKHL 32, [2007] 1 WLR 2055. See, further below, text after n 103. 36 Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market [2006] OJ L376/36. On the Directive generally, see C Barnard, ‘Unravelling the Services Directive’ (2008) 45 Common Market Law Review 323. On some of the private law implications of the Directive, see M Schauer, ‘Contract Law of the Services Directive’ (2008) 4 European Review of Contract Law 1. 37 These information duties refer, essentially, to the identity of the provider and to the main features of the service contract. So, the provider has to inform the recipient about his name, his legal status and form and about his registration in a public register if there is any such registration. He also has to inform the recipient about the main features of the service contract, providing information about: the main features of the service, ‘if not already apparent from the context’; the price of the service, if it is predetermined by the provider for a given type of service; the general conditions and clauses; and any after-sales guarantee. 38 The examples of these include: details of the price, if it is not predetermined for a given type of service, or to the method of calculating the price, or a sufficiently detailed estimate; a reference to the professional rules if the activities performed by the providers are part of a regulated profession, or to codes of conduct to which the provider is subject. 39 Further potentially difficult questions arise from the fact that, with regard to information duties, the Directive is a minimum harmonisation measure, so that a Member State can go further in imposing additional information requirements upon service providers located on its territory. See Art 22(5). The implications for the service recipient’s position will be played out in the field of private international law: to take one example, the applicable law might turn out not to be that of the Member State where the service provider is established (leading to complications if the applicable law was of a system which had not imposed such extra information duties). See, further, Schauer (n 36) 10–11. 35

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contract then the information must only be made available before the service is provided. Thus, in the latter case, a recipient may need to fall back upon ordinary domestic contract law to protect his or her interests (eg in order to seek rescission for mistake; non-incorporation of non-notified clauses; contract void if no price or method for its calculation (although contrast German law, which would complete such a contract)).40 This would also raise questions concerning which is the applicable law under the contract. Second, one might wonder: do these requirements apply only to cross-border provision of services or also to domestic situations? The answer to this question has far-reaching implications for the impact of the Directive in national law generally (and for private law, given the information duties noted above). Arguments can be made either way. On the one hand, the goals of the Directive are: to remove of barriers to cross-border service provision (Recital 1); to facilitate freedom of establishment and freedom to provide services (Article 1(1)); and to ensure that providers and recipients of services benefit from those two freedoms.41 Such arguments would tend to favour the restriction of these provisions to cross-border situations only. Yet, on the other hand, the wording of the Directive in no way makes explicit that its provisions are to be restricted to crossborder service provision. No reference is made to the supplier and recipient of services being in different Member States (see Articles 2(1) and 4(2) and (3)); and one could argue that the point of encouraging these freedoms is to establish a competitive market in services in the EU (Recital 2): this requires a level playing field for competitors engaging in the same market, so that such duties should apply to domestic providers too. Third, with regard to remedies and enforcement, no specific requirements are laid down in the Directive, leaving it to Member States to ensure that the Directive is enforced. This could be achieved via regulatory enforcement (whether by some State regulator, such as the Office of Fair Trading (OFT) or similar, or by entities qualified to act to protect such interests, eg of service consumers). But it could also lead to remedies for private parties in contract law, eg rights to revoke the contract and, if loss is suffered, claim damages. This will depend upon specific domestic implementation and/or the underlying national private law rules (and whether they are found to apply to such information duties as laid down in the Services Directive).

40 See, generally, BS Markesinis, H Unberath, and A Johnston, The German Law of Contract: A Comparative Treatise, 2nd edn (Oxford, Hart Publishing, 2006) ch 3. 41 European Commission, Handbook on Implementation of the Services Directive (Luxembourg, Office for Official Publications of the European Communities), http://ec.europa.eu/internal_market/ services/docs/services-dir/guides/handbook_en.pdf, 6.

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F. EU ‘Soft law’ Instruments (eg Recommendations, Guidelines) with No More Than Persuasive (Interpretive) Value but which Impinge, Directly or Indirectly, Upon National Private Law Subject Matter So-called ‘soft law’ instruments, such as recommendations and guidelines, do not grant rights directly to individuals and typically have no more than persuasive (interpretive) value in EU law,42 yet their substance may in some cases impinge, directly or indirectly, upon national private law subject matter. Three particular areas provide excellent illustrations of the potential for such soft law instruments to influence developments in national private law, although there is insufficient space here to discuss these dynamics in detail.43

(i) EU Company Law44 Commission Recommendations have been adopted on both directors’ remuneration45 and directors and board committees.46 In the light of the recent financial crisis, in April 2009 the Commission adopted a further Recommendation complementing these two previous documents.47 The potential for such 42 Case 322/88 Grimaldi v Fonds des maladies professionelles [1989] ECR 4407: ‘[N]ational courts are bound to take … recommendations into consideration in order to decide disputes submitted to them, in particular where they are capable of casting light on the interpretation of other provisions of national or Community law’ (19). See, generally, L Senden, Soft Law in European Community Law (Oxford, Hart Publishing, 2004). 43 Although one might envisage that others will emerge. See eg, in the EU Energy Law field, the recommendations expected to emerge from the Agency for the Cooperation of Energy Regulators (ACER) may have a significant impact upon the contractual behaviour of various private parties in the energy field, particularly transmission system operators. See eg ACER, ‘Framework Guidelines on Capacity Allocation Mechanisms for the European Gas Transmission Network’, FG-2011-G-001, 3 August 2011. For discussion of the role of ACER, see A Johnston and G Block, ‘Energy’ in D Vaughan and A Robertson (eds), and P Eleftheriadis (managing ed), Law of the European Union (looseleaf) (Oxford, Oxford University Press, 2007 onwards, EU Energy Law section, 2012) s 13, esp paras 824ff. 44 I am grateful to Felix Steffek for his suggestions in this area. 45 Commission Recommendation of 14 December 2004 fostering an appropriate regime for the remuneration of directors of listed companies 2004/913/EC [2004] OJ L385/55. 46 Commission Recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board 2005/162/EC [2005] OJ L52/51. For its Report on Member States’ application of this Recommendation, see Commission Staff Working Document SEC(2007) 1021 final. Of the 21 Member States covered by the Report, it appears that most already apply the provisions of the Recommendation to a large extent while others are pursuing reforms to do so: see Annexes 1 and especially 2 to the Report. 47 Commission Recommendation complementing Recommendations 2004/913/EC and 2005/162/ EC as regards the regime for the remuneration of directors of listed companies C(2009) 3177, accompanied by Communication COM(2009) 211 final. Even more recently, reforms have been proposed to modify the Capital Requirements Directives (2006/48/EC and 2006/49/EC), including bringing the remuneration policies of credit institutions within the field of prudential supervision (in a ‘hard law’ sense). See Commission Press Release IP/09/1120 of 13 July 2009 and Proposal for a Directive of the European Parliament and the Council amending Directives 2006/48/EC and 2006/49/EC as regards capital requirements for the trading book and for resecuritisations, and the supervisory review of remuneration policies SEC(2009) 974 final and SEC(2009) 975 final.

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measures to influence national private law is significant, even if Member States are under no obligation to introduce the contents of such recommendations into national law.

(ii) EU Consumer Law48 A range of soft law instruments exists in the consumer law field. These concern: the arbitration of consumer disputes;49 Commission Recommendations on outof-court dispute settlements;50 and Council Resolution on an EC-wide network of bodies for extra-judicial resolution of consumer disputes.51 A recent study has shown that these measures have had a genuine impact upon the development of such mechanisms at national level in the EU, while acknowledging that gaps remain in awareness and use of the principles under these Recommendations.52

(iii) EU Securities Law53 Various Recommendations have been adopted by the Committee of European Securities Regulators (CESR)54 (under the so-called ‘Lamfalussy process’)55 and their influence on private parties’ practices (even if not necessarily being cited by the courts: according to a 2010 study, there have been two citations in Germany, none in the UK).56 There has been some inclusion by private parties of points drawn from these CESR Recommendations in their contracts inter se on a case-by-case basis; there is also the possibility that elements from such Recommendations may become relevant when seeking to determine on the facts whether or not there has been a fraud on the market, especially with regard to information disclosure by issuers of securities (yet not, it seems, affecting the definition of ‘fraud’ itself).57 48

I am grateful to Maud Piers for her suggestions in this area. Discussed, both generally and in the Belgian context, by M Piers, ‘How EU Law Affects Arbitration and the Treatment of Consumer Disputes’ (2004–05) 59 Dispute Resolution Journal 77. 50 Commission Recommendation on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes 98/257/EC [1998] OJ L115/31, and Commission Recommendation on the principles for out-of-court bodies involved in the consensual resolution of consumer disputes 2001/310/EC [2001] OJ L109/56. 51 Council Resolution of 25 May 2000 on a Community-wide network of national bodies for the extra-judicial settlement of consumer disputes [2000] OJ C155/1. 52 F Alleweldt et al, Study on the Use of Alternative Dispute Resolution in the European Union (Civic Consulting et al, for DG SANCO, 2009), http://ec.europa.eu/consumers/redress_cons/adr_ study.pdf, esp 120ff. 53 I am grateful to Jan Hupka for his suggestions in this area. 54 Since replaced by the European Securities and Markets Authority, on which see www.esma. europa.eu. 55 Launched in March 2001. See Commission, Final Report of the Committee of Wise Men on the Regulation of European Securities Markets, 15 February 2001. 56 J Hupka, ‘Neue Rechtsquellen im europäischen Kapitalmarktrecht und ihre Behandlung durch nationale Gerichte’ in C Busch, C Kopp, M-R McGuire and M Zimmermann (eds), Europäische Methodik: Konvergenz und Diskrepanz europäischen und nationalen Privatrechts: Osnabrücker Tagung 2–5 September 2009. Jahrbuch Junger Zivilrechtswissenschaftler 2009 (Stuttgart, Boorberg, 2010) 291–315. 57 Ibid. 49

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G. EU Law Requirements Causing Change/Adaptation in National Law (eg Via National Legal Environment Case Law), which then has Consequences for National Law Outside the EU Law Field Due to National (Constitutional) Law Principles of Equivalence/Non-Discrimination There have been references made by national courts to the Court of Justice under Article 267 TFEU (ex Article 234 EC) involving apparently ‘internal situations’ with no EU law connection, yet in which EU law is relevant because national constitutional law requires equal treatment of like situations. The national court needs to ensure that the treatment of its own nationals is not less favourable than the treatment that would be accorded to a national of another Member State as a result of the application of EU law.58 Thus, the EU law answer to an ostensibly hypothetical EU law question (‘If this claimant/product were to originate in another Member State, what would EU law require?’) is crucial to a national court’s answer to a genuine and practical question falling squarely within national law, because of the comparability of the situation of the present claimant with that of a hypothetical ‘EU law claimant’. From a parochial perspective, it is notable that the UK does not have such an explicit national constitutional requirement or principle, although one could argue that, by virtue of the House of Lords’ judgment in the so-called Belmarsh case (named after the prison where the applicant was held), the UK does now have something akin to such a requirement, albeit only insofar as the applicant/claimant is a ‘victim’ of a human rights violation within the meaning of the European Convention for the protection of Human Rights and Fundamental Freedoms.59 Examples of this phenomenon would seem to include, in the field of free movement of goods, TK-Heimdienst:60 the case concerned trade restrictive rules preventing itinerant grocery sales in one Austrian administrative district unless the trader was established in that district. These rules were applied to a trader established in another Austrian administrative district, which was a situation comparable with, for example, a trader established over the border in Germany, Italy, Slovakia, Hungary or the Czech Republic. In competition law, meanwhile, the Bronner case may provide an illustration: Bronner had applied to be given access to Mediaprint’s distribution system but Mediaprint refused to agree to

58 On this phenomenon, see the case note by E Spaventa on Case C-254/98 Schutzverband gegen unlauteren Wettbewerb v TK-Heimdienst Sass GmbH [2000] ECR I-151 in (2000) 37 Common Market Law Review 1265. 59 A v Secretary of State for the Home Department [2005] 2 AC 68 (‘the Belmarsh case’). In the Belmarsh case, it was held that to discriminate between UK nationals and others in the use of detention without trial under national anti-terrorism legislation would amount to a disproportionate restriction upon human rights, since there was no rationale for drawing such a distinction. As cynics may have surmised, the UK response to this judgment was to make such detention possible for UK nationals as well, thus ending the discrimination. 60 Case C-254/98 TK-Heimdienst (n 58).

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this.61 Had Bronner been a German claimant, then EU competition law would have applied. Had those rules required that such access be given to Bronner, then in such circumstances, even if Austrian competition law had not been in the same terms as the EU rules, the application of a constitutional equality clause in Austria would have required that similar treatment be accorded to an Austrian claimant in the same situation as Bronner. The Court of Justice has explicitly recognised this reasoning in the SADC case: 28. At the outset, it must be mentioned that the Italian Government submits that that question is inadmissible since the activities in question in the main proceedings are confined in all respects within a single Member State. 29. In that regard, it should be pointed out that a reply might none the less be useful to the national court in particular if its national law were to require, in proceedings such as those in this case, that an Italian national must be allowed to enjoy the same rights as those which a national of another Member State would derive from Community law in the same situation (see [the] order in Case C-250/03 Mauri [2005] ECR I-1267, paragraph 21).62

Clearly, the same type of impact could occur by virtue of the operation of one part of the Court’s case law on the NLE:63 the ‘practical (im)possibility’/‘effectiveness’ criterion.64 If, through this criterion, national law procedures/remedies are found inadequate to secure the enforcement of EU law rights, then it seems that national courts have a duty to fashion an alternative, EU law-compliant (set of) rule(s). Having done so, national courts may then have to face the argument that this outcome would provide better procedures/remedies for the enforcement of EU law rights than for comparable rights under national law. The Court’s recent Uniplex judgment,65 concerning the UK’s implementation of the EU’s Public Procurement Remedies Directive,66 provides an illustration of how this process might work in the future. Article 1(1) of the Directive requires Member States to adopt the necessary measures to ensure that decisions taken by contracting authorities under the procurement rules may be reviewed effectively and as rapidly as possible. It does not contain any provisions setting out specific time-limits, leaving this to be dealt with at a national level. The UK’s implementing rules, the Public Contracts Regulations 2006,67 provide that: 61 Case C-7/97 Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs- unde Zeitschriftenverlag GmbH & Co KG [1998] ECR I-7791. It could be argued that the case better reflects a kind of renvoi or conscious parallelism by the Austrian legislator (see below, s III(B)). Again, this shows that there may be overlaps between the categories developed here. 62 Case C-451/03 Servizi Ausiliari Dottori Commercialisti Srl v Calafiori [2006] ECR I-2941. 63 The ‘equivalence’/‘non-discrimination’ principle from that case law has the opposite effect, relying as it does upon pre-existing comparable national law as the basis for the provision of an equivalent procedure/remedy for the enforcement of EU law rights. 64 See above, Section II.D. 65 Case C-406/08 Uniplex (UK) Ltd v NHS Business Services Authority [2010] ECR I-817. 66 Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts [1989] OJ L 395/33 (‘Remedies Directive’). 67 Public Contracts Regulations 2006, SI 2006, No 5.

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Regulation 47(7)(b) … [p]roceedings must be brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose, unless the Court considers that there is good reason for extending the period within which proceedings may be brought.

Regulation 47(7)(b) mirrors the time-limit for commencing judicial review proceedings, in rule 54.5 of the Civil Procedure Rules (CPR),68 subject to CPR 3.1(2)(a), which gives the Court discretion to extend time if there is good reason for doing so. The Court of Justice held, first, that the time limit for commencing such proceedings could only start to run when the applicant knew or ought to have known of the breach of the procurement rules (rather than from the date of the breach itself).69 Second, the Court of Justice was concerned that the Regulation 47(7)(b) created uncertainty because it seemed possible for an application to be rejected within the three-month period if not brought ‘promptly’. Insofar as the UK rules gave a domestic court the discretion to dismiss a case within that period for lack of promptness, the Court concluded that the UK had failed to properly implement the Remedies Directive. Third, and consistently with the first finding, the national court’s discretion under Regulation 47(7)(b) had to be exercised to allow an applicant to make its claim beyond the three-month limit where that was necessary to ensure that an applicant acquiring knowledge much later benefited from an equivalent limitation period. The relevance of the Uniplex judgment here is that the national rules for bringing an ordinary domestic application for judicial review are in terms essentially identical to those under the UK’s regulations implementing the Remedies Directive. While the accommodation of the Court’s judgment in UK procurement law will be relatively straightforward (partly by a small change to the Regulations to be adopted by the relevant UK minister under secondary legislation, and by partly by the exercise of the judicial discretion provided for in those regulations),70 the potential impact further afield is less straightforward. Thus, both the issue of the legality three-month time limit itself and the treatment of the ‘promptness’ requirement have implications for ordinary judicial review, at the very least because such cases may involve fundamental rights questions (thus raising discrimination questions under the Belmarsh case and more general questions about access to justice). More generally, the resulting situation may well raise questions of consistency: for example, the UK may choose 68 For access to the most recent updated version, see www.justice.gov.uk/guidance/ courts-and-tribunals/courts/procedure-rules/civil. 69 This was vital to Uniplex, since it had not received a ‘debriefing’ letter from the NHS Business Services Authority until three weeks after it had been informed that its tender had not been accepted and only after it had requested such reasons for the decision. This time difference took Uniplex’s application outside the three-month period from the original decision, yet would have placed it within three months from receipt of the debriefing letter. 70 One might note, however, that other countries may have more difficulties in accommodating the consequences of the judgment, given that many (perhaps most?) EU Member States’ systems might not contain such provisions allowing for the exercise of judicial discretion.

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to respond to the judgment simply by making minor amendments to the implementing Regulations, leaving the courts to grapple with whether the logic of the Court’s judgment in Uniplex should also be applied to ordinary applications for judicial review. This might shift the relevance of knowledge of the grounds for an application from consideration under CPR 3.1(2)(a) (concerning discretionary extension of the time period) to CPR 54.5 (concerning the point from which the time limit starts to run). In practice, the main legal result might be simply that a straightforward three-month time limit might come to apply in future, while in practice such legal shifts may cause public decision-makers to issue reasons for their decisions alongside communicating the results of the formal decisions themselves. This would circumvent the time limit extension problems, but might also impose significant extra costs on some public decision-making bodies. The Uniplex case is a complex example which applies in a mainly public law field. Yet it illustrates nicely the subtle and often difficult implications for national law of EU law rules and principles, combining as it does a harmonising Directive, the application of a judgment of the Court of Justice of the EU, including its NLE case law, and the impact upon areas of national law both directly affected by the EU rule per se and indirectly having to react to the presence of those EU rules within the national legal system more generally.

III. Typology/Taxonomy II: Creation of ‘Spillover’-type Situations Uniplex provides a nice bridge from the identification of those situations where EU law has an impact upon national law and a consideration of which of those situations amount to ‘spillovers’ of EU law into national law (although, of course, our focus here concerns national private law in particular).71 In the tentative classification which follows, I would suggest that the impact of Uniplex upon UK procurement law contains elements of: • the direct impact of EU law (ie the proper interpretation of the Remedies Directive with regard to the ‘knowledge’ question); • ‘pseudo-spillover’ from EU law (ie interpretation of national provisions to 71 Other kinds of spillover could also be envisaged: for example, imagine that a trader in one Member State wishes to sell its produce to a retailer in a second Member State, and that retailer insists that those goods comply with the domestic standards laid down in that second Member State. Where that second Member State’s rules go beyond the minimum standards laid down by EU legislation, then a decision by the trader in the first Member State to produce its goods to the standards required by the second Member State could be viewed as a type of ‘spillover by contract’. The effect is to extend the practical scope of that second Member State’s rules to cover activities undertaken in the first Member State (albeit for the purpose of supplying that second Member State’s market demand). No doubt, this scenario is a very common phenomenon in practice across a range of economic sectors.

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secure effective enforcement of the rights laid down in the Remedies Directive); and • ‘real’ spillover effects from EU law into national law (by virtue of the questions of equivalence and consistency raised for national law on judicial review more generally). As will become clear from the ensuing discussion, the key distinguishing feature of a true or ‘real’ spillover is that the influence of EU law is exercised, not directly by virtue of its own claim to normative force, but rather in a more indirect fashion by virtue of its presence within the national legal order. It is this presence which may force national law to react and/or adapt to EU law, or it may encourage actors within the national legal system to adopt EU law ideas, concepts or principles in areas of pure national law (whether via interpretive evolution or express extension).

A. ‘Pseudo-Spillovers’ Why is this first category styled only as ‘pseudo-spillovers’? Because, in fact, these are situations where EU law claims to have an impact directly upon national private law by virtue of the normative force of its own rules and principles,72 rather than having an impact or influence by virtue of the presence of its rules/ principles alongside others in the national legal order. Such situations may appear to be a spillover effect due to the absence of express EU law provisions claiming to cover a particular subject matter or activity, but the nature of the impact of EU law in such cases is because broader, general EU law principles are combined with express provisions to create EU law’s impact. Examples which fall into this category are the Court’s case law on national procedures and remedies (ie the NLE), which has been referred to above.73 Similarly, the Court’s development of Member State liability for sufficiently serious breaches of EU law (under cases such as Francovich and Brasserie du Pêcheur/ Factortame (No 3)) may also be classified under this heading, such liability

72 This chapter does not propose to involve itself in the ongoing debate concerning the theoretical basis of claims to the supremacy of EU law, nor the related sovereignty and legal pluralism discussion, nor rights-based analyses of the scope and persuasiveness of doctrines of direct effect, indirect effect and the EU case law on national remedies and procedures. Rather, their currently asserted legal implications of these lines of case law (and the ways in which national courts have applied them) are taken as given and then used in the analysis of the impact of EU law and its classification. 73 Furthermore, it should be noted that the most expansive line of case law under this heading has had a tendency, over time, to become incorporated by the EU legislature in later amendments and consolidations of the Directives to which such procedures and remedies have become attached. Thus, Art 6 of Directive 76/207 (n 16) finds its analogous provision in the new Arts 17 and 18 of Directive 2006/54/EC (n 16), albeit that the new text contains significantly more far-reaching obligations on Member States. These new provisions essentially codify the case law of the Court of Justice of the EU on national procedures and remedies under the 1976 Directive (from Case 14/83 Von Colson (n 16) onwards) as part of the new legislative framework.

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arising by virtue of principles said to be inherent in the structure of the Treaties and the goals of the EU.74

B. ‘Real’ Spillovers Before embarking upon a more detailed examination of the true targets of this paper, there are two preliminary points which should be borne in mind. First, it is possible that the operation of EU law’s impact under the ‘pseudo’ category could lead to ‘real’ spillovers. For example, the Uniplex case (discussed above) illustrates how the application of the case law on national procedures and remedies (a pseudo-spillover effect) might generate a situation in which genuine spillovers will be involved (in the form of the consistent and coherent future application of the ‘offending’ national law provision to purely national law situations). Second, it is also possible that there could be a cumulation of these ‘real’ spillover effects in national private law or that there will overlaps between these categories, where one could explain the national law measure/rule in terms of more than one type of spillover, depending upon which of the salient points of any given example the reader might choose to place the stronger emphasis.

(i) Issues Raised Concerning the Coherence/Consistency of Interpretation/ Application of Law as between EU and Purely Domestic Law Questions (ie Juxtaposition) There are various examples in which the application of EU law within the national legal order may create questions of consistency and coherence with the rules of national law which must exist alongside those EU law rules. Indeed, the cases discussed under Section II.G above provide one strong series of examples of just this phenomenon, utilising national constitutional equality provisions both to highlight the relevant incoherence and to provide a legal mechanism to address the inconsistency generated by the presence of the EU law requirement within the national legal order. Another illustration is provided by the possible impact of Article 3 of the Consumer Sales and Guarantees Directive (CSGD) upon the provisions of German law concerning the interpretation of what it would be ‘unreasonable’ to require of the seller in terms of extent of outlay to secure performance of a contract of sale of a specific thing.75 Under Article 3(2) CSGD, with regard to non-conforming goods, ‘the consumer may require the seller to repair the goods or he may require the seller to replace them, in either case free of charge, unless this is impossible or disproportionate’; ‘disproportionate’ in this context means that the costs imposed on the seller are, in comparison with the alternative 74 Joined Cases 6/90 and 9/90 Francovich and Bonifaci v Italy [1991] ECR I-5357 and Joined Cases C-46 and 48/93 Brasserie de Pêcheur v Germany and R v Secretary of State for Transport ex parte Factortame (No 3) [1996] ECR I-1029, respectively. 75 See Markesinis, Unberath and Johnston (n 40) ch 9, 413–18.

