1. Dr. Christian Schmies 28. June 2013 The Common European Sales Law - Some Policy Questions -

2. 2 I.The CESL in the Context of European Private Law Harmonisation (1) - Overview - The Starting Point: Fragmented Harmonisation of European Private Law Traditional Method of European Private Law Harmonisation  Harmonisation by way of Directives  necessity of implementation into national law by each member state  Sectoral Harmonisation  e.g. Consumer Credit, Unfair Terms and Conditions  Minimum Harmonisation  Discretion Left to Member States to go beyond European legislation –e.g. adding additional layers of consumer protection Innovative Character of CESL  Optional Regime („28th Regime)  precedents in other areas of European law  European Regulation instead of European Directive  Full harmonisation

3. 3 II.A Need for CESL in Business – to – Consumer (B2C) Transactions? Limited Amount of Cross-Border Trade in Goods in European Union  Only 1 in 10 EU companies trade in goods across borders  33% of EU consumers buy online domestically but only 8% buy online cross-border  Estimate: At least EUR 26 billion are lost in foregone trade due to differences in contract law Variety of Barriers for Cross-Border B2C Business  Legal Systems / Tax / Language / Culture / Logistics  What is the relative importance of differences in national legal systems?  European Commission estimates additional transaction costs for companies wishing to target EU consumers in other countries at EUR 10,000 per country Jurisdictional Competition as Alternative to CESL?  Jurisdictional competition in European consumer law is intentionally limited  Art. 6 Rome I Convention  27 different national mandatory consumer protection laws apply

4. 4 II.A Need for CESL in B2C Transactions? Potential benefits of CESL for Cross-Border B2C business  Choice of „neutral“ law easier in cross-border cases than choice of one of the „national“ laws  With CESL, European traders could apply one set of rules across the EU  no further need to look at national mandatory consumer protection laws  significant reduction in transaction cost for trader  Product range offered to consumers may increase in particular in small and medium-sized economies

5. 5 II.A Need for CESL in B2C Transactions? Potential Problem for CESL to become popular in B2C Transactions  European consumers may be reluctant to agree to choice of optional new CESL  information cost regarding new law  „sunk cost effect“: time / energy invested in existing system may decrease willingness to accept new regime  already high level of consumer protection within EU may make it irrational to explore CESL as alternative option for consumer  However: consumers may be forced to accept CESL if trader only accepts contracts under CESL  Argument of „one set of rules“ across EU is too simplified  significant matters are out of scope of CESL –e.g. legal personality / lack of capacity / illegality / representation  Potential lack of uniform interpretation of CESL across member states –creation of special European court system for jurisdiction on CESL?

6. 6 III.A Need for CESL in Business – to – Business (B2B) Transactions? Significant Differences in the case for CESL in B2B and B2C transactions  Different legal systems potentially less important in B2B transactions  International Chamber of Commerce (2012): -„the difference among European systems of contract law is not a significant problem for cross- border trade in B2B transactions.“  Less restrictions for jurisdictional competition in B2B transactions  No need for an additional regime to avoid 27 mandatory consumer protection regimes  With the United Nations Convention on Contracts for the International Sale of Goods (CISG) a uniform sales law is already in place  23 EU member states are contracting states to the CISG

7. 7 IV.Intangible Benefits of CESL „Epistemic“ Benefits of CESL  CESL has spurred a multitude of research, publications and conferences strengthening the pan-European legal discussion on contract law matters Benefits of CESL as a legal tool-kit  for other areas of European law  for other jurisdictions  as model for own legislation  as chosen law in international transactions –However, Commission Draft does not provide for choice of CESL if none of the parties is domiciled in EU  as a first step to mandatory rather than optional harmonisation CESL as an instrument to strengthen European Identity

8. 8 Partner Profile Dr. Christian Schmies Office:Frankfurt Telephone:+49 69 17095-975 E-Mail:christian.schmies@hengeler.com Practice Areas Investment Law Banking and Banking Regulatory Insurance Supervisory Law Capital Markets Curriculum Vitae Rheinische Friedrich-Wilhelms-University of Bonn (Dr. iur.) School of Advanced International Studies, Johns Hopkins University, Bologna/Washington D.C. (M.A.) Admitted to bar 2007 Hengeler Mueller since 2007 Partner since 2013