учебный год 2023 / de la Mata Munoz, Personal Security

consumer law59• Besides, it is also questioned whether there should be a horizontal instrument regulating consumer rights instead of a sectorial fragmented approach. This line has been followed and the Proposal for a Directive on Consumer Rights was published in October 2008.

(iii) Prospects on coming EU law: protecting sureties and consumers of financial products and its impact on market integration

In view of the current activity of the European Commission, probably other Directives will also be revised, for instance those relating to the provision of information to buyers of financial services. In the longer term, there may be proposals for further harmonisation measures in sectors where there still appears to be a need for consumer protection (such as contracts for services or personal security) or where the differences between the laws of the Member States appear to cause difficulties for the internal market (e. g. insurance or security over movable property)60•

bb) Optional instrument: Opting-in a unified code?

The EU Commission considers the possibility to use the CFR as the basis for an optional instrument to which the parties could adhere. Although it has made it clear that the CFR is not intended to propose a 'European Civil Code' which would harmonise contract laws of Member States'61 , it may be used as a set of rules to which the parties (including consumers) may opt-in. The structure and methodology used in the development of the CFR will favour the different use of this work for the purpose of alternative

regulatory body. The European Parliament has recently welcomed this idea62•

One issue arises with regard to the application of an opt-in instrument. If the instrument contains rules of a mandatory nature6 , such nature is dormant as long as the CFR has no formal legal status. If the CFR may be adopted by a choice of law, the parties may chose partial application of the rules ("depe~age"). Consequently, even those rules conceived as mandatory (for instance those consumer protective rules) may be left out by choice

59Lannoo/de la Mata, 7 ff. The authors study the use of the total harmonisation approach in EU directives as the method to achieve legal harmonisation.

60See Draft Common Frame of Reference, Interim outlined edition (www.law.net.eu). See also critical assessment below.

61Communication 2004, 8. See also the Green Paper on the Conversion of the Rome Convention of 1980, 2002, 654 final, 14.

62See: Resolution 3. September 2008, (www.europarl.europa.eu/sides/getDoc.do? type=TA&reference=P6-TA-2008-0397&language=EN&ring=B6-2008-0374).

63For instance the rules on personal security in the DCFR do contain mandatory provisions. See below.

276 Chapter 6: Security rights in the EU context

unfair terms has been published69 • Also the Common Core of European Private Law Project (the so called, Trento Common Core Project) has completed several comparative studies on European private law70.

Other academic groups have focused on specific fields of private law. Based in Pavia, the Academy of European Private Lawyers, ("Gandolfi Project") has published a draft "European Contract Code'', inspired by the Italian Civil Code and a draft Contract Code prepared for the Law Commissions of England and Scotland by Harvey McGregor71 . Besides, while the European Group on Tort Law ("Tilburg Group") has drafted Principles of European Tort Law72, the Commission on European Family Law conducts research concerning the harmonisation of family law in Europe73 . At a different level, the Unidroit Principles ofInternational Commercial Contracts are geographically not limited to Europe but its scope is restricted to commercial contracts exclusively74.

Finally, since the European Institutions started the debate on harmonisation of European Private Law, academic work on the subject has been frenetic. Particularly worth being mentioned in this chapter is the work of the Draft Common Frame of Reference as it is inspiring the political attempt to develop a CFR and has devoted specific attention to security rights.

In the same frame of the EU Commissions efforts on European private law, two French organisations, Association Henri Capitant des Amis de la Culture Juridique Fram;aise and Societe de Legislation Comparee, also performed scientific research in this context. The result of this contribution was the publication of two books in 2008 one on common contractual principles and the other on common contractual terminology75•

69Contract I: pre-contractual obligations, conclusion of contract, unfair terms. Prepared by Research Group on the Existing EC Private Law (Acquis Group), Milnchen 2007. Chapter 8 on "remedies" is published in Schulze, Common frame of reference and existing EC contract Law, Munich 2008.

