Hamonisation of Choice of Law Rules in Contracts in Europe

With progress and globalisation, the free movement of goods, labor and capital is ensured within the Common Market of the Member states of the European Union. As a consequence, cross border legal differences between national laws both in public and private laws should be minimised and harmonised. The Procureur-General at the Supreme Court of the Netherlands, Hartkamp opined in his Paper   that the international harmonisation and integration of contract law is not really necessary except for the difficulties and problems encountered and the widespread belief that it is necessary and useful to address these problems.

There is an assumption that unification and harmonisation of contract law is for economic reasons. It is believed that it is necessary for international trade, free competition and free movement of goods and services, thus enhancing economic prosperity. According to Hartkamp, this assumption is belied by the fact that the United States albeit composed of fifty different states, is the world’s largest single national market. Hartkamp further opined that there is no proof that harmonisation can spur trade between the Member states.

Albeit he supports integration and harmonisation, this would be primarily for reasons of political and cultural reasons. He maintains that a “unified European contract law would be a new cultural asset of enormous value. ”  To those who claimed that harmonisation can jeopardize the cultural values of other European member states, he opposes this by agreeing with Professor Ole Lando when he asserted that “there is cultural value in having Europeans live under the same laws. ”

The move for harmonisation of civil law started in the 1980s. The European Parliament had enacted in 1989, 1994, 2001, and 2003 several resolutions for the creation of a European Contract Law. The European Parliament directed its members in 1999 to conduct a study on contract law and which study was presented in 2003. The European Parliament strongly supported this and further directed the European Commission from continuing its work. There were four options regarding the area of contract law as proposed by the European Commission.

Option 1 related to mere reliance on the power of the market in regulating itself; option 2 proposed the drafting of the “common principles in contract law;” option 3 referred to the proposed “improvement of the quality of existing legal rules;” and, option 4 proposed the establishment of “new comprehensive legal rules which were either to replace national laws or to be applicable simultaneously with national laws. ” After several consultations, the 2004 Communique was published and which contains “contains the intention to make a consultation process in order to obtain the reactions from EU institutions, member states and stakeholders.

”  It further contains intent to develop a Common of Reference which shall consist of definitions and model rules of contract law and using as basis the “optimum standards found in the member states’ legal systems. ”  It may be recalled that the so-called common frame of reference is supposed to include the principles of European contract law considering that the absence of clear definition, for instance the concept of ‘damages’ can lead to confusion in the differences in the manner of application within the member states. This common frame of reference will be adopted in 2009 after a series of consultations.