1

Introduction

AS THE TITLE suggests, this book aims to be a study in both comparative and EC law. It develops along two intersecting axes, the comparative and

the European.

The comparative axis is based on the idea that the fate of any change which is made to the law is that it will be incorporated into the existing tradition and will come to be interpreted in the traditional ways: ‘even radical legislation enters a continuing tradition which probably affected the way in which it was drafted and certainly will affect the ways in which it is read and applied.’1

The comparative analysis carried out in this book starts from the assumption that law is more than a set of rules, but comprises a set of methods, values, ways of thinking and perceptions of the law’s role in the society: it is, in other words, a ‘tradition’. The aim of this work is to demonstrate the inescapability of tradition when drafting and, more significantly, interpreting the law. Most studies on the relationship between European and national law are concerned with the impact that the former has on the latter; this book, on other hand, is (also) concerned with the impact that domestic legal systems have on European law, that is, the way that the drafting and the interpretation of Directive 93/13 on Unfair Terms in Consumer Contracts is being affected by national traditions.

The comparative axis also acts as an epistemological tool by which the shortcomings, characteristics, rationales and values of each system reveal themselves with more clarity and vividness by means of comparison: ‘Auf Vergleichen lässt sich wohl alles Erkennen, Wissen zurückfüren’:2 accordingly, from a methodological point of view this work aims to demonstrate the essential role played by comparative analysis in the understanding of the effects of European law on national legal systems. Although this work does not directly enter in the debate on harmonisation of private law, it suggests a method to assess the desirability and effect of measures of harmonisation: only comparison can unveil and explain the degree of divergence or convergence of legal systems; broader inferences can then be drawn on the viability and consequences of further measures of harmonisation. In this respect, the choice to concentrate the analysis on the Italian and the English

1M Krygier, ‘Law as Tradition’ (1986) Law and Philosophy 237 at 251.

2‘All knowledge is based on comparison’: Novalis, Works III, ed Minor (Jena, 1907) 45, fragment 229, as quoted in K Zweigert and H Kötz, An Introduction to Comparative Law, vol. I (Oxford, Clarendon Press, 1998) v.

Directive 93/13 and EC Consumer Law and Policy 5

not be considered ‘a point of reference or the object of a single policy objective or measure’4 as the Treaty does not determine his rights and duties, nor impose or allow for active measures to improve his position. The provisions of the Treaty that explicitly refer to the consumer illustrate what could be called a ‘productivist’5 perception of his interests in the common market: the attention to consumption has its ‘raison d’être’ in the fact that it is directly related to production and distribution. In other words, the Treaty proceeds on the basis that the consumer is the ultimate beneficiary of the economic objectives of the Community: at the European level, consumer law revolves around the application of the substantive provisions of the Treaty which act as an instrument for the achievement of the economically efficient integrated market. For instance, the transformation of relatively small-scale national markets into a large single Community market will stimulate competition and induce producers to achieve maximum efficiency in order to protect and to expand their market share. In this context, competition is regarded as the ‘consumer’s best friend’ and its intensification should serve the consumer by increasing the available choice of goods and services.

The Member States’ attitude at the time the Treaty was drafted and their trust in market forces rather than in governmental intervention to correct or replace the functioning of the market may be considered surprising if considered in the light of the general trend towards what is generally called the ‘welfare state’ (Etat Providence, Sozialstaat, Stato sociale), entailing new forms of state control and intervention in the market: the state intervened to devise new principles to govern the operation and the outcomes of the market. Instead of permitting the distribution of wealth to be determined by voluntary choices to enter market transactions, the social security system, funded largely through progressive taxation, reshaped the eventual outcomes of the distribution of wealth,6 and ideas of social justice justified the channelling and regulation of market transactions. Similarly, employment legislation was passed to confer rights on employees which they could not secure for themselves by contract; landlord and tenant legislation was enacted to give minimum rights to tenants; the increasing awareness of consumers’ rights and the development of consumers’ representative groups in the late fifties in many European states also involved revising to different extents the classical principles of freedom of contract, caveat emptor and fault liability, seen as mechanisms discriminating against consumers and other weaker parties or groups in the society.

In brief, while Member States seemed to assert that the free market mechanisms would benefit consumers at European level, they were at the same time enacting interventionist measures within their territory. This can be explained by the fact that the concern of the European founders at the time was certainly not social policy but the creation of an economically integrated European market; at the same time, nobody was probably aware of the fact that, in the evolution of the

4L Krämer, EEC Consumer Law (Brussels, Bruylant 1996) 2.

5T Bourgoignie and D Trubek, Consumer Law, Common Market and Federalism (Berlin/New York, De Gruyter, 1986) 100.

6H Collins, The Law of Contract (London, Butterworths, 1997) 9.

6 Unfair Contract Terms in EC Law

Community, it would be those interventionist measures themselves which would be considered, at a later stage of the development of European integration, obstacles to market-building.