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remedy, ‘unreasonable’. How much can the seller be required to expend before that cost becomes unreasonable? The answer to this question is in its own terms not necessarily straightforward, but when it must also be juxtaposed with the position under associated provisions of national law then the answer given to the interpretation of Article 3(2) has repercussions for the consistent application of national private law more broadly. In this instance, if the contract price forms the ceiling of what can ‘reasonably’ be required of the seller in a case involving non-conforming goods, then under the German law of impossibility of performance (which applies at the earlier stage of whether performance is required in the first place) it would make sense to adopt a similar ceiling on such seller’s costs.76 Equally, if the contract price does not act as a ceiling for non-conforming goods, then it would be inconsistent to allow the seller to escape the initial obligation of performance on less stringent, impossibility-related grounds.77 This shows that the interpretation of an apparently minor element of the CGSD may have far-reaching consequences for the German system of remedies for irregularities of performance, even though that Directive clearly did not itself target those other areas of national contract law. Given their careful, interlocking design, code-based systems of national private law are, perhaps, most clearly susceptible to this kind of coherence-based reasoning, although there is no reason in principle why similar dissonances might not both be identified and addressed under a common law system of private law. This point is further demonstrated by considering the potential impact of the wording of Article 3(2) of the UCPD, which provides that: ‘This Directive is without prejudice to contract law and, in particular, to the rules on the validity, formation or effect of a contract.’ This formulation does not prevent the possibility of friction between adjacent areas and possible interactions between UCPD provisions and underlying domestic laws. We can consider two possible examples. First, there is the question of whether the provisions of the UCPD will feed into the construction of contracts when analysed under the general law of contract, even in the absence of specific private law actions by which individual consumers could enforce those rules. Will this only occur, if at all, in a de facto fashion, in that the fear or the result of regulatory enforcement will lead to such practices being avoided in future? Or is there greater potential for a de jure spillover via the judicial implication and/or construction of contract terms in the light of such prohibitions? Insofar as national systems would in any case imply that appropriate standards of ‘professional diligence’ would be part of the contract terms (Articles 2(h) and 5(a) UCPD),78 it may be that references to the 76 See eg U Huber, ‘Die Schadenersatzhaftung des § 275 Abs 2 BGB neuer Fassung’ in I Schwenzer and G Hager (eds), Festschrift für Peter Schlechtriem zum 70 Geburtstag (Mohr Siebeck, Tübingen, 2003) 521, 545. 77 See eg C-W Canaris, ‘Die Behandlung nicht zu vertretender Leistungshindernisse nach § 275 II Abs 2 BGB beim Stückkauf ’ [2004] Juristen Zeitung 214, 217. 78 A ‘standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, commensurate with honest market practice and/or the general principle of good faith in the trader’s field of activity.’

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UCPD will be at best of a confirmatory nature, but the point is worth bearing in mind. As for the second example, one might envisage definitional overlaps and interactions between the UCPD and pre-existing national law rules: if particular behaviour by a business amounted to an aggressive or coercive practice according to the UCPD, would that raise questions about whether it might be said to amount to duress or undue influence in, for example, English contract law? This suggestion might be thought far-fetched, given the relatively restrictive doctrine of duress in English law,79 but in the absence of specific rights for private parties to enforce the provisions of the UCPD it is not inconceivable that such a suggestion might be made by an aggrieved consumer seeking some kind of remedy in an English court.

(ii) Explicit Renvoi Techniques Employed by National Law (Typically in National Primary or Secondary Legislation, Although One Could Envisage Such a Development via Judicial Action) for the Interpretation/ Application of Domestic Law, where that Domestic Law Is Based Upon, or Parallel to, EU Law One method for effecting such renvoi involves the conscious use or copying of terms of art from EU law into national law, such as the use by the UK’s Civil Aviation Authority of the term ‘package’ from the Package Travel Directive in its own bonding scheme for travel agents selling flights. Under the Package Travel Directive, the scope of the term ‘package’ is significant in defining the scope of application of the measure’s provisions. In Club-Tour80 the Court of Justice of the European Union held that the term ‘package’ used in Article 2(1) of the Directive must be interpreted as including holidays organised by a travel agency at the request and according to the specifications of a consumer or a defined group of consumers.81 Further, the term ‘pre-arranged combination’ of tourist services was interpreted by the Court so as to include combinations put together at the time when the contract is concluded between the travel agency and the consumer.82 The Court followed the Opinion of Advocate General Tizzano, who, inter alia, had invoked a pro-consumer rule of interpretation: where there was doubt as to the correct interpretation of the Directive, that interpretation ought to prevail which ensured that ‘the consumer has the broadest protection possible’.83 The extensive reading of the term ‘pre-arranged’ to include combinations of services put together in a travel agency at the request of the consumer means that such travel agencies have to take out insurance to cover the risk of insolvency, as required under Article 7 of the Directive. In the English case of The Queen (on the application of The Association of 79

See, generally, Peel (n 27) paras 10-002–10-011. Case C-400/00 Club-Tour, Viagens e Turismo SA v Alberto Carlos Lobo Gonçalves Garrido [2002] ECR I-4051. 81 Ibid, para 16. 82 Ibid, para 20. 83 Ibid, Opinion of AG Tizzano, para 21. 80

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British Travel Agents Ltd) (ABTA) v Civil Aviation Authority (CAA), The Secretary of State for Trade and Industry84 the courts had to address the interpretation of the Package Travel Directive. This was mainly due to the fact the UK’s regime for issuing Air Travel Organisers’ Licences (ATOLs)85 was amended in 2003 to include a definition of ‘package’ which was intended to align with that drawn from the Package Travel Directive and used in the UK’s rules implementing that Directive.86 Indeed, the very motivation for aligning the two regimes was to prevent travel agents from evading the indemnity provisions (which would apply under both the 1992 Regulations and the 1995 ATOL Regulations) by various devices relating to splitting or unbundling the contracts relating to different aspects of a holiday. This provides a fascinating illustration of the spillover effects that originate from an EU directive but which may encourage the (re)alignment of purely national rules to ensure coherence with the national implementation of the EU rules.87 The Court of Appeal in the ABTA case cited extensively from the Court of Justice’s judgment in Club-Tour and pointed out that there was nothing in the UK’s implementing regulations to prevent UK courts from following the expansive approach taken in Club-Tour:88 regulation 2(1)(c)(ii) of the 1992 Regulations specifically provides that ‘the fact that a combination is arranged at the request of the consumer and in accordance with his specific instructions  … shall not of itself cause it to be treated as other than pre-arranged’, and while this did not imply that such requests will always lead to pre-arrangement, it is clear that this does not prevent the Regulations from being applied in accordance with Club-Tour.89 In the UK, the careful formulation of the reformed competition law regime provides a strong, broad illustration of this approach, both in general in the structure of the competition rules (essentially copying wording and concepts directly from Articles 101 and 102 TFEU into the prohibitions laid down in Chapters I and II (respectively) of the Competition Act 1998 (CA 1998)) and in the use of a dedicated renvoi clause in section 60 of the 1998 Act (the ‘governing principles clause’).90 In essence, section 60 seeks to ensure that, so far as possible and taking into account any relevant differences, the interpretation and appli-

84 The Queen (on the application of The Association of British Travel Agents Ltd) (ABTA) v Civil Aviation Authority (CAA), The Secretary of State for Trade and Industry [2006] EWHC 13 (QB (Admin)) [2006] ACD 49; overturned by the Court of Appeal in R (on the application of ABTA) v Civil Aviation Authority [2006] EWCA Civ 1299 (‘the ABTA case’). 85 The Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995, SI 1995, no 1054. 86 The Package Travel, Package Holidays and Package Tours Regulations 1992, SI 1992, no 3288. 87 On this, see further, A Johnston and H Unberath, ‘Law At, To or From the Centre? The European Court of Justice and the Harmonisation of Private Law in the European Union’ in F Cafaggi (ed), The Europeanization of Private Law. Collected Courses of the Academy of European Law (Oxford University Press, Oxford, 2006) ch 5. 88 ABTA (n 84) para 20, per Chadwick LJ. 89 Compare, however, DTI, The Package Travel Regulations—Question and Answer Guidance for Organisers and Retailers (November 2006; available at www.dti.gov.uk/files/file35634.pdf) Question 5. 90 For discussion, see generally PJ Slot and A Johnston, An Introduction to Competition Law (Oxford, Hart Publishing, 2006).

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cation of UK competition law follows the same approach as that taken under EU competition law. Various other cases which have reached the Court of Justice of the EU via the Article 267 TFEU procedure have involved similar questions.91 Yet it should be pointed out that, in closely interconnected areas of law, the use of the renvoi technique may also bring with it rather more unexpected questions of interpretation. The example used here may well be a scenario which is a hybrid of the ‘juxtaposition’ and ‘renvoi’ types: for it, we return to the operation of section 60 of the UK’s CA 1998 and the relationship between competition law and the common law, specifically covenants in restraint of trade. To provide the context, we must note that it is possible that cartels and other anti-competitive collusive practices with a European dimension may find themselves subject to investigation by both the Commission and the OFT simultaneously. In such a situation, conflicts may arise between these authorities’ competences to apply competition law. According to the Court, such a conflict must be resolved by reference to the rule that the Community law competence takes priority. This principle has now been enshrined in Article 3(2) of Regulation 1/2003/EC.92 On the basis of its Article 3(1), when applying the UK’s CA 1998 Chapter I prohibition to agreements, concerted practices and decisions of trade associations that affect trade between Member States, the OFT and the UK courts (including the Competition Appeal Tribunal) are obliged to apply Article 101 TFEU (ex Article 81 EC) as well. This may not lead to a UK-level decision or judgment that prohibits an agreement which does not breach Article 101(1) TFEU or which can be accepted on the basis of Article 81(3) TFEU. Similarly, agreements that satisfy the criteria laid down by the various EU block exemption regulations cannot be prohibited at UK level. The starting point for this priority rule is clear, but its application in practice can sometimes be trickier. The differences between UK and EU competition law in this area are, in practice, usually of no real importance. The substantive norms involved are essentially the same. The national courts will always have jurisdiction in such cases and the OFT is usually competent to deal with such anti-competitive practices. Nevertheless, there are situations in which the division of competences does matter. For example, there are subtle differences between the EC and UK systems concerning exemptions from the prohibition on anti-competitive agreements, alongside the possibility of criminal law sanctions for breach of the UK provisions in the form of the cartel offence under sections 188–91 of the Enterprise Act 2002.93 91 See eg Joined Cases C-297/88 and 197/89 Dzodzi v Belgium [1990] ECR I-3763, Case C-28/95 Leur-Bloem v Inspecteur der Belastingdienst/Onder-nemingen Amsterdam 2 [1997] ECR I-4161, and the discussion (and criticism) by S Lefèvre, ‘The Interpretation of Community Law by the Court of Justice in Areas of National Competence’ (2004) 29 European Law Review 501. 92 Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty [2003] OJ L1/1 (‘Regulation 1/2003/ EC’). 93 See, further, Slot and Johnston (n 90) 230–34 and the references cited therein.

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To these differences, one should add the parallel existence of the common law doctrine that has long permitted the courts to intervene to declare void any contract or covenant that operates in restraint of trade.94 This raises an important definitional question of whether or not the common law in this area counts as national ‘competition law’ for the purposes of Regulation 1/2003/EC. This is a further potential illustration of the impact that the application and enforcement of primary EU Treaty rules (as implemented by EU regulations) may have upon the application of long-established national private law rules. This question of the interface between restrictive covenants and EU competition law95 was considered in the Days Medical case,96 although only obiter as the facts which led to the litigation arose before the entry into force of the relevant EU Regulation. The court in Days Medical took the view that the common law rules could not be applied to invalidate a restrictive contract or covenant where that agreement fell within the scope of what was then Article 81 EC (now Article 101 TFEU) but was not prohibited by it, either because it fell within a relevant exemption therefrom or else was not found to have an anti-competitive effect.97 However, the story does not end there. The provisions of Regulation 1/2003/ EC may have a further influence upon national law when we consider the interpretation of the relationship between national competition law and restrictive covenants. Under section 60 CA 1998, the UK authorities and courts are required to interpret national competition law consistently with the EU provisions unless there are relevant differences between the two systems.98 This provision intends to secure the consistent application of the substance of the UK rules, in line with the EU competition law provisions: in this manner, the compliance burden imposed upon undertakings should be reduced, since any uncertainty as to whether particular conduct falls under EU or UK competition law should not produce any change in the substance of the applicable competition law provisions. True, there is a marked absence of any UK law equivalent of the exclusionary rule in Article 3(2) of Regulation 1/2003/EC, which might suggest that no similar 94 On which see, generally, JD Heydon, The Restraint of Trade Doctrine, 3rd edn (Sydney, LexisNexisButterworths, 2009); M Trebilcock, The Common Law of Restraint of Trade: A Legal and Economic Analysis (Toronto, Carswell, 1986); RP Whish, Competition Law, 3rd edn (London, Butterworths, 993) ch 2; Peel (n 27) paras 11-062–11-109; and C Goodwill, A Kammerling and C Osman, Restrictive Covenants under Common and Competition Law, 6th edn (London, Sweet and Maxwell, 2010). 95 MC Lucey, ‘Unforeseen Consequences of Article 3 of EU Regulation 1/2003’ (2006) 27 European Competition Law Review 558. 96 Days Medical Ltd v Pihsiang Machinery Co Ltd [2004] EWHC 44 (Comm), [2004] 1 All ER (Comm) 991. 97 See Peel (n 27) paras 11-062ff on covenants, English law and its relationship with EU and UK competition law. 98 See s 60(1) CA 1998: ‘The purpose of this section is to ensure that so far as is possible (having regard to any relevant differences between the provisions concerned) questions arising under this Part in relation to competition within the United Kingdom are dealt with in a manner which is consistent with the treatment of corresponding questions arising in Community law in relation to competition within the Community.’ On this, see Slot and Johnston (n 90) 32–35 and the references cited therein.

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exclusionary effect should be found under national competition law—ie the fact that a particular practice falls within the scope of the rules of the CA 1998 should not preclude the possibility that other, stricter national law could claim to cover the same practice. However, any approach to this question must, it is submitted, also consider the reliance by UK competition law under the CA 1998 upon the ‘parallel exemption’ regime under its own Chapter I prohibition.99 This regime is one of the more ingenious and practically significant devices introduced by the CA 1998, providing a mechanism which allows UK law to take advantage of the substance of EU block exemption regulations even in situations falling wholly under UK law. Under section 10 CA 1998, a so-called ‘parallel exemption’ (section 10(3) CA 1998) from the application of the UK competition rules is afforded to undertakings by allowing any agreement that benefits from an EC block exemption regulation also to rely upon its substance to be exempted from the Chapter I prohibition under UK law (namely where it does not have an effect upon trade between Member States). Following the recent reforms to the UK regime for vertical agreements,100 section 10 CA 1998 assumes even greater importance, allowing undertakings to rely upon important block exemption regulations concerning vertical restraints (Regulation 2790/1999/EC) and technology transfer agreements (Regulation 772/2004/EC). This regime may have consequences for the interpretation of the relationship between the UK’s CA 1998 and the established law on restrictive covenants: if the restrictive covenants rules were still applicable to an agreement that could benefit from the parallel application of, say, the block exemption Regulation for vertical agreements, then this would undermine the clear objective of the UK regime to secure substantively identical results under UK and EU competition law, thus easing the compliance burden for undertakings. It is thus submitted that it is arguable that in these circumstances, it would not be inappropriate to apply a version of the exclusionary rule laid down by Regulation 1/2003/EC so as to prevent the application of the common law on restrictive covenants where that would render void an agreement that would otherwise have been acceptable under the parallel exemption regime. In this way, the existence of the exclusionary principle in EU competition law has an impact upon the proper interpretation of the national UK competition law regime, and upon the relationship between that national regime and pre-existing rules of national private law. In the terms adopted in this paper, this result is achieved by a combination of the renvoi-type of spillover with a version of the juxtaposition type. Typically, the general idea here is to ensure consistency of interpretation and application by national courts and authorities of provisions which are essentially identical in nature (EU and national law). From the Court’s perspective, this is important to avoid later divergences in the interpretation and application of EU law. For example, if a national system were to develop its own interpreta99 100

See Slot and Johnston (n 90) 65–66. On which see ibid, 97–100.

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tion of an EU law concept but in the context of purely national law provisions and proceedings, then it would be highly likely to apply the same interpretation to the application of EU law, as and when the latter issue arose.101 This could lead to fragmentation in the application of EU law. From the national system’s perspective, meanwhile, such co-ordinated interpretation is desirable to ease the regulatory and compliance burdens on those parties enforcing and/or subject to these prima facie identical rules. At the same time, it should be emphasised that such spillovers will not necessarily cause different national legal rules and principles within an otherwise harmonised field to coalesce, let alone secure a coherent framework of private law at the domestic level.102 For example, compare the results reached in the English and French case law on ‘compensation’ for commercial agents on termination of the agency relationship. The UK’s implementation of the remedies provisions of the Commercial Agents Directive may provide an example of renvoi under this heading, albeit one that uses terms included in an EU Directive even though that Directive itself does not define or specify them. Thus the actual reference made by the UK rules might better be seen as a de facto reliance upon the national systems from which the two concepts of compensation (France) and indemnification (Germany) in the agency field were drawn. Under those circumstances, the relevant spillover effect is derived from the national system whose provisions inspired the formulation adopted in the Directive, before being transmitted into the legal systems of other Member States by the medium of the Directive itself. The UK case law up to Lonsdale v Howard & Hallam Ltd103 could easily be read in this light, with some courts104 drawing directly upon the French practice in their attempt to determine what ‘compensation’ should cover in this context. The appellate judges in Lonsdale, however, took their own distinctive domestic approach to the question (perhaps surprisingly without pursuing a reference to the Court of Justice on the question).105 In the Court of Appeal, Moore-Bick LJ (with whose judgment the other members of the court concurred) was careful to start the analysis by ascertaining the precise nature of the damage that the agent suffers on termination of the agency relationship. The identifiable loss is said to be ‘the loss of the agency business and goodwill that the agent would have 101 The Art 267 TFEU case law is replete with references to this overriding concern. See eg Case 66/80 International Chemical Corporation v Amministrazione delle Finanze dello Stato [1981] ECR 1191 and Case 314/85 Firma Foto-Frost v Hauptzollamt Lübeck-Ost [1987] ECR 4199. 102 On this topic, see J Smits, ‘The Complexity of Transnational Law: Coherence and Fragmentation of Private Law’, TICOM Working Paper 2010/01, available at http://ssrn.com/abstract=1538187. 103 Lonsdale v Howard & Hallam Ltd, Court of Appeal: [2006] EWCA Civ 63, [2006] 1 WLR 1281, [2006] ICR 584; House of Lords: [2007] UKHL 32, [2007] 1 WLR 2055. 104 See King v T Tunnock Ltd, 2000 SC 424; although it should be noted that other courts preferred to examine all the circumstances in an attempt to make a ‘fair and proportionate award’: Tigana Ltd v Decoro Ltd [2003] Eu LR 189. 105 Or perhaps not: Case C-456/04 Honyvem Informazioni Commerciali Srl v Mariella De Zotti [2006] ECR I-02879 afforded some discretion to Member States concerning the method for calculating compensation in this context; see, further, Lord Hoffmann’s judgment in the House of Lords in Lonsdale (n 103) paras 16–20.

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enjoyed had [that] relationship not come to an end; damages should accordingly reflect the value of this business at the date of termination’.106 This method was preferred to that adopted in the French practice, because the French approach failed to make any ‘reasoned attempt to ascertain the true extent of the agent’s loss’.107 In the House of Lords, Lord Hoffmann (with whom the rest of their Lordships concurred) delivered a speech in which the Court of Appeal’s judgment was upheld and in which further detailed guidance was given on the assessment of such agent compensation on termination of the agency (the minutiae of which need not concern us here). The firm approach taken by the House of Lords here in developing a distinctively domestic approach108 to this question ensures that the practical results for agents in different Member States may well differ significantly.109

(iii) Extension (Again, Typically via Primary/Secondary National Legislation, Although Not Necessarily Limited To This) of EU Law-mandated Protection or Rights to Cover under National Law Persons/Areas Beyond What Is Required by EU Law This idea of extending the application of EU rules to cover purely national law situations has also been called ‘supererogatory implementation’;110 it has often been relied upon to try to secure coherence between the EU rules and the pre-existing national private law, and thus of private law as a whole within the domestic legal order.111 Various examples of this approach can be found in Member State ‘over’-implementation of the EU’s harmonisation directives: 106 B Parker, ‘Compensating Commercial Agents’ (2006) 65 Cambridge Law Journal 502, 503. Moore-Bick LJ’s method for identifying the value of this business seems to view the agent’s entitlement as a share of the goodwill in the business built up by his labours, which he saw as ‘a species of property’. This method has myriad knock-on consequences, including rendering any reliance upon notions of mitigation of loss irrelevant, and relegating various questions as to the quality of the agent’s performance and the duration of the agency to no more than aspects of the assessment of the valuation of the agency business. Assessment of this value at the date of the termination of the agency relationship has the other difficulty of leading to negligible compensation where the agency involved is of a fixed-term nature and has expired due to the passage of time (ibid, 504). Moore-Bick LJ’s judgment here seems to focus upon ‘preventing the unjust enrichment of the principal through its receiving the goodwill generated by the agent “free of charge”’ (ibid, 504). 107 Ibid, 503. 108 And one which has not met with universal approval: see eg, for criticism, L Macgregor, ‘Compensation for Commercial Agents: An End to Plucking Figures from the Air?’ (2008) 12 Edinburgh Law Review 86; and, for cautious praise, A McGee, ‘Termination of a Commercial Agency—The Agent’s Rights’ [2011] Journal of Business Law 782. 109 A point emphasised by both Macgregor (n 108) and S Saintier, ‘Final Guidelines on Compensation of Commercial Agents’ (2008) 124 Law Quarterly Review 31; and note the words of Staughton LJ in the earlier cases of Page v Combined Shipping and Trading Co [1997] 3 All ER 656, 660: the two purposes of the Commercial Agents Directive are ‘first[, the] harmonisation of the law of Member States  … so that people compete  … on a level playing field  … the second objective is one which appears to be a motive of social policy, that commercial agents are a down-trodden race, and need and should be afforded protection against their principals’. 110 S Leible, ‘The Approach to European Law in Domestic Legislation’ (2003) 4 German Law Journal 1266, 1268. 111 See Smits (n 102) 9.

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eg the Hungarian Civil Code now contains provisions concerning the protection of ‘micro’-sized enterprises under the implementation of EU Directives concerning consumer law. This scope of protection goes beyond the concept of the ‘consumer’ laid down in the relevant EU Directives. The scenario at issue in the Leur-Bloem case112 is another illustration of such extension of an EU law set of rules (there, concerning the tax treatment of cross-border mergers) to cover internal situations (purely domestic mergers) as well. A subtly different illustration is provided by the UCPD and national implementation concerning enforcement and remedies going beyond what the UCPD requires. Under Article 11(1) of that Directive, it is clear that provision must be made either for ‘legitimately interested’ persons or organisations to take legal action against unfair commercial practices or for them to be able to bring such practices before an administrative authority which must be able either to decide on such complaints or itself to initiate legal proceedings against those practices. In many Member States, this has meant that implementation has been limited to regulatory oversight and enforcement (eg, in the UK, by the OFT); yet national systems are able to adopt a right for private parties to enforce the UCPD rules via essentially private law(-style) remedies. This option has already been taken up in Ireland,113 and the UK government is currently consulting the English and Scottish Law Commissions on whether to take advantage of this option, in the interests of increasing the clarity and effectiveness of these rules in their protection of consumers from such unfair commercial practices.114 Tentatively,115 a further possible illustration of such an extension may be taking place in the influence of the EU’s Community Trade Mark Regulation116 (CTM Regulation) on the interpretation of the EU’s Trade Marks Directive and,117 particularly interestingly for our purposes, associated national practices used in the application and enforcement of the substantive rules under that Directive. Given the national basis for intellectual property (IP) rights (prior to 112

Case C-28/95 Leur-Bloem (n 91). See s 74(2) of the Consumer Protection Act 2007. 114 See Law Commission and Scottish Law Commission, Consumer Redress for Misleading and Aggressive Practices: A Joint Consultation Paper (Law Commission Consultation Paper No 199, Scottish Law Commission Discussion Paper No 149, April 2011). See, most recently, Law Commission and Scottish Law Commission, Consumer Redress for Misleading and Aggressive Practices (Law Commission Consultation Paper No 332, Scottish Law Commission Discussion Paper No 226, 28 March 2012). 115 I am deeply indebted to Graeme Dinwoodie for our discussions on this nascent, but fascinating, topic, which he has discussed (in his remarks at the conference ‘European Methods and Interactions in the Field of Intellectual Property Law’ (Jesus College, Oxford, 7–8 January 2012)) under the heading of ‘vertical coherence’ between EU and (sometimes harmonised) national law in the trade marks field. 116 Originally, Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark [1993] OJ L11/1; now codified in Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version) [2009] OJ L78/1. 117 Originally, First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks [1989] OJ L40/1, now codified in Directive 2008/95/ EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (Codified version) [2008] OJ L299/25. 113

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the advent of the CTM Regulation and the Regulation on the Community Design Right),118 the internal market harmonisation programme focused on addressing trade barriers created by difference in national laws; the Regulations, by contrast, aimed to address trade restrictions which were the result of different national rights (whose territorial basis might per se compartmentalise national markets) by creating uniform, EU-level regimes for EU trade mark and design rights. However, the coexistence of these two sets of rules has implications for both the harmonisation Directives and for the national regimes charged with their application. Clearly, where the same wording is used for a concept under both the harmonisation Directives and the Regulation, there is at least prima facie a strong argument for the Court of Justice adopting a common interpretation of such terms to ensure coherence in the use of the term across those instruments.119 However, the recent Opinion delivered by Advocate General Bot in the IP Translator case shows that the impact of the CTM Regulation may extend further: by virtue of the need for the CTM Regulation to provide a complete trade mark system at the EU level, it made provision (unlike the Directive) for various procedural and some substantive (like dilution) elements.120 Thus, the different practices of the UK Registrar of trade marks and the EU’s Office for Harmonisation in the Internal Market (OHIM, essentially, the EU IP office) had led to a reference for a preliminary ruling which focused on whether, under the Trade Marks Directive, the UK Registrar should be required to adopt the approach taken by OHIM under the CTM Regulation in identifying the (class of) goods or services for which trade mark protection was sought. Advocate General Bot started his analysis by examining the principles in the CTM Regulation— even though the case substantively concerned the Directive and even though the Directive itself was silent on the particular question at hand—asserting that the definition of a common approach under the two instruments was essential, since they were based on common basic principles and given that the two regimes may interact.121 Although the Opinion ultimately rejected the approach adopted by OHIM as being appropriate as the uniform method to employ,122 there is clear potential for his line of reasoning to extend—as a matter of the application of EU law and by virtue of the presence of both harmonising and unifying EU legislation in the same basic area of substantive law—the application of EU law concepts into fields of national law.123 The approach of the Court of Justice in its judgment is to be awaited with no little interest. 118 Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs [2002] OJ L3/1. 119 See eg Case C-482/09 Budějovický Budvar v Anheuser-Busch, Judgment of 22 September 2011, paras 28–37. 120 Case C-307/10 Chartered Institute of Patent Attorneys v Registrar of Trade Marks, Judgment of 19 June 2012, Opinion of AG Bot. The Commission, OHIM and 11 Member States lodged observations in this case (see para 31 of the AG Opinion). 121 Case C-307/10 Chartered Institute of Patent Attorneys (n 120) Opinion of AG Bot, paras 37ff. 122 Ibid, paras 86–97. See now the judgment of the Grand Chamber of the Court of Justice in this case (nyr, 12 June 2012). 123 A question which follows on from this discussion, and one which will require investigation, is whether there are other areas in EU law where such interpretive dynamics might be predicted.

