A Commission paper listing options for moving closer to a genuine EU contract law is scheduled for publication tomorrow (1 July).
The dossier is in the hands of EU Justice Commissioner Viviane Reding, who has lofty ambitions for her second term at the EU executive.
"The first priorities in the field of justice are consumer contract law and contract law," a source close to the commissioner told EurActiv.
Introducing an EU contract law and a possible civil code is an ambitious long-term goal for supporters of closer European integration, as it is expected to make the EU's single market genuinely borderless.
Today, companies have to adapt to local rules if they want to sell their products in a different EU country. This legal uncertainty and the additional cost of compliance with several legal systems often end up discouraging cross-border commerce.
The problem is particularly acute for small and medium-sized enterprises (SMEs), which usually cannot afford lawyers in 27 different countries.
But it is also a problem for bigger companies. Amazon and eBay, two of the biggest e-commerce companies in the world, have websites in the UK and Germany, for example, but not in Luxembourg, because the market there is too small to cover their costs.
What presents problems for companies also presents problems for consumers. "Today, nearly two of every three consumers trying to buy from another EU country are turned down because traders refuse to serve the consumer's country," Commissioner Reding told EurActiv.
"This is certainly a time of crisis for Europe's economy. But it is also a time where we have an historic opportunity to drive economic growth by easing the cost of cross-border transactions. I therefore believe that now is the time to make a quantum leap towards a more European contract law," she said.
However, the idea is far from consensual, as contract law is currently the responsibility of EU member states, which have historically been reluctant to give up their national sovereignty on the matter.
Options on the table
Reding seems to be aware that introducing an EU contract law will be more difficult than imposing price caps on cross-border phone calls, which was the main highlight of her previous tenure as information society commissioner (EurActiv 25/03/09).
This is why she is proposing only gradual improvements to the current situation, giving EU member states a list of available options.
The least ambitious would be to establish non-binding model contract rules. "This could be used by European and national legislators as a source of inspiration when drafting legislation and by contractual parties when drafting their standard terms and conditions," reads the Commission document, obtained by EurActiv.
As an alternative, the EU could provide national legislators with a "toolbox" to adopt more coherent national rules in the field of contract law.
However, both these options would clearly leave the current barriers in place, with little chance of circumventing them.
Another relatively mild option would be for the Commission to issue a "recommendation" in order to encourage the harmonisation of national contract laws. Although not legally-binding, such an instrument has proven effective in the telecoms sector by influencing national regulators. However, such voluntary actions can also yield limited results.
Alternatively, the Commission could go for bolder plans, such as an optional EU contract law, or the harmonisation of national contract laws.
The boldest proposal would involve a "full-fledged European Civil Code, replacing all national rules on contracts" but also on property, tort, family, employment and general obligations, which are at the core of civic life.
More pragmatically, introducing an optional EU contract law could be the shortest and easiest way to achieve real change. Under this option, national legislation would remain in place but businesses and consumers would have the choice of voluntarily opting for a standard European set of rules.
According to its supporters, such an approach would also result in healthy competition between different sets of national rules.
However, this instrument would not necessarily make life easier for consumers, who would have to adapt to two different sets of contract rules – national and European – with possible greater legal uncertainty that will not encourage consumption.
The document, which the Commission is expected to publish on 1 July, will mark the launch of a public consultation with relevant parties that will last until January 2011. The Commission will then draft proposals according to the results of the public debate.
