The European Draft Common Frame of Reference (CFR)

Panloss went to a very interesting lecture yesterday by Hugh Beale of Warwick and formerly the English Law Commission on the publication of the first part of the European CFR project - namely the Draft CFR on Contract (CFRC).

What is the CRC and why should you care? This is a grand plan, which has in various forms been gathering momentum for many years, to distill principles out of the whole of European private law - as derived from the now 27 members of the EU - and create a kind of codified version of those principles. Naturally, given the differences not only between common (England, Ireland) and civil law (everyone else) not to mention linguistic, political and economic differences (the arrival of the Access countries has kind of complicated things:-) this has not been an easy task. One can tell how pleased Hugh Beale and his colleagues (including Eric Clive at Edinburgh, whom Pangloss also saw talking about this a few weeks back - and was very pleased to be given a copy of the Draft CFRC) are to finally show off the first fruit of their labours.

Is this going to impose a European Civil Law Code on you, me and my mum? No, in no uncertain terms. Although aspirational academic work on such a code is ongoing, it is recognised to be politically and probably legally impossible for the EC to take such a supranational stance. Instead the CFR will be used as a "toolbox" which can be explored for stuff like common EU definitions of key legal terms (like "damages" or "termination"); as a kind of model law which EC member states might adopt when reforming their law; and more controversially, as a model the EC might look to when it reforms its law. In many ways, the spur for the completion of this particular part of the CFR has been the EC's ongoing attampts to reform and modernise its consumer law - the so called Acquis, which is currently found in a multitude of Directives.

Still wondering why IT lawyers should be interested? Well one possible thing that might happen next is that the acdemic CFR may be turned into a more limited "political" CFR - espoused officially by the European Commission - which might become available (via an "optional instrument") as a kind of new extra legal system. Rather in the way that a contract cane be governed by, or arbitration can currently be decided under the "the law of the Vienna Convention", say, a business - Amazon say - might sell to all the inhabitants of the EC with the contract, and any dispute arising, governed by the "law of the CFR".

THis is where it gets exciting. At present, one of the big problems about cross border selling is having to worry about the consumer protection laws of every country you sell to. In Europe, Rome 1 (now a Regulation) , on choice of law, dictates that even if Amazon UK (say) dictate that the law of the contract shall be English law, if they're selling to a French (or Finnish or Latvian) person they have to take the risk that if there is a dispute. the "mandatory rules of consumer protection" of France (or Finland or Latvia) will still apply, and over-ride the law they know and had calculated their insurance premiums upon (English).

Sounds a very academic point but businesses , especially SMEs and one-man outfits are highly risk averse. Facing unquantifiable risk, they'll choose to sell at home and not to France or Latvia or Finland. None of this is good for the dream of the low cost, high choice, competitive Single Market for consumers. And in real life the Commission has already noticed that even big players like iTunes (who can afford Finnish and Latvian lawyers) are choosing to sell to some parts of the EU (usually the safer better known Western members) and not to the full 27.

But the "law of the CFR" will be specifically drafted to already include what is seen as at least the minimum EU-wide consumer protection - possibly more than that. So there's no policy reason why Amazon or iTunes shouldn't be able to select "the law of the CFR" as the governing law and NOT have to worry about the law of France, or Finland, or Latvia or whoever next joins the EU.

What about the consumer? Well the idea is also that the consumer will get a choice. When making a contract with Amazon, they'll be presented with the option to accept "the law of the CFR" - or to demand their home consumer law applies. The "CFR" choice will be a Blue Button - so the scheme is the "Blue Button" plan.

Panglos wonders what the point is of presenting the consumer with an option. No consumer she has ever known has rejected a sale because of the governing law - only because it wasn't cheap enough or good enouigh in quality. Consumers will never know enough to make an informed choice about giving up their home law protections. And from the retailer end, the smart money is they won't offer a real choice anyway, but will simply say , if the consumer refuses "the law of the CFR" that they won't accept their order - and we're back to the status quo of partition of markets.

But the "Blue Button" choice apart, the concept of a "law of the EU" as a choice of law seems a brilliant solution to the current Single e-Market impasse - my congratulations to whosever stroke of inspiration this was.

Finally the CFR folks (academic version) very much want feedback on their draft CFRC. It is I believe available at http://www.law-net.eu/ . One piece of feedback Pangloss has already delivered is that she would very much like to see this "toolbox" feed into the review of the Electronic Commerce Directive which has started about now. As every e-commerce lawyer knows, the provisions on when and how an e-contract can be made in the ECD Art 11 are a complete mess, for the simple reason that the ECD drafters were unable politically to harmionise EC basic formation of contract law. The CFRC might provide a way out of this dilemma. Let's hope someone passes the good news on :)