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(iv) Adoption of EU Law Concepts/Techniques to Apply Beyond the Scope of EU Law, Changing the Original Position/Approach Under National Law By virtue of the nature of this category, such developments will often take place through court judgments or, indeed, the possibility of such evolution may be strongly rejected by the judiciary. On the latter point, the treatment of groups in English corporate law seems, outside of the requirements of EU law, resolutely to have resisted any such spillover influences thus far, the courts holding to the principle that separate legal personality must be respected.124 This is in contrast to the principles of EU competition law (see, for example, cases such as ICI and Viho Europe):125 in UK cases under this heading, the courts have been prepared to apply the notion of a ‘single economic unit’ to such groups of companies, indeed often in a creative fashion.126 An excellent illustration of the former point, meanwhile, is provided by the English courts’ slow adoption of purposive techniques of legislative interpretation.127 Traditionally, when interpreting a statute, the English courts have taken the view that the ‘general proposition that it is the duty of the court to find out the intention of Parliament … cannot by any means be supported’.128 This general impression is supported by various commentators. As Cross stated in the first edition of his Statutory Interpretation in 1976, the judge’s task is to ‘give effect to the ordinary or, where appropriate the technical meaning of the words in the general context of the statute’.129 In 1978, Kahn-Freund underlined that ‘[n]or is teleological interpretation … used in Britain. A re-interpretation of a legislative text so as to adjust its effect to technical and social change … is hardly conceivable in Britain’.130 Of course, as a matter of EU law it has been clear, at least since Possible areas might include: the energy sector (via ACER practice); the financial and securities sector (via the evolution of the ESMA’s practice); and food safety law (via the European Food Safety Authority’s role). No doubt, others will emerge over time. 124 One outlier is provided by the judgment of Lord Denning MR in DHN Food Distributors v Tower Hamlets London Borough [1976] 3 All ER 462, but the case has been heavily criticised (Woolfson v Strathclyde 1978 SLT 159) and confined to its context (Adams v Cape Industries plc [1991] 1 All ER 929, 1019) by subsequent judgments. 125 Case 48/69 ICI v Commission [1972] ECR 619; and Case T-102/92 Viho Europe v Commission [1995] ECR II-17, upheld on appeal: Case C-73/95 P, [1996] ECR I-5436. 126 See Provimi v Aventis Animal Nutrition [2003] EWHC 961, [2003] ECC 29, discussed in Slot and Johnston (n 90) 295–98. One question which arises is whether the UK courts will adopt a similar approach to purely domestic competition law cases: given s 60 of the Competition Act 1998, there seems to be no reason in principle to expect them to deviate from the reasoning in Provimi in a purely national competition law case. 127 For an outline, see Usher (n 11) 254–57. See, further, S Vogenauer, Die Auslegung von Gesetzen in England und auf dem Kontinent (Tübingen, Mohr-Siebeck, 2001). 128 Magor and St Mellors Rural District Council v Newport Corporation [1952] AC 189, per Lord Simonds. 129 R Cross, Statutory Interpretation (Butterworths, London, 1976) 43. 130 O Kahn-Freund, ‘Common Law and Civil Law—Imaginary and Real Obstacles to Assimilation’, in M Cappelletti (ed), New Perspectives for a Common Law of Europe (Leiden, Sijthoff, 1978) 137, 157. One might argue with this claim, for example, in the context of formalities for the transfer of

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Von Colson,131 that UK courts are required to interpret national law in the light of the wording and purpose of the relevant EU rules (the so-called doctrine of ‘indirect effect’ or ‘consistent interpretation’),132 but we are here concerned with the question of whether this has had any spillover effects in national law. Perhaps unsurprisingly, Lord Denning MR was among the first judges in the UK to espouse the desirability of adopting what he called the ‘European method’, showing an eloquent awareness of these differences in approach in Bulmer v Bollinger SA.133 For our purposes, his judgment in the Court of Appeal in Buchanan & Co v Babco Shipping Ltd134 is of interest. The case involved the interpretation of the Convention on the Contract for the International Carriage of Goods by Road 1956, which was in issue by virtue of the UK’s Carriage of Goods by Road Act 1965 (enacted to give force of law to the 1956 Convention), rather than what was then EEC law. The Court of Appeal unanimously proceeded to construe the Convention, not as if it were an English statute, but by reference both to the French text of the Convention and to any decisions of other national courts (in the event, there was none in the latter category), with the result that the plaintiffs were held entitled to recover the sums claimed: had the traditional English interpretive approach applied, the plaintiffs would have gone away empty-handed.135 On appeal, however, the House of Lords rebuffed this interpretive approach.136 Nevertheless, even in cases outside the EU law field it soon became clear that the tide was turning (albeit slowly), as shown by Bank of Scotland v Grimes,137 in the private law field, and Smalley v Crown Court, real property and the Statute of Frauds 1677 and its successor provision, s 53 of the Law of Property Act 1925. See eg Rochefoucauld v Boustead [1897] 1 Ch 196. 131

Case 14/83 Von Colson (n 16). One might query here whether the UK courts were already at least open to purposive interpretation when it came to the interpretation of national law where that national law had been enacted or was relied upon to ensure that the UK met its international obligations: see eg Salomon v Commissioners of Customs and Excise [1967] 2 QB 116. 133 Bulmer v Bollinger SA [1974] Ch 401, 425ff. 134 Buchanan & Co v Babco Shipping Ltd [1977] 3 All ER 1048 135 It should be pointed out that, as A Jolowicz noted at the time in ‘Some Practical Aspects and the Case for Applied Comparative Law’ in M Cappelletti (ed), New Perspectives for a Common Law of Europe (Leiden, Sijthoff, 1978) 237, 253, the Court of Appeal’s approach proceeded on the assumption that the substance of the Convention and the ancillary rules in other national systems were in ‘virtually identical’ terms. The reason for the difficulties under the combination of English law and the Convention (via the Carriage of Goods by Road Act 1965 Act) was due to the operation of s 85 of the Customs and Excise Act 1952, which required duty to be paid on goods stolen while held in bond. Thus, the Court of Appeal’s approach to construing the Convention in a purposive manner to protect the plaintiff might well have been entirely superfluous, not to say misleading, in other national systems. As Jolowicz wrote, ‘I do not know whether [the rules were identical in other countries] or not … but what does seem clear is that no one at any stage even thought it necessary to try to find out’ (ibid). On this issue of national courts consulting the law of other EU Member States when interpreting and applying the law (both of EU origin and in contiguous national law areas), see A Johnston, ‘Instances and Analysis of Feedback in the Loop-flow between EC Law and National Private Law: Some Tentative Insights for Comparative and European Community Lawyers’ in O Remien (ed), Schuldrechtsmodernisierung und Europäisches Vertragsrecht (Tübingen, MohrSiebeck, 2008) 235, 263–65 and 272–73. 136 Buchanan & Co v Babco Shipping Ltd (n 134) esp 1053, per Lord Wilberforce. 137 Bank of Scotland v Grimes [1985] 2 All ER 254. 132

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Warwick,138 in criminal law. Meanwhile, in a case on the interpretation of doubletaxation treaties in the context of both UK law and EU law, the House of Lords adopted an explicitly purposive interpretive approach to the construction of Article 10 of the relevant double-taxation treaty. As Lord Nicholls noted, ‘Article 10, like all documents, must be interpreted purposively.’139 Indeed, the constitutionally significant judgment140 of the House of Lords in Pepper v Hart141—which allows courts to make reference to parliamentary material (particularly Hansard) in construing obscure or ambiguous legislation—seems to be based entirely upon such purposive ideas of interpretation.142 While subsequent courts have not been over-zealous in their reliance upon Pepper v Hart, there are many clear and high-profile examples of its application in purely national law situations: for our purposes, the tort case of Mirvahedy v Henley143 provides a clear illustration within our field of private law.144 Their Lordships were directed to a number of extracts from Hansard during the passage of the Bill that led to the 1971 Act, and counsel also made extensive reference to the Law Commission’s views in its report and draft bill that presaged the Bill that eventually went before Parliament.145 The expanding use of the purposive interpretive approach by the UK courts is also an example of a systemic form of spillover effect,146 which can perhaps be contrasted with the individual substantive examples canvassed in the preceding sections. The potential significance of this point is the ability of such systemic effects to exercise an influence across the whole domestic legal system, even in the absence of any interaction with specific EU law rules within that system. Instead, such effects become institutionalised within the recipient national system and can exercise influence over the approach taken to purely national law questions (as well as, perhaps, making that system more receptive to the outcome of similar interpretive exercises when applied to EU law provisions by the Court of Justice).

138

Smalley v Crown Court, Warwick [1985] 1 All ER 769, 779. Pirelli Cable Holding NV v Inland Revenue Commissioners [2006] UKHL 4, [2006] STC 548, para 13. See also ibid, para 105, per Lord Walker. 140 See eg A Kavanagh, ‘Pepper v Hart and Matters of Constitutional Principle’ (2005) 121 Law Quarterly Review 98. 141 Pepper v Hart [1993] All ER 42. 142 See ibid, 64, per Lord Browne-Wilkinson, with whose speech the majority in their Lordships’ House concurred. 143 Mirvahedy v Henley [2003] UKHL 16, [2003] 2 AC 491. 144 For discussion, see S Deakin, BS Markesinis and A Johnston, Markesinis & Deakin’s Tort Law, 7th edn (Oxford, Oxford University Press, 2012) 532–36. 145 However, a number of their Lordships explicitly found them not to have been helpful in divining the proper approach to s 2(2). See Mirvahedy v Henley (n 143) Lord Slynn, para 60, Lord Hobhouse, para 65, Lord Scott, para 102 and Lord Walker at paras 158–60, either due to their lack of clarity, to changes wrought to the Law Commission’s proposals or due to apparent misunderstandings in some of the statements made by Ministers to Parliament during the passage of the Bill. 146 I am grateful to Sebastian Martens for discussions on this topic. 139

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IV. Theorising Spillover Impacts: Some Constitutional Dimensions This chapter is part of ongoing research into these questions of spillover effects, so this section will, of necessity, raise a variety of potential questions that cannot, as yet, be answered either conclusively or in great detail; however, the topics addressed briefly below concern various matters of potential significance to the clearer understanding of spillover effects, and their significance, in the future. One which cannot be addressed in detail here concerns the analysis of spillovers in the light of EU integration theory. Both neo-functionalist and multi-level governance accounts may yet prove to be of assistance in analysing and explaining the development of the impact of EU law in this area, or at least may facilitate a dialogue between lawyers and political scientists concerning the process of EU (legal) integration.147

A. Spillovers as EU ‘Competence Creep’? This issue of competence creep is likely to be more relevant to some types of spillover than others: after all, insofar as EU legislation requires significant changes to be made to the substance of domestic law, it is inevitable that significant wider changes may be necessary in order to accommodate such changes within the domestic legal order.148 Further, where the spillover occurs by virtue of a rational national choice to extend the application of EU law (particularly via the extension or renvoi methods discussed above in Sections III.B(iii) and III.B(ii), respectively), then it seems artificial to allege that this expanded scope of coverage for the substance of EU law rules and concepts should be criticised with the (sometimes emotive) language of ‘competence creep’. However, neither is the notion of such creep irrelevant in the context of spillovers. First, a proper appreciation of likely spillover effects may need to be fed back into any sensible analysis of the key EU law preconditions for the exercise of EU legislative competence: subsidiarity and proportionality. This is relevant because, on the one hand, it provides the proper context for an appreciation of 147 For helpful overviews of neo-functionalist governance, see B Rosamond, Theories of European Integration (Basingstoke, Macmillan, 2000) ch 3; and A Niemann with PC Schmitter, ‘Neofunctionalism’ in A Wiener and T Diez (eds), European Integration Theory, 2nd edn (Oxford, Oxford University Press, 2009) ch 3. As for multi-level governance systems, they can be described as one involving ‘overlapping competencies among multiple levels of governments and the interaction of political actors across those levels’. G Marks et al, ‘Competencies, Cracks and Conflicts: Regional Mobilisation in the European Union’ (1996) 29 Comparative Political Studies 167. See, generally, I Bache and M Flinders (eds), Multi-level Governance (Oxford, Oxford University Press, 2004), esp S George, ‘Multi-Level Governance and the European Union’, ch 7. 148 See JHH Weiler, ‘The Transformation of Europe’ (1991) 100 Yale Law Journal 2403, also published (with additions) in JHH Weiler, The Constitution of Europe (Cambridge, Cambridge University Press, 1999) ch 2.

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the likely impact of any proposed EU legislation upon national law and, on the other, it may highlight potential difficulties in leaving certain goals to be achieved by the Member States acting on their own. Second, where the national accommodation of particular EU provisions is easy to foresee when an EU legislative proposal is being developed (particularly where national delegations emphasise the extent of possible difficulties which they might face as a result of the wording or scope of a given proposed provision), then it is possible to view the EU-level knowledge of such inevitable national changes as using the EU legislative process to achieve results which will partly be effected by those purely domestic, ‘accommodating’ amendments to the national legal landscape. Third, it may serve to inform more careful interpretation of the terms actually used in EU legislation. The example of the Commercial Agents Directive discussed above (Sections II.B and III.B(ii)) shows that the failure to define the full consequences of a particular term (‘compensation’) under the Directive can lead to a conclusion that this matter has clearly been left to Member States’ national legal systems.149 Yet in the interpretation of other EU instruments,150 the Court of Justice has shown itself willing (even predisposed?) to expand the impact of, for example, a Directive, even in the absence of specific wording addressing the associated national procedures or remedies used to achieve the Directive’s substantive goals.

B. Implications for Judicial Role(s) and Practice? (i) Looking to the Court of Justice of the EU for Guidance? One way in which the Court of Justice might provide national courts (and, indeed, legislators) with guidance on how to address such situations might be through the development of General Principles of European Civil/Private Law. This is this subject of Martijn Hesselink’s contribution in this volume,151 and so I will not endeavour to analyse this interesting, difficult and controversial topic here. It is possible that the Optional Instrument envisaged under the proposed European Sales Law Regulation152 has the potential to make an interpretive contribution in this regard, perhaps in a fashion comparable to the use of the EU’s Charter of Fundamental Rights153 between its adoption in 2000 and its 149

As held in the Honyvem case (n 105) and relied upon by Lord Hoffmann in Lonsdale (n 103). See above Sections II.D and II.E; further examples can be seen in the Court’s case law interpreting the Unfair Terms in Consumer Contracts Directive, see n 12, discussed in Johnston and Unberath (n 87) 180–85. 151 See MW Hesselink, ‘The General Principles of Civil Law: Their Nature, Role and Legitimacy’ in this volume. 152 European Commission, Proposal of 11 October 2011 for a Regulation of the European Parliament and of the Council on a Common European Sales Law COM(2011) 635 final. 153 Originally, see [2000] OJ C364/1; see now [2010] OJ C83/389. By virtue of Art 6 TEU, the Charter now has the same legal status as the Treaties. 150

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more recent acquisition of legally binding status after the entry into force of the Treaty of Lisbon in late 2007. Thus, it might be used as a kind of soft law, acquiring interpretive influence through references made to it by the European courts in the development of more general EU law approaches to such questions of private law, as and when they arise under binding EU instruments (eg consumer law Directives and other legislation) or as part of the evolution of the Court’s NLE case law when national remedies and systems of private law have an impact upon the effective enforcement of EU law rights.154

(ii) Looking to Other National Legal Regimes? Where EU concepts (whether embodied in legislation or possibly developed under the banner of General Principles of Civil/Private law) have been based upon or derived from Member State legal systems other than the English, actors in the national legal system may gain guidance from practice under those other systems. The Commercial Agents Directive and the notions of indemnity and compensation (based upon the German and French systems, respectively) have been discussed above; another example might be drawn from the field of the Trade Marks Directive,155 where the inclusion within the notion of ‘likelihood of confusion’ of the idea of a ‘likelihood of association’,156 as laid down in its Articles 4(1)(b) and 5(1)(b), is derived from the practice under the Benelux system (although it should be noted that such references to the origins of the ‘association’ term have been made, and dismissed as unhelpful in those English cases where the issue has arisen).157 Where there are other Member States with greater range and/or depth of decisional practice than our own, this may provide an opportunity to learn about potential issues, problems and solutions.158 At the same time, there is clearly a need to take great care in appreciating the context of such decisions and prac154 For this in the Charter context, see Case T-54/99 max.mobil Telekommunikations Service v Commission [2002] ECR II-313, paras 48 and 57 for the first CFI reference; and see Case C-540/03 European Parliament v Council [2006] ECR I-5769, para 38, for the first use thereof by the Court of Justice. 155 Directive 2008/95/EC (n 117). 156 See ibid, Recital 11, which includes the notion of association within the question of whether there is a ‘likelihood of confusion’. 157 For a discussion of the Benelux system, see C Gielen, ‘Harmonisation of Trade Mark Law in Europe: The First Trade Mark Harmonisation Directive of the European Council’ (1992) 14 European Intellectual Property Review 262, who discusses the drafting history and, in particular, the confusion/ association issue in the light of Benelux law. See ibid, 266–67. See also Wagamama v City Centre Restaurants [1995] FSR 713, where Laddie J rejected reliance upon what he styled ‘Chinese whispers’ as to the origin and meaning of the Directive. For discussion, see W Cornish and D Llewellyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 6th edn (London, Thomson Sweet and Maxwell, 2007) paras 18-94ff, esp 748, fn 9. 158 Eg the application of the defence of contributory negligence under English law on negligently inflicted psychiatric injury is a little-developed area, whereas German law has relatively broad experience of such issues: for discussion, see Greatorex v Greatorex [2000] 1 WLR 1976 (where German law was cited to Cazalet J by counsel for the Motor Insurers’ Bureau) and BS Markesinis, ‘Foreign Law Inspiring National Law: Lessons from Greatorex v Greatorex’ (2000) 59 Cambridge Law Journal 386 (where the US and German material is analysed).

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tices from other Member States’ systems, both in a practical and a legal-systemic sense. We must avoid the risks of learning the wrong lessons, or bastardising a potentially useful lesson by over- or under-doing the analysis: comparative law’s experience may be of use here. One might perhaps cite the use of the ‘transferred loss’ argument by Robert Goff LJ in his judgment in the English Court of Appeal in The Aliakmon,159 which drew explicitly upon German reasoning, yet also ran the risk of importing other assumptions from the legal context which may not necessarily obtain in our own system. Indeed, in a later judgment,160 Lord Goff (as he had become) abandoned the transferred loss argument, stating that he had not used the term ‘with any great accuracy’; instead, their Lordships fashioned an alternative approach to the question at hand.161 All of this suggests that, while such avenues have long been familiar to comparative lawyers, courts are reluctant to traverse them in many cases; nevertheless, the particular context and demands of harmonising EU law, and concomitant spillover effects, may yet lead to such approaches being employed in some areas in the future as a source of guidance (or inspiration) for national courts.

(iii) Guidance for the Court of Justice of the EU One way in which the national legal systems can contribute to providing guidance for the Court of Justice is in the willingness of national courts to send references for a preliminary ruling under Article 267 TFEU.162 Sometimes, this may be the only way in which to enrich the Court’s experience of the range of issues faced by national legal systems in the incorporation and implementation of EU law. The loss of various opportunities to contribute to the evolution of EU law on various topics can be seen in a number of the lines of English case law discussed in this chapter (eg concerning commercial agency: Sections II.B and III.B(ii) above) and elsewhere.163 Another method that might be employed under this heading is the frequency and quality of a Member State’s governmental institutions’ interventions in cases

159 Leigh & Sillivan Shipping v The Aliakmon Shipping Co (The Aliakmon) [1986] AC 785. For discussion, see Deakin, Markesinis and Johnston (n 144) 157–73; and Markesinis and Unberath (n 40) 303ff. See, generally, H Unberath, Transferred Loss: Claiming Third Party Loss in Contract Law (Oxford, Hart Publishing, 2003) esp 123–28. 160 Alfred McAlpine Construction v Panatown [2001] 1 AC 518, 557. 161 For discussion, see Deakin, Markesinis and Johnston (n 144) 155–57 and Unberath (n 159) ch 8. 162 On these questions under English law generally, see R v International Stock Exchange ex parte Else [1993] 1 All ER 1042 and R v Minister for Agriculture, Fisheries and Food ex parte Portman Agrochemicals [1994] 3 CMLR 18. For general discussion, see T de la Mare and C Donnelly, ‘Preliminary Rulings and EU Legal Integration: Evolution and Stasis’ in P Craig and G de Búrca (eds), The Evolution of EU Law, 2nd edn (Oxford, Oxford University Press, 2011) ch 13. 163 Eg the Unfair Terms in Consumer Contracts Directive (n 12). Cases such as Office of Fair Trading v Abbey National [2009] UKSC 6, [2010] 1 AC 696, suggest themselves. See Council Directive of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1985] OJ L210/29 and A v National Blood Authority [2001] EWHC 446 (QB), [2001] 3 All ER 289.

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before the Court of Justice.164 Such activities may offer the Court differing points of view on the matter at hand, as well as perspectives on the difficulties that arise within various national settings, thus informing the Court’s performance of its interpretive function with a richer understanding of the meaning and implications of EU law provisions when applied in context.165

C. National Constitutional Implications—The UK Example (i) The Role of National Parliaments in the Implementation of EU Law into National Law In assessing the potential significance of spillover effects for national parliaments, much will depend upon specific national constitutional arrangements and how they operate vis-à-vis EU law and its incorporation in the national legal order. In the UK, for example, the vast majority of implementation of EU law takes place in secondary legislation promulgated by the relevant Minister, under the auspices of section 2(2) of the European Communities Act 1972. This process relies upon the interest and diligence of Members of Parliament and the House of Lords in scrutinising such use of these delegated legislative powers before granting their approval (or at least not expressing their collective disapproval) of the secondary legislation so promulgated. While such scrutiny is perhaps variable in its depth and quality, perhaps an appreciation that such implementing rules could themselves generate potentially far-reaching spillover effects might further focus the minds of those scrutinising such measures adopted under section 2(2). Of course, whether the time, resources and expertise needed to perform this function is always available in the relevant committees is another matter.

(ii) Section 2(2) Itself This provision allows the relevant Minister to make rules for the purposes of: (a) ‘implementing any EU obligation of the United Kingdom … or … enabling any rights enjoyed … to be exercised’; and (b) ‘dealing with matters arising out of or related to any such obligation’. The precise scope of this provision was at issue in Oakley Inc v Animal Ltd: at first instance,166 a challenge was brought against the use of section 2(2), focusing specifically upon exactly what the government may do when implementing an EU measure (there, the Design Rights Directive).167 Argument centred on the use of that provision to adopt national measures which 164 For statistics and analysis, see M-PF Granger, ‘When Governments Go to Luxembourg: The Influence of Governments on the Court of Justice’ (2004) 29 European Law Review 3. 165 On such national contributions to this EU ‘discourse’, see de la Mare and Donnelly (n 162) 378–81. 166 Oakley Inc v Animal Ltd [2005] EWHC (Ch) 210 and EWHC (Pat) 419. 167 Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs [1998] OJ L 289/28, implemented by the Registered Designs Regulations 2001, SI 2001, no 3949.

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were not mandated by an EU obligation. Ultimately, this was overturned on this point by the Court of Appeal,168 but it has led to a number of comments on the constitutional implications of this implementation method.169 Indeed, such matters are now even reaching the national press.170 It seems that spillover effects as defined in this paper, although sometimes possibly falling within the scope of section 2(2)(a) (where they concern ‘enabling any rights … to be exercised’), will usually fall to be analysed under section 2(2)(b) of the 1972 Act. One might wonder whether the judgment of the Supreme Court in Ahmed v Secretary of State for the Home Department will also have implications for the future use of section 2(2) ECA 1972 by the executive, both generally and specifically in addressing spillover effects.171 In Ahmed the seven-judge panel (with Lord Brown dissenting on one point) ruled that two Orders in Council adopted under the United Nations Act 1946 should be quashed as being ultra vires the powers granted to the executive by section 1 of the 1946 Act. The Justices in the majority were careful to stress that measures which would impose restrictions upon individual rights required Parliamentary primary legislative approval and could not be effected by the executive under such delegated legislative powers. While the Oakley v Animal case did not, perhaps, reach the extremes of interference with individual rights highlighted by Ahmed, the general point concerning the relationship between Parliament and the executive chimes more consistently with the view taken in Oakley by the judge at first instance than that of the Court of Appeal. Thus, it may be that the incorporation of spillover effects in such implementing measures, alongside other potential uses of section 2(2) of the 1972 Act, may yet lead to such constitutional questions being asked again in the near future.

