Comparative Private Law - appunti CEILS 2022/2023, Appunti di Diritto Privato Comparato

Scarica Comparative Private Law - appunti CEILS 2022/2023 e più Appunti in PDF di Diritto Privato Comparato solo su Docsity! Comparative Private Law Comparative Private Law Methodological Aspects Comparison is very useful for different sciences. There is a need to be flexible in thinking about law (no more only domestic ones: now, international, transnational and also with animals!). Comparison is not only in law, but also in other disciplines. Lawyers usually are focused on differences. Very often, comparison has to deal with complexity and it is a highly dynamic matter. Is comparative law a science or a method? Both. If we consider it a science, it is the knowledge that aims at getting knowledge on similarities and differences among legal systems. For others, the definition is too broad and comparative law is only a method. The first thing to see is dismantling the system and looking at what is in the rule. Method depends on the goal you have. Sometimes, you have to look also at other fields: sociology, technology (e.g. surrogacy), ethnography, anthropology (e.g. systems of alternative dispute resolutions), … When comparing, we look for divergences and similarities depending on the aim of our analysis. Sometimes, uniformity is more stressed (when you want to do something), some others diversity is highlighted, usually together with similarities when the aim is getting to know something. They’re two sides of the same coin: usually, studying comparative law you find out both aspects. The main aim of CIL is providing knowledge. For a long time, it was only about national law and the limit of this is that it became difficult to highlight the dysfunctionalities of systems. Now, it is impossible to study law without looking at the outside world. Examples: multiple marriages and the status of second/third/… wives, children from surrogacy not recognized, … What method should we use? - functionalism: looking for similarities through focusing on the function of law. Some basic features of law are common to all systems, e.g. contracts which are agreements, marriage. Now it is criticized because of the attention only to similarities, for the bias for what is common. However, it depends on how you use it. - structuralism: it looks at the whole system (e.g. role of judiciary, relation law-religion, role of constitutional court and revision of law,). It goes to analyze how the law is made and, especially, applied. - common core: developed by Schrediger after a questionnaire was spread in different legal systems (e.g. offer and acceptance in shops: when?) What was common to all systems was the common core. Sometimes, the differences outlined were not between common law and civil law, but on other levels. - legal formants: developed by Sacco and influenced by linguistics (formants are components of a language), they debunk the system and show where certain decisions come from and influence the system. Very often, it emphasizes differences (but as a consequence, similarities can be evident). Legal transplants can happen for a variety of reasons: - voluntary: Eu copied from US antitrust law, codes copied → prestigious - involuntary: Napoleon code imposed everywhere; market economy in socialist countries → imposed/strongly influenced There is no fixed recipe for transplants. The wider the difference is between the two systems, the more likely it is that you will have bad reactions against it. Also, how wide the transplant is influences the reaction: adopting a whole civil code is different from adopting a single provision. Prestige is another factor influencing transplants. It is even more complex when you’re looking for uniformity (lots of systems converging or unified), instead of a two-system relation: when several legal systems interact, it gets difficult; this is what happens in Eu. Synchronic and diachronic comparison are different. Synchronic when you’re looking at different systems in a certain time; you can do the same diachronically, looking at what changes from a period of time to another, also in a single legal system. Legal families are useful but have also limits; they’re boxes in which we can categorize legal systems on the basis of the structure (e.g. civil law: influence on Roman law roots and predominance on statutory law, while case law is only application of the law; common law: continuity with medieval law, case law prevalence). There is also micro-comparison (as this course) on specific fields of law that has to consider the structure (e.g. decision by HoL is not the same as one by Court of Cassation): you need to be aware of the main features of the system. In recent years, there has been a revision of legal families. They are still valid for legal education. National laws have to interact with EU law and globalization has an impact on law as well. Comparative law has grown enormously in recent years. This has raised new challenges, and opened up new horizons for our subject. New perspectives on the vocation of comparative law as a means to know how the law unfolds in various places have emerged. The once prevailing, nearly exclusive attention to the national dimensions of the law is a thing of the past. A strong awareness has matured about what lies beyond the State and how to work on these dimensions of the law. Comparative law thus plays a major role in clarifying how various legal regimes, deriving from diverse origins, interact at the world and at the regional, national and sub national level. In any case, comparative law is indispensable to map the dynamics of (attempted) transfer and ad hoc adaptation that are part of world-wide trends. Although global trends in a number of domains have emerged, this is not a world without borders. In this context, comparative law should be fully aware of how globalising and localizing processes are mutually constitutive, rather than reciprocal opposites. They shape each other, and thus co-exist. No unilinear process is at work here. Our discipline is still confronted with tendencies that highlight both the universalising and the localizing views of the subject. That reflection calls for an analysis on law as conveyed by language, and on the translation processes across languages. Once more, not all notions or categories are designed for travel across space and time. Lastly, I have expressed a concern for the capacity of comparative law to address themes related to