EU Private Law
1. Concept and demarcation
The private law of the European Community was conceptualized under the designation of Community private law by the German scholar Müller-Graff in 1987. According to this author, the concept comprises the ‘rules of private law based on Community law which are binding with an identical content (although not necessarily with full-fledged causes of action) throughout the Community’. The first element and essential yardstick for the classification is the source of the binding effect of a rule of private law: it must flow from Union law irrespective of whether the rules in question need to be implemented at the national level, like directives, or whether they are directly applicable, like regulations.
As a second element, the definition outlined above refers to the ‘identity of content’ of a rule throughout the Union. It is, however, doubtful whether this condition is met by all rules that form part of the private law of the European Union. First, numerous legal Acts specify precisely formulated options which may be chosen by the Member States. If a Member State chooses one of the options offered by a Union Act, its law, although resulting from national legislation, can nevertheless be said to be backed by Union law and should therefore be classified as forming part of EU private law. An example is provided by the post-contractual claim that Art 17 Dir 86/653 accords to commercial agents as a kind of redress for the loss of clientele. For the implementation of that provision, Art 17 allows Member States to choose between a claim for compensation of damages resulting from that loss and an indemnity for the subsisting benefits which the principal will keep after termination of the contract. Both options are regulated in a rather precise manner in paras 2 and 3 and form part of EU private law although an identity of content is out of the question. Secondly, the identity of the content of the legal effect is sometimes waived as an objective by the European Court of Justice (ECJ) as can be shown, for instance, by Art 3 Dir 93/13 on unfair terms in consumer contracts. Under that provision a contractual term ‘shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’. While the court is prepared to ‘interpret general criteria used by the legislature of the Union in order to define the concept of unfair terms’, it has refused to ‘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’, ECJ Case C-237/02 – Freiburger Kommunalbauten  ECR I-3403 para 22; ECJ Case C-243/08 – Pannon  ECR I-4713 para 42. As a result, it would be incorrect to attribute identity of content to Art 3, although the directive is effective throughout the Union. It follows that the concept of EU private law is exclusively related to the origin of its legal rules: it comprises Acts of the Union; that is why it is appropriate to refer to EU private law in the future.
Because of the source of its legal effect, EU private law can be distinguished from national (or sub-national) private law, from the uniform private law of international conventions and from non-state law. National private law derives its legal effect from the sovereignty of Member States or—eg in the case of Scotland or Catalonia—from the constitutional powers of their competent subdivisions. Although the formal source of its binding effect differs from that of EU private law it often serves to implement directives and can indirectly be attributed to EU private law to that extent.
The uniform private law of international conventions flows from an intergovernmental cooperation of Member States and not from sovereign rights transferred to the Union. From the perspective of the European Union, it is therefore part of national law. This applies to treaties concluded under the former Art 293 EC as well; consequently, such treaties will not be subject, without specific authorization, to the jurisdiction of the European Court of Justice.
In more recent times, the borderlines between international conventions and EU private law have, however, been blurred. First, the Union has become a contracting party to several conventions of uniform private law, eg the Montreal Convention for the unification of certain rules for international carriage by air of 28 May 1999. The Court of Justice has declared such conventions to be an integral part of Union law. They can consequently be attributed to EU private law and are subject to interpretation by the Court of Justice. In accordance with its case law, they prevail over provisions of secondary Union legislation, ECR Case C-344/04 – International Air Transport Association v Department for Transport  I-403 paras 35–6.
Secondly, the Union sometimes authorizes Member States by specific decisions to ratify certain international conventions ‘in the interest of the Union’. In particular, this applies to conventions which, among other subjects, deal with issues of jurisdiction and the recognition and enforcement of judgments which are already regulated in Union law, see Reg 44/2001. Because of the comprehensive character of that regulation, the conclusion of international conventions addressing the subjects covered by Reg 44/2001 is a matter for the exclusive competence of the Union, see ECJ Opinion 1/03 – Competence of the Community to conclude the new Lugano Convention  ECR I-1145. Often, however, such competence of the Union is absent in respect of other subjects covered by the respective convention. In such situations of shared competence only Member States can ratify a convention and will do so ‘in the interest of the Union’ to the extent that matters falling into the exclusive competence of the Union are covered by the instrument. Examples are given by the Council decisions which authorize the Member States to accede to the Bunkers Convention of 2001 (2002/ 762) and the 1996 Hague Convention on parental responsibility and the protection of children (2003/93). The same procedure applies where a convention treating matters of exclusive competence of the Union only allows for the accession of states and not of the Union. It is still unclear whether and to what extent these conventions become an integral part of EC/EU private law. The jurisdiction of the Court of Justice for the interpretation of those instruments would depend on a corresponding clarification. Given the shared competence of Union and Member States, it would appear to follow that the jurisdiction of the court would extend to those issues which the Union has exclusive competence to regulate. But the internal consistency of an international instrument will often require that the court interprets other provisions as well.