V. Conclusions So, one might ask: why should we care about spillover effects, their identification and proper categorisation? First, an understanding of spillover effects can aid in the careful analysis of, and make a contribution to, the EU legislative process and the relevant legal instruments used (particularly Directives). An appreciation of the need generally to consider such spillover effects should aid Member States (and MEPs) during negotiations in highlighting and discussing the (sometimes inevitable) spillovers 168

Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337. See eg M Howe, ‘Oakley Inc v Animal Ltd: Designs Create a Constitutional Mess’ (2006) 28 European Intellectual Property Review 192. 170 See eg P Johnston, ‘Who Will Defend Our Free Speech?’, Daily Telegraph, 2 April 2007. 171 Ahmed v Secretary of State for the Home Department [2010] UKSC 2, [2010] 2 WLR 378, discussed by A Johnston and E Nanopoulos, ‘The New UK Supreme Court, the Separation of Powers and Anti-terrorism Measures’ (2010) 69 Cambridge Law Journal 217. 169

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that may eventuate. Thinking about these phenomena may also inform lobbying efforts at both national and EU level (and co-ordination between national parties, bodies, associations, etc): spillovers thus have ex ante implications for the EU legislative process. Second, there is a set of impacts which spillovers may have after the conclusion of the EU legislative process for any given measure. Spillover effects may have constitutional consequences: from the foregoing discussion, it seems that spillover effects may have (sometimes significant) implications for the performance of the judicial function, at national and EU levels, and in shaping their interaction and co-operation. Similarly, spillover effects may in some contexts have consequences for the analysis of EU competence, the pursuit of accountability at the EU (and national) level and, thus, for the scrutiny of decision-making processes and outcomes, particularly with regard to national implementation decisions. There is also potential for systemic influences derived (at least in part) from EU law’s impact upon national practice (as the example of the UK courts’ adoption of the purposive interpretive approach, discussed above, shows) to have more far-reaching effects upon the national legal system, even in purely national law situations. Spillovers may also have other implications, including an effect upon substantive law. Various actors within the legal system—including legal advisers (both qua adviser and qua lobbyist), individual private parties, the judiciary and executive/administrative bodies)—will need to take the implications of spillover effects into account in the performance of their functions. There is a need to take account of these (potential) spillover effects, predicting their likely incidence and implications under existing and new EU legal instruments and provisions. These insights concerning spillovers might be applied to encourage new (national) legal developments (whether by judicial evolution or legislative/executive reform) or to lobby against their adoption/extension/use. Either way, forewarned is forearmed.

17 Competition Law and Contract: The Euro-defence OKEOGHENE ODUDU

I. Introduction Article 101 TFEU, which prohibits agreements that restrict competition between undertakings, and Article 102 TFEU, which prohibits certain conduct when engaged in unilaterally by dominant undertakings, are directly applicable provisions of EU law—they can be invoked before, and enforced by, national courts.1 Further, and importantly, in the event of a conflict between rights and obligations arising from national law and rights and obligations arising from EU law, those arising from EU law take precedence.2 Thus the consequence of entering into a contract that is contrary to the EU competition rules is to preclude the vindication of rights arising from a contract governed by national law in preference to ensuring that the Treaties rules are upheld and promoted.3 This chapter explores the situation in which two or more independent entities enter into a contract; one party fails to comply with the terms of that contract, but seeks to resist an action for breach of contract by claiming that to enforce the contract would be contrary to EU competition law—the Euro-defence.4 Although this chapter is focused on the use of EU competition law to a defeat a claim founded

1 Case 127/73 Belgische Radio en Televisie v SV SABAM (BRT v SABAM) [1974] ECR 51, para 16; Case C-282/95 P Guérin automobiles v Commission [1997] ECR I-1503, paras 39–40; Case T-51/89 Tetra Pak Rausing SA v Commission [1990] ECR II-309, para 42; Case C-453/00 Kühne & Heitz NV v Productschap voor Pluimvee en Eieren [2004] ECR I-837, para 20; and Arts 1(1), 1(2) and 6 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Arts 81 and 82 of the Treaty [2003] OJ L1/1. 2 Case 6/64 Costa v ENEL [1964] ECR 585; Case 14/68 Walt Wilhem [1969] ECR 1; Case 127/73 BRT v SABAM [1974] ECR 313, paras 2 and 14; Art 101(2) TFEU. 3 AP Komninos ‘“Transient” and “Transitional” Voidness of Anti-competitive Agreements: A Nonissue and an Issue’ (2007) 28 European Competition Law Review 445, 446. 4 The Euro-defence is also pleaded by third parties to the contract, a common occurrence in the area of intellectual property law, when the validity of arrangements between the licensor and licensees are called into question. See eg S Hall ‘Competition Law as a Shield: Euro-defences to Breaches of Intellectual Property Rights in the IT Industry’ (1991) 2 International Company and Commercial Law Review 334.

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in contract, Euro-defence can be used to describe the use of any provision of EU law to defeat any claim based on national law.5 The defensive invocation of EU competition law constitutes one of the main mechanisms of enforcement and provides one of the main incentives for compliance. Whish and Bailey note: [T]he threat that competition law poses is not that the Commission or some other competition authority will impose a fine, but that a key term of the contract will be unenforceable in commercial litigation.6

At the same time it is clear that reliance on Euro-defences has acquired and retains a distinct pejorative sense amongst judges in the English court, being taken to imply a last-ditch and unmeritorious attempt to invoke the Treaties’ provisions as a shield against clear breaches of national law.7 This chapter is concerned with identifying reasons for judicial hostility to the Euro-defence and the implications this hostility has for the enforcement of the EU competition law provisions. In Section II it is argued that the Euro-defence dilutes the incentive to comply with contracts and also creates a strong incentive for a party with valid contractual rights to settle unmeritorious claims. In Section III it is argued that the judicial reaction has been first to increase the burdens faced by a party wishing to raise the Euro-defence and secondly to reduce the benefit to be had by successfully raising the Euro-defence. Section IV concludes the chapter by considering whether, by seeking to deter unmeritorious recourse to the Euro-defence, the English court has made it overly difficult to bring a meritorious competition law claim that would impinge on contractual relations.

II. Negative Consequences of the Euro-Defence It is argued that the Euro-defence has two negative consequences that may make it unpopular with English judges. The first is that the Euro-defence dilutes the 5 The term Euro-defence seems to have arrived in the judicial lexicon via Walton J in British Leyland Motor Corporation v T I Silencers [1980] 1 CMLR 598, para 3 and again in British Leyland Motor Corporation Limited and Others v TI Silencers Limited [1980] 2 CMLR 332, para 1. Lawton J recognised ‘Euro defence’ as a term of art in Lansing Bagnall Limited and Others v Buccaneer Lift Parts Limited [1984] 1 CMLR 224, para 1. See also Allen & Hanburys Limited v Generics (UK) Limited [1985] 1 CMLR 619, para 15, per Falconer J; British Leyland Motor Corporation Limited and Another v Armstrong Patents Company Limited [1983] ECC 67, paras 84–91, per Foster J; and Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91, para 1, per Megarry VC. 6 R Whish and D Bailey, Competition Law, 7th edn (New York, Oxford University Press, 2012) 320. 7 The pejorative sense is expressly recognised in Intel Corp v VIA Technologies Inc [2002] EWHC 1159, para 90; Heathrow Airport Ltd v Forte (UK) Ltd [1998] Eu LR 98, 105; and Nelson & Co Limited v Guna SpA [2011] EWHC 1202 (Comm), paras 49 and 53; M Jarvis, ‘The Sunday Trading Episode: In Defence of the Euro-defence’ (1995) 44 International and Comparative Law Quarterly 451, 452, writing of a Euro-defence based on the Treaties free movement provisions; Hall, above n 4, 334; and the rather amusingly titled S Bennett, ‘Euro Defence Equals No Defence?’ (2002) 4 World Licensing Law Report 5.

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incentive to comply with contracts. It does so by making it difficult for parties suffering a breach of contract to obtain a judicial remedy. The second reason is that the Euro-defence is a substitute for a positive claim that the competition rules have been infringed. A positive action is not—and would not—be brought because the claim has no substantive merit. However, because the costs of defeating the Euro-defence are high, there is a strong incentive to settle an unmeritorious claim.8

A. Diluting Compliance Incentives Contractual rights and obligations have value because they can be enforced.9 However, as Shavell observes: a party must expend effort and funds to obtain a settlement or a judgment from trial … the costs of litigation mean that it may not occur, with significant consequences for the effectiveness of the legal system.10

One reason for judicial hostility to the Euro-defence is that it so increases the cost of enforcing a contract that the value of contract as an institution is diminished. This can be understood by looking at the three stages of litigation set out by Shavell. In the first stage a party must decide whether to enforce their contractual rights through the courts. In the second stage the party must decide whether to settle the dispute. If the dispute is not settled, stage three is that the courts will determine the case after trial. A party will bring an action for breach of contract if the payment or remedy expected to be obtained in stage two or awarded by the court in stage three is of greater value to the complainant than the cost of bringing an action.11 It follows from this that a party with contractual rights can be deterred from bring an action to enforce those rights if the party in breach can increase the cost of bringing an action.12 A consequence of raising the Euro-defence is that the cost of resolving the contract law claim will be considerably increased.13 This is because, first, signif8 These reasons have recently been articulated in Oracle America Inc (Formerly Sun Microsystems Inc) (Appellant) v M-Tech Data Limited (Respondent) [2012] UKSC 27, para 7, per Lord Sumption. 9 PS Atiyah and SA Smith, Atiyah’s Introduction to the Law of Contract, 6th edn (Oxford, Clarendon Press, 2005) 4–5; and SA Smith, Contract Theory (New York, Oxford University Press, 2004) 106–63. 10 S Shavell, Foundations of Economic Analysis of Law (Boston, Belknap Press, 2004) 387. 11 Ibid, 389–90. At 415 it is noted that the existence of the third stage provides an inducement for proceedings to be resolved at the second stage. 12 Ibid, 406, writing specifically about legal expenses. 13 The cost and delay entailed in a Euro defence are acknowledged in Sandvik Aktiebolag v K R Pfiffner (UK) Limited and Others [2000] FSR 17, 33–34, per Neuberger J. The strategic use of the Euro-defence to impose the cost and delay that it entails is noted in D Cowan and JS Nazerali, ‘Reforming EU Distribution Rules—Has the Commission Found Vertical Reality?’ (1999) 20 European Competition Law Review 159, 164–65; N Shelkoplyas, ‘European Community Law and International Arbitration: Logics that Clash’ (2002) 3 European Business Organisation Law Review 569, 576; and A Rose ‘“The End” can make good sense’, Financial Times, 19 November 2001. On the strategic use of competition law more generally, see RP Mcafee and NV Vakkur, ‘The Strategic Abuse of the Antitrust Laws’ (2004) 1 Journal of Strategic Management Education 1.

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icant costs are imposed on the party seeking to resist the Euro-defence as ‘the plaintiffs must give discovery and call witnesses, which could include marketing personnel and an expert’;14 and second, because there will be a long delay before the conclusion of proceedings.15 The national court may be asked or required to make a reference for a preliminary ruling to the Court of Justice to resolve uncertainties as to how competition law should be applied. It also seems to have been common for a respondent to add the Euro-defence at the same time as making a complaint to the European Commission. The respondent would then ask that national law proceedings be stayed pending the outcome of proceedings before the Commission, and any possible appeal to the General Court and the Court of Justice.16 No better illustration of delay can be found than in the Crehan litigation. The contract in dispute had been notified to the Commission in July 1992 and it was not until October 1997 that proceedings before the Commission were brought to an end.17 During this time national proceedings were stayed.18 National proceedings recommenced in October 1997 and resulted in the Court of Justice being asked to make a preliminary ruling, which was delivered in September 2001.19 A trial in the national court commenced in February 2003 and it was not until July 2006 that the Euro-defence was finally disposed.20 To the extent that the cost of enforcement diminishes the incentive to enforce a contract, it also dilutes the incentive to comply with the contract, since compliance cannot be compelled.21 Thus the Euro-defence may be raised simply to allow a party to escape contractual obligations or a bad bargain. Whish and Bailey note that English ‘[j]udges tend to be hostile by instinct to what may be seen as technical—even scurrilous—attempts to avoid contractual obligations by invoking points of competition law’ and that ‘[t]he maxim pacta sunt servanda— contracts should be honoured—has a powerful influence where an undertaking purports, on the basis of a ‘technicality’ of competition law, to avoid a contractual obligation’.22 But it is just such technical or tactical defences that most often confront the court in cases raising breach of EU competition law as a defence to a claim for breach of contract. For example, until relatively recently, Union

14 Chiron Corporation and Others v Organon Teknika Limited and Others [1992] 3 CMLR 813, para 9. In Hutchinson 3G UK Limited v (1) O2 (UK) Limited; (2) Orange Personal Communications Services Limited; (3) T-mobile (UK) Limited; and (4) Vodafone Limited [2008] EWHC 50 (Comm), para 36 and 60, it was not contested that discovery of the requested documents necessary to develop a competition law claim would cost in the region of £800,000–£1,000,000. 15 Delay caused by resolution of a Euro-defence is recognised in Philips Electronics NV v Ingman Limited and Another [1998] 2 CMLR 839, paras 9–10, per Laddie J. 16 MTV Europe v BMG Records (UK) Limited and Others [1995] 1 CMLR 437, paras 2 and 24–27; Hagen v D & G Moretti SNC [1980] FSR 517, 519, per Buckley LJ; and British Leyland Motor Corporation Limited and Another v Armstrong Patents Company Limited [1983] ECC 67, 84–91, per Foster J. 17 Inntrepreneur Pub Company (CPC) and others v Crehan [2006] UKHL 38, paras 25–33. 18 Crehan v Inntrepreneur Pub Company (CPC) [2003] EWHC 1510 (Ch), para 123. 19 Ibid, paras 127–30 and Case C-453/99 Courage v Crehan [2001] ECR I-6297. 20 Inntrepreneur Pub Company (CPC) and others v Crehan [2006] UKHL 38. 21 Shavell, above n 10, 397; G Tullock, The Logic of the Law (New York, Basic Books, 1971) 63. 22 Whish and Bailey, above n 6, 320 and 321.

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competition law was primarily enforced by the European Commission.23 Under this enforcement regime an agreement that restricted competition under Article 101(1), but satisfied the criteria of Article 101(3), so that it was not problematic from the competition law prospective, could not be enforced unless it had been notified to the European Commission. Although either party to the contract could notify the Commission of the agreement, when neither party had done so, one of the parties could then rely on the failure to notify the agreement to prevent its enforcement.24 The desire to safeguard the institution of contract can explain the English court’s reluctance to allow co-contractors to raise the Euro-defence. In Crehan v Inntrepreneur Mr Justice Park noted that a breach of Article 101 TFEU is not established by a complainant with the simple grievance ‘that he made a bad bargain’.25 This idea is also set out by Mr Justice Walton in British Leyland Motor Corporation v TI Silencers, noting that: There is nothing in any provision of the Treaty of Rome  … which sets out to relieve one party to a bad bargain—if you like, a thoroughly bad bargain—from the result of his folly.  … the harshness of the terms, if they be harsh, is, for present purposes, nihil ad rem.26

The need to ensure contracts are honoured also colours the English court’s interpretation of the protective scope of competition law, it being viewed as existing to ‘protect third-party competitors and not parties to the prohibited agreement’.27 However, before the Court of Justice of the EU, Crehan has managed to successfully argue that to prevent him from raising the defence would infringe rights he derived from the Treaties, which must be protected.28 The frustration caused by the Euro-defence is that it prevents the national court from adopting a fair solution under the law of contract, not because the 23 Arts 4(1) and 9(1) of Council Regulation No 17 (EEC): First Regulation implementing Articles 85 and 86 of the Treaty [1962] OJ 13, and Joined cases C-295/04 to 298/04 Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] ECR-I 6619, Opinion of AG Geelhoed, para 29. 24 The use of the Euro-defence to prevent the enforcement of contracts that have not been notified, rather than preventing the enforcement of contracts that are prohibited by, and unjustifiable within, the competition law regime is one of the justifications offered for modifying Art 4(2) of Regulation 17, above n 23, to allow retroactive application of the conditions of Art 101(3) TFEU, albeit still at the time by the Commission only: Communication from the Commission on the application of the Community competition rules to vertical restraints—follow-up to the Green Paper on Vertical Restraints COM(98) 544, [1999] 4 CMLR 34. 25 Crehan Inntrepreneur Pub Company (CPC), Brewman Group Limited [2004] ECC 8, para 143. See also Heathrow Airport Ltd v Forte (UK) Ltd and others [1998] ECC 357, para 28, arguing that Art 102 TFEU cannot be used by parties that simply wish to escape what has turned out to be a bad bargain.. 26 British Leyland Motor Corporation Limited and Others v TI Silencers Limited [1980] 2 CMLR 332, para 46. 27 Courage v Crehan [1999] UKCLR 110, [1999] ECC 455 (English Court of Appeal), para 19. Also Gibbs Mew Plc v Gemmell [1998] Eu LR 588 (Court of Appeal (Civil Division)). 28 Case C-453/99 Courage v Crehan [2001] ECR I-6297, Opinion of AG Mischo, paras 25–26. Compare this with debate of the ability of co-contractors to rely on an antitrust infringement as explained in S Calkins, ‘Summary Judgment, Motions to Dismiss, and Other Examples of Equilibrating Tendencies in the Antitrust System’ (1986) 74 Georgetown Law Journal 1065, 1099.

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party in default has pleaded a right of superior value, but because the party has pleaded a right from a superior legal order. Thus, Whish and Bailey point out that the sanction of voidness, as a general proposition, impacts not on serious infringements of the competition rules, such as the operation of cartels, but on more innocuous agreements where the harm to competition is much less obvious.29

Concern and frustration with this state of affairs is reflected in the dicta of Sir Robert Megarry VC, noting that: many defendants whose contentions have had little substance have tended to encase themselves in portions of the Treaty and its jurisprudence and so hold at bay with their  Euro-defences  many plaintiffs who otherwise would have had an easy path to prompt litigious success. I do not, of course, suggest that there are no Eurodefences which have substance and merit: that is obviously not the case. But nobody would deny that some Euro-defences  are purely technical and lacking in substance.30

B. Incentive to Settle Unmeritorious Claims A second reason for judicial hostility to the Euro-defence is that it creates an incentive for a party with well-founded contract law rights to settle unmeritorious claims. To see this problem the Euro-defence is better viewed as a counterclaim, or a positive action for infringement, though it is not always pleaded as such. Using again the three stages of litigation set out by Shavell, a party should bring an action for breach of competition law if the payment or remedy expected to be awarded by the court in stage three is of greater value to the complainant than the cost of bringing an action.31 If the claim is without merit, the complainant will expect a low reward after trial, and must meet the cost of establishing the competition law infringement, which will be costly, not least because of a need for ‘expert economic evidence’.32 29

Whish and Bailey, above n 6, 320. Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91, para 11; British Leyland Motor Corporation Limited and Others v TI Silencers Limited [1980] 1 CMLR 598, para 25, per Walton J; British Sky Broadcasting Group Ltd and Another v David Lyons [1995] FSR 357, 361, per Aldous J; and Aldous LJ in Biotrading & Financing OY v Biohit Ltd [1998] FSR 109, 134, describing certain defences based on European law as ‘hopeless’. Also note the frustration expressed by Aldous J as to the re-emergence of Euro-defences in Chiron Corporation and Others v Murex Diagnostics Limited (No 9) [1995] FSR 318, 320–21. 31 Shavell, above n 10, 389–90. 32 Intel Corp v VIA Technologies Inc [2002] EWHC 1159, para 90, citing HMSO v Automobile Association [2001] ECC 272 at 279; R Whaite, ‘The Draft Technology Transfer Block Exemption’ (1994) 16 European Intellectual Property Review 259, 260; Commission Regulation (EU) No 267/2010 of 24 March 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector [2012] OJ L L83/1, Art 2 and Recital 5; Joined Cases 6 and 7/73 Istituto Chemioterapico Italiano SpA and Commercial Solvents Corporation v Commission [1974] ECR 223, Opinion of AG Warner, para 269, and Art 6(2) ECHR. On the burden of proof, see Art 2 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Arts 30

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Thus an unmeritorious claim is not likely to be brought as a positive action.33 The Euro-defence enables a party to bring actions in which the expected return from litigation would exceed its cost if brought as a positive claim. By bringing the claim as a Euro-defence, rather than the low reward expected from the unmeritorious competition law claim, the reward is now the value of the avoided contractual obligation. At the same time the cost of action is not significantly greater than defending the contract claim, whilst significant additional costs are imposed on the counter-party. Up until trial the major costs of determining the competition law claim fall on the party resisting the Euro-defence.34 The Eurodefence may be seen as ‘fanciful’,35 ‘based upon hope rather than fact’,36 or as a defence ‘without any substance’.37 Yet the respondent will settle the action even if no competition law infringement can be shown to exist because it is cheap to make the assertion of a competition law infringement and expensive to defend against.38 To defeat the Euro-defence the respondent must incur the significant costs of disclosure and management time noted above.39 Disclosure of material is required even before a case is pleaded.40 The asymmetric nature of these costs makes it possible, and indeed likely, that the respondent will settle an unmeritorious claim rather than incur the expense of litigation.41 81 and 82 of the Treaty [2003] OJ L1/1; M Brealey, ‘The Burden of Proof before the European Court’ (1985) 10 European Law Review 250. 33 It has been argued that an allegation of infringement of competition law should only come before the courts as a positive action. See Sportswear Spa v Stonestyle Ltd [2006] EWCA Civ 380, para 76, though the claim is rejected. It has also been suggested, and rejected, that positive action by making a complaint to the competition authorities is the appropriate enforcement mechanism, so that the Euro-defence is an abuse of process. See Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91, paras 1 and 6. 34 FH Easterbrook, ‘Detrebling Antitrust Damages’ (1985) 28 Journal of Law and Economics 445, 461. 35 Waterlow Directories Limited v Reed Information Services Limited [1993] ECC 174, para 23, per Aldous J. Also A Overd and B Bishop, ‘Essential Facilities: The Rising Tide’ (1998) 19 European Competition Law Review 183. In seeking to encourage private parties to enforce EU competition law provisions before the national courts, the European Commission has been alert to the concern that unmeritorious claims not be encouraged. See Commission staff working paper accompanying the White Paper on damages actions for breach of the EC antitrust rules SEC/2008/0404 final, paras 2, 12, and 16. 36 Quantel Limited v Electronic Graphics Limited [1990] RPC 272, 280. 37 Philips Electronics NV v Ingman Limited and Another [1998] 2 CMLR 839, para 59. 38 Shavell, above n 10, 421–22, setting out these two conditions for negative value actions and the rationality of settling a meritless claim. Collins J in Intel Corp v VIA Technologies Inc [2002] EWHC 1159, para 90, notes ‘the ease with which a defence based on [Arts 101 and 102] may be generated on the basis of vague or imprecise allegations’. In the US it has been noted that ‘plaintiffs can initiate suits with little specific evidence’. See Comments, Antitrust Enforcement by Private Parties: Analysis of Developments in the Treble Damage Suit (1952) 61 Yale Law Journal 1010, 1034. 39 See references above at n 14. Also Philips Electronics NV v Ingman Limited and Another [1998] 2 CMLR 839, paras 9–10 and FH Easterbrook, ‘Discovery as Abuse’ (1989) 69 Boston University Law Review 635. 40 See Rule 31.16 (pre-action); Rule 31.6 (standard); Rule 31.17 (third-party) of the Civil Procedure Rules. 41 Bell Atlantic Corporation et al v William Twombly (2007) 127 SCt 1955, 1967; W Breit and KG Elzinga, ‘Private Antitrust Enforcement: The New Learning’ (1985) 28 Journal of Law and Economics, 405–43, 433–35; SC Salop and LJ White, ‘Economic Analysis of Private Antitrust Litigation’ (1986)

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III. Equilibration Those with recourse to the Euro-defence need not comply with their contracts and may also extract settlement payments from those that would find the defence costly to disprove. There is thus an incentive to raise unmeritorious Eurodefences. The problem of unmeritorious Euro-defences faced by the English court is similar to the problem faced by the US courts of unmeritorious recourse to antitrust law, which is encouraged by the ability to recover treble damages, attorney fees and costs.42 Calkins, writing about this problem, observed that the US courts had responded with modifications to the substantive and procedurals rules that increased the barriers faced by private parties bringing antitrust claims, a phenomenon he termed equilibrating.43 When Malcolm Jarvis wrote of the disrepute into which the Euro-defence had been brought by the use of the Treaties’ free movement rules to challenge the opening hours of retail stores, he wished to argue that the English courts would eventually learn how to control unmeritorious recourse to the Euro-defence.44 In this section it is argued that the English courts have used a number of techniques to equilibrate recourse to a defence based on competition law in contract disputes. The first type of response is to increase the burdens faced by a party wishing to raise a Euro-defence: the courts have required a Euro-defence to be properly pleaded and also require that there be a nexus between the competition law infringement and the contractual obligation that is sought to be avoided. Failure to satisfy either of these conditions will result in the Euro-defence being struck out, so that there will be no substantive determination of the competition law infringement being alleged. When the Euro-defence is allowed to proceed to trial the court has signalled that it will ensure the conditions for a substantive infringement of the competition rules are shown to exist. Whether jurisdiction 74 Georgetown Law Journal 1001, 1028–30; Mcafee and Vakkur, above n 13. It is noted that most cases settle before judgment, see Shavell, above n 10, 410; RA Posner, Economic Analysis of Law, 6th edn (New York, Aspen Publishers, 2003) 567; SC Salop and LJ White, ‘Economic Analysis of Private Antitrust Litigation’ (1986) 74 Georgetown Law Journal 1001, 1024. Attention is drawn to the use of the Euro-defence to manipulate settlement negotiations in Hall, above n 4, 337; and Cowan and Nazerali, above n 13, 164–65. 42 DA Crane, The Institutional Structure of Antitrust Enforcement (New York, Oxford University Press, 2011) 56–63; and DH Ginsburg, ‘Comparing Antitrust Enforcement in the United States and Europe’ (2005) 1 Journal of Competition Law and Economics 427, 439. Credit Suisse Securities (USA) LLC, Fka Credit Suisse First Boston LLC v Glen Billing (2007) 127 SCt 2383, 2396. More generally, see ED Cavanagh, ‘Detrebling Antitrust Damages: An Idea Whose Time Has Come?’ (1987) 61 Tulane Law Review 777, 809–15. 43 On the various equilibrating techniques, see Calkins, above n 28, at 1104–27; and FS McChesney, ‘Talking ’Bout My Antitrust Generation: Competition for and in the Field of Competition Law’ (2003) 52 Emory Law Journal 1401, 1408–11. The equilibrating tendency has been recognised in the EU context in R Wesseling, The Modernisation of EC Antitrust Law (Oxford, Hart Publishing, 2011) 4, 19 and 28, but cf C Bright, ‘EU Competition Policy: Rules, Objectives and Deregulation’ (1996) 16 Oxford Journal of Legal Studies 535, 544–45. 44 M Jarvis, ‘The Sunday Trading Episode: In Defence of the Euro-defence’ (1995) 44 International and Comparative Law Quarterly 451, 464.