justice. Traditionally, issues of justice have been discussed at the national level. Theories of justice at the global level are still very much debated. Nonetheless, this will happen because they are able to satisfy demands for justice in a world that is no longer governed by national and international legal regimes only. In the 19th and 20th centuries, comparative law reached autonomy from other branches of law, but later there was a gradual re-insertion of comparative law elements in all fields of law. The historical use of comparative law was used also in Ancient Greece by Aristotle and the idea of common law, since mankind is the same everywhere, then the law should be equal (Enlightenment, one way road to development). A period of enthusiasm was the end of the 20th century, with the Congress of Comparative Law of Paris, 1900: the same law for the whole world had to be found, but the bias was that only Western and legislation-centered law was considered. This crumbled down due to ww1; the new aim was to be aware of the differences and this multilateralism had a boom after ww2; now it is in crisis. After the world, the emphasis was on legislation (still today) but we know that legislation is only one part and that Western world is one part of the whole. The main (for some, the only) aim of comparative law is to allow a better understanding of foreign legal systems, however, the use of comparative law is an instrument of critical understanding of one’s own national legal system (distance). The use of instruments of other sciences might be necessary, particularly social sciences and humanities: linguistics, political science, economics, sociology, history, anthropology, … Comparative law was and is an instrument for legal education and legal training as well. The use of comparative law is important to reform national law (you have to know what you have to change) and legal transplants play a key role: the vast majority is composed of copied-pasted law. After knowing the topic, judgment takes place in deciding which model to choose. In legal transplant, the aim might be the establishment of harmonized, uniform or unified rules at the international (regional) level. International organizations of international organizations (Uncitral, Unidroit, Council of Europe, EU, etc.) have a relevant role, like the role of resistance and path-dependency in legal transplants (relevance of the context). There is the use of comparative law by national and international judges (interpretation + analogy) as well. Globalization has an impact too, transnational law firms usually use international arbitration, without entering into the domestic legal system. Private international law is what is called conflict of laws: when a case has links with several systems, there should be rules on how to judge the case. There has been a huge effort to produce uniform rules (before, domestic laws used to say when they could apply but problems arose; now there is the EU and the Hague Conference for PIL). If you cannot harmonize the rule, at least we should harmonize the rules on how to use different rules. There is a changing role of comparative law and change of scientific paradigms, with trends to move away from national law, towards regional and world integration. The more there is globalization, the more global governance is necessary. Globalization as we know it increases world-wide social relations linking distant localities and mutual relationships and influences. There are positive aspects (increased productivity, sometimes increased incomes, …). The relevance is mainly of historical, cultural, economic, and social factors: it is global for the effects (there is no social aspect that it’s not touched), but not for geographical factors. However, the term is too vague and ambiguous. For us, it is relevant to underline that it is no longer enough to focus only on the national dimension. The mindset of lawyers is binary (either domestic or international) and monistic (based on the Westphalian concept of states); however, there is complexity that goes beyond this dichotomy. Globalization makes the legal framework way more complex: more actors, non-traditional actors, more complex nature of laws (soft law, no longer hierarchy of sources of law, areas that can be ruled only by international laws such as data law, environmental law). We must also acknowledge that the idea of the disappearance of states in favor of an increasing globalization has failed. This is evident especially now, in the moment of the crisis of globalization with nationalism getting strong again: States still play an important role. Bringing together certain systems means selecting and so letting out some systems, which might be dangerous. No classification has an absolute value, it depends on what you need; generalization is fine and useful but not an unchangeable truth. There are some challenges for traditional law: the dichotomy of national law/international law; State law as a self-contained legal system; law as top-down command; law as a formal, theoretical and logical construction; universal legal values; separation of law and religion. The new elements are: forms of non-State law (religious and customary law); bottom-up forms of law; close relation of law and social practices; diffusion of law (post-colonial phase); co-existence and interaction of different layers of law. The criticism of Western law is due to the fact that it is State-oriented, secular, positivistic, top-down, North-centric, theoretical. Also the classifications on legal families have been criticized: new taxonomies: hegemonic/counter hegemonic theories (de Sousa Santos), sustainable diversity (Glenn), broader notion of law (Tamanaha). Criticism of traditional micro-comparison of law has also spread: the comparison was done only in official law in Western countries (common law/civil law), mainly in private law and for description instead of prescription. There is a need for a revision of the traditional model of comparative law: broader conception of law; link with bordering fields of study; broader geographical scope; more developed theories on law. There are different levels of law: global, international, regional, transnational, inter-communal, territorial State, sub-State, non-State, … According to the Westphalian conception of State, it can delegate some parts of its sovereignty to international organizations: traditional international law is about states. Transnational law is slightly