It is disputed whether there is such a thing as non-state law. Irrespective of the personal views taken on this issue, its authority can only be explained by the persuasive force of the respective rules and of their authors and perhaps by continuous usage, but not by any kind of a sovereign order, whether of a Member State or the Union. The European Union and Member States may, however, acknowledge the existence of such rules; recital 14 of the Rome I Reg 593/2008 hints at this possibility.
2. Trends of legal development
The development of EU private law results from the framework of objectives and the corresponding legislative competences of the Union. These competences are not explicitly related to private law in general and not even to major parts of it such as commercial law. They are, rather, directed towards the implementation of certain objectives laid down in the founding treaties for specific policy areas. As a consequence, EU private law has not developed in a systematic sense in traditional areas of the law, but in view of the changing priorities of Community policy with a corresponding accumulation of legislative Acts in certain subject areas. Initially, the harmonization of company and corporate law under Art 50 para 2(g) TFEU/44 para 2(g) EC took the lead at the end of the 1960s. In the 1970s, Community policy was put under pressure to strengthen its efforts for a common social policy. This led to the adoption of several directives on employment law, see eg Dir 76/207 EEC on the implementation of the principle of equal treatment for men and women as regards access to employment etc and Dir 77/187 EEC on the safeguarding of employees’ rights in the event of transfers of undertakings. The internal market programme of the 1980s was linked to the announcement of then Commission President Jacques Delors that 80 per cent of business law would be influenced by Community law after the implementation of the programme (European internal market). In accordance with this announcement and based on the new provision of Art 114 TFEU/95 EC which was created by the Single European Act, Community policy turned to new areas of the law, in particular to intellectual property and consumer law (consumers and consumer protection law). Increased legislative activities in the latter field in particular made European legal scholars conscious of the new player who had taken hold in the arena of private law. The concept of Community or Union private law emerged only in that phase, and it was not before 1990 that scholars gradually started to look for systematic structures and consistency in the new body of law. Platforms of discussion such as the Zeitschrift für Europäisches Privatrecht in Germany and the European Review of Private Law in the Netherlands, both founded in 1993, give evidence of the changes in scholarly consciousness and perception. The Treaty of Amsterdam has given further thrust to the development of EU private law. While the Treaty of Maastricht had provided for a coordination mechanism for private international law within the framework of the newly established European Union, this area of the law remained a matter for intergovernmental cooperation of Member States. The Treaty of Amsterdam brought about the so-called change of pillars: the Community received its own legislative competence for private international law (PIL) and international civil procedure (European civil procedure). In accordance with the Treaty of Lisbon, measures adopted in this field are no longer required to be necessary for the proper functioning of the internal market, cf Art 65 EC with Art 81(2) TFEU. Consequently, the aim of progressively establishing an area of freedom, security and justice by means of promoting the judicial cooperation in civil matters has become an independent objective alongside the establishment of the internal market. This has far-reaching consequences. While the legislation of the Union in respect of substantive private law is still determined and limited by sectoral policies and the corresponding market-related legislative bases, the powers for the establishment of an area of freedom, security and justice including the legislative competence for the conflict of laws is no longer subject to those limitations and has assumed a comprehensive nature. This change has led Community institutions as early as 1998 to chart a far-reaching legislative programme for the conflict of laws. Beyond the private international law of obligations, it extends to the law of family relations and succession in international relationships (European family law (PIL); succession law (international)).
From the development outlined above the contours of a system of private law in the European Union become visible which is composed of three elements: (1) a large number of fragmentary directives and regulations on specific issues of single subject areas which is supplemented by (2) the comprehensive body of national private law of the Member States (3) whose application is governed by an almost uniform private international law of the Union in many areas. While the legislative Acts of the Union dealing with substantive private law create common absolute or minimum standards applicable throughout the Union, the aim that is pursued in the areas not covered by those Acts is harmony of decisions. Divergences subsisting between the national systems in those areas shall lose their harmful effect in the single case through the operation of conflict rules. Applied by all national courts in the Member States of the Union, these conflict rules have the effect of referring a given case to the same national law.
While institutions of the Union are working on the implementation of this three-tiered conception of a European system of private law, the work on a uniform substantive private law of the European Union has started, and some believe that these efforts will one day lead to the adoption of a European Civil Code. A first step in that direction is the Common Frame of Reference (CFR) on European Contract Law, which, however, will only have internal and no binding effect even if transposed into an optional instrument. It is therefore unlikely that the Union will have a monistic system of private law in the foreseeable future.