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to apply EU law exists will be closely scrutinised; the ‘more economic approach’ to determine the existence of a competition law violation will be taken; and a heightened standard of proof may be applied. In addition to increasing the burdens faced by a party wishing to rely on the Euro-defence the court has also reduced the benefit of doing so: the court will sever the infringing clauses from the contract and enforce non-infringing provisions, so that a whole contract is rarely avoided. Additionally, the clauses are not treated as void ab initio, so that even a clause seen as anti-competitive may be enforced to a limited degree.

A. Increased Burdens (i) Striking Out and Summary Judgment The negative consequences of the Euro-defence arise because it is costly to defeat even an unmeritorious claim and because it imposes a significant delay on obtaining the remedy sought for breach of contract. These problems can be avoided if an unmeritorious claim can be identified early on and without incurring significant costs.45 The tools for doing so are provided in the Civil Procedure Rules. Using case management powers under the 1998 Civil Procedure Rules, or its inherent jurisdiction, the English court may delete written material from a statement of case so that it cannot be relied on when the contract dispute proceeds to trial.46 An application that a Euro-defence is struck out is often combined with an application for summary judgment, which is granted if it can be shown that the Euro-defence has no real prospect of success.47 A claim is struck out if it discloses no reasonable ground, whereas summary judgment is granted when, whilst disclosing a reasonable ground, it has no reasonable prospect of success: the court may treat an application for striking out as one for summary judgment.48 The rationale for striking out claims and summary judgment is to ‘avoid defences without merit going to what is likely to be a long and expensive trial’.49 The question of whether the Euro-defence is disposed of more readily using

45

See eg Yale Security Products Limited v Newman [1990] FSR 320, 327. Civil Procedure Rules, rule 3.4. Ibid, rule 24.2. 48 M Brealey QC, N Green QC, and K George (eds), Competition Litigation: UK Practice and Procedure (New York, Oxford University Press, 2010) paras 7.21–7.23. Criteria to be applied to determine whether a claim is to be struck out are set out in Civil Procedure Rules, Practice Direction 3. The principles governing the grant of summary judgment are conveniently summarised by Sir Andrew Morritt VC in Celador Productions Ltd v Melville [2004] EWHC 2362 (Ch), paras 6–7, approved by the Court of Appeal in Doncaster Pharmaceuticals Group Ltd v The Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661, per Mummery LJ, para 4. See further Sun Microsystems Inc v M-Tech Data Ltd [2009] EWHC 2992 (Pat), paras 6–7 and Intel Corporation v Via Technologies Inc [2003] EWCA Civ 1905, paras 32–35. 49 Intel Corporation v Via, ibid, para 32. 46 47

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these powers than other defences is both quantitative and qualitative.50 It may be that there is a greater tendency to dispose of the Euro-defence at the early stage, but also that the circumstances in which the Euro-defence is raised are those in which the criteria governing early disposal are most often satisfied. Here we are concerned merely with the qualitative aspect—with why the court considers the Euro-defence to disclose no reasonable ground or to have no realistic prospect of success. Early disposal of the Euro-defence occurs first because of a failure properly to plead an infringement of the competition rules;51 and second, because it is insufficient to show, as a defence rather than a counterclaim, that the competition rules have been infringed. Instead, enforcement of the contract must enable the competition law infringement to occur or allow such an infringement to continue, a condition which is described as ‘the nexus requirement’.52 (a) Defective Pleading The English courts have maintained the principle that ‘defendants cannot be deprived of the right to plead, call evidence concerning, and argue the point’.53 It is readily accepted as ‘necessary for Euro defences to be allowed, provided that they are properly pleaded and properly particularised’.54 The pleading requirements can be quite demanding, it being noted that a: euro-defence is not properly pleaded simply by reciting the statutory requirements. Instead, it is necessary to plead primary facts. As the position was put by Roth J in Sel-Imperial Ltd v The British Standards Institution [2010] EWHC 854 (Ch): ‘[t]o contend that a party has infringed competition law involves a serious allegation  … 50 It is arguable that the Euro-defence faces a heightened level of scrutiny. See Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91, para 12, per Megarry VC; British Leyland Motor Corporation Limited and Others v TI Silencers Limited [1980] 1 CMLR 598, para 6, per Walton J; Hagen v D & G Moretti SNC, above n 16, at 518–19, per Buckley J. Compare with the use of early disposal mechanisms described in Calkins, above n 28, at 1104–37. 51 On the requirements of pleading, see A Nelson & Co Ltd v Guna SPA [2011] EWHC 1202 (Comm), para 49, per Mackie QC, sitting as a deputy high court judge; Football Association Premier League Ltd v QC Leisure (No 2) [2008] EWHC 1411 (Ch), para 366, per Kitchin J; and Brealey et al, above n 48, para 7.31. 52 On the need for nexus, see Intergraph Corporation and Another v Solid Systems CAD Services Limited and Others [1995] ECC 53, paras 55–58; Sportswear SpA v Stonestyle Ltd [2006] EWCA Civ 380, paras 30–31. The need for nexus is established in British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd [1984] 3 CMLR 102, paras 89–93, per Oliver LJ, and in Sandvik AB v KR Pfiffner (UK) Ltd (No.2) [2000] FSR 17, 62, per Neuberger J. 53 Hagen v D & G Moretti SNC, above n 16, 520, per Templeman LJ. See also British Leyland Motor Corp Ltd v TI Silencers Ltd [1981] FSR 213, 227, per Templeman LJ. Although acknowledging the pejorative regard in which Euro-defences are held, it is accepted that they should be assessed on their merits in Intel Corp v VIA Technologies Inc [2002] EWHC 1159, para 90 and Heathrow Airport Ltd v Forte (UK) Ltd [1998] EuLR 98, 105, per Collins J, and in Nelson & Co Limited; Bach Flower Remedies Limited v Guna Spa [2011] EWHC 1202 (Comm) para 53, per Mackie QC, sitting as a deputy high court judge. 54 Lansing Bagnall Ltd v Buccaneer Lift Parts Ltd [1984] 1 CMLR 224, para 15, per Templeman LJ. As an example see Oracle America, Inc (Formerly Sun Microsystems, Inc) v M-Tech Data Limited and Another [2010] EWCA Civ 997, paras 29, 35 and 38, per Arden LJ.

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a Defendant faced with such a claim is entitled to know what specific conduct or agreement is complained of and how that is alleged to violate the law  … it is only through the clear articulation of each party’s position in its statement of case, with appropriate factual detail, that the other side can know what case it has to meet.55

It is arguably necessary to plead each component of the competition provision being relied on in the defence so as to indicate how it will be established that that component can be proven as satisfied.56 For example, it is necessary to define the product and the geographic market said to be affected by the restriction of competition and indicate why the measures complained of constitute a restriction of competition and why trade between Member States is affected.57 The Euro-defence is often struck out as a result of a failure to meet these pleading requirements. For example, Mr Justice Ferris, striking out Euro-defences based on Articles 101 and 102 TFEU, in Intergraph Corporation v Solid Systems CAD Services, found the pleaded case embarrassing in its failure to identify with sufficient precision the agreement or concerted practice which is alleged.  … If more than this is intended to be alleged the pleading does not show what this is and is embarrassing.58

Similarly, Mr Justice Collins has complained of pleading ‘so devoid of specificity that it falls plainly within that category of Euro-defences which is so vague and imprecise that it does not really amount to a serious allegation at all’.59 (b) The Nexus Requirement The fact that a party has infringed competition law is not sufficient to prevent them from enforcing any of their legal rights.60 To prevent enforcement of rights arising from contract, it is also necessary to show that to allow the contractual right to be enforced would either cause a restriction of competition or allow a restriction of competition to continue. This is referred to as ‘the nexus requirement’.61 If nexus cannot be established, the infringement of competition 55

Cited in A Nelson & Co Ltd v Guna SPA [2011] EWHC 1202 (Comm), para 49. Football Association Premier League Ltd v QC Leisure (No 2) [2008] EWHC 1411 (Ch), paras 335–41 and 363. 57 Ibid, para 366. 58 Intergraph Corporation v Solid Systems CAD Services Ltd [1995] ECC 53, para 15. Also Duracell International Inc v Ever Ready Limited [1989] RPC 731, 748, per Vinelott J. 59 Intel Corp v VIA Technologies Inc [2002] EWHC 1159, para 130. Also Sandvik Aktiebolag v KR Pfiffner (UK) Ltd [2000] FSR 17, 58, per Neuberger J, Hoover Plc v George Hulme (Sto) Ltd and George Hulme [1982] 3 CMLR 186, para 84, per Whitman J and A Nelson & Co Ltd v Guna SPA [2011] EWHC 1202 (Comm), para 53. 60 Philips Electronics NV v Ingman Ltd [1998] 2 CMLR 839, para 59, per Laddie J; British Leyland Motor Corporation Ltd v TI Silencers Ltd [1980] 1 CMLR 598, para 17, per Walton J; Imperial Chemical Industries Ltd v Berk Pharmaceuticals Ltd [1981] 2 CMLR 91, para 9, per Megarry VC; and Sportswear Company SpA, Four Marketing Ltd v Sarbeet Ghattaura [2005] EWHC 2087, paras 24–25. However, see Intel Corporation v Via Technologies Inc and Elitegroup Computer Systems (UK) Limited; Intel Corporation v Via Technologies Inc; Via Technologies (Europe) Limited and Realtime Distribution Limited [2003] EWCA Civ 1905, paras 2, 15 and 80. 61 British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd [1984] 3 CMLR 102, para 89–93, 56

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law cannot provide a defence to an action for breach of contract and the Eurodefence will be struck out.62 Satisfaction of ‘the nexus requirement’ can clearly be seen in Football Association Premier League Ltd v QC Leisure. There is a danger of over-simplification because the case was not pleaded as one of breach of contract, but it is easier to describe it as if it had been. The Premier League had agreed to allow works protected by copyright to be viewed in a specific geographical location. An action was brought against those viewing the protected works outside the agreed territory, essentially on the ground that this was breach of contract.63 The incompatibility of the contract with competition law is then invoked as a defence, it being argued that the contract clause restricting the viewing of the protected works to a particular territory is a restriction of competition by its object.64 The nexus is clear—the clause the court is being asked to enforce—the territorial restriction—is alleged to be one in breach of competition law and as such Mr Justice Barling allowed the Euro-defence to proceed to trail.65

(ii) Restrictive Approach to the Jurisdictional Limit of EU Competition Law The ability to rely on the Euro-defence arises only if the contract affects trade between Member States. The concept of an agreement ‘which may affect trade between Member States’ is intended to define the boundary between EU and national law.66 It has long been clear that the reach of EU competition law is not avoided simply because an agreement is implemented or operating within a single Member State.67 However, when seeking to prevent a party relying on a breach of competition law to avoid contractual obligations the English court has at times taken such a restrictive approach to the jurisdictional reach of EU competition law. Take, as an example, Heathrow Airport v Forte, in which Forte per Oliver LJ; International Business Machines Corporation v Phoenix International (Computers) Ltd [1994] RPC 251, 273; Intergraph Corporation v Solid Systems CAD Services Ltd [1995] ECC 53, paras 55–58; Sandvik AB v KR Pfiffner (UK) Ltd (No 2) [2000] FSR 17, 62, per Neuberger J; and Sportswear SpA v Stonestyle Ltd [2006] EWCA Civ 380, paras 30–31. 62 Failure to establish nexus was the reason for striking out Euro-defences in both Duracell International Inc v Ever Ready Ltd [1989] RPC 731, 746 and Ransburg-GEMA AG v Electrostatic Plant Systems Ltd [1989] 2 CMLR 712, paras 8, 10, 18, 23, 28–29 and 31. 63 Football Association Premier League Ltd v QC Leisure (No 2) [2008] EWHC 1411 (Ch), paras 335 and 344. 64 Ibid paras 335–41, 344. See also Murphy v Media Protection Services Ltd [2008] EWHC 1666 (Admin), paras 54–56, 63, and 67. 65 Football Association Premier League Ltd v QC Leisure [2008] EWHC 44 (Ch), para 46; also at paras 7 and 25. 66 Joined cases 56 and 58/64 Établissements Consten SàRL and Grundig-Verkaufs-GmbH v Commission [1966] ECR 299, 341; Case 23/67 SA Brasserie De Haecht v Consorts Wilkin-Janssen [1967] ECR 407, 415. See Commission Notice, Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty [2004] OJ C101/81. 67 Case 43/69 Brauerei A Bilger Söhne GmbH v Jehle and Jehle [1970] ECR 127, 135, para 5; Case 8/72 Vereniging Van Cementhandelaren v Commission [1972] ECR 977; Joined Cases C-215/96 and C-216/96 Carlo Bagnasco v Banca Popolare di Novara [1999] ECR I 135.

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had entered into an agreement to use buildings owned by Heathrow Airport in exchange for 6 per cent of the gross turnover of the business operated from the premises.68 This turned out to be a bad bargain, and Forte was trying to avoid an action to recover the contractual rent. It was argued that inter-state trade was affected by supplying airline meals for international flights departing from Heathrow Airport: meals would leave the United Kingdom prior to consumption and airlines may be supplied with in-flight meals for both the outward and return flights.69 Collins QC, sitting as a deputy High Court judge, was of the view that: The relevant trade is trade to airlines at Heathrow airport, a purely local trade carried on  … at or in the vicinity of Heathrow.  … Its local character is not affected by the fact that three of Alpha’s customers are airlines incorporated in other Member States; or that many of the passengers who consume its products will be residents of, or nationals of, other Member States; or that some of the food will be consumed outside UK airspace.70

By taking a narrow interpretation of the jurisdictional reach of EU competition law the court is able to enforce the contract and support the view that having freely negotiated a contract ‘it is not open to one of [the parties] to turn around seven years later and say that insistence on compliance with its terms is an abuse’.71

(iii) A More Economic Approach By making a distinction between the object of restricting competition and the effect of restricting competition, the Treaty provides two means by which a restriction of competition can be established.72 The object approach provides a legal presumption that competition is restricted.73 For a long time there had been slavish application of the presumption, without reflecting on whether the context 68

Heathrow Airport Limited v Forte (UK) Ltd [1998] ECC 357, para 4. Ibid, para 41. Ibid, para 42. See also the Irish High Court conclusions that an effect on trade between Member States was absent despite finding that 4,000–5,000 units of the goods under question moved between the Republic of Ireland and the United Kingdom; 30,000 between the United Kingdom and the Republic of Ireland; and an unspecified number between the United Kingdom and both Belgium and the Netherlands, in Radio Telefis Eireann, the British Broadcasting Company and BBC Enterprises Limited and Independent Television Publications Limited v Magill TV Guide Limited (Magill) [1990] ECC 273, paras 7, 32, 37, 43–44, 53–54, 57, 62–63, 74 and 77. 71 Magill, para 28. 72 Case 56/65 Société Technique Minière v Maschinenbau Ulm GmbH [1966] ECR 235, 248 73 That ‘object’ exists as a legal presumption that restrictive effects arise is accepted by Foskett J in R ex parte Cityhook Limited and Cityhook (Cornwall) Ltd v Office of Fair Trading [2009] EWHC 57 (Admin), para 125; Communication from the Commission—Notice—Guidelines on the application of Article 81(3) of the Treaty [2004] OJ C101/97, paras 21 and 24; Communication from the Commission—Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements [2001] OJ C3/2, paras 18 and 25; Case C-209/07 The Competition Authority v Beef Industry Development Society Ltd and Barry Brothers (Carrigmore) Meats Ltd [2008] ECR I-8637, report of the hearing, para 17; DG Goyder, EC Competition Law, 4th edn (New York, Oxford University Press, 2003) 96; O Odudu, The Boundaries of EC Competition Law: The Scope of Article 81 (New York, Oxford University Press, 2006) 113–25. 69 70

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justifies reliance of the presumption of restricted competition.74 More recently there has been a renewed emphasis on economic harm and the circumstances in which such harm is appropriately presumed.75 There is a growing recognition that, at trial, if a point is to be taken seriously, an exercise of some sophistication is needed to identify the market, and it is usual for evidence from economists to be adduced to enable the market to be identified by the court.76 It is also recognised that a ‘counterfactual’ analysis may be required, that is to say, it must be shown what the market would have looked like in the absence of the challenged measures.77 The English court has shown a willingness to engage in this rigorous examination of alleged economic harm.78 Further, procedural rules now require any claim or defence pleading competition law, unless commenced in the Commercial Court, to be transferred to the High Court at the Royal Courts of Justice and assigned to the Chancery Division.79 This makes it clear that the case will be heard by a judge with training, experience and expertise in the ways and means of competition law and the more rigorous approach taken to identifying harm to competition will deter unmeritorious recourse to the Euro-defence.

(iv) Standard of Proof The more economic approach increases the difficulty of establishing a restriction of competition. This difficulty is further increased by the standard required in order to prove the restriction. In civil litigation matters in dispute are decided on the balance of probabilities, meaning ‘more likely than not’.80 As a matter of EU law, it is also accepted that competition law infringements do not require matters to be proven to a standard higher than the civil standard.81 However, owing to 74 Joined Cases 56 and 58/64 Établissements Consten SàRL and Grundig-Verkaufs-GmbH v Commission [1966] ECR 299, 343. 75 See N Forwood, ‘The Commission’s More Economic Approach—Implications for the Role of the EU Courts, the Treatment of Economic Evidence and the Scope of Judicial Review’ [2009] European Competition Law Annual 255. For recent reflection on the appropriate application of the presumption, see D Bailey,  ‘Restrictions of Competition by Object under Art 101 TFEU’  (2012) 49  Common Market Law Review 559. 76 A Nelson & Co Ltd v Guna SpA [2011] EWHC 1202 (Comm), para 55. 77 Football Association Premier League Ltd v QC Leisure (No 2) [2008] EWHC 1411 (Ch), paras 335–41, 363. 78 Inntrepreneur Pub Company (CPC) and others v Crehan [2006] UKHL 38, at paras 12 and 43–72; Crehan v Inntrepreneur Pub Company (CPC) and Another [2003] EWHC 1510 (Ch), [2003] 27 LS Gaz R 39, at paras 136 and 156–61;and Duracell International Inc v Ever Ready Limited [1989] RPC 731, 745. 79 Civil Procedure Rules, Part 30.8 and Practice Direction—Competition Law—Claims Relating to the Application of Articles 81 And 82 of the EC Treaty and Chapters I And II of Part I of the Competition Act 1998, paras 1.1 and 2.1. 80 Home Secretary v Rehman [2001] UKHL 47, para 55, per Lord Hoffmann; Re B [2008] UKHL 35, para 12, per Lord Hoffmann; JJB Sports Plc v Office of Fair Trading [2004] CAT 17, para 195; Bookmakers Afternoon Greyhound Services Ltd v Amalgamated Racing Ltd [2008] EWHC 1978, para 392; and Cityhook [2007] CAT 18, para 207. 81 In Case T-53/03 BPB plc v Commission [2008] ECR II-1333, para 64, the General Court rejects a claim that a competition law infringement must be proven ‘beyond reasonable doubt’. See also Case T-99/04 AC-Treuhand AG v Commission of the European Communities [2008] ECR II-1501,

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the serious consequences of finding a competition law infringement—not just the possible invalidity of the contract, but damage to reputation, disqualification as a director, criminal proceedings under the Enterprise Act 2002, section 188, and the possibility of civil fines, the English court has been reluctant to make findings on the normal civil standard. Instead there has been a search for proof to ‘a high degree of probability, but less than the standard of proof in criminal matters’.82 The Competition Appeal Tribunal has sought to clarify matters, noting that: it is important to distinguish between two different things: what the test is, on the one hand, and what is the nature of the evidence necessary to satisfy the test, on the other. As regards the test, the civil standard is the balance of probabilities. As regards the nature of the evidence … where serious matters are in issue, for example conduct akin to dishonesty, the quality and weight of the evidence needs to be stronger than it would need to be if the allegations were less serious. As we understand Re H, the law in effect presumes that conduct akin to dishonesty, or capable of attracting penalties, is less likely than honest conduct.83

Thus, the evidence required to prove a competition law infringement, although not equated to a higher standard of proof, may filter out unmeritorious recourse to Euro-defences. The requirement for greater and better evidence to substantiate a Euro-defence can be justified by the cost of an erroneous decision. The errors may be one of two types, either false positives (type I error, over-deterrence, or false conviction) or false negatives (type II error, under-deterrence, or false acquittal).84 False negatives are less costly than false positives, because competition may operate to correct false negatives; in contrast, false positives are not corrected by the market and also entail the risk that those avoiding erroneously imposed sanctions will be deterred from enforcing their contractual rights.85

B. Reduced Benefits It can be seen that there is in place a range of not insignificant obstacles to successfully establishing an infringement of competition law. Even when this is done, however, it is not sufficient to establish a complete defence to a contractual claim. One technique, severance, and one concept, transient nullity, can be used to ensure that contractual obligations are enforced even though a restricparas 113 and 148; and LO Blanco, European Community Competition Procedure, 2nd edn (New York, Oxford University Press, 2006) paras 4.20–4.21. 82 Shearson Lehman Hutton Inc v Maclaine Watson & Co Ltd [1989] 3 CMLR 429, para 284. See also Heathrow Airport Limited v Forte (UK) Ltd [1998] ECC 357, para 20 and Intel Corp v VIA Technologies Inc [2002] EWHC 1159, para 90. 83 JJB Sports Plc v Office of Fair Trading; Allsports Limited v Office of Fair Trading [2004] CAT 17, para 199, referring to Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563, 586, per Lord Nicholls. 84 Mcchesney, above n 43, at 1412. 85 Ibid, 1412–13.

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tion of competition is established. These tools reduce the benefit of claiming an unmeritorious Euro-defence and so reduce the incentive to do so.

(i) Severance The Court of Justice has held that the sanction of nullity applies only in respect of the specific clauses in a contract that infringe the competition rules, rather than the whole agreement.86 It is for the national court to determine whether, once that clause is excised, there remains an extant enforceable contract.87 In Chemidus Wavin v TERI the Court of Appeal said, in deciding whether a contract remains to be enforced after clauses contrary to competition law are excised, that it is necessary to consider whether: the contract could be said to fail for a lack of consideration or on any other ground, or whether the contract would be so changed in its character as not to be the sort of contract that the parties intended to enter into at all.88

In Beckett Investment Management Group v Hall, an employment case concerned with restrictive covenants, the Court of Appeal felt the contract remains to be enforced if the following three conditions are satisfied: (1) The unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remains. (2) The remaining terms continue to be supported by adequate consideration. (3) The removal of the unenforceable provision does not so change the character of the contract that it becomes ‘not the sort of contract that the parties entered into at all.’89

The margin of appreciation available when applying the principles of severance provides a powerful technique by which the English court is able to mitigate the impact of a successful, but unmeritorious, invocation of EU competition law as a defence to an action for breach of contract. As an example, in Inntrepreneur Estates Limited v Boyes, whilst the Court of Appeal held that an obligation to purchase beer exclusively from a particular supplier was prohibited by competition law, and that clause was severed, there otherwise remained a valid contract, so that the obligation to pay rent contained in the contract was not avoided.90 By way of contrast, in what has become the leading case on the enforceability of contracts following severance of anti-competitive clauses, Byrne v Inntrepreneur Beer Supply Co, the Court of Appeal held that an obligation to purchase beer exclusively from a particular supplier was contrary to competition law but decided that the contract failed. The invalidity of the contract as a 86

Case 56/65 Société Technique Miniére v Maschinenbau Ulm GmbH [1966] ECR 282. Ibid, 304; and Case 319/82 Société de Vente de Ciments et Bétons v Kerpen and Kerpen [1983] ECR 4173, paras 11–12; Case 56/65 Société Technique Miniére v. Maschinenbau Ulm GmbH [1966] ECR 282, 304. 88 Chemidus Wavin v TERI [1978] 3 CMLR 514, 519–20. 89 Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613, para 40, quoting Crawford QC, sitting as a deputy judge of the High Court in Sadler v Imperial Life Assurance Co of Canada Ltd [1988] IRLR 388, 391–92. 90 Inntrepreneur Estates Limited v Boyes [1993] 2 Estates Gazette 112, 117–18. 87

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whole prevented the party that had successfully invoked competition law from enforcing the remainder of the contract, it having been argued that the contract remained valid so that a clause allowing an extension of the lease could be invoked.91 Although the Euro-defence succeeded in both cases, in neither case does it seem to have been beneficial to the party pleading it. It has been thought that severance can be used to remove restrictive clauses, but cannot be used to remove clauses preventing the contract benefiting from a block exception regulation.92 This is based on the position at the time that only the European Commission may confer exemption.93 Even within that context, Holleran v Daniel Thwaites suggests that the English court will sever clauses, not only so that the remainder falls outside Article 101(1) but also so that it falls within Article 101(3).94 And in Byrne v Inntrepreneur Mr Justice Neuberger held that a contractual provision alleged to prevent the application of the block exemption could be treated as excised under an express contractual provision for severance of invalid terms.95 This view has greater force now that national courts are empowered to apply Article 101(3) TFEU. It can thus be seen that even when the Euro-defence is successfully pleaded, the national court has a power to preserve the main force of a contract when justice so requires.