70This group has been Lead by Ugo Mattei and Mauro Bussani. See: (www.jus.unitn. it/dsg/common-core).

71Gandolfi/Gatt, Code europeen des contrats: avant-projet, Milano 2004. See: (http:// www.accademiagiusprivatistieuropei.it).

72Principles of European Tort Law: text and commentary, Wien 2005 (www.egtl.org).

73See: (www2.Law.uu.nl/priv/cefl).

74Unidroit principles of international commercial contracts 2004, Rome 2004. See: www.unidroit.org. See also Bonell, An international restatement of contract law: the UNIDROIT Principles of International Commercial Contracts, N.Y., 2005; Bonell, The Unidroit Principles in Practice: Caselaw and Bibliography on the Unidroit Principles of International Commercial Contracts, N.Y., 2006.

75Fauvarque Cosson/Mazeuad, Projet de cadre commune de reference. Principes contractuels communs, Paris 2008.

bb) The Draft Common Frame ofReference (DCFR) 76 and its predecessors

The latest result of this fabulous scientific team work is the recently published Draft Common Frame of Reference (DCFR), as the main academic contribution to the CFR-process.

The DCFR was delivered to the European Commission in December 2008, while a full version with comments and comparative notes has been published in 2009. This is the delivery from the Study Group on a European Civil Code (Study Group) and the Research Group on EC Private Law (Acquis Group) under a frame research contract launched by the European Commission77 .

As it is explained in the introduction to the DCFR, this text is the result of more than 25 years' collaboration of jurists from all jurisdictions of the present Member States within the European Union. It began in 1982 with the constitution of the Commission on European Contract Law (CECL) and was furthered by the establishment of the Study Group in 1998 and the Acquis Group in 2002. From 2005 the Study Group, Acquis Group and Insurance Contract Group formed the so-called "drafting teams" of the CoPECL78 network.

The DCFR consists of more than 6000 pages, including principles, definitions, rules, comments and comparative notes79• The coverage is very broad80 . Building on the well known Principles on European Contract Law, the result of this joint effort will certainly serve as the key basis for an eventual CFR. Its content, scope and structure would allow its use as an optional instrument81 to which parties may opt-in. Beyond this possible use, the DCFR do have a much broader meaning as they have built on common principles of EU private law, being possibly used by the EU institutions as a guiding tool for their law-making activities as well as by law practitioners and academics in their work on EU private law.

76von Bar, Principles, Definitions and Model Rules of European Private Law. Draft Common Frame of Reference (DCFR). Outline Edition, Munich, 2009. Find the first (interim) edition of the DCFR under: (http://webhOl.ua.ac.be/storme/DCFRinterim.pdf).

77More on the contract and the network, http://www.copecl.org/.

78See: www.copecl.org.

79See: http://www.sellier.de/pages/en/buecher_s_elp/europarecht/643.principles_defi nitions_and_model_rules_of_european_private_law.htm (accessed 21 April 2009).

80It includes rules on the formation, validity, interpretation and contents of contracts and, by analogy, other juridical acts, the performance of obligations resulting from them and on the remedies for non-performance of such obligations, but also a series of model rules on so-called "specific contracts" and theights and obligations arising from them.

81So was it recently considered by the European Parliament. See for a recent statement, resolution 3. September 2008, (www.europarl.europa.eu/sides/getDoc.do?type= TA&reference=P6-TA-2008-0397&language=EN&ring=B6-2008-0374).

In terms of its impact on security rights, besides general contract law aspects, the DCFR contain a specific part on personal security which is dealt below.

cc) Academic attempt to harmonise the law ofsecurity rights: Study Group on a European Contract Law and its integration in the DCFR

The law on security rights has been included in the academic studies attempting to harmonise EU contract law.

