Sources of European Private Law
by Axel Metzger
1. Terminology, overview
The term ‘source of law’ is used with various meanings. For some authors, a ‘source of law’ describes the institution which may create legal norms, eg a legislature or a court. Mostly, ‘source of law’ is meant to describe the resulting legal norm, eg the legislative enactment of a parliament or the case law derived from a line of court decisions. Used in the plural, ‘sources of law’ designate the variety of different legal norms recognized in a given legal order. As such the concept is used to draw a line between the sources of binding law and merely auxiliary sources which may help discover or interpret the law but are not binding themselves, such as legal literature. These auxiliary sources describe what the law is but have no normative force as such. In this entry, ‘source of law’ is used in its narrow sense, meaning a binding legal norm.
In European private law, the sources of law may be grouped according to the different levels of law: the national level (2.), the European Union level (3.) and the international and uniform law level (4.).
2. Private law sources of national jurisdictions
Regarding sources of law, traditionally, the differences between the continental civil law systems and the English common law have been emphasized. However, there are many common features deserving attention.
a) Continental private law
The most important legal source in continental private law jurisdictions is the legislative act, especially the codification. Codifying an entire body of private law rules within one comprehensive enactment has a long tradition reaching back to the age of natural law. The most successful codifications were enacted in the early 19th and 20th centuries, ie the French Code civil (1804), the Austrian Allgemeines Bürgerliches Gesetzbuch (ABGB), 1811), the German Bürgerliches Gesetzbuch (BGB, 1900) and the Italian Codice civile (1942). The new Dutch Burgerlijk Wetboek (BW, 1970–2003) proves that codification has not lost its appeal as a strategy for legislatures.
Although the claim of completeness is a characteristic feature of all codifications, there are different concepts of what should be part of a codification of private law. The new Dutch Burgerlijk Wetboek incorporates commercial, transportation and consumer protection law. Other jurisdictions show a tendency to regulate these and other areas of private law in more specific enactments. In Germany, the current trend is to integrate into the Bürgerliches Gesetzbuch consumer protection rules that since the 1980s had been enacted in specific acts of legislation.
Besides legislative enactments, the continental legal systems have traditionally recognized customary law as a source of law. Today the relevance of customary law for legal practice is less significant due to the density of regulation by statutes. According to the internationally prevalent theory, customary law requires the longstanding observance of a norm by its addressees, typically a local or otherwise coherent community (usus) and the conviction of those observing the norm that they are following a legal norm (opinio iuris). Contrary to the predominant theory in Germany, constant court practice should not be qualified as customary law or Justizgewohnheitsrecht because such qualification confuses the categories of customary law and case law.
An additional source of law may be found in the general principles of law. In national legal systems, general principles derived from the codifications by way of analogy or other types of inductive reasoning are of prime importance. By contrast, the principles based on a comparative legal analysis, eg the Principles of European Contract Law (PECL), are only rarely invoked by continental courts.
Whether court decisions (precedent, rule of) should be recognized as a source of law is controversial. In Germany and Austria, the predominant theory denies such a qualification, whereas contemporary French and Dutch theorists accept the normative value of case law. However, even the more restrictive approach admits that legal practice often relies on and refers to case law. Nevertheless, according to this restrictive approach, case law should only be used as a secondary source without any prescriptive power.
Finally, it is commonly understood amongst legal theorists in continental Europe that articles and books written by scholars are not binding legal sources. In contrast to the communis opinio doctorum under the ius commune, the writings of authors are not, therefore, authoritative. Scholars may describe the law as it stands and may elaborate proposals for its future development, but their writings do not constitute normative legal sources.
b) English law
English law has traditionally been dominated by case law, especially in the classical areas of the common law, eg contracts or torts. The binding force of precedents in the narrow sense of the rule of stare decisis (precedent, rule of) is only one variety of using precedents. Mostly, English courts refer to decisions of other courts without being legally obliged to do so, be it by reference to obiter dicta of older cases or by reference to the decisions of lower courts or foreign—typically other commonwealth—jurisdictions (persuasive authority).
However, statutes are of increasing importance in England. Even though English law resisted the 19th-century codification movement and did not convert its traditional case law into a comprehensive legislative enactment, some statutes that were enacted were of paramount importance, eg the Bills of Exchange Act 1882, the Partnership Act 1890, the Sale of Goods Act 1893 and the Marine Insurance Act 1906.