(ii) Transient Nullity One consequences of an effects-based competition law is that a contract may at times raise no competition law concerns because, for example, the parties have many competitors; and at other times that very same contract may raise a myriad of concerns because, for example, the parties have few if any competitors. The legality of the contract is not determined endogenously but depends on the exogenous circumstances in which it is operating and over which the parties may have little if any control. The competition rules prohibit the agreement only in those times when it restricts competition—as observed by Lord Justice Chadwick: ‘The prohibition is temporaneous (or transient) rather than absolute; in the sense that it endures for a finite period of time—the period of time for which it is needed—rather than for all time.’96 A question is whether a contract that infringes competition law is to be considered void ab initio and incapable of resurrection or instead to be merely unenforceable in any period in 91 Courage Ltd v Crehan; Byrne v Inntrepreneur Beer Supply Co Ltd (formerly known as Courage Ltd); Inntrepreneur Beer Supply Co Ltd v Langton; Greenalls Management Ltd v Smith; Walker Cain v McCaughey [1999] 2 EGLR 145, 167–70. A similar outcome, but based on a clause severed due to infringement of Art 102 TFEU, arises in EWS v E.ON UK [2007] EWHC 599 (Comm). The established principles on severance are summarised in McCable v Scottish Courage [2006] EWHC 538 (Comm), para 51. 92 VAG France v Magne [1986] ECR 4071; [1988] 4 CMLR 98; Stergios Delimitis v Henniger Bräu [1991] ECR I-935; [1992] 5 CMLR 210; Nissan v Dupasquier [1996] 4 CMLR 778 93 In the context of vertical agreements Arts 4 and 5 of Regulation 2790/99 seem to determine whether severance to bring an agreement within a block exemption is possible. 94 Holleran v Daniel Thwaites [1989] 2 CMLR 917. 95 Byrne v Inntrepreneur [1998] All ER (D) 634. 96 David John Passmore v Morland [1999] 1 CMLR 1129, para 27, emphasis added.

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which anti-competitive effects arise. Lord Justice Chadwick concludes from the nature of the competition prohibition that the second approach is required: ‘If the prohibition is temporaneous (or transient) then so is the nullity.’97 The possibility that a contract is unenforceable only during the period in which restrictive effects are shown to exist increases the difficulty faced by those wishing to benefit from a Euro-defence and reduces the benefit from doing so.98 The court is able to enforce the contract and give contractual remedies for the periods in which the contract is not in breach of the competition rules. The transient nature of the nullity (as distinct from the transient nature of infringement) has been questioned, it being argued that the character of nullity is regulated by EU law, and the Court of Justice has indicated that nullity can have retroactive effect.99 According to the Court’s case law, nullity is ‘capable of having a bearing on all the effects, either past or future, of the agreement or decision [in question]’.100 However, the Court has not yet demanded that nullity must always have retroactive effect. Komninos holds the view that this is a question of EU law: Ever since Passmore, English courts and commentators have taken as granted this theory [of transient nullity]. This is remarkable, since this is a national theory that refers to a Community law concept and it has never been confirmed by the European Court of Justice, which remains the only competent court to interpret Community law in an authoritative manner. It is even more remarkable that English courts and commentators have never wondered why this is and still remains largely an English issue and why national courts and commentators in other Member States have not considered this an issue.101

Without assessing whether the nature of the nullity is a question of EU or national law, the response here is that the English court is engaged in the search for an equilibrating mechanism that recognises the need to enforce law from a superior legal order but minimises the negative effects that such enforcement has on the institution of contract within the national legal order.

IV. The Danger of Over-Equilibrating The Euro-defence has two negative consequences that may make it unpop97 Ibid, paras 28–34. The assessment is supported by S Preece, ‘Passmore v Moreland: I’m Not Bitter’ (2000) 21 European Competition Law Review 433, but rejected by G Cumming, ‘Passmore v Morland PLC’ (2000) 21 European Competition Law Review 261. 98 Brealey et al, above n 48, para 18.29. 99 Case 56/65 Société Technique Minière (LTM) v Maschinenbau Ulm GmbH (MBU) [1966] ECR 235, 250 and Case 48/72 Brasserie de Haecht v Oscar Wilkin and Marie Janssen (II) [1973] ECR 77, para 27. 100 Case 48/72 Brasserie de Haecht, above n 99, para 26; Joined Cases C-295/04 to 298/04 Manfredi, above n 23, para 57, emphasis added. 101 Komninos, above n 3, 448.

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ular with English judges: it dilutes the incentive to comply with contracts and provides a strong incentive to settle an unmeritorious claim. Assessing the ability to rely on the sanction of nullity to resist the enforcement of obligations imposed by national law, Mr Justice Walton felt that ‘Euro-Defences pleaded in the defence raise matters of profound consequence’ because if such defences were to be accepted ‘a most profound change has taken place in the law of England without anybody having appreciated that such a position might arise’.102 The feared consequence from a contract law perspective is that when a contract is breached, if the defaulting party raises a Euro-defence, regardless of rights conferred by national laws of contract, the co-contractor ‘will be left remediless’.103 To avoid this consequence the English courts have used and developed a number of techniques to equilibrate recourse to the Euro-defence. The burdens faced by a party wishing to raise a Euro-defence have increased and at the same time the benefits of successfully invoking the Euro-defence have diminished. Much may also be said of the procedure of transferring Euro-defence claims to the Chancery Division of the High Court, since the prospect of specialist scrutiny may further deter the frivolous claim. The techniques enable the English court to balance the need to ensure compliance with EU law obligations with the desire to protect and promote the institution of contract. The question for this concluding section is whether the balance is properly struck, or whether in filtering out unmeritorious recourse to the Euro-defence it has become too difficult to bring a meritorious competition law based defence. At this stage it is too early to say. It is clear that the English court is willing to consider the Euro-defence in a trial of the merits.104 Thus, in Football Association Premier League Ltd v QC Leisure Mr Justice Barling was satisfied that ‘the Art [101] defence is a legitimate subject for a trial’.105 Analysing the attitude of the English courts to Articles 101 and 102, Greaves concluded that there is an immediate acceptance that these provisions are part of the law that must be applied in the courts. … the judges seem to be willing to hear argument on EuroDefences and to act on it.106

At the same time there is a view that, whilst often raised, the Euro-defence had seldom been successful.107 The rarity of successful recourse to the Euro-defence 102

British Leyland Motor Corporation Ltd v TI Silencers Ltd [1980] 2 CMLR 332, para 51. Ibid. 104 Philips Electronics NV v Ingman Ltd [1998] 2 CMLR 839, paras 83–95. 105 Football Association Premier League Ltd v QC Leisure [2008] EWHC 44 (Ch), para 59. See also Intel Corporation v Via Technologies Inc and Elitegroup Computer Systems (UK) Ltd; Intel Corporation v Via Technologies Inc, Via Technologies (Europe) Ltd and Realtime Distribution Ltd [2003] EWCA Civ 1905, para 32, per Morrit VC. 106 R Greaves, ‘Concurrent Jurisdiction in EEC Competition Law: When Should a National Court Stay Proceedings?’ (1987) 8 European Competition Law Review 256, 269, references omitted. 107 Pitney Bowes Inc v Francotyp-Postalia GmbH and Another [1991] FSR 72, 75, per Hoffmann J. On the success and failure of European competition law arguments before the English courts more generally, see BJ Rodger, ‘Private Enforcement of Competition Law, the Hidden Story: Competition Litigation Settlements in the United Kingdom, 2000–2005’ (2008) 29 European Competition Law Review 96; AD Macculloch and BJ Rodger ‘Wielding the Blunt Sword: Interim Relief for Breaches 103

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in contractual claims is unsurprising. The need to comply with EU competition law, and the consequences that follow from any failure to comply, particularly for an important commercial transaction, make it unusual for neither party to have subjected an agreement to competition law scrutiny before proceeding with the transaction.108 Indeed, the experience had been of parties being over-zealous in their compliance attempts, unwilling to do anything unless legal certainly was guaranteed.109 From this perspective the Euro-defence has fared poorly precisely because parties make great efforts to ensure that their contracts comply with competition law so that the defence rarely reflects a genuine belief that the contract infringes competition law or that an infringement of competition law could be established. The paradox is that the threat of the Euro-defence is so great that parties take steps to ensure they are never in a position where the defence could successfully be invoked. The frequency with which the Euro-defence has been raised would suggest a high number of unmeritorious claims. Although at an early stage, equilibration shows clear signs of having resulted in more focused claims. This can be seen from two recent examples of the Euro-defence before the courts.110 A first example is Calor Gas v Express Fuels, though this is a decision of the Scottish Outer House. It concerns the supply of liquefied petroleum gas for resale in cylinders to domestic customers. In exchange for being supplied with Calor cylinder gas the dealer agreed not to purchase gas from a competing supplier for a period of five years and following termination of the agreement was prohibited from handling Calor cylinders.111 When the contract came to an end Calor sought an injunction to prevent the dealer from breaching the post-termination condition that the dealer not handle Calor gas cylinders.112 As a defence it was argued that the agreement was contrary to EU competition law. The court assessment was that there was jurisdiction to apply EU competition law and it of EC Competition Law before the UK Courts’ (1996) 17 European Competition Law Review 393; A Robertson, ‘Litigating under the Competition Act 1998: Recent Case-law: Part 2’ (2004) 3 Competition Law Journal 85; A Robertson ‘Competition Law in the UK Courts: A Review of the Last 3 Years’ (2009) 8 Competition Law Journal 79; A Robertson, ‘UK Competition Litigation: From Cinderella to Goldilocks?’ (2010) 9 Competition Law Journal 275; B Rodger, ‘Competition Law Litigation in the UK courts: A Study of All Cases to 2004’ (2006) 27 European Competition Law Review 241 (Part 1), 279 (Part 2), 341 (Part 3); B Rodger, ‘Competition Law Litigation in the UK Courts: A Study of All Cases 2005–2008’ (2009) 2 Global Competition Litigation Review 93 (Part 1) 136 (Part 2). 108 On the general compliance culture, see M Smith, Competition Law: Enforcement and Procedure (London, Butterworths, 2001), paras 2.01–2.33. 109 It was thus common to describe EU block exemption regulations as having a strait-jacket effect because they did not leave much room for commercial flexibility and innovative transactions. When the Commission reformed the block exemption regime it was trumpeted as the removal of ‘the strait-jacket imposed by the old Block Exemption Regulations’. Commission Press Release IP/00/520 Brussels, 24 May 2000 ‘Commission finalises new competition rules for distribution’. 110 See also the operation of the Euro-defence before an arbitrator in P Runeland and G Blanke, ‘Recent Enforcement Cases under the New York Convention in Europe and the CIS’ (2009) 75 Arbitration 565, 568–69 and G Blanke and R Nazzini, ‘French Supreme Court Confirms Minimalist Review of Competition Law Awards’ (2008) 1 Global Competition Litigation Review 44–46. 111 Calor Gas Ltd v Express Fuels (Scotland) Ltd [2008] SLT 123, para 4. 112 Ibid, para 5.

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engaged the more economic approach, finding that both the market was difficult for a new gas supplier to enter and that both clauses made a significant contribution to that difficulty.113 In Jones v Ricoh Jones provided assistance to companies by managing their photocopying equipment. Jones agreed with Ricoh, a supplier of photocopying equipment, that it would assist in making sales to companies on condition that Ricoh not approach any of Jones’ clients directly. When it transpired that Ricoh had approached a client directly, Jones brought an action for breach of contract. As a defence Ricoh argued that the clause was contrary to Article 101(1) TFEU, did not benefit from Article 101(3) TFEU, and so was unenforceable. Mr Justice Roth found, on the basis of its object, that the clause was restrictive of competition and unenforceable and granted summary judgment dismissing the claim that an agreement not to approach clients of Jones had been breached.114 These two cases illustrate that it is possible to surmount the barriers imposed to prevent unmeritorious recourse to competition law to defend an action for breach of contract. But it is also clear that successful invocation of competition law as a defence now requires a more focused attempt to establish both the infringement of competition law and the relevance of the competition law infringement to the contract law dispute. In Calor Gas v Express Fuels the party was able to show restrictive effects by providing economic evidence and analogous decisions taken by competition authorities in neighbouring geographic markets. Jones v Ricoh concerned a clause that benefited from a presumption of restrictive effects. In both cases it is the clause to be enforced that is found to be anti-competitive, so that nexus is clearly established and the parties benefit directly from severance. The Euro-defence is important, not so much because it is frequently successfully invoked before the national court, but because the threat it poses is so severe that parties take steps to comply with their competition law obligations. Through this lens it can be seen that efforts to weed out and deter unmeritorious recourse to EU competition law will have little impact on the effectiveness of EU competition law and meritorious claims. This is not to claim that the Eurodefence is redundant. There are signs of the Euro-defence mutating to question, not the validity of a contract, but the type of remedy the national court may award for breach of that contract. In Intel v Via it was accepted that even when a competition law infringement did not create a defence to the breach of contract claim, ‘it may yet constitute a defence to the remedies of injunction, delivery up and an account of profits’.115 Hence, there is no doubt that the Euro-defence will endure and that the many consequences of its invocation remain to be explored. 113

Ibid, paras 21–44. Jones v Ricoh UK Ltd [2010] EWHC 1743 (Ch), paras 39–49. 115 Intel Corporation v Via Technologies Inc and Elitegroup Computer Systems (UK) Ltd; Intel Corporation v Via Technologies Inc, Via Technologies (Europe) Ltd and Realtime Distribution Ltd [2003] EWCA Civ 1905, para 87. Also Pitney Bowes Inc v Francotyp-Postalia GmbH [1991] FSR 72, 76–77, per Hoffmann J; Lansing Bagnall Ltd v Buccaneer Lift Parts Ltd [1984] 1 CMLR 224, para 14, per Templeman LJ. See also Thetford Corporation v Fiamma SpA [1987] FSR 244, 249–50, per Fox LJ. 114

Index Introductory Note References such as ‘178–9’ indicate (not necessarily continuous) discussion of a topic across a range of pages. Wherever possible in the case of topics with many references, these have been divided into sub-topics and/or only the most significant discussions of the topic are listed. Because the entire volume is about ‘EU law’ and ‘private law’, the use of these terms (and certain others which occur throughout) as entry points has been minimised. Information will be found under the corresponding detailed topics.

48-hour week 239, 242, 244, 248–51 access to employment, vocational training and promotion 85, 182, 215, 257, 288, 361 to justice, obstacles to 193–4 market 55, 66, 311 to services of general economic interest and in network services 269–71 acquis 132, 150, 159, 165, 216, 228, 282 and general principles of civil law 169–72 principles 135, 170, 283–4 actors 2, 55–7, 60, 287, 290, 356, 373 market 55, 57, 60, 84 out-of-state 55–6 private 5, 42–5, 48, 51–2, 72, 207, 214 actuarial factors 264–5 adaptability 241, 245, 250–1 administrative courts 86, 89, 148 administrative law 36, 74–6, 80–1, 84–7, 89 obligations 81 ADR see alternative dispute resolution advice, investment 348, 350–1, 353, 356 advice duties 347, 354, 356 Advocates General 92, 166–7, 176 age 22–3, 50, 78–9, 253–4, 256–9, 263, 274–5 discrimination 83, 257–8 agencies 294–7, 301, 309, 367, 376, 382 agency relationships 364, 381–2 agents 364, 376–7, 381–2 commercial 364–5, 381–2, 389–90 alternative dispute resolution (ADR) 200, 224, 345, 356, 368 annulment 119–20, 140, 308 appearances, entering of 107–9, 111, 117–18, 128 applicable foreign law 98, 106, 112, 114 applicable law 25, 91, 97, 104–7, 112–13, 320, 365–6

uniform rules of 112–13 application 3–4, 12–13, 75–7, 259–61, 357–9, 370–2, 376–80 consistent 375, 379 direct 50, 82, 208 horizontal 4, 18, 38, 50, 64, 71, 81 appropriateness 1, 7, 30–2, 45–6, 317, 347, 350 arbitration 119–20, 123, 289, 307–8, 368, 414 agreements 308 clauses 33, 119–21, 287, 289, 301, 305, 307–9 arbitrators 119–20, 287, 289, 414 arguable case, good 112 Austria 11, 22, 56, 215, 221, 369–70 autonomous collective agreements 238 autonomous interpretation 135, 143, 176 autonomy 4, 43, 48–51, 55, 158–9, 178, 260–1 contractual 23, 301, 307, 309–10 national 26, 159 personal 57, 242 private see private autonomy procedural 92, 120, 128, 181, 191–2, 198 average consumer 3, 310, 333–56 Dutch law 348–50 German law 352–5 legislative framework 342–8 meanings 335–41 multiplicity of standards in consumer credit and investment law 341–55 as point of reference 355–6 UK law 350–2 B2C see business consumer relations bad bargains 398–9, 407 balance 38, 121, 129, 192–5, 218–19, 254–6, 413 institutional 84, 205 of probabilities 408–9 banks 56, 192–3, 306, 341–3, 345–8, 352–4, 360

418 bargaining power 58, 117, 171, 236, 239, 241, 293 inequality of 58, 64, 280, 284 barriers 10–11, 14, 17, 57, 62, 67, 366 to trade 11, 62, 336–8 Belgium 17–19, 116, 261, 308, 378, 407 benchmarks 335–6, 339–40 black lists 5, 291–316 centralised 297, 308, 313 and hardcore restrictions 302–4 impact on US private autonomy 294–6 importance of discourse 296–8 over time 301–9 political stakes 311–14 as Sonderweg 298–301 thought experiment 307–9 in Transatlantic trade 294–301 uniform lists and structural asymmetries 309–14 US critique 304–6 block exemptions 303, 380, 411, 414 boilerplates 304–6 breach of contract 22, 93, 395, 397–8, 403, 406, 415 of duty 189, 200, 352 of public law norms 344–5 Britain see United Kingdom burden of proof 4, 102, 113, 123, 183, 400–1 business actors 293, 305, 307 business consumer relations 308, 341–2 law 141, 180, 226, 291, 294, 318, 333 and non-discrimination principle 262–3 business premises 125, 134, 197, 202, 318, 342, 360 cancellation 125, 133–4, 137–8, 151, 185, 359 right of 125, 134 capital investment 138, 231–2 care 347–8, 350, 353, 356, 375, 390, 393 duties of 333, 338, 342, 345–9, 351–4, 356 case-by-case basis 40, 47, 359, 368 case law 11–12, 91–2, 116, 118–19, 125, 338–9, 373 see also Table of Cases horizontal effect 61–6 casual consumers 337, 340 Central and Eastern Europe (CEE) 310, 312 centre-periphery dimension 310, 314 certainty, legal 6, 16–23, 26, 181, 194–8, 209–10, 216 CESL see Common European Sales Law children 242–3, 261, 300, 313 choice 5, 43–4, 60, 67, 109, 242, 319–20 freedom of 5, 34, 113, 270 citizens 68, 84–5, 168, 180, 182, 204, 262 Union and Member States 29–52 citizenship 52, 68, 85, 260–1 and non-discrimination 260–2 civil cases 89, 115

Index civil courts 86, 89–129, 148, 196 comparisons 105–6 and French law 101–5 and German law 98–101 and national law 92–106 Océano Grupo Editorial and related cases 92, 114, 117–26, 128–9, 188 and UK law 93–8 civil courts general position of Court of Justice on application of EU law on their own motion 114–16 civil justice 89, 98, 127 civil law 3, 7, 42, 85, 90–1, 131–80, 216 common system of 169–70 general principles of see general principles, of civil law meaning 148–9 civil procedure 89–90, 92–3, 99, 101–3, 105, 115, 129 civil process 89–91, 95, 121, 126–7, 129 claim forms 97, 111 client protection 343 co-contractors 399, 413 co-regulation 45, 297 coercion 4–5, 7 coherence 8, 23, 36, 51, 83–4, 143, 164–6 and general principles of civil law 163–6 horizontal 162, 165 progressive 144–5 vertical 164–5, 383 collective agreements 4–5, 224–5, 235–41, 243–4, 246–7, 249, 251–2 autonomous 238 national-level 236–7 collective bargaining 5, 14, 224, 235–9, 243, 248, 250–2 collective interests 44, 69, 275 collective regulation 64, 241, 261 commercial agents 364–5, 381–2, 389–90 commercial practices, unfair 226–7, 318, 333, 342–5, 359, 375–6, 383 common core 172–4 see also acquis Common European Sales Law (CESL), proposed 126, 156, 173–5, 178, 255, 297, 328 common law 42, 169, 173, 282, 306, 352, 378–80 common traditions 170–1 companies 12, 25, 30, 33, 54, 353–4, 415 listed 367 company law 155, 255, 367–8 comparative law 32, 37, 135, 174 compensation 136–7, 151, 187, 272–3, 344–5, 364–5, 381–2 fair 187, 216 level of 202 liability of individuals to pay for loss caused by acts in violation of EU law 24–6

Index for non-material damage 273, 362 compensatory rest 247, 249 competence creep 8, 141, 169, 388–9 competences 31, 47–8, 83–4, 141, 158–9, 205–6, 226–7 exclusive 51, 160–1, 323 shared 159–60, 164, 226, 323, 333 competition 14–15, 194–5, 231–2, 269–70, 302–7, 378–9, 407–11 authorities 396, 401, 407, 415 distortion of 25, 151, 157, 160, 187, 203, 363 law 9, 11, 25–26, 153–4, 160–1, 203, 377–9 Community/Union 14–15, 161, 186, 378–80, 395–6, 406–7, 414–15 and contract 395–415 infringements 400–2, 404, 408–9, 414–15 limited scope of application to private agreements 13–15 national 304, 379–80 private enforcement 160–2, 165–6, 363 restrictive approach to EU jurisdictional limit 406–7 United Kingdom 378–80 regulatory 231, 252 restriction of 15, 161, 399, 405–8 rules 14, 256, 343, 377, 397, 404, 410–12 competitiveness 5, 229, 231–2, 235, 244, 250 competitors 37, 183, 199, 302, 310, 312, 411 complexity 71, 153, 343, 352, 356 compliance 189, 192, 197, 213, 229, 231, 413–14 costs 229, 231 concerted practices 203, 378, 400, 405 conditions of employment 85–6 see also working conditions conduct 1, 21, 25, 80–1, 218, 220–1, 409 private 81, 84–5, 218 conferral 7, 83, 158, 206, 210, 216 confidence 52, 180, 296, 312 consumers 228–30, 313 conflict of laws 98, 105–6, 113 conflicts of interest 354 confusion 32, 261, 390 consistency 54, 66, 371, 373–4, 380 constitutional dimension of private law liability rules 199–222 constitutional framework 155, 323–4, 328–9 constitutional fundamental rights 42–3 constitutional justification 83–5, 87 constitutional law 29, 35, 39, 46, 167–8, 204, 298 national 29, 369 constitutional principles 7, 154–7, 204–6, 214, 256, 387 constitutional status 82, 84, 131, 153–8, 170, 204, 253 constitutional traditions 23, 142, 179, 258–9

419

constitutionalisation 24, 31–2, 34, 38–43, 45, 152 constitutionalism 38–9, 213, 222 constitutionality 42, 267 constitutions 38–9, 41–2, 50, 155, 161, 214, 222 construction sector 237–8 consumer associations 299, 305 consumer confidence 228–30, 313 consumer contracts 92, 116–17, 119, 121–3, 228–30, 292, 307–8, 312–15 law 165, 299, 314 consumer credit 124, 300, 304, 318, 335, 341–2, 355–6 Directive 124, 318, 335, 343, 346, 348–9, 360 consumer disputes 368 consumer groups 159, 230, 295 consumer injunctions 360–1 consumer law 164–6, 170, 183–4, 188–9, 226–9, 270, 319–23 Community/Union 5, 7, 142, 182, 317–22, 326, 333 soft law instruments 368 Directives 338, 348, 390 multiplicity of standards 341–55 principles 170 consumer markets 230, 263 consumer policy 194, 270, 294, 296, 317, 323 consumer protection 124–6, 142, 159–60, 225–9, 323–4, 329–31, 336–8 high level 142, 170, 179–80, 226, 230 level 142, 315, 321, 329 limitation 142–3 consumer rights 125, 136, 165, 190, 296–7, 312, 318 Directive 136, 140, 164, 170, 180, 202, 318–19 consumer sales, Directive 164, 197, 199, 201, 318, 360–1, 374 consumer transactions 4, 7, 225, 342–3 consitutional case for EU regulation 322–9 cross-border 317, 321, 324 regulation 7, 317, 322–4 without internal market dimension 317–31 case for/against EU law involvement 329–30 consumerism 297 consumers 116–26, 227–30, 303–10, 317–22, 326–30, 333–46, 348–53, 356 average see average consumer not binding on the consumer 117, 121 casual 337, 340 confident 228, 296 empowered 334, 347–9 habitual residence 320, 326 interests 179, 183, 194, 297 opportunistic 305

