Markos Kyprianou
European Commissioner for Health and Consumer Protection

European Contract Law: Better Lawmaking to the Common Frame of Reference

UK Presidency Conference
London, 26 September 2005

Ladies and Gentlemen,

I am delighted to be here, alongside Lord Falconer, to open this important conference on European Contract Law.

I am sure I speak on behalf of all of us in congratulating the UK authorities for managing to reschedule this conference so quickly, following the bomb attacks that prevented us from meeting in July.

It is heartening to see that so many of us, with such diverse backgrounds, have taken the opportunity to join in today's discussion. Let me thank all those who have invested their time and effort towards making today's event possible.

And finally let me also thank the Corporation of London for allowing us to use this impressive venue.

The event

This conference - the first European Discussion Forum on Contract Law - brings together all the players contributing to the European Contract Law project.

As a starting point for today's debate, let me recall our aims in the area of European contract law, and the parallel task of improving the current EU rules for consumer protection.

Acting on the mandate granted by the European Council at Tampere in 1999, the Commission embarked on the European contract law initiative.

The findings of the consultations that have underpinned our work to date have recently been mirrored by a survey of 175 businesses across Europe, carried out by the international law firm Clifford Chance, who are present today.

The clear result of this survey was that businesses still perceive obstacles to cross-border trade within the EU, mainly due to: differing implementation of EU law across Member States; the cost of foreign legal advice; and variations between national legal systems.

What do we want to achieve?

We aim to remedy inconsistencies in contract law at European level, and to remove obstacles to the internal market arising from differences in national contract law rules. To this end, our main aim is to create a Common Frame of Reference or CFR.

The CFR will be a valuable tool to help us improve the quality and coherence of existing and future Community legislation in contract law.

What have we done so far?

It is essential, of course, that we get the substance and the details right, and that we can rely on the very best expert advice. I am glad to say that we now have all the structures that we originally envisaged up and running:

the research network that undertakes the preparatory academic work;

the network of stakeholder experts that provides practical input; and

the Member State experts' network that maintains the link to Member State capitals and policymakers.

Review of the "Consumer Acquis"

Let me also comment on the state of play regarding the review of the consumer acquis - an issue which falls more wholly within my remit than the broad field of contract law, and an issue to which I shall devote much energy.

I plan to conduct a wide consultation, involving Member States' experts and stakeholders.

The formal start of this process will be the publication, in the first half of 2006, of a comprehensive document on the current application of the acquis. This will draw on the preliminary evidence we will have gathered, including the findings of a comparative law analysis, on which work is underway. The document will offer early ideas on the rationalisation and simplification of the acquis.

This is a substantial exercise, and one which I am determined to take forward rapidly. Where our research and consultations show that there is scope to modernise the acquis by regulatory means, I plan to come up with first proposals in early 2007.

It is too early to predict what we might propose in 2007, but let me offer some pointers. The reform of the consumer acquis could be conducted in two ways that are complimentary rather than mutually exclusive.

The first option is a vertical, piecemeal approach. This would entail the revision of existing directives on an individual basis.

The second option is a horizontal approach. This would involve the presentation of one or more framework instruments to regulate common features of the consumer acquis. The framework instruments would provide common definitions, in a similar way to the Unfair Commercial Practices Directive, and regulate the main consumer contractual rights and remedies.

As with all major policy initiatives launched by the Commission, any decision to revise the consumer acquis will be subject to an impact assessment.

Synergies

I envisage useful synergies between the work on the review of the acquis and the work on the CFR. Proposals arising from the review will provide a practicability test for the preliminary findings of the CFR. In turn, the acquis review work will feed into and thus inform the elaboration of the CFR.

Once finalised, the Commission will use the CFR for the purposes of the ongoing acquis review. This mutual input will be fruitful and advantageous for both projects.

Issues

In order to achieve good results, we need to organise and steer the CFR process in a way that ensures effectiveness and efficiency.

Since the beginning of our substantive work in March, we have heard quite a number of suggestions and comments from those involved in the common work. We have listened carefully, reflected on the comments received, and last week delivered our First Annual Progress Report to the Council and European Parliament.

I will now address the main points that have arisen so far, starting with some very broad issues.

I am aware that some of you have suspicions that the Commission aims to create a European Civil Code. I can categorically state that we are not working on a European Civil Code. As early as 2001, in the first consultation round, it was very clear from the responses that this was not the favoured option. So no Civil Code.

I hear other voices, in particular from the UK, that Member States' national orders would be replaced; that the Commission wants Common Law to disappear; or that Common Law voices will be drowned out in the CFR debate. As a Common Law lawyer myself, let me state that this is not the case. We will take into account all contributions on an equal basis.

Turning to a more practical issue, there are those who say: "This is all very well, but we see anomalies as regards timing, planning, and transparency." We take these concerns very seriously. I know that technical detail can distort efficient and effective work. I also appreciate that there are always "teething troubles" at the start of a big project.

We want to adapt and improve work within the CFR-net. To this end, we have already taken first steps. For instance, we have prolonged the time stakeholder experts have available to look at the research drafts from one to two months.

And we had prepared, for the originally scheduled event, a paper that suggested further changes. Unfortunately we did not have the opportunity to discuss this in July. But we integrated many of these ideas in our First Annual Progress report.

You will have seen that we have submitted, in this Report, concrete suggestions - such as how to organise workshops in order to enhance the effectiveness of the CFR-net input; how to deal with the amount of detail in research drafts; and how to get a clearer picture on the overall structure of the CFR.

And we have done more - we have identified substantial issues that require close attention, for example: freedom of contract, overall coherence, clear distinction between B2B and B2C contracts.

One working session of today's event, in the afternoon, is dedicated to discussing these issues. I invite you all to use this opportunity to express your views.

Finally I would like to answer a very important question: "Is it not the case that any results of the CFR work will come far too late to be of any use for the review of the acquis?"

With your help, the Commission can, I believe, avoid this. We intend, in the CFR, to clearly prioritise issues that are relevant to the consumer contract law acquis and to a lesser extent also the other contract law related acquis.

A clear focus of CFR preparation on policy relevant aspects will make the process more operational and efficient and will be essential for its success.

Vision

Let me conclude by emphasising the significant rewards this complex and challenging Europe-wide endeavour should reap.

I envisage that the CFR could be the basis for a New Deal between EU legislators. The Parliament, the Council and the Commission could agree to use a single toolbox to rationalise and improve the process of making EU laws.

This is not just a Commission exercise, but one in which all institutions have an interest. More coherent, clearer and simpler European contract law legislation, in particular in the area of consumer law, should be our common aim.

To achieve this, it is not enough for only the Commission to use the CFR for drawing up coherent legislative proposals. If we want the final product to offer coherence and quality, we will also need a clear agreement from all institutions to use this tool.

The Commission has already started on the grassroots work. We have given access to our CFR website to colleagues from the Parliament so that they can follow the CFR discussions. Furthermore, we have invited Parliament colleagues, for instance from the secretariats of the interested Committees, to share with Commission services the task of reporting from CFR workshops.

In the longer term, once we have real first findings from the CFR-net, we will need to hold substantial political discussions. It is my aim that by the end of this Commission's mandate - in 2009 - the Common Frame of Reference will have been adopted as a tool for lawmaking.

I would like to conclude with an invitation to all of you to share with us your views today.

How do you see the contribution of the CFR to better lawmaking, in particular to better consumer contract law?

How should we shape the process, and how should the substance be dealt with in order to achieve best results in this project that is so important for both businesses and consumers?

I eagerly await your comments.

Thank you.