The private law of substantive directives and regulations is characterized by its close market orientation. It owes its existence to the political aim of improving and harmonizing the functioning of certain markets at a European level. European consumer law is particularly influenced by the notion that consumer markets are not necessarily confined to the local or regional sphere, ie that the consumer, too, may demand goods and services at the end of the supply chain in markets which potentially have a European dimension. Divergences between the mandatory standards in Member State law are suspected of forestalling the emergence of such European consumer markets (consumers and consumer protection law). The recitals of many consumer directives of the Union point to restrictions of competition and indirect restrictions of the basic freedoms as necessitating a harmonization (fundamental freedoms (general principles); European internal market). Such market-related considerations have a special significance even where the measures of the Union are not based on Art 114 TFEU/95 EC or Art 115 TFEU/94 EC, but on other legislative bases instead such as Art 50 para 2(g) TFEU/44 para 2(g) EC for company law, Art 91 TFEU/71 EC for the law of transport or the subsidiary basis of Art 308 EC which equally referred to the need of a measure for the common market before the Treaty of Lisbon took effect, but see now Art 352 TFEU.
The embedding of secondary private law in specific policy fields of the Union has led to a considerable fragmentation of legislation. Directives and regulations of EU private law have therefore been called ‘islands’ in the ocean of national private law. Over the course of time, the increasing number of such Acts in certain fields such as consumer law, corporate law or intellectual property has made certain contexts visible and has caused some ‘archipelagos’ to emerge. But a systematic structure as known in classical private law is still out of the question. Basic distinctions such as that between civil law and commercial law, or between the law of obligations and the law of property may be elaborated in the course of the further work on a Common Frame of Reference, but they remain insignificant for present EC/EU private law. Thus, Dir 94/47 (now repealed by Dir 2008/122) on time share contracts relating to immovable property resorted to referencing purchases establishing ‘a real property right or any other right relating to the use of one or more immovable properties …’. Similarly, in accordance with its Art 1 para 5, Dir 2002/47/EC on financial collateral arrangements only applies ‘to financial collateral once it has been provided’. While the English version (provided) might and the German version (besitzgebunden) would definitely be understood as requiring the transfer of possession of something tangible, the directive makes clear that an obligatory arrangement would suffice. The Archimedean point of a system of directives and regulations of EU private law is formed by the specific policy fields of the founding treaties; as a consequence, the traditional categories of continental private law that have evolved over 2000 years are relatively insignificant. It follows from the same context that the law of the Union generally does not distinguish between private law and public law. An example is given by Dir 2002/83 on life assurance which regulates some private law aspects such as the information duties of insurers and a right to withdrawal of the policyholder alongside numerous issues of public law concerning, among others, the authorization of a company to offer life assurance, financial supervision, the separation of life assurance from other sectors and the establishment of sufficient technical provisions. The mix of regulations again makes clear that their function for the operation of the market and not the balancing of individual interests—as occurs in private law—is guiding legislation. However, the Treaty of Amsterdam has established in Art 81 TFEU/65 EC a legislative basis in civil and commercial matters which no longer needs to relate to the operation of the internal market now that the Treaty of Lisbon is in effect. This contributes to a clearer demarcation of public law and private law within the law of the European Union; at the same time it opens a gate for traditional private law considerations designed to protect and balance the interests of individuals in a given conflict.
Peter-Christian Müller-Graff, ‘Privatrecht und europäisches Gemeinschaftsrecht’ in Peter-Christian Müller-Graff and Manfred Zuleeg (eds), Staat und Wirtschaft in der EG (1987) 17; Martin Gebauer, Grundfragen der Europäisierung des Privatrechts (1998); Martin Franzen, Privatrechtsangleichung durch die Europäische Gemeinschaft (1999); Journals: Zeitschrift für Europäisches Privatrecht; European Review of Private Law; Europa e Diritto Privato; Zeitschrift für Gemeinschaftsprivatrecht. Collection of sources: Jürgen Basedow (ed), European Private Law/ Droit privé européen/Diritto privato europeo/ Europäisches Privatrecht, vols I–III (1999–2002); Jürgen Basedow, ‘Civil and Commercial Matters—A New Key Concept of Community Law’ in Festskrift til Helge Johan Thue (2007) 151; Bettina Heiderhoff, Gemeinschaftsprivatrecht (2nd edn, 2007); Arthur S Hartkamp and others (eds), Towards a European Civil Code (4th edn, 2011).