420

Index

consumers – continued reasonably well-informed and reasonably observant and circumspect 334, 339–40, 343 contract face-to-face 326 contract fairness 299, 306, 311 contract law 39, 54–5, 135, 140, 150–1, 175–6, 365–6 general 135, 140, 150, 224, 375 general rules of 175, 225 private autonomy 291–316 contract partners 255, 263, 274 contract terms 63, 68, 119, 121–3, 179, 298–9, 375 unfair 116–19, 123–4, 171, 173, 294–7, 308–9, 318–19 contract(s) 53–69, 133–8, 151–3, 186–7, 395–9, 401–7, 409–15 binding force 134, 140, 148, 153, 155, 157, 159 breach of 22, 93, 395, 397–8, 403, 406, 415 and competition law 395–415 consumer 92, 116–17, 119, 121–3, 228–30, 292, 307–8, 312–15 cross-border 5, 55, 327–8 distance 136, 187, 202, 318, 333, 342, 360 of employment 66, 149, 224–8, 230–5, 239–40, 244–5, 284–5 illegal 96, 127, 363 institution of 399, 412–13 partnership see partnerships private 11, 62, 67 of sale 201, 374 service 3, 284, 365 contracting parties 6, 53, 58, 60–1, 133–4, 160, 203 potential 57–8 private see private parties contractual agreement 239, 242 contractual autonomy 23, 301, 307, 309–10 contractual freedom see freedom, of contract contractual obligations 8, 91, 143, 319, 398, 401–2, 406 contractual relations/relationships 4, 21, 53, 58–9, 210, 224–5, 347 contractual rights 124, 396–7, 409 control 14, 74, 76, 79, 81, 123–4, 127 fairness 297, 301, 308–11 convergence 10, 35, 143, 164, 168, 300–1 gradual 144–5 social 232 transatlantic 298, 300 core 19, 22, 31, 36–7, 39–41, 47, 172–4 correction 149–50, 158 cost/benefit calculus 229 costs 117, 229–32, 271–2, 312–13, 374–5, 397–8, 400–3 labour 231, 236, 312–13 litigation 4, 308, 397

costs of compliance 229, 231 Court of Justice 116–21, 181–98, 201–6, 210–12, 246–8, 257–61, 264–7 case numbers 195 E Friz case 133, 137–40, 142–3, 145, 159–60, 170, 176 effectiveness principle see effectiveness, principle general position on application of EU law by national courts of their own motion 114–16 Hamilton case 133–7, 140, 142–3, 145, 147, 159–60, 176 intervention in horizontal relations in the absence of EU legislation 49–51 Messner case 133, 136–7, 140, 142–3, 145–7, 150, 159–60 and non-discrimination principle 264–9 Océano Grupo Editorial and related cases 92, 114, 117–26, 128–9, 188 relationship with EU legislator 190–1 relationship with Member States 191 Société thermale d’Eugénie-Les-Bains case 6, 133–5, 137, 140, 142–5, 156, 159 and Working Time Directive 246–8 courts 39–43, 89–125, 127–8, 192–4, 196–7, 397–8, 400–4 administrative 86, 89, 148 civil see civil courts France 103–4, 124 Germany 49, 101, 136, 186–7, 196, 258–9, 353 lower 103–5, 114 national/domestic 16–19, 24–7, 91–2, 107–29, 182–6, 192–6, 207–10 Netherlands 14, 114, 116, 342, 349 referring 50, 143, 150, 272 relative roles of parties and 90–3, 95, 101–6, 111, 121, 126–7 Spain 117, 119 Sweden 25, 52, 237–8 United Kingdom 96–7, 111–13, 351–2, 376–8, 385–7, 402–4, 408–14 covenants, restrictive 378–80, 410 credit 306, 336, 342–3, 346, 349, 351 agreements 124, 202, 300, 318, 335, 343, 346 consumer 124, 300, 304, 318, 335, 341–2, 355–6 credit scoring, discriminatory 276 criminal law 30, 35, 189, 378, 387 criminal sanctions 189 cross-border contracts 5, 55, 327–8 cross-border economic activity 53, 67–8 cross-border service provision 366 cross-border shopping 228, 329–30 cross-border trade 11, 27, 67, 155–6, 229–30 cross-border transactions 5, 228, 317, 319, 321, 325–31

Index cross-collateralisation clauses 300 curia novit legem 91 damages 24–5, 160–3, 186–8, 200–1, 203, 217–19, 361–6 actions 165, 203, 401 expectation 166 non-material 273, 362 de minimis threshold 57–8 deadlines 16, 77–9, 260 defective products see product liability defence(s) 49, 95, 105, 108, 115, 398–406, 413–15 Euro-defence see Euro-defence rights of the 108 unclean hands 165 deficit, legitimacy 48–9 democracy 167–8 democratic legitimacy 177, 206 dependent contractual employment relations 285 deregulation 6, 31, 43–5, 231–2, 269, 293, 301–2 derogations 60, 75, 80, 233–5, 239–40, 243–5, 247–8 differentiation 153, 157, 253, 255–6, 263, 266–8, 346 direct application 50, 82, 208 direct effect 42, 73, 78–9, 115, 131, 150–2, 207–10 general principles of civil law 150–4 horizontal 16, 19–24, 26, 33, 54, 207–9, 211 incidental 16–18, 21–2 direct horizontal effect see horizontal direct effect Directives harmonising 226, 325, 361, 372, 382, 384 horizontal direct effect 16, 19, 21, 23–4 and private parties 15–22 unimplemented 20, 73 directors 367, 409 disability 253–4, 263, 274–5, 288 disclosure 254, 299–300, 307, 328, 368, 401 duties 299, 304, 354 pre-contractual 299–300 discretion 77, 79, 97, 103, 215, 218–19, 296 judicial 292, 371 discrimination 10–11, 59–60, 253–8, 260–2, 264–5, 267–76, 286 see also equal treatment; non-discrimination age 83, 257–8 effective remedies and sanctions 271–4 gender 241, 311, 313 indirect 240, 262–3, 276 individualistic concept and collective dimension 274–7 nationality 5, 57–8, 60, 64, 66 private 67–8

421

prohibition of 10–11, 255, 260, 262, 272 discriminatory credit scoring 276 discriminatory preferences 60–1, 67 disputes 71–2, 76–81, 93–6, 114–17, 289, 307–8, 397–8 consumer 368 contract 402–3 horizontal 50, 74, 78–9, 81, 86–7 private 19, 23, 27, 101, 215 distance contracts see distance selling distance selling 136, 184, 187, 189, 202, 318, 333 Directive 136–7, 187, 318, 360 distortion of competition 25, 151, 157, 160, 187, 203, 363 divergence 299, 333, 335, 341–2, 346, 356, 380 diversity 10, 56, 169, 225, 329 division of labour 153, 166 doctors 246–8 domestic consumer transactions 317–31 domestic courts see national courts domestic law see national law domestic legal systems see national legal systems domestic standards 232, 243, 372 domicile 104, 107, 117 doorstep sellers 190, 197 doorstep selling 125, 134, 140, 183, 185–6, 188, 318 Directive 125, 134, 137, 186, 197, 318, 362 dualist perspective 144–5, 147 duties 99–101, 108–14, 119–23, 199–200, 209–11, 347–8, 353–5 advice 347, 354, 356 breach of duty 189, 200, 352 of care 333, 338, 342, 345–9, 351–4, 356 fiduciary 345, 351–2 information 201, 341, 344, 349, 356, 365–6 primary 200 private law 205, 220–1, 347, 353 secondary 200 dysfunctionality 223, 241, 251 economic efficiency 230, 255 economic integration 78, 152, 199 economic migration 230 economics 11, 66, 152, 178, 189–90, 302–3, 401–2 ECSC see European Coal and Steel Community effect direct see direct effect horizontal see horizontal effect indirect 42, 51, 345, 373, 386 restrictive 407, 412, 415 retroactive 137, 186, 192, 267, 412 effective enforcement 188, 193, 276, 363–4, 373, 390

422

Index

effective judicial protection 77, 81, 154, 203–4, 206, 213–16, 272 effective protection 116, 139, 147, 254, 363 effective remedies 213, 215, 271–4, 276 effective sanctions 193, 262, 271–4 effectiveness 6, 12–13, 26–7, 114–16, 119–20, 128–9, 211–13 of Community control 18–19 of consumer protection 125, 142 of EU law 52, 118, 208 of EU rights 213, 216 principle 6, 115–16, 120, 124, 181–98, 211–12, 272–3 areas of application relevant to private law relationships 183–4 impact on private relationships in practice 195–8 justification 190–8 non-availability of remedies and unexpected obligations 194–5 obstacles to access to justice and unexpected remedies 193–4 and procedural law 188 role of national courts 196–8 and substantive law 184–8 and unexpected liability or risk 188–90 effet utile 20, 142 efficiency 137, 147, 178, 229, 245, 250, 308–10 economic 230, 255 emergency services 240, 243 employees 82, 126, 192, 224, 235–7, 239, 245–7 fixed-term see fixed-term contracts employers 58–60, 66–7, 192, 224, 231–3, 235–51, 272 foreign 237–8, 252 private 11, 22, 212 employment 22–3, 65–7, 182, 231–2, 257, 259–62, 284–6 see also personal work relations conditions of 85–6 contracts of 66, 149, 224–8, 230–5, 239–40, 244–5, 284–5 dependent 286 equality law, Community/Union 279, 286–9 law 3–4, 224–8, 231–2, 235, 279–80, 283–4, 289–90 Community 126, 227, 233, 239, 243, 250, 279–90 equilibrium with private law relationships 280–4 Jivraj v Hashwani case 279, 287–90 non-discrimination in 257–60 personal scope 285–7 policies 233–4 relations/relationships 5, 22, 254, 258, 274, 284–6, 289

employment relations/relationships and social dumping 223–52 empowered consumers 334, 347–9 empowerment 105, 315, 334, 341 enforceability 17, 72, 74, 108, 188, 410 enforcement 73, 75, 193, 293–4, 296, 361, 383 effective 188, 193, 276, 363–4, 373, 390 intellectual property rights 202 of judgments 91, 106, 143, 148 private 160–2, 165–6, 363 regulatory 366, 375 England see United Kingdom enrichment, unjust(ified) 136–7, 140, 145, 148, 154–6, 159, 176 equal treatment 41, 76–7, 82–3, 203, 253, 256–7, 268–9 see also discrimination; non-discrimination principle of 59, 78–9, 157, 182, 257–8, 262–3, 265–6 Equal Treatment Directive 182, 185 Equal Treatment Framework Directive 77–9 equality 2, 5, 66–8, 254–5, 257, 265–6, 268–9 principle 59–60, 131, 142, 254–5, 266 rationale 10, 12–13 of shareholders 81, 150 equilibration 4, 402–12, 414 equilibrium 165, 284–5 equivalence 91, 183, 213, 361–2, 364, 370, 373 principle of 77, 114–16, 118–20, 123, 128, 160–1, 205–6 establishment 7, 10, 33, 64, 77, 153, 170 freedom of 10, 33, 77, 153, 219, 366 ethnic origin 59, 76, 253–4, 256, 262, 274 Euro-defence 4, 395–415 danger of over-equilibrating 412–15 dilution of compliance incentives 397–400 economic approach 407–8, 415 equilibration 4, 402–12, 414 incentive to settle unmeritorious claims 400–1 judicial hostility 396–7, 400 negative consequences 396–401 unmeritorious 402, 410 European Coal and Steel Community (ECSC) 357 European Commission 49, 113, 165, 175–6, 248–9, 334, 398–9 European Court of Justice see Court of Justice European Parliament 124–6, 185, 201–2, 226–8, 269–70, 318–19, 359–61 European Trade Union Confederation 52 Europeanisation 31, 34–8, 45, 48, 144, 293 Europeanist perspective 144–6 evidence 81, 90–1, 93–8, 100, 111–12, 127–9, 408–9 gathering of 91–2, 102, 128 exclusionary rules 379–80 exclusive competences 51, 160–1, 323 exclusive jurisdiction 108–9, 128

Index exclusive territorial jurisdiction 122–3 exemptions 97, 265–6, 268, 378, 411 block see block exemptions exercise of public power 2, 45, 82, 84, 204 expectation damages 166 expectations 167, 181, 192–4, 198, 232, 340–1, 346 presumed 335–6, 339 expert knowledge 166, 168 expert parties 341, 348, 350 experts 36, 167, 169, 289, 398 legal 167–8 expiry 77, 119–20, 193–4 extension 15, 25, 59, 76, 80, 286–8, 382–4 partial 286 fair compensation 187, 216 fairness 119, 121–2, 152, 270, 299, 306–7, 312–15 contractual 299, 306, 311 control 297, 301, 308–11 faits adventices 103 false negatives 409 false positives 409 fault 189, 203, 218–20, 362 fiduciary duties 345, 351–2 finality 120–1, 144 Financial Ombudsman Service (FOS) 345, 351–2, 356 financial services 284, 343, 345, 350 distance marketing of consumer 183, 318, 342, 360 market 352, 355 Financial Services Authority (FSA) 345, 351 fiscal neutrality 156–7, 169–70 fixed-term contracts/work 22, 78, 233–4, 243 flexibility 225, 233–4, 241, 244–5, 247–50 flexicurity 233–5, 241, 244, 249–52 foreign employers 237–8, 252 foreign law 36, 91, 97–8, 104–6, 113, 126 applicable 98, 106, 112, 114 application of 97, 103, 105, 113, 128 content of 113–14 formal legitimacy 45–6 forum selection clauses 307–8 FOS see Financial Ombudsman Service founding Treaties 36, 142, 154–5, 163 framework agreements 78, 233 France 12, 66, 82, 85, 92, 159, 193 courts 103–4, 124 law 89, 92, 110, 124, 127, 295, 319 and civil courts 101–5 fraud 135, 201, 368, 386 free movement 10–13, 36–7, 53–7, 60–2, 64–6, 217–19, 221 case law 54, 334, 336 and freedom of contract 55–61 of goods 11–13, 26–7, 65, 72, 74, 153, 209 law 11–16, 27, 37, 54–63, 65–9, 153, 215

423

application 55–7, 62 horizontal effect 53–69 of persons 12–13 freedom 12–13, 43–4, 54–6, 59–61, 65–9, 152–3, 219–21 of choice 5, 34, 113, 270 of contract 4–5, 44, 53–69, 152–3, 275–7, 293, 304 and free movement situations 55–61 of establishment 10, 33, 77, 153, 219, 366 fundamental freedoms 9, 12–13, 15, 44, 50, 63, 68 individual 8, 45, 55, 67–9 market freedoms 5, 51, 152–3, 162, 166, 179 of movement see free movement full compensation 219, 273 full harmonisation 228–9, 235, 292–3, 296, 311–12, 319, 333–4 functions 19, 43, 63, 81, 149–50, 336, 339–41 judicial 26, 50, 52, 394 fundamental freedoms 9, 15, 44, 50, 63, 68, 179 and private parties 10–13 fundamental rights 38–44, 49–50, 179, 205–6, 252–4, 264–6, 276 constitutional 42–3 horizontal effect of 39, 42 gap-filling 66, 83–4, 131, 149–51, 158–9, 163–4, 345 gender discrimination 59, 236, 241, 254, 264–6, 268, 274–6 general constitutional principles 253, 259 General Court 398, 408 see also Court of Justice general economic interest, services of 269–71, 274 general frameworks 22, 59, 77, 203, 217, 257, 286 general interest 34, 40, 74, 124, 270 general principles 3, 40, 50, 74–6, 78–83, 85–6, 257–8 application of 44, 254 of civil law 3, 7, 131–80, 202, 216 and acquis 169–72 chameleonic character 161–2 and coherence 163–6 and common core 172–4 direct effect 150–4 discourse and dialogue 166–9 E Friz case 133, 137–40, 142–3, 145, 159–60, 170, 176 and general principles of Union law 154–6 Hamilton case 133–7, 140, 142–3, 145, 147, 159–60, 176 hierarchy of norms 154–8 legitimacy 162–80

424

Index

general principles of civil law – continued meaning of principles 146–8 Messner case 133, 136–7, 140, 142–3, 145–7, 150, 159–60 and model rules 175–7 nature 139–49 and objectives 178–80 personal scope 141–2 roles 149–62 Société thermale d’Eugénie-Les-Bains case 6, 133–5, 137, 140, 142–5, 156, 159 sovereignty and subsidiarity 158–61 substantive scope 140–1 territorial scope 140, 142–5 as unwritten primary EU law 152–4 as unwritten secondary EU law 150–2, 156–8 and values 177–8 of European private law 83, 132, 149 functions 163 independent 82, 154 of private law 46, 132, 139, 142, 146, 153–5, 166 of Union law 3, 9, 141–3, 149–51, 153–5, 157–8, 172–3 and general principles of civil law 154–6 horizontal application 81–6 impact on private relationships 71–87 and private parties 22–4 situation as regards 74–81 general private law 40, 134, 150, 170, 172, 284, 349–50 general public interest 225, 256 Germany 137–8, 171, 213, 254–5, 257–60, 321–2, 368–9 courts 49, 101, 136, 186–7, 196, 258–9, 353 law 22–3, 77, 91–2, 105–6, 136–8, 319, 390 average consumer 352–5 and civil courts 98–101 good faith 40, 136–7, 148–50, 153–7, 173–6, 195, 294 general principle 137, 145, 155, 169, 173, 352–3, 375 goods 11, 18–19, 58–60, 200–2, 263, 327–9, 386 free movement of 11–13, 26–7, 65, 72, 74, 153, 209 non-conforming 374–5 goodwill 379, 381–2 governance 45–6, 164, 299, 355 multi-level see multi-level governance governments 32, 46, 51, 74, 222, 224–5, 392 gradual convergence 144–5 Guidelines 140, 226, 267, 330, 367, 382, 406–7 Habermas, J. 166–9, 175, 177 habitual residence

consumers 320, 326 traders 321, 328 hardcore restrictions 5, 302–4, 314 harmonisation 35, 125, 127, 133, 140, 328, 333–4 full 228–9, 235, 292–3, 296, 311–12, 319, 333–4 minimum 229–30, 319, 321, 333–4, 365 private law 38, 315, 377 harmonising Directives 226, 325, 361, 372, 382, 384 Hart, HLA 146, 298 health 156, 233, 240, 245, 247, 250, 252 insurance 266, 268 public 152, 247, 337 hierarchy of norms 154–8 holidays 243, 245, 326, 362, 377 horizontal application 4, 18, 38, 50, 64, 71, 152 general principles of Union law 81–6 horizontal coherence 162, 165 horizontal direct effect 16, 19–24, 33, 42, 131, 151–3, 207–9 horizontal disputes 50, 74, 78–9, 81, 86–7 horizontal effect 13, 39, 50–1, 83, 132, 153, 257 case law 61–6 direct see horizontal direct effect free movement law 53–69 of fundamental rights 39, 42 horizontal litigation 73, 76–8 horizontal relations/relationships 2, 30–1, 33–4, 36–45, 52 appropriate level for public intervention 47–9 appropriateness of public intervention 47 Court of Justice intervention in the absence of EU legislation 49–51 EU involvement rephrased in constitutional terms 46–51 hours of work 225, 235, 239–40, 242–50 see also working time human rights 38, 179, 204, 260, 265, 275, 369 illegal contracts 96, 127, 363 illegality 63, 96–7, 363–4 ILO see International Labour Organization immovable property 107, 202, 318, 343, 360 implementation 79–80, 181–3, 234, 236–7, 248, 257–8, 382–3 national 198, 377, 383, 394 in-work poverty 251 incentives 8, 236, 242, 244, 396–8, 400, 413 incidental direct effect 16–18, 21–2 inclusion, social 275 incompatibility 4, 78–9, 218, 220, 406 incorporation 38, 224, 391–3 indirect discrimination 240, 262–3, 276 indirect effect 42, 51, 345, 373, 386

Index individual agreements 239, 244, 249 individual dignity 59, 67 individual rights 42, 182, 222, 239, 249, 251, 393 individualisation 227, 239–41, 248, 251–2 individuals 1–2, 11–12, 18–21, 29–30, 40, 42–3, 47–8 liability to pay compensation for loss caused by acts in violation of EU law 24–6 private autonomy of 152, 180 industrial action 25, 227, 237–8 information 54, 68, 110, 339–42, 344, 346–50, 365–6 duties 201, 341, 344, 349, 356, 365–6 provision of 17, 347, 365 rights 343, 346, 352–3 information society services 360 initiative 91, 115–16, 122–3, 125, 172, 228, 284 injunctions 227, 274, 345, 360–1, 414–15 consumer 360–1 labour 224 institutional balance 84, 205 institutions 8, 75, 206, 214, 217–18, 230, 232 see also individual institutions legislative 229–30 instrumental rationality 281–2 instrumentalisation of private law 38, 48 insurance 107, 274, 345, 376 contracts 65, 126, 263, 265 health 266, 268 motor 64, 265 and non-discrimination principle 264–9 premiums 264, 267–8 insurers 65, 264, 267–8 integration 11, 36–7, 39, 67–9, 282–3, 357, 388 economic 78, 152, 199 intellectual property (IP) 65, 202, 209, 337, 383, 390, 395 rights 202, 209, 343, 395 intent, legislative 170–1 interest rates 353 interests 40–3, 124, 139, 142, 152, 193–4, 348–51 collective 44, 69, 275 legitimate 117, 273, 277 private 34, 40, 139, 153, 179 public see public interest relevant 142 interference 8, 40, 44, 192, 205, 213, 292 internal market 7, 13–14, 66–8, 151–3, 179–80, 270, 336–8 see also single market freedoms 4–6, 221 law 50, 194, 342, 348, 352 international jurisdiction 101, 103–4, 106–11, 118, 128 International Labour Organization (ILO) 243, 286 international law 36–7, 101, 174, 294

425

Internet 136, 140, 228, 254 see also distance selling interpretation 133–6, 148–50, 189, 196–7, 246–8, 362–4, 374–81 autonomous 135, 143, 176 of Directives 131, 176, 338 in the light of EU law 185, 196 proper 100, 197, 372, 380 intervention 1, 7–8, 26–7, 48–9, 115–16, 128–9, 284–5 judicial see judicial intervention legislative 41, 48, 50 regulatory 5, 51 intrusion 14, 38–9, 49, 212, 217, 281, 290 investment 137, 322, 344–8, 353 advice 348, 350–1, 353, 356 agreements 348–9 capital 138, 231–2 decisions 344, 346–8 firms 341–3, 346–50, 354 inward 231 law 335–6, 341, 343, 356 objectives 347, 353–4 service providers 334, 346–8, 350, 354 services 342, 344, 346, 352, 354 investors 343, 346, 353–4 inward investment 231 IP see intellectual property Ireland 65, 86, 109–10, 193, 209, 360, 407 Italy 18–19, 24, 184, 215, 217, 225, 234 iura novit curia 91, 100 jobs 223–5, 231, 233, 236, 242, 244–5, 248 permanent 233–4 judges 35, 51, 92, 96, 99, 163, 167 and principles 147–8 United Kingdom 4, 127, 396, 404, 413 judgments enforcement 91, 106, 143, 148 recognition of 108–9 judicial discretion 292, 371 judicial intervention 124, 206, 300 national 128 judicial protection, effective 77, 81, 154, 203–4, 206, 213–16, 272 judicial review 50, 89, 214, 306, 371–3, 408 juridical private law 282–3 juridical rationality 281 juridification 227, 235–9, 241, 248, 252 jurisdiction 33, 91, 97, 106–12, 115–18, 205–6, 326–8 agreements 104, 107–8 exclusive 108–9, 128 general principle of 107–8 international 101, 103–4, 106–11, 118, 128 national 224, 272 special 89, 104, 108, 112 territorial see territorial jurisdiction

426

Index

justice 34, 89–90, 107, 113, 120, 127, 193 civil 89, 98, 127 social 5, 152, 236, 255, 293, 309, 315 substantive 98–9, 127 justiciability 58, 207, 210 justification 6–7, 66–7, 152, 181, 211–12, 241, 252–3 effectiveness principle 190–8 regimes 152–3 knowledge 166–7, 169, 275, 310, 346–7, 371–2 client’s 353–4 expert 166, 168 labour 14, 26, 53, 153, 166, 230–1, 279–80 costs 231, 236, 312–13 division of 153, 166 injunctions 224 law 16, 30, 42, 44, 224, 234–5, 252 see also employment, law markets 223–5, 230–1, 233–4, 241, 243, 250, 263 migration 230 standards 231–2, 235, 250, 252 Lamfalussy process 368 Lando principles 135, 148 law-making 147, 166, 173–4, 334–5, 355–6 lawyers 22, 32, 43, 55, 194, 295, 388 legal basis 31, 48–9, 51, 84, 100–1, 141, 322–3 effectiveness principle 190–1 legal certainty 6, 16–23, 26, 181, 194–8, 209–10, 216 legal framework 68, 72, 79, 86, 126, 223–5, 235 legal order 22, 42, 74, 80, 83–5, 87, 116 legal persons 30, 33, 149 legal systems 4, 32, 75, 143–5, 160–1, 167–8, 172–4 domestic 32, 74–5, 77, 115, 205, 324, 326 legality 7, 43, 71–2, 74, 216, 237, 411 principle of 7, 204–5 legality review 218 legislative acquis see acquis legislative process 297, 323–4, 361, 389, 393–4 legislators 139, 146–7, 157, 167, 169, 190, 345 national 159, 172, 192, 205, 231, 295, 338 and rules 147–8 legislature 4, 42, 49–50, 84, 125, 190–1, 236 legitimacy 8, 32, 42, 45–8, 52, 131–2, 281–2 deficit 48–9 democratic 177, 206 formal 45–6 general principles of civil law 162–80 interference with private law relations/ relationships 192–5 substantive 192–3 legitimate interests 117, 273, 277 liability 6–7, 9, 160, 188–90, 344–5, 353, 361–2

conditions of 218–19 constitutional dimension of private law rules 199–222 Francovich 206 imposition of 200, 212 of individuals to pay compensation for loss caused by acts in violation of EU law 24–6 no-fault 219 non-contractual 162–3, 166, 201 private 7, 203, 206, 219–20, 273, 334 private law see private law, liability product 163, 199–201, 391 rules 7, 200, 206, 217 constitutional dimension of private law 200–1, 222 function and nature 199–201 stage 199, 219 state 214–15 third party 266, 268 liberalisation 303–4 life expectancy 265–7, 269 limited competences 51, 169 lis pendens 107, 109, 111, 128 Lisbon judgment 161, 258–9 listed companies 367 litigation 23, 71–4, 77, 89–90, 101–4, 113–14, 400–1 civil 91–2, 101, 105, 121, 125, 254 costs 4, 308, 397 domestic 335, 348, 355 horizontal 73, 76–8 private 20, 76, 78, 275 public interest 275 vertical 73, 75, 77 loss 24–5, 186–7, 192, 202–3, 344–5, 354, 362–3 lower courts 103–5, 114 main proceedings 12, 62, 64–5, 120, 123, 136, 138 management 14, 26, 236 portfolio 347–8, 350, 352–3, 356 market, stock 348–9 market access 55, 66, 311 market actors 55, 57, 60, 84 market building 152, 163, 179, 227 and social dumping 228–38 market contracts 224, 226 market freedoms 5, 51, 152–3, 162, 166, 179 market integration 194–5, 341, 345 market participants 1, 51, 221 market power 57–8, 64 markets 43–4, 53, 55–8, 67, 208–9, 343, 408–9 in financial instruments 334, 343–4, 346–50, 352–3, 355–6 financial services 352, 355 internal market see internal market

Index labour 223–5, 230–1, 233–4, 241, 243, 250, 263 single market 228–9, 231–3, 245, 325 material scope 79, 333 maximum harmonisation see full harmonisation maximum protection 139 mediating tools 336, 338–41 mere incompatibility 218 migrant workers 85–6, 286 see also free movement migration, economic 230 minimum harmonisation 229–30, 319, 321, 333–4, 365 minimum standards 225, 230, 232–3, 235, 237–9, 241, 244–7 minimum standards Directives 235, 243 minorities 59, 100–1 minority shareholders 81, 156–7 misrepresentation 344–5, 349, 352 model rules 172, 201, 282 and general principles of civil law 175–7 motor insurance 64, 265 movement, free/freedom of see free movement multi-level governance 44, 164, 223–52, 388 mutual recognition 56–7 national competition law 304, 379–80 national courts 16–19, 24–7, 91–2, 107–29, 182–6, 192–6, 207–10 general position of Court of Justice on application of EU law 114–16 role in relation to effectiveness principle 196–8 national law 33–6, 183–6, 192–8, 321–2, 324–8, 361–77, 379–89 and civil courts 92–106 content of 194, 220 harmonisation of 323–4 interpretation of 132, 196, 198, 210, 386 provisions of 150, 321, 340, 381 rules of 20, 160–1, 187, 203, 212, 272, 321 spillovers from EU law see spillovers national legal orders 1–2, 24, 35, 120, 181, 357–8, 373–4 national legal proceedings 17–18, 20, 23, 26 national legal systems 74–5, 77–8, 225–6, 282–3, 285, 357–8, 389–91 national legislation 35, 51, 78–9, 237, 248–9, 261, 338 national legislators 159, 172, 192, 205, 231, 295, 338 national level 2, 7, 52, 143–5, 159–60, 235, 324–5 national measures/provisions 17–19, 22, 64, 75, 79, 182–4, 197 national principles 138, 141, 143, 159–61, 195 national private law 32, 171–2, 341, 358–60, 362, 367–8, 372–5

427

and EU law 6–7 national procedural autonomy 211, 213, 361 national procedural law 116, 118–19, 121–2, 128–9, 182, 214 national remedies 182, 213, 315, 363–4, 373, 390 national rules see national law national sovereignty see sovereignty national systems 36, 114, 144, 160, 174, 380–1, 386–7 nationality 10–11, 59–60, 104, 252, 260–1, 274–5, 296–7 discrimination 5, 57–8, 60, 64, 66 negligence 93, 200, 218, 345 Netherlands courts 14, 114, 116, 342, 349 law 344–5 average consumer 348–50 network services 269–71 neutrality, fiscal 156–7, 169–70 nexus requirement 402, 404–6, 415 NGOs 273–5 no-fault liability 219 non-application 121, 181, 187 non-availability of remedies 194–5 non-compliance 18, 189, 344–5 non-conforming products, marketing of 17–18 non-contractual liability 162–3, 166, 201 non-contractual obligations 91, 106–7, 112 non-discrimination 33, 58, 255–6, 261–3, 265–7, 273–5, 283–4 see also discrimination; equal treatment and citizenship 260–2 in employment law relations 257–60 law 59, 256, 274, 276, 283 principle 50, 141, 151, 156, 163, 173 access to and treatment in services of general economic interest and in network services 269–71 extension by primary law 260–2 extension to business consumer relations 262–3 and private autonomy 253–77 unisex tariffs in insurance 264–9 rule 12, 58, 67 non-material damage, compensation for 273, 362 non-regression clauses 234–5 normative content 208, 212, 336, 356 norms 29–30, 207–9, 211, 217, 219–21, 333–4, 344 hierarchy of 154–8 nullity 187, 304, 412 objectives 5, 14–15, 38, 142, 163, 170, 323 and general principles of civil law 178–80 obligations 16–21, 62–5, 77–8, 80–6, 133–5, 192–4, 219–21 clear 220

428

Index

obligations – continued contractual 8, 91, 143, 319, 398, 401–2, 406 non-contractual 91, 106–7, 112 procedural 217–18 second-order 75, 81 substantive 6, 71–6 unexpected 185–6, 194–5, 198 universal service 270–1 obstacles 10, 12, 21, 61–2, 145, 193–4, 207–8 occupation(s) 22–3, 59, 77, 182, 203, 226, 286–8 on-call work 240, 246–8, 250 online transactions 7, 320, 326–8 see also distance selling; Internet opportunistic consumers 305 opt-outs 234, 243, 245, 248–9, 251 optional instruments 140, 173, 297, 314, 325, 329–30, 389 over-deterrence 409 package travel 163, 199, 201, 318, 333, 342, 360, 376–7 Parliament see European Parliament part-time work 243, 245, 251 parties 53–63, 90–106, 108–16, 121–3, 125–7, 363–4, 395–407 contracting see contracting parties expert 341, 348, 350 injured 24, 202 private see private parties professional 346, 353 relative roles of courts and 90–3, 95, 101–6, 111, 121, 126–7 third 16–17, 51, 53, 57, 61, 65, 166 weaker 39, 42, 44, 123, 125–6, 129, 224 partnerships 137–8, 140, 159, 260 party autonomy 54–6, 60, 65, 152, 232, 255–6, 269 party disposition 98, 105, 122, 127 party initiative 125, 129 party presentation 98–100, 105, 122, 127 passengers 126, 151, 185, 359, 407 payment protection insurance see PPIs payment services 270, 274 penalties 15, 133, 183, 189, 312, 409 pension schemes 258, 260 perceptions 26, 55, 281–2, 285, 289, 293, 297 periods of rest see rest periods permanent jobs 233–4 personal characteristics 256, 263, 274 personal data 254, 301, 360 personal scope 12–13, 26, 244, 279 employment law 285–7 general principles of civil law 141–2 personal work relations 224, 279–90 see also employment pleadings 93–5, 97, 113, 127, 404–5 portfolio management 347–8, 350, 352–3, 356

positive action 39, 122, 397, 400–1 posted workers 237–8, 252 Posted Workers Directive 237, 252 poverty 251, 270 powers 45–7, 63–4, 84, 95, 104–6, 118–20, 122–6 delegated legislative 392–3 private 39, 52 public see public power separation of 7, 169, 205, 216 PPIs (payment protection insurance) 350–1 pre-contractual disclosure 299–300 preferences 4, 17, 53–7, 60–1, 85, 230, 289 contractual 5, 54, 58, 62–3, 65, 67 discriminatory 60–1, 67 preliminary rulings 133–4, 136–8, 150, 217, 258, 384, 398 premiums 264, 267–8 presumptions 38, 177, 308, 407–8, 415 prices 18, 58, 177, 189, 229, 363, 365–6 primary law 66, 151–3, 155, 158, 161–2, 170, 184 unwritten 84, 151, 154–5 principled approach 13, 153 principled reasoning 147, 180 principles of civil law see general principles, of civil law general see general principles and judges 147–8 meaning 146–7 privacy 40, 296, 301, 360 private actors 5, 42–5, 48, 51–2, 72, 207, 214 private agreements 9–10 limited scope of application of competition law 13–15 private autonomy 2–7, 32, 43–4, 46–7, 62–3, 220–1, 281–2 and black lists in contract law 291–316 elusive character in EU law 9–27 and EU law 3–5 impact of black lists in US 294–6 and non-discrimination principle 253–77 protection of 4–7, 15, 22, 201, 205, 217–18 restriction of 8, 281 and social goals 5–6 private behaviour 46–8 private conduct 81, 84–5, 218 private contracts 11, 62, 67 private contractual preferences 61–3, 67 private defendants 77–8, 80, 212, 215, 218, 220–1 private discrimination 67–8 private disputes 19, 23, 27, 101, 215 private employers 11, 22, 212 private enforcement of competition law 160–2, 165–6, 363 private individuals 29–30, 33, 35–7, 39–43, 46, 49–52, 62

Index private interests 34, 40, 139, 153, 179 private international law 37, 97, 105–6, 126, 261–2, 325–6, 365 EU 106–14 private law see also Introductory Note autonomy of 43, 48, 276, 287 classic 31–2 constitutionalisation of 31–2, 34, 38–9, 43, 45 duties 205, 220–1, 347, 353 in employment relationships 223–52 general 40, 134, 150, 170, 172, 284, 349–50 harmonisation 38, 315, 377 instrumental 282 instrumentalisation of 38, 48 juridical 282–3 liability 201, 203, 207, 209–14, 216–20, 222, 344–5 conditions of 217–21 constitutional dimension of rules 199–222 constitutional importance of rules 204–6 establishing 208–9 and existing EU law concepts 207–11 principles and justifications 211–16 substantive influence of EU law 201–4 multi-level system of 143, 165, 168 national see national private law neutrality of 38, 48 principles see general principles, of private law relations/relationships 1–4, 6–9, 29–34, 261–3, 279–82, 289–90, 341–4 and effectiveness principle 181–98 and EU employment law 280–9 substantive legitimacy of interference with 192–5 remedies 153, 188, 271, 344 rules 139, 142, 180, 333, 341, 344, 348 national 335, 345 private lawyers 31–2, 34, 38–9, 42–3, 45–6, 49–50, 66 private liability 7, 203, 206, 219–20, 273, 334 private litigation 20, 76, 78, 275 private nature 53, 72, 90, 127, 152 private parties 25–7, 39–40, 42–3, 61–5, 71–4, 76–82, 150–3 and EU secondary legislation 15–22 and fundamental freedoms 10–13 and general principles of EU law 22–4 legitimate claims of 6, 26 obligations of 131, 194 position of 6, 16 private persons 11, 30, 34, 39, 89 private relationships 42–3, 46, 48, 195, 199, 245, 317 see also private law, relations/relationships; private parties

429

and Directives 73–4 and general principles of Union law 71–87 and Treaty provisions 72 private sector 11, 13, 33, 288 private sphere 9, 24–7, 34, 38, 40, 43–5, 47 probabilities 193, 267 balance of 408–9 procedural autonomy 92, 120, 128, 181, 191–2, 198 national 211, 213, 361 procedural law 182–4, 188, 191 impact of effectiveness principle 188 national 116, 118–19, 121–2, 128–9, 182, 214 procedural obligations 217–18 procurement rules 370–1 product liability 163, 199–201, 391 product safety 301, 313 productivity 231, 242, 251, 310 profit 21, 161, 242, 267, 349, 354, 415 proof burden of 4, 102, 113, 123, 183, 400–1 standard of 111, 403, 408–9 proper interpretation 100, 197, 372, 380 property 34, 36–7, 107, 165, 254 immovable 107, 202, 318, 343, 360 intellectual see intellectual property law 30, 174 proportionality 15, 31, 45, 47–8, 191, 219–20, 272 review 219 tests 240, 252, 268, 277 prospectuses 343–4 pseudo-spillovers 372–4 public authorities 10, 16–18, 29–30, 33–4, 39–41, 43–7, 73–7 actions of 11, 39, 76 public bodies 19, 74, 89, 218 Public Contracts Regulations 370 public corporations 89 public health 152, 247, 337 public interest 33–4, 40, 43, 115–16, 118–19, 125–6, 128–9 general 225, 256 litigation 275 public intervention 41, 44, 46–7, 49 appropriateness of 47 public law 2–3, 32–6, 43, 76–80, 85–7, 341–2, 344–6 norms/rules 333, 344–6, 353 public lawyers 29, 34, 39, 43, 47 public policy 15, 33–5, 40, 44, 104, 118–19, 126–7 rules 124 public power 2, 7, 39, 45, 82, 84, 90 exercise of 2, 45, 82, 84, 204 public/private divide 30–3, 43–5, 47 public services 269 public sphere 24, 34, 43–4

430 purposive interpretive approach 387, 394 race 236, 253–4, 262, 275–6, 286 rationality 281–2, 401 high degree of 166–7 instrumental 281–2 juridical 281 reasonably well-informed and reasonably observant and circumspect consumer 334, 339–40, 343 recognition 25, 91, 109, 128, 143, 172, 230 mutual 56–7 Recommendations 367–8 referring courts 50, 143, 150, 272 reforms 165, 314, 367 regulatory enforcement 366, 375 relational scope 285, 290 relative roles of parties and courts 90–3, 95, 101–6, 111, 121, 126–7 religion 254, 263, 286, 288 remedies Directive 370–2 effective 213, 215, 271–4, 276 national 182, 213, 315, 363–4, 373, 390 non-availability 194–5 private law 153, 188, 271, 344 unexpected 185–6, 189, 193–4 remuneration 149, 192, 212, 245, 367 renvoi 370, 376–82, 388 reregulation 31, 43–5 residence, habitual see habitual residence responsibility 25, 38, 49, 63, 87, 101–2, 350–2 see also duties; liability rest periods 246–9 restitution 364 restraint of trade 378–9 restrictions 4, 12, 14, 43, 46, 53–7, 60–2 of competition 15, 161, 399, 405–8 hardcore 5, 301, 302–4, 314 restrictive covenants 378–80, 410 restrictive effect 407, 412, 415 retroactive effect 137, 186, 192, 267, 412 review 11, 42–3, 50–1, 111, 150–1, 165, 264 judicial 50, 89, 214, 306, 371–3, 408 legality 218 proportionality 219 rights 40–2, 77, 89–90, 120, 199–201, 209–11, 213–15 alienable 105 civil 89, 114 constitutional 39–43, 51, 60, 204 contractual 124, 396–7, 409 economic 311 exercise of 25, 115–16, 128, 205 fundamental see fundamental rights human 38, 179, 204, 260, 265, 275, 369 inalienable 105 individual 42, 182, 222, 239, 249, 251, 393 information 343, 346, 352–3

Index intellectual property (IP) 202, 209, 343, 395 of market participants 51, 221 particular 202, 361 private 89–90 social 219, 310–11 substantive see substantive rights risk assessment 264–5 risk profiles 266, 268–9 risks 138, 187–8, 196, 198, 231–2, 349–50, 353–4 rules and legislators 147–8 meaning 146–7 safety 156, 233, 237, 240, 245, 247, 252 sanctions 20, 105, 183, 189, 219, 271–2, 275 criminal 189 effective 193, 262, 271–4 scope 7–8, 10, 75–80, 113, 140–1, 165, 288–91 of application 3, 23, 25–7, 79–80, 85, 148, 254 material 79, 333 personal see personal scope relational 285, 290 substantive see substantive scope territorial 140, 142–5 scrutiny 14, 76, 84, 182, 290, 306, 392 see also review second-order general principles of Union law 76, 78 second-order obligations 75, 81 secondary law 80–1, 131, 154, 156–8, 169–71, 257–9, 262 secondary legislation 1, 8–9, 48, 59, 66, 68–9, 392 securities law 368 self-employment 11, 285–9 self-regulation 45, 227, 235–6, 241, 305, 335, 355 sellers 102, 117–19, 122, 136, 193, 304–7, 374–5 separation of powers 7, 169, 205, 216 seriousness, sufficient 218–19 service contracts 3, 284, 365 service providers 68, 221, 320, 346–8, 365 investment 334, 346–8, 350, 354 services 55–6, 58–61, 224–9, 263, 269–71, 346–7, 365–6 Directive 365–6 emergency 240, 243 financial see financial services of general economic interest 269–71, 274 information society 360 investment 342, 344, 346, 352, 354 network 269–71 payment 270, 274 provision of 10–11, 149, 237 public 269

Index universal 270–1 severance 409–11, 415 sex discrimination see gender discrimination sexual orientation 77, 253–4, 256, 258, 260, 263, 274–5 shared competences 159–60, 164, 226, 323, 333 shareholders equality 81, 150 minority 81, 156–7 single market 228–9, 231–3, 245, 325 see also internal market skills 60, 230–1 social convergence 232 social dumping 223–52, 293, 310, 312 and market building 228–38 prevention 227, 233, 241, 244–5, 251–2 social goals 5–6 social inclusion 275 social justice 5, 152, 236, 255, 293, 309, 315 social origin 254 social policy 15, 26, 64, 321, 382 social rights 219, 310–11 soft law instruments 367–8 sovereignty 35–6, 38, 158–61, 164, 169, 373 Spain 148, 248 courts 117, 119 special jurisdictions 89, 104, 108, 112 special relationships 349–50, 356 spillovers 8, 344, 357–94 adoption of EU law concepts/techniques to apply beyond the scope of EU law 385–7 as competence creep 388–9 constitutional dimensions 388–93 direct, hierarchically superior addition or replacement/ substitution 358–9 direct consequences of direct, superior EU law rule focused on different areaa 359–60 EU law requirements causing change/ adaptation in national law 369–72 extension 373, 382–4 harmonising Directives covering other subject matter 365–6 harmonising legislation requiring Member State implementation on same subject matter 360–1 implications for judicial role(s) and practice 389–92 national constitutional implications 392–3 renvoi 370, 376–82, 388 scenarios 358–72 soft law instruments 367–8 Treaty provisions/harmonising Directives with clear implementation-related consequences for national private law 361–5 stability 120, 149, 342–3, 345

431

standard forms 294, 296, 299, 304–6 standard of proof 111, 403, 408–9 standardised terms 305–6, 309 standards 5, 10, 18, 82, 84, 229, 235–7 domestic 232, 243, 372 double 336, 341, 348 EU 231–2, 236, 303 higher 229–30 labour 231–2, 235, 250, 252 minimum see minimum standards state 19, 23–5, 30–1, 39–45, 58–60, 64–7, 214–15 host 232, 237 state intervention 4–5, 32, 45, 55, 59, 85, 87 state liability 214–15 striking out 403–6 subordinate contractual employment relationships see employment, relations/relationships subsidiarity 7, 31, 39–40, 47–8, 158–61, 191, 323–4 substantive justice 98–9, 127 substantive law 98, 181, 183–4, 191, 384, 394 impact of effectiveness principle 184–8 substantive legitimacy 192–3 substantive obligations 6, 71–6 substantive rights 77, 127, 210, 214, 358, 360 enforceable first-order 81 primary 217–18 substantive scope 1, 16, 19 general principles of civil law 140–1 sufficient seriousness 218–19 summary judgment 403–6 suppliers 55, 59–60, 67, 117–19, 193, 304–7, 410 Sweden 25, 52, 220, 237–8 courts 25, 52, 237–8 tax law 100, 134, 148, 169–70, 183, 191, 205 Directives 133, 156 technical regulations 17–18, 21 national 210 termination 99, 134, 140, 245, 259, 364–5, 381–2 terminology 29, 33, 42, 89–90, 127, 148–9, 211 terms 54–7, 116–19, 121–3, 125–9, 236–9, 305–8, 374–6 boilerplate 306, 314 contract see contract terms legal 31, 47, 90, 93, 100, 105, 110 unfair see unfair contract terms territorial jurisdiction 104 exclusive 122–3 territorial scope 140, 142–5 third parties 16–17, 51, 53, 57, 61, 65, 166 liability 266, 268 time limits 266–7, 371–2 timeshares 202, 318, 360 top-down principles 170–2

432

Index

tort 30, 34, 36–7, 165, 174, 198, 344–5 trade 3, 10–11, 21, 56, 336–8, 377–80, 405–7 barriers to 11, 62, 336–8 cross-border 11, 27, 67, 155–6, 229–30 restraint of 378–9 trade marks 209, 339, 383–4, 390 trade unions 10–12, 51, 224, 237–8, 241–2, 275 traders 17, 186–7, 192–4, 309–12, 319–21, 326–30, 369 EU 310–12 habitual residence 321, 328 US 294–6, 314 traditional approach 55, 93, 96–7, 104 traditions common 170–1 constitutional 23, 142, 179, 258–9 training see vocational training transactions 7, 199, 306–7, 319, 321–3, 325–9, 346–7 commercial 149, 225, 327, 337 consumer see consumer transactions domestic 7, 324–5, 327–8, 331 face-to-face 327–8 transatlantic convergence 298, 300 transferred loss argument 391 transient nullity 409, 411–12 transport 24, 126, 210, 214–15, 243, 269, 274 transposition 22–3, 74, 78–9, 137, 142, 260, 325 Treaties 8–15, 48–51, 60–5, 75–80, 83–6, 203–6, 399–402 Treaty provisions 10–13, 15, 25, 37, 75, 153, 206–9 applicability 207–8 and private relationships 72 trial 93–5, 110, 369, 397–8, 400–3, 408, 413 turnover taxes 133, 156–7 uncertainty 39, 100, 153, 189, 195, 286, 334 see also legal certainty unclean hands defence 165 unconscionability 294, 300, 306, 309, 345 under-deterrence 409 undertakings 10, 14, 30, 134, 149, 203, 379–80 unemployment 233, 351 unenforceability 19–20 unexpected obligations 185–6, 194–5, 198 unexpected remedies 185–6, 189, 193–4 unfair business-to-consumer practices 226, 291, 318, 333, 359 unfair commercial practices 226–7, 318, 333, 342–5, 359, 375–6, 383 unfair contract terms 116–19, 123–4, 171, 173, 294–7, 308–9, 318–19 Directive 92, 117, 171, 173, 183, 194, 294–5 unfairness 92, 118–23, 173, 193, 292, 304, 308 unimplemented Directives 20, 73

unions see trade unions unisex tariffs in insurance 264–9 United Kingdom 242–5, 360, 368–71, 376–7, 385–6, 396–8, 404–7 competition law 378–80 constitutional implications of spillovers 392–3 courts 96–7, 111–13, 351–2, 376–8, 385–7, 402–4, 408–14 employers 244–5 judges 4, 127, 396, 404, 413 law 105–6, 111–12, 127, 200, 350–2, 362–4, 379–80 average consumer 350–2 and civil courts 93–8 United States 44, 173, 295, 297, 299, 301–2, 304–5 courts 303, 308–9, 402 critique of black lists 304–6 impact of black lists on private autonomy 294–6 jurisdictions 294, 300–1 traders 294–6, 314 universal service obligations 270–1 unjust(ified) enrichment 136–7, 140, 145, 148, 154–6, 159, 176 unmeritorious claims 4, 396–7, 403, 413–14 incentive to settle 400–1 unmeritorious recourse 396, 402, 408–9, 413, 415 unwritten primary law 84, 151, 154–5 general principles of civil law as 152–4 unwritten secondary law, general principles of civil law as 150–2, 156–8 vagueness 39–40, 147 value-added tax see VAT values 39, 136–7, 177–80, 202–3, 235–6, 382, 397 constitutional 7, 38 and general principles of civil law 177–8 underlying 177–8 VAT (value-added tax) 133–4, 157, 169, 171 common system of 157, 169, 171 vertical agreements 302–3, 380 vertical coherence 164–5, 383 vertical litigation 73, 75, 77 vertical relationships 30, 39, 41, 44, 52 vertical restraints 301–4, 307, 380, 399 vocational training 182, 215, 257, 361 wages 225, 227, 231, 237–8, 242, 251, 311 weaker parties 39, 42, 44, 123, 125–6, 129, 224 wealth disparities 313, 315 weight 19, 22, 26, 105, 146, 193, 409 welfare 56, 152–3, 269 withdrawal 135–7, 140, 147, 187, 190, 196–7, 202

Index women 182, 200–1, 240, 242–3, 254, 257, 265–9 work 14, 22, 156, 236, 239–40, 242–7, 249 fixed-term 78, 233–4 part-time 243, 245, 251 work relations, personal 224, 279–90 workers 14, 22, 85, 156, 224–5, 230–40, 242–51 free movement 59, 72 individual 239–40, 243–4, 246, 251 migrant 85–6, 286 posted 237–8, 252 workforce 232–3, 236, 244

433

agreements 244, 251 working conditions 182, 215, 233, 237, 251, 257, 361 see also conditions of employment working hours see hours of work working time 234–5, 242–4, 246–7, 249–51 see also hours of work Directive 82, 228, 239, 241–51 Directive, Commission assessment 248–50 Directive, and Court of Justice 246–8 organisation of 82, 228, 239, 243 significance 242–3