different. The web of cross-bordering of legal relations, which creates a crossing of national borders and international relations, creates the need of a new conceptual framework challenging the Westphalian conception of the State and national law. Jessup found out that private agreement, national law, international legislation formed a bunk of law not related to one only national system. The definition of transnational law is quite vague but useful, because it’s about linking legal systems, not simply national or international law, it’s a combination of aspects. There is interaction, cooperation and conflict (horizontal, vertical and diagonal relations; networks), a multiplicity of law-making institutions and actors that causes dispersion and complexity, a link to globalization with multi-level governance (norm production and enforcement). There is tension between legality/legitimacy, public/private, State/market, hard/soft law, government/governance. Comparative private law in Europe Usually, private law is defined in opposition to public law (horizontal and vertical relationships of entities). However, this definition is broad and the scope of private and public law varies from country to country (e.g. public law broad in socialist state, private law wide in state-less communities). Comparative law was very much linked to private law in the beginning (also for scholar interest: Roman law linked to private law), but then there was a gradual expansion of comparative law to other parts of law and now comparative law is mainly about public law (judicial review, human rights, ...), since there is the blurring of the divide between public and private law: e.g. private entities or public bodies doing the same, checking unfair contract clauses, private law rules bordering public law; private companies managing public goods such as energy, data, … There can also be the opposite, from public to private, such as the privatization taking place in the 80's, due to the theories of laissez-faire and neoliberalism. Now, they’re still private but there are mandatory public law rules to respect and public entities supervising the market. It is difficult to define what Europe is: it depends on whether you are referring to geography, history, culture, politics, law (e.g. Turkish, Japanese, Codes influenced by European Codes) … There are hardly any pure systems: it is difficult to say what is European law (France: easy; Turkey: ?). Also, European law is not necessarily EU law: first of all, it is a geographical matter (Uk, Norway, Iceland, …); the, it is also a substantial matters: European law is a synthesis of looking out at various national laws, getting the common core, and it’s not made of a single authority, it’s not a formal legal system; on the contrary, Eu is an entity and EU law is continental Europe). Around the middle of the twentieth century the focus shifted from the similarity of rules to the similarity of results. When comparatists increasingly compared the civil law with the common law, they had to acknowledge significant differences between the respective norms themselves. Adopting the “functional method” first propagated by Ernst Rabel. Beginning in the 1980s, a slowly growing and increasingly influential group of scholars questioned the discipline’s bias in favor of similarity and demanded a shift of focus towards diversity and “difference”. This movement has four, interrelated, components. First, it is part of a broader, left-wing methodological attack on the discipline’s mainstream. Second, in some iterations, the attack on the mainstream was rooted in postmodern philosophy and epistemology. The third development is a shift of orientation in some of the disciplines from law-as-rules to law-as-culture. The fourth element was important as a timely trigger of these critiques: in Europe, much of the turn away from rules and towards culture was a reaction against the large-scale and multi-facetted project of a common private law for Europe. Aconvenientlabelforthe cluster of ideas emerging from these four elements is“difference theory”. “The desire for sameness breeds the expectation of sameness, which, in turn, begets the finding of sameness”. At the same time, an orientation towards difference can fall prey to exactly the opposite bias: if we prefer difference, we will look for it – and find it. Claims of the “irreducibility of difference” or the “incommensurability” of legal cultures exoticize even neighboring legal families (like the civil and common law). They gloss over commonalities and deny the possibility of unification. Both “universalism” and “difference theory” tend to associate themselves with certain political directions. Finally, there is an uneasy relationship between celebrating difference (e.g., between legal cultures) on the one hand, and the contemporary ideology of equality (of groups and their members) on the other. There is virtually no agreement about how to assess similarity and difference. Discussing that question in a meaningful way calls for a consensus on at least three points. The first is the relevant frame of reference. The second point is the level of generality. Finally, since no two legal systems are entirely alike nor entirely diverse, similarity and difference are matters of degree, and measuring that degree requires a defined scale. In addition, similarity and difference are not only matters of degree, their assessment also depends “on the comparatist’s standpoint, on his epistemological interest, and on his prior expectation”. Similarity or difference are not static but constantly changing. This leads to the question whether, over time, legal systems are becoming more or less alike. First, on the issue of what is converging (or not),scholars have looked at very different aspects of legal systems – often without making that clear. Second, it is important to distinguish various forms of convergence. Third, comparatists have noted that convergence can have a variety of underlying causes. Fourth, general claims about the prevalence of convergence or divergence are extremely dubious since both processes can affect very different elements of legal systems, occur in a variety of forms, and are driven by multiple factors. Like the debates about similarity and difference, comparatists’ views on convergence and divergence have been intimately connected to recent historical developments, both on the global level and in the specific European context. On the global level, beginning