It did not take too long, however, before the contradiction in Member States’ behaviour emerged. In 1961, four years after the signing of the Treaty, the vicepresident of the Commission, Sicco Mansholt, acknowledged that ‘the general interests of consumers in the Common Market are not represented to the same extent as those of producers’.7 Therefore, despite the exclusion of consumer protection from the explicit constitutional structure of the Treaty of Rome, the status of the consumer as a partner of the developing structure of Community law and practice started earning recognition, at first largely at an informal level by ‘soft law’ initiatives. Since the Paris Summit of October 1972 various political declarations insisted on the social dimension of the European Community. The objective of Community policy-making was said not to be confined to the establishment of the internal market, but to promoting an active and comprehensive social policy throughout the Community.

The first Preliminary Programme of the EEC for a Consumer Protection and Information Policy8 was the Commission’s answer to the Paris demand. A second, similar Programme was issued in 1981.9 Under these programmes, consumers were granted five basic rights (right to protection of health and safety, right to protection of economic interest, right of redress, right to information and education, right of representation).

The roots of Directive 93/13 can be found at those early stages of the development of EC consumer policy. According to the 1975 Programme, the increased abundance and complexity of the goods offered had as a side effect abuses and frustration of the consumer who was no longer able to fulfil the role of balancing factor; as a consequence, producers and distributors had increasing opportunities to determine market conditions. The need had arisen to formulate a specific Community consumer policy aimed at securing, inter alia, effective protection against damage to consumers’ economic interests. Within this framework, it would be the Community’s task to adopt measures aimed at ensuring that purchasers of goods or services were protected ‘against the abuse of power by the seller, in particular against one-sided standard contracts, the unfair exclusion of essential rights in contracts, harsh conditions of credit, demands for payment for unsolicited goods and against high-pressure selling methods’.10

The Second Programme for a consumer protection and information policy, referring to the question of unfair contract terms, reported that the Commission had considered that their first step ‘should be to draft a discussion paper in which [they] will set out all the problems which this subject involves and the various

7Quoted in V Kendall, EC Consumer Law (London, Chancery Law Publishing, 1994) 7.

8Council Resolution of 14 April 1975 OJ C92, 1.

9Council Resolution of 19 May 1981 OJ C133, 1. Both the 1975 and the 1981 Resolutions are expressly referred to in Recital 8 of Dir 93/13.

10Council Resolution of 14 April 1975, above n 8, para 19.

Directive 93/13 and EC Consumer Law and Policy 7

options open with a view to harmonising those aspects which may be affected by discrepancies in this area’.11 The fulfilment of the task of raising the standard of living of European citizens—stated the Programme—requires that disparities between Member States are eliminated so that a high standard of consumer protection against unfair terms can be enjoyed by all consumers throughout the Community. In other words, the existence of a genuine internal market with rules providing the same protection to all consumers appeared to the Council to constitute a considerable direct benefit to the consumer, while, on the other hand, avoiding distortions of competition.12

The legislative history of Directive 93/13

Between 1975 and 1977 the Commission prepared a few draft proposals, which were discussed by governments’ experts, but in the same years an intense burst of legislative activity on the part of the Member States took place: in 1976 the Federal Republic of Germany adopted a statute on unfair contract terms,13 in 1977 the UK did so too,14 and France followed in 1978.15 The introduction of different regulatory frameworks for unfair terms in several Member States certainly did not facilitate the attainment at Community level of a degree of consensus sufficient to proceed with work in that area; in addition, there were conflicting visions of the appropriate intensity of social regulation on the matter and of the acceptable degree of Community involvement in its realisation. Owing to this, to commitments in other areas and to lack of staff the Commission’s work in the field of unfair term halted for almost 10 years.

In 1984 the Commission took the initiative again by publishing a consultation paper entitled ‘Unfair Terms in Contracts Concluded with Consumers’,16 which constituted the main background to the Directive; nonetheless, 16 more years had to pass before the Commission put forward its first proposal for a directive on unfair terms.

The first proposal for a Directive on Unfair Terms in Consumer Contracts was submitted by the Commission on 24 July 1990.17 The Commission’s proposal had its first reading in the European Parliament in October 1991, after which the Commission submitted an amended proposal. This was adopted by the

11Council Resolution of 19 May 1981 above n 9, para 30.

12See the European Parliament’s call for the adoption of a Directive on Unfair Terms in its Resolution on the Second Programme (OJ C291, 10 November 1980).

13Gesetz zur Regelung des Rechts der Allgemeiner Geschäftsbedingungen (AGB-Gesetz) of 19 December 1976.

14Unfair Contracts Terms Act (UCTA) 1977.

15Loi sur la protection et l’information des consommateurs des produits et des services (loi Scrivener), no 78-23 of 10 January 1978.

16Commission Communication presented to the Council on 14 February 1984, Bulletin of the European Communities, Supplement 1/84, 5.

17Proposal for a Council Directive on Unfair Terms in Consumer Contracts COM (1990) 322 final, [1990] OJ C243.