It was first included in the Principles of European Contract Law developed by the Study Group. As a result of four years work by a network of EU researchers, an EU-wide harmonised set of rules on personal security rights was published in 200782. This work has been pursuit in the framework of the Draft Common Frame of Reference. On this basis, Book IV of the DCFR (regulating "Specific contracts and the rights and obligations arising from them") included a Part G on "Personal Security"83 . Coherence between these rules and general contract law as developed within the other Books of the DCFR (in particular Book I to III) has been achieved84 .

The rules make a basic distinction between dependent and independent personal security contracts. Building on the heritage of national law traditions, they attempt to provide a set of useful provisions in view of the needs and uses of modern times. An example of this approach can be found in Chapter 4 of this Part G (Book IV), entitled "special rules for personal

85

security of consumers ". Under the frame of an extreme diversity of national regulation of the subject within the EU, this Chapter takes consideration of the special needs of consumer sureties today as well as of the EU law on consumers, providing practical solutions. Given demand for consumer protection in current practice in this field, this Chapter appears to be of particular interest. On one side, it may serve as a point of reference in those jurisdictions with lower protection standards for consumerssureties. Second, the possible use of the DFCR as an opt-in text may contribute to achievinj a greater EU market integration for credit, eliminating legal barriers to it 6187• Finally, an alternative use of the referred Chapter

82Drobnig et al., 2007. I had the honour to work four years on the development of this rules and the comments thereto, in the frame of the Max-Planck-Institut ftir auslandisches und internationales Privatrecht in Hambug. For the fruitful and pleasant work I wish to thank my colleagues at the time.

83See Draft Common Frame of Reference, Interim edition, 282 ff.

84The version of the rules as developed by the Study Group on a European Civil Code was originally in coherence with the PECL. The relation between the PECLs and the

DCFR has been included in the DCFR, 51 (Table of destinations).

85Consumer is understood as non-professional.

86See the study on private law systems in the EU and the role of discrimination on the grounds of nationality as a justification for a European Civil Code. v. Bar (head of

will more likely (or sooner) take place in the context of the foreseeable further developments of the EU acquis, in view of a possible future EU law on consumer sureties, eventually as a maximum harmonisation Directive, on the basis of art. 95 EC Treaty.

C. Should we attempt to harmonise EU Personal Security Rights?

In the current crisis context securing lending to the economy has become one key objective of the EU institutions. Given the supporting role that security rights provide to lending activities it is questionable whether harmonising the law applicable to personal security rights within the EU would not provide advantages in this respect.

As previously mentioned, cross-border lending and even more, cross border personal security is still largely underdeveloped within the EU. This is particularly true for securities provided by consumers and SMEs as larger corporations are usually prepared to submit their contracts to one particular legislation (common in practice being English law).

The reasons for the current lack of integration are many fold. On the one hand, as has been largely explained, both lending and securing activities imply the need to assess risks. Obviously, this risk evaluation becomes more difficult when it needs to be performed across the borders. Different credit recording systems or different behavioural patterns in the member states make cross border security riskier and more costly, giving origin to the so called natural barriers to market integration. Another commonly mentioned natural barrier is language differences, especially in the context of business with consumers and SMEs. Besides, legal barriers also create obstacles to market integration88 ; especially, as we have seen above, the very diverse consumer protection rules applicable to consumers in the context of security rights. All these barriers to cross-border business are the reason why financial institutions have so far opted for entering mergers

team)/Barendrecht/Basedow/Drobnig/vanGerven/Hondius/Kerameus/Koussoulis/Lando/L oos/Tilmann, The Private Law Systems in the EU: Discrimination on Grounds of Nationality and the Need for a European Civil Code, European Parliament, Directorate General for Research, Working Paper, Legal Affairs Series JURI 103 EN (1999). See specific parts on security by Drobnig and the Hamburg team and v. Bar/Lando/Swann loc. cit. (fn. 5 above).

87See Lannoo/de la Mata, 7 ff.

88de la Mata/Lannoo, 2-5. Legal barriers as obstacles to market integration are also commonly mentioned in the explanatory notes to Internal Market Directives, such as the Consumer Credit Directive.

280 Chapter 6: Security rights in the EU context

and acquisition processes (M&A) 89 with local institutions that know how to proceed in that country remaining competitive and efficient.

In this context, harmonisation of personal security laws in the EU is, if not the only, one important measure towards market harmonisation. The next question is whether complete harmonisation of the law applicable to personal security interest should be attempted or whether efforts should be limited to those core areas that generate greater barriers, this being clearly consumer protection issues90.

The comparative studies on the law of personal security rights within the EU has shown that the basic commonalities among the different legal systems would allow for a legal harmonisation of the security provisions without unbareable complexity91 . However, a complete harmonisation of the personal security legislation at EU level should not be necessary at the current stage. Harmonisation could be limited to consumer protection aspects of personal security legislation. Such harmonisation would have a twofold justification. First, it is creating distortions to market integration and consumer protection which would justify issuing a harmonising Directive on the basis of art. 95 EC Treaty. Beyond, attempting to increase the common standards of consumer protection remains within the scope of the EU competencies (art. 4 and art. 151 EC Treaty). In the context of credit, consumers are highly in need of protection92• Specially, consumer sureties, often not able to assess the risk they are assuming and contracting under emotional pressure while helping beloved persons or relatives altruistically.

Using art. 95 EC Treaty as the legal basis for consumer protection legislation, is not absent of complexity. Eliminating the legal barrier to market integration often means applying maximum harmonisation approach to the harmonising Directive. Under total/maximum harmonisation, member states may not go beyond the protection level agreed in the Directive when implementing at national level. Maximum harmonisation in the context of consumer protection is often strongly criticised as it prevents higher standards of protection there where it is socially demanded with the consequent elimination of the natural competition among legislations93. While this is obviously true, the direct benefits of market integration for consumers in terms of access to credit and better conditions seems to compensate

89 For references on recent M&A in the field of consumer finance, see de la Mata/ Lannoo.

90 The reason is based on the divergent legislations and the application of International Private Law rules. See de la Mata/Lannoo, 5.

91See PECL and Drobnig et al.

92As proved in practice and evidenced by the large case law on the subject Europewide. See Colombi Ciacchi, 2007, with extensive references.

93See Reifner in several publications.

increasingly been the approach taken by the European Commission in latest consumer protection legislation95 and this trend is expected to continue in the current crisis context96•

Finally, one can think of a set of harmonised rules on personal security which may be used by the parties as the law applicable to the contract on a voluntary basis (an opt-in text). This is the idea behind the DCFR or the PECL on Personal Security. This option, allows for national differences while eliminating legal barriers exclusively for cross-border business.

D. Final consideration: comparative law of security rights in view of current EU developments

Bringing this comparative law study into the light of the current developments in European private law, gives raise to a final reflection.

In the context of an EU integrated market, promoting the knowledge of private law in the different jurisdictions has gained immense practical importance. Due to increased cross-border business, practitioners explore the sources of their legal obligations. Lawyers and courts increasingly refer to foreign legislation and case law, searching for efficient solutions to their practical needs and using comparative law studies for this purpose.

In terms of law making, comparative law contributes to the approximation of national legislations through a natural evolutionary process97. Academic work on European private law has called the attention of Courts98 and legislators becoming a great source of inspiration both at national and EU level. Even if a broader view of existing private law within Europe shows rather communalities than differences in the final results99, in technical terms, legal solutions in one jurisdiction might be used in another (this has been referred to as "borrowing" or "transplanting"100 legal solutions). The present study has brought upon several examples of this nature.

94de la Mata/Lannoo.

95For instance, the Consumer Credit Directive was based on targeted maximum harmonization.

96See for instance: Communication on Driving Europe's Recovery, 4.4.2009, Annex I, above.

97Watson, 2001.

98DCFR, 7.

99"( ..• ) laws may be regarded as regional manifestations of an overall common Eu-

ropean legacy". DCFR, 6.