in the late twentieth century, societies, economies, and even important aspects of culture seemed to converge towards a single dominant model. The development was similar in the European context. In the closing decades of the twentieth century European integration seemed unstoppable as the EU grew rapidly in size and forcefully unified ever more areas of law. The body of comparative work focusing on positive rules is far too large to survey. It mostly comprises studies of rules in constitutions, legislation, and court decisions. Numerous other studies have investigated particular concepts. Comparative studies of particular concepts and institutions are by and large considered unproblematic, at least in principle. By contrast, rule comparison has come under fire from scholars advocating a social and cultural approach. Still, properly conducted, rule comparison serves two particularly important purposes. First, it provides basic information and essential building blocks for a variety of more specific projects. Second, rule comparison is a proper training ground for the comparative law novice because its fairly narrow compass makes it more easily controllable than the comparison of principles or institutions, not to mention legal families, tradition, or cultures. Even working with positive rules is not as easy as it may seem. For a comparatist it comes naturally to assume that for every issue every legal system has a rule. Rodolfo Sacco demonstrated that things are not nearly so simple. He pointed out two closely related facts: first, in every legal system there are multiple elements, second, these elements often contain different rules governing the same problem. Sacco called these (and other) elements “legal formants”. He knew, of course, that jurists are quite aware of this multiplicity. He argued, however, that within their own system they usually either assume that all norms operate in harmony or they ultimately pick one over the rest. Comparatists, Sacco postulated, must not do that. In order thoroughly to grasp the compared systems’ work,scholars must “see the entire law” and thus “recognize all the ‘legal formants’ of the system and … identify the scope proper to each”. This is no easy job for two main reasons. One is that the number, type, and importance of legal formants varies greatly among legal systems; the other reason is that some formants are not openly stated but operate in a silent or even hidden manner. Sacco’s approach had enormous influence in Italy. Sacco has been criticized for stating the obvious. Sacco’s approach is valuable because it asks comparatists to look not only at the law on the books and the law in action but also at the law “in debate” if they want to obtain a realistic picture of a legal system. Appreciating this competition helps us understand, for example, why two legal systems can share the same legislative rule but still reach different results. In addition, Sacco’s approach pushes comparatists to recognize the potential differences between how rules are stated, interpreted, and applied; between how decisions are announced, explained, and actually made. Last but not least, Sacco shows that and why comparatists cannot simply rely on the rules reported to them by foreign jurists about their respective systems:these jurists may not recognize, or simply not want to admit to, the rules’ multiplicity, and they may not be aware of the unarticulated formants that influence their decisions. Comparative lawyers have grouped the legal systems of the world since the beginning of the twentieth century. Thus, the classification of legal systems has been the most prevalent form of “macro-comparison”. One can perhaps distinguish three main phases. The first coincided roughly with the first half of the twentieth century. The second phase comprised the 1960s and 1970s and saw the publication of the two most influential taxonomies. In the subsequent decades, both went through several editions, were translated into multiple languages, and became classics. The end of the twentieth century brought the beginning of a third phase during which interest in classification projects was rekindled. The importance of taxonomies lies mainly in the mapping and orientation they provide. Yet, they can also be, and sometimes are, used as works in progress that force comparatists constantly to reflect upon the ways in which legal systems are similar or different, i.e., what unites or divides them. Thus, most comparatists would agree that, on balance, taxonomies of legal systems are more helpful than harmful, provided they are not overrated but handled with caution. The development of legal systems has often been affected by the law of others. The strength of the impact has ranged from mere influence by, to outright adoption of, foreign law.893 In the latter case, one can speak of “transplants” or “receptions”, though many other terms have been used as well. Though high to begin with, the volume of such exports and imports has grown dramatically since the late twentieth century as a result of several factors. The contact between legal systems has intensified because of increased global economic and social interaction. It is widely accepted today that virtually all legal systems contain elements they imported from somewhere else at one time. How open a legal system is to foreign elements varies greatly depending on a multitude of factors. Younger systems tend to be more open than mature ones. The phenomenon has attracted the attention of legal scholars for a long time. Among comparatists in particular, the discussion is primarily associated with a short book published in 1974, i.eAlan Watson, Legal Transplants – An Approach to Comparative Law. Reduced to its essentials, Legal Transplants made four principal points. First, the proper task of comparative law is to explore the evolving relationships between legal systems. Second, “most changes in most systems are the results of borrowing”. Third, since such borrowing has often occurred between fundamentally different systems. Fourth, “the transplantation of legal rules is socially easy”. Watson’s book triggered an extensive and ongoing discussion of legal transplants. Defining different categories may bring some order into a very complex picture and can thus help us better understand the phenomenon in all its ramifications. Considering, first, the objects of transplants immediately tells us that the material varies widely in both form and