Finally, English legal theory acknowledges the binding character of customary law. As on the Continent, its impact on legal practice is not very significant.
3. Private law sources of EU law
The law of the European Union comprises a constantly growing body of rules relevant for private law relationships. On the European level, the founding treaties of the Union and the statutory enactments based on these treaties represent the most important source of law. In addition, the case law handed down by the European Court of Justice (ECJ) and the General Court of the European Union (GC) plays an important role. Finally, general principles of law and international conventions concluded in the framework of the Union deserve attention.
a) Primary law
Regarding primary law, the four fundamental freedoms of the Treaty on the Functioning of the European Union (TFEU) are of special interest. Although drafted for the EU Member States as addressees, the four freedoms have manifold repercussions on the private law relationships of individuals and private entities. The provisions on the free movement of goods and services (Arts 34, 40 TFEU/28, 34 EC) have consequences for the law of contracts, unfair competition and intellectual property, and the free movement of persons (Arts 49, 54 TFEU/43, 48 EC) for labour law and company law. Free movement of capital has strong implications for banking and insurance law and for capital market regulation. Finally, the competition law regime in Arts 101–106 TFEU/81–86 EC is of major importance for the framework of European private law, especially regarding contract law, mergers and acquisitions.
b) Secondary law
The main point of interest regarding the EU law is its secondary law, ie regulations and directives, comprising provisions on private law issues. Although under the founding treaties and now the TFEU the European Union has only limited competence to enact pertinent regulations and directives, it has nevertheless, since the 1960s, created a tight net of legislative enactments with significance for private law relationships. As regards the legislative power of the Union, the competences for the internal market (Art 116 TFEU/96 EC) and for the free movement of services (Arts 62, 53(1) TFEU/55, 47(2) EC) have been of major importance. Today, even estimated conservatively, there can be no doubt that the acquis communautaire enacted in the different fields of private law from contract law, product liability, and consumer protection law, to corporate and banking law, labour law, competition law and intellectual property easily exceeds 100 regulations and directives.
Not all of these enactments are of the same importance for legal practice and theory. Moreover, most regulations and directives concern specific fields of private law such as corporate or labour law or intellectual property. However, if Dir 93/13 of 5 April 1993 on unfair terms in consumer contracts or Dir 99/44 of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees are taken as examples, it must be recognized that EU law has not just harmonized marginal aspects of private law but also core issues. The emergence of this impressive and ever-growing body of European private law would have been impossible without the backing of the European Court of Justice (ECJ). That Court has constantly applied a harmonization-friendly approach. There is only one case regarding the internal market in which a directive has been declared void for lack of legislative competence (ECJ Case C-376/98 – Advertising and Sponsorship of Tobacco Products  ECR I-8419; advertising (tobacco products)). Apart from this rather exceptional case, the competence provisions of the treaties are typically construed very broadly.
Regulations of the European Union are applicable directly in the Member States and may address private parties. By contrast, directives have to be implemented by the Member States and technically address only Member States rather than private parties. Therefore, it has been suggested that the notion of ‘European private law’ should only cover the enactments of the Member States implementing European directives and not the directives as such. But this would hardly be right. The implementing acts have a common core, and this common core can be found in the provisions of the directives. In this sense, therefore, and looking at their substance the directives regulating questions of private law may qualify as European private law.
c) General principles of law, case law
The European Court of Justice regularly refers to general principles of law. These principles are often found by a comparative analysis of the law of the Member States. They may also be derived by analogy from the primary or secondary law sources of the European Union. In this way, the court has recognized many of the fundamental principles of private law, eg pacta sunt servanda, causation, lucrum cessans, duty to pay interest, or good faith, although typically these principles were invoked at first in administrative law cases before being used later in cases regarding private relationships.
Finally, according to many authors the case law of the ECJ and the GC should be recognized as a source of European private law. However, this is controversial. In particular, authors coming from continental jurisdictions deny the normative quality of the decisions of the Union courts.
d) Conventions concluded within the framework of the Union
Of mere historical interest are conventions concluded in the framework of the European Union. According to Art 293 of the EC Treaty, Member States of the Community could conclude conventions that were open only for the EU Member States. The TFEU does not contain a similar provision. The most important examples of such conventions were the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968 and the Rome Convention on the law applicable to contractual obligations of 1980 (which was technically not concluded on the basis of Art 293). Both conventions have been now replaced by regulations (Reg 44/2001 and Reg 593/2008).
4. Private law sources of international law
As a third layer of European private law, international conventions containing private law rules should be taken into account. Since the late 19th century, the private law of the European jurisdictions has been influenced by cooperation among the industrial states. Today, regulatory decisions are often reached on an international level. Therefore, a portrayal of European private law without highlighting this international level would be incomplete.
Two schools of thought may be identified regarding private law on the international level. While the classical positivist school only recognizes international treaties as a source of law, a second school also refers to non-state rules governing international trade or other international private relationships. Candidates for such non-state rules of international law are general principles of law and the lex mercatoria.
a) Uniform private law in international conventions
Which international conventions comprising private law rules should be characterized as ‘European’ private law? Certainly those ratified by all Member States of the European Union. This should remain true even if the convention is open for third countries. Being applicable within the European Union and outside of it does not prevent a rule from being a uniform rule for the whole Union. Examples are the Revised Berne Convention for the Protection of Literary and Artistic Works (intellectual property, private international law of), the European Patent Convention (patent law), the Convention on the Contract for the International Carriage of Goods by Road (carriage of goods by road) and the Montreal Convention for the Unification of Certain Rules for International Carriage (air transportation (contractual liability)). Additionally, conventions negotiated and signed by the European Union should be classified as ‘European’, eg the WTO Agreements.
More complex questions are raised by conventions not ratified by all Member States of the European Union. One example is the United Nations Convention on Contracts for the International Sale of Goods (sale of goods, international (uniform law)), which has not been ratified by the United Kingdom, Ireland, Malta and Portugal. Other unification projects are territorially restricted by design. Here an example is the cooperation of the Scandinavian countries which has led to the adoption of uniform sales laws in Denmark, Finland, Iceland, Norway and Sweden (Scandinavia, harmonization of law). A second example is provided by the Benelux countries which have enacted uniform laws on agency, trademarks and designs. Even though territorially restricted, the rules of these conventions should be regarded as an integral part of European private law. European private law should not only reflect the similarities of the European legal systems, but also their differences. To grasp the full picture, international conventions not ratified by all Member States must therefore be included. Furthermore, the European Union often uses international (or regional) conventions as a blueprint for its legislation, eg the United Nations Convention on Contracts for the International Sale of Goods (CISG) for the Sale of Consumer Goods Directive (Dir 1999/44).
b) Non-state sources of international or ‘transnational law’
For similar reasons, one should not require that non-state sources of international or ‘transnational law’, especially general principles of law or the lex mercatoria, be recognized in all Member States of the European Union in order to be characterized as sources of European private law. Of particular importance in the field of international trade law are the UNIDROIT Principles of International Commercial Contracts (PICC), which have been published in a second, revised version in 2004 and which are of increasing importance in international arbitration. The UNIDROIT PICC together with the growing body of published arbitral awards and internationally-used standard terms form the nucleus of the currently evolving transnational trade law or lex mercatoria.
René David, ‘Sources of law’ in IECL II (1984) ch 3; Michael John Mustill, ‘The New Lex Mercatoria—The First Twenty-five Years’ in Maarten Bos and others (eds), Liber Amicorum for Lord Wilberforce (1987) 149; Rupert Cross and JW Harris, Precedent in English Law (4th edn, 1991); Franz Bydlinski, Juristische Methodenlehre und Rechtsbegriff (2nd edn, 1991); Karl Larenz, Juristische Methodenlehre der Rechtswissenschaft (6th edn, 1991); Helmut Coing, ‘Einleitung zum BGB’ in von Staudingers Kommentar zum Bürgerlichen Gesetzbuch (13th edn, 1995); Johannes BM Vranken, Mr. C. Asser’s Handleiding tot de beoefening van het Nederlands burgerlijk recht, Algemeen deel (1995); Klaus Peter Berger, Formalisierte oder ‘schleichende’ Kodifizierung des transnationalen Wirtschaftsrechts (1996); Jürgen Basedow, ‘Das BGB im künftigen europäischen Privatrecht—Der hybride Kodex’ (2000) 200 AcP 445; Philippe Malaurie and Patrick Morvan, Introduction générale (2004).