100 Watson, 2000 (http://www.ejcl.org/ejcl/44/44-2.html).

In view of the EU policies aiming at increasing credit market integration, comparative studies on credit and credit related issues might be of particular importance in the near future.

In times of reflection on the needs and benefits of a private law harmonisation in Europe, the reason for efforts endeavoured to comparative law studies gain sense as it may also contribute to a common evolution of certain core values, which will likely be essential the more integrated our markets become. An illustration of this is provided by the impact that the different approaches on consumer rights have had in several European countries, such as Spain. Simply the exposure to the idea of the need to protect the consumer (either on the basis of market integration needs or by even linking it to the idea of fundamental rights) has modified the perception for this need in these jurisdictions. As things evolved the different approaches that currently exist in Europe on the rights of consumer sureties will likely converge facilitating harmonisation of laws and with it the elimination of eventual legal barriers to market integration.

European private law harmonisation can, thus, only be seen as a natural on-going process based on the needs of our current society as it develops. Building up on our common legacy, comparative law contributes so to the further development of a European shared law tradition on the basis of our modem society and our market needs.

Table of Statutes: Italian and Spanish Law

Italy

Codice Civile (Civil Code), Regio Decreto 16 marzo 1942, no. 262, Approvazione del Testo del Codice Civile.

Legge fallimentare, RD 16 March 1942 cited as Legge Fallimentare.

Legge Cambiaria, RD 14 dicembre 1933 no. 1699 (LC) cited as Legge Cambiaria.

Legge 11 febraio 1994 no. 109, Legge quadro in materia di lavori publici, as ammended cited as Legge 109/94 (see art. 30). (http://www.simone.it/appaltipubblici/merloni/ art.merloni/art30.htm) and its development through the Regolamento di attuazione DPR 554/1999 (art. 100 to art. 108).

Decreto legge 12 de marzo de 2004 no. 123 cited as Decreto legge 123/2004 (GURI no. 109 del 11.5.2004 Suplemento Ordinario no. 89). (http://www.unipa.it/~cdl/guriall/ guri2004/mag04/4dm 123.pdt).

Spain

C6digo de Comercio (Commercial Code), Real Decreto de 22 de agosto de 1885 por el que se publica el C6digo de Comercio, Gaceta nos. 298 a 328, de 16 de octubre al 24 de noviembre de 1885.

C6digo Civil (Civil Code), Real Decreto de 24 de julio de 1889, Gaceta nos. 206 a 208, de 25, 26 y 27 de julio de 1889.

Ley Hipotecaria, Texto refundido segun Decreto de 8 de febrero de 1946, BOE no. 58 de 27 de febrero de 1946, as amended, cited as Ley Hipotecaria.

Ley 57/1968 de 27 de Julio reguladora de las percepciones de cantidades anticipadas en la construcci6n y venta de viviendas, BOE no. 181 de 29 de julio de 1968 (Order of 29th November 1968 (BOE 5 December 1968)).

Fuero Nuevo de Navarra, adopted by the Ley 1/1973 of 1 March 1973, BOE de 7 de marzo de 1973, cited as Fuero Nuevo de Navarra.

Ley 50/1980, de 8 de octubre, de Contrato de Seguro (Law on Insurance Contract), (BOE no. 250, de 17 de octubre de 1980), as amended.

Ley 26/1984, de 19 de Julio, General para la Defensa de los Consumidores y Usuarios (General Law on Consumer's Protection), BOE no. 176, de 24 de julio de 1984.

Ley 19/1985, de 16 de Julio, Cambiaria y del Cheque (BOE no. 172, de 19 de July) (LCC) cited as Ley 19/1985, cambiaria y del cheque (LCC).

Ley de Sociedades An6nimas, Texto refundido de la ley de sociedades an6nimas, aprobado por Real Decreto Legislativo 1564/1989 de 22 de diciembre (LSA), BOE no. 310 de 27 de diciembre de 1989, cited as Ley de sociedades an6nimas (LSA).