substance. Second, considering the mode of transplants, one can distinguish between the process, the medium, and the direction of transmission. Finally, some scholars have established typologies of transplants mainly according to their reasons. Any attempt to combine all these types of categories into one, comprehensive, typology must inevitably result in a highly complex picture. What factors determine success or failure? Certainly, geographic proximity between the systems involved has not played much of a role. Comparatists have vigorously debated whether legal transplants are contingent on the social and cultural similarity (or at least compatibility) of the systems involved. Studying legal transplants thus shows that the connection between law on the one hand and society and culture on the other is neither uniform nor straightforward; instead, it varies from one sector and situation to another. Throughout their history, comparative legal studies have responded, with varying success, to the needs of the times. Like earlier periods, the twenty-first century now presents the discipline with its own challenges. Scholars have regarded these challenges mostly as results of “globalization”, and that approach has sometimes provided a helpful framework for discussion. Yet, “globalization” is also confusingly multifaceted, difficult to define, ideologically charged, and popular as a label for various political, economic, and technological agendas. Since the late twentieth century, however, these functions have increasingly been taken over by the internet. Today, information about foreign law and legal systems is available on myriad websites established by foreign ministries of justice. While the largesse of electronically (and for the most part gratuitously) accessible information about foreign law has drastically reduced the informatory role of comparative law, it has also drastically increased the need for what one might call the discipline’s explanatory function. The first problem is that electronically accessible information about foreign law is largely raw: it is often unprocessed, unstructured, and unexplained. In such raw form, its utility is severely limited. The second, and closely related, problem is that the internet user can easily be misled to believe that once the pertinent websites have been consulted, he or she has acquired all the knowledge necessary to solve the problem at hand. The final problem is the ever-increasing mass of information. It results from a combination of three factors: storage space is cheap, legal systems proliferate (infra B.), and legal change is accelerating. Comparative law also needs to develop responses to two special features of communication prevalent in the electronic age. One of these features is simply the much-increased speed of exchange. The second feature of modern electronic communication is its “dialogic format”. The “age of information” is largely the age of the internet, the internet’s main operating language is English, and English has become the lingua franca of law. At the same time, this situation has hugely multiplied the notorious translation pitfalls inherent in working with different legal systems. Twentieth-century comparative law was solidly based on the paradigm of the modern nation state. In the twenty-first century, however, the discipline’s “nationalist heritage” has become too narrow. In recent decades, comparatists of law have already made occasional efforts to address legal orders not based on the nation state. Some have also shifted their attention from the study of “legal families” consisting of national systems to “legal traditions” transcending them. Some comparatists have even proposed to look beyond the concept of legal systems and shift the focus to “epistemic communities”. Studying global legal pluralism adds breadth and complexity to a field whose scope has already been hugely expanded over the past century in many other regards. In the second half of the twentieth century mainstream comparative law presented itself essentially as an apolitical “legal science” in the tradition of continental European jurisprudence. In the last few decades, the mainstream’s political innocence has come under increasing attack. In the twenty-first century ignoring or marginalizing the political implications of comparative law has become increasingly unsustainable. Globalization, especially of the economy, has dramatically increased the interaction between legal systems. This, in turn, has greatly augmented the political role and impact of comparative law. Suffice it to mention three contexts. First, comparative law often significantly supports the modernization of legal systems especially in developing countries. Second, even where comparative law helps to spread facially neutral rules governing traditional areas of private law all over the world, it causes political effects. Third, comparative law plays an important role in helping economic actors exploit what may be called a transnational law market. Thus, comparative law is rife with – more or less open – political dimensions. No matter how neutral comparatists wish to remain. What does globalization mean for the comparative study of law? - M. Graziadei Globalisation is a sort of ‘obscure object of desire’ for comparative legal studies. Here is a complex world process, cutting across the national and the international dimension of law. ‘Globalisation’ is a portmanteau notion, associated with different meanings, accommodating different uses by different people. One would be easily drawn to the conclusion that this is a flexible, if not confusing term, a notion that belongs to the narrative of late modernity, rather than to the vocabulary of law, alluding to a post-national order characterized by a reduced role of the state. We should speak of globalization in the plural, rather than in the singular, by considering the multiplicity of actors and trends at work. Although globalising trends have lost some of their force since the financial crisis of 2008, it would be premature on this basis to conclude that the pendulum is swinging back at full speed. The reality of the pandemic has had a deep impact on the whole system of networks and relations that were the backbone of globalisation, well beyond the huge global economic downturn caused by it. To put my case in a nutshell, I will argue that comparative law remains an essential tool to cope with today’s challenges of legal research. At the same time, comparative law is also profoundly transformed by its efforts to meet those complex challenges. I reject any view of globalization as a linear dynamic: transnationalism and nationalism, or globalizing and localizing processes, are rather mutually constitutive, as they shape one another. Since its birth, comparative law has experienced a dualism when interrogated on how to think about the local and the universal in the law. The first component of this dualism borders on the ethnographic. To know who we are we must know other customs and other ways of living, varied as they are. This is a form of grounded universalism, that admits the variability of cultures, while recognising the fundamental unity of humanity. A second tendency is, however, also deeply rooted in the comparative law community, and that is to look for the ‘best’ solution(s), the better laws, so that a single set of universal solutions should be preferred over all the others. This creates a procrustean dichotomy between good global or universal norms and bad regional or local norms. The latter are then considered to be of dubious validity or worthless. A similar sentiment of superiority leaves little room for productive, profound engagements with any alternative option. In the long run, these two different orientations appear as a couplet that has marched hand in hand through the centuries. In the West, recurrent doubts about the value of ‘civilisation’ go back to the beginning of the use of that word. Surely the strong faith in the functional method shared by an earlier generation of European comparativists was also an attempt to drive the comparison towards more universalistic conclusions by asserting convergence beyond local variations. This stance implicitly responded to the idea that the spreading of modernity would have produced more uniformity across the world. ‘Classical’ theories of modernization assumed that the cultural program of modernity, as first developed in Europe, would ultimately take over in all modernizing societies. Far-reaching variability and difference are still present within the West, and more generally across the globe, however. There is no single, uniform path to modernity, although comparisons across these different paths may also unveil surprising convergence. Modern comparative law was born in the age of the nation states and historically reflects certain assumptions and beliefs about the relationship between the law and the State elaborated in the West. The invention of the modern State belongs to the beginning of European history. Although for legal and political theory this was a major innovation, societies have existed and thrived without being subject to the machinery of the State. Within the above mentioned State based framework, commerce was always a disruptive element because of its cosmopolitan orientation. In a world dominated by nations, commerce and trade represented a primary force undercutting nationalism, by working out its contradictions. This analysis was supported by leading comparative law scholars who maintained that trade law was the field where global or at least regional harmonization could have best met success. This line of thought found its way into comparative law circles beyond official projects for the unification of law. This general picture remained relatively stable until the late 1970s, when legal change by transfer and imitation, rather than by original creation, began to be regularly discussed in the comparative law community. The growth of a more cosmopolitan outlook on the law challenged the very idea of ‘nation state’ in full control of the sources of law, turning it into a problematic intellectual construct. The realization that national boundaries are far from watertight when it comes to lawmaking was a fundamental turning point for comparative law scholarship in the late twentieth century. The comparative law literature on legal transfers presents rival views of the phenomenon in terms of causes and effects. Many legal transfers derive from the capacity and the urge to push or carry over a policy transfer. On the other hand, perhaps surprisingly, on closer examination there are also legal transfers that do not go together with a corresponding policy transfer. Legal scholars have seldom looked at the phenomenon of legal transfers from the policy makers’ point of view. Nonetheless, a whole range of legal reforms that countries all over the world have adopted has its roots in the dynamics of policy transfer. While comparative law debated whether legal transplants were possible at all, and what they achieve, political science went on to discuss theories about change produced under these circumstances. Comparative law scholarship has been quick to point to a variety of factors that show how the diffusion of norms may result in reforms that remain on paper, as happens when a country enacts an international convention protecting women’s rights, while not supporting the corresponding policies. The overall argument is that law perhaps is not that all powerful instrument of change, when confronted with other societal forces, which are set in motion in the presence of different cultural elements. Is it true that legal reform by way of imitation is more easily promoted and more easily turned into an effective policy in countries that all belong to the history of western civilisation? Surely some legal transplants mostly occur among countries that share a common past,61 but comparative law scholarship could benefit from more systematic, empirically informed studies on the effects of legal transfers across countries all belonging to the Western legal tradition. There are several indications that certain forms of resistance are independent of cultural differences related to the non—Western origin of the local law. Since identity is a complex construct, what can be learnt by an examination of legal transfers ‘within the West’ is that imitation as perfect conformity will seldom happen, or will seldom be fruitful, even though two territories and two social contexts might share much in common.63 A certain level of pragmatism is part of the game; selective adaptation and borrowing is the most likely outcome of the transfer process. The most important lesson to draw by far is that no transfer will take root, unless a local constituency supports it. This, however, involves a further paradoxical possibility, namely that that constituency which has the power to support the transfer shall also have the power to turn the outcome of process to its own purposes, which explains why selective adaptation and borrowing is a likely possibility, along with the total failure of the attempt to change the local reality. With respect to globalization, the comparative law community as well shows different, alternative visions concerning its long term sustainability and effects. I will do so by considering just a tiny part of the story relating to the role of markets in the unfolding of globalization, touching upon the diffusion of human rights doctrines incidentally, as they are brought into this picture by proponents of the expansion of markets. There are also cases in which widespread disillusionment and resentment follow as a consequence of a full and pacific integration of a country into a market society, inspired by liberal values. The situation occurring in several parts of Eastern Europe after completion of the transition process and the accession to the EU is a case in point. The democratic backsliding experienced by Poland and Hungary speaks of the will of the elites in power and of large sectors of the population to reject certain features of democratic liberalism. To explain the ongoing illiberal backlash, Ivan Krastev and Stephen Holmes suggest that the distinction between imitation and borrowing is of crucial importance in considering the effects of emulation.82 Imitation is the demand to replicate the same goals that others have. Borrowing may be an adaptive strategy to reinforce one’s ability to resist foreign influence or pressure, without conceding much beyond the form of what is borrowed,83 while the drive to imitate would ultimately result in a sense of loss of identity and self-esteem. For a time, imitation was justified as ‘a return to Europe’ and thus, in a sense, a return to their authentic self. Still, at some point, the suspicion grew that the original was better than the copy, while an idealized model of the West was constantly held up to them. When the prosperity of the West suffered the blow of the financial crisis of 2008 all of this began to unravel. Soon elites of provincial origins garnered considerable political support, especially outside the capitals, by speaking the language of national identity, an element that was neglected or devalued in the process of harmonization. At a more general level, transnational human rights norms and advocacy may stir up similar responses, and provide an obvious instance of transfer with a potential for backlash. ‘The backlash narrative alters public discourse, reinvigorates and reshapes traditional institutions. Some advice: do not pretend to have the moral high ground, do not push legalism and universalism to the extreme, recognise the validity of local normative systems, and use an appropriate language of respect and fairness that travels across normative systems. Globalization has sometimes been presented as a process of integration among various parts of the world, marked by increasing interconnections, a kind of huge ‘coming together’ of humanity. The reality on the ground is both more complicated and conflictual. This is a more interconnected, interdependent world, but it is also a world divided by more international borders than there have ever been. The traditional expression of state-level sovereignty that is involved in selecting immigrants seems to be a balm of comfort for nationalist forces in many countries, a sort of moral compensation for the loss of sovereignty that the State must accept on other grounds. The globalized world of today is still a divided world. It is no longer divided along the lines established for the greatest part of the twentieth century. But it still has borders, ruling powers, and States. Certainly it is also a more interdependent world, with global markets and global firms, with a myriad of global actors. It is a world in which sovereignty is constantly put under the pressure of transnational players and trends. The phenomenal impact of the digital technologies accentuated this trend in the last years. In this complex environment, a whole range of global legal regimes respond to the need to address coordination problems that have worldwide dimensions. Global actors and institutions of various kind, beyond the State, are in charge of the design and the evolution of these regimes, which rely on harder and softer forms of law. Other subjects play in this arena as well, some more visible than others, like multinational firms and global non-profit organizations. The overall picture is often fitted into the conceptual frame of ‘global legal pluralism’, whose appeal is mostly linked to the double edged ideas of bottom up growth of norms and rules, and overlapping normative orders. The interesting paradox lying before our eyes is that, while the need for global governance is more evident than ever before, it is also being more contested and rejected than ever before’. This function of comparative law will be accentuated by what is coming. At the ECJ, the litigation initiated by Maximilian Schrems over privacy protection in data transfers across the Atlantic has been in substance a huge exercise in comparative law over the respective EU and US data protection regimes. The interesting part of the story concerning the Schrems litigation is linked to the fact that it does not revolve around the technology, but rather on how privacy is understood on the two sides of the Atlantic. Similar comparisons in our epoch are no longer confined within the boundaries of the Western legal tradition; they will be even less limited in the future. In the same vein, it is also telling that a whole set of comparative projects launched at the world level are now established, and that many of them concern aspects involving the laws and the legal systems of all the States that compose the international community. In the last few decades, comparative law has grown and changed: it has addressed a whole new range of research questions; it has developed a sensitivity for legal pluralism, and for alternative forms of normativity emerging in the transnational dimension, across the globe. The fields of comparative constitutional and administrative law have grown tremendously, along with all the disciplines. Criminal law and procedure as well is following this trend. Meanwhile, new equilibria at the world level are setting a new agenda. They are shifting research towards more comparative law studies dedicated to Asia, Africa, and South America. The borders of the discipline are much more porous in methodological terms too. More and more often, legal history itself is turning to comparisons and to transnational, global approaches to illuminate legal change across time. Comparative law and the study of legal translation go together as well. An awareness of all these developments does not yet pervade all the branches of our discipline. Within this overall framework, comparative law has seldom explicitly taken a stance on questions of justice as an integral part of the comparative exercise. Comparisons are made to test some hypotheses, and much of what is being compared actually already incorporates a dimension relating to ‘justice’, however defined. Globalization and comparative law - W. Twining Globalization is restricted to economic matters and is associated with American and western hegemony. Lawyers have a tendency to move from the very local or the national straight to the global, leaving out all intermediate levels. These messy overlapping patterns make mapping law in the world difficult. They place ideas of normative and legal pluralism at the center of understanding law from a global perspective. Global law making homeownership more accessible, with social housing associations acting as owners in countries such as the UK where tenancies are regulated in an unstable way and thus not attractive. Legal dangers: buyer is not a co-owner but lessee with increased burdens, e.g. responsibility for repairs and service charges; risk to lose purchase price in case of repossession for rent arrears Right to buy schemes (IT, PL [„rent to own lease“] and CR): usufruct allowing immediate use for fixed periods combined with right to gradually acquire dwelling at a later stage. Tenants need to pay rent for the use of the house and installments for acquisition. PL: lessor needs to establish mortgage to secure buyer‘s right to reclaim installments in case sale is not performed. Little practical significance. Occupation right (FL, PL): holder receives exclusive, unlimited right of possession of dwelling against payment of 15% of its value and (low rent). Holder may transfer the right back against payment of full value. Mostly used by social landlords such as municipal housing companies Intermediate Tenures - Private Governance Structures Apartment ownership (condominium): traditional adaptation of ownership to multi-unit dwellings where separate ownership would not be possible without regulation. Juxtaposition of full entitlement (ownership or usufruct) of the dwelling and joint entitlement of common parts such as walls, stairs and common rooms. Private governance feature: ownership assembly and administrator appointed by owners; German recent reform decreases minority rights against renovations, energy refurbishment in particular. Housing policy potential limited as apartment ownership has pricing and accessibility problems Scandinavian equivalents: Finnish housing companies and Swedish tenant ownership (type of cooperative) Housing cooperatives exist in almost all EU States but with widely different features („third pillar of housing“). Cooperative as a legal person acquires a building (often with public help), members buy small or only symbolic shares, which gives them permanent housing rights against payment of a moderate rent. Membership may be transferred to other members only, no market prices exist; members are not personally responsible for the cooperative's debts. Co-determination rights are private governance features of cooperatives: election of representatives; assembly of members may decide on all matters related to the cooperative. Variations in Sweden (rental cooperatives where cooperative rents building); Netherlands: loose association composed of owners or tenants of at least 5 dwellings only; Polish variation: cooperatives may no longer be established since 2007, apparently regarded as undesired remnant of Communism; but existing cooperative rights are still traded and inherited. Company law structures Finnish housing companies; individual house organized as limited liability company Ger/Aus apartment house syndicates: complex interlinked structure of individual „house projects“ (also organized as separate limited liability companies) with framework company Community land trusts (US), bail réel solidaire (FR, BE): non-profit association, typically established with public aids and/or private donations, administers real estate, made available though purchase, donation or ground leases, for the purpose of building and managing housing units to be leased through long term contracts to users fulfilling certain social criteria (typically vulnerable families) trust is co-administered by residents and public representatives and/or other stakeholders (e.g. private foundations) tool against land speculation and gentrification of neighborhoods, e.g. in Brussels There is no single „best tenure“: each tenure has pros and cons and its beneficial use depends on individual economic and social preconditions and preferences. Effective regulation of market leases is crucial, otherwise black market structures arise. Making available effective intermediate tenures becomes more important to address the current housing crisis. Unfair contract terms They are linked to many mechanisms. The underlying principle is contractual justice and the recognition that there might be distortion. Standard terms (which are everywhere in our life) are defined in advance by one party for an indefinite number of contracts. In this situation, there is no proper negotiation: it’s a take-it-or-leave-it. There is an asymmetric position of the parties, an imbalance of contractual power and, in complex contracts, there is a partial knowledge on the consumer’s side (asymmetric information). It is highly efficient from an economic point of view (equivalent to standard goods and service) but it moves away from the standard path of negotiation. The EU Directive states that if the unfair terms don’t influence the fundamental parts of the contract, the latter can be carried out without it. Unfair contract terms are different from standard terms. The unbalance can be due to the fact that the contract is not negotiated or negotiated by the parties but one has more contractual power and imposes his view; unfairness can be due to these two reasons. The Eu Directive mentions the non-negotiated terms (it can be the whole contract or one clause). One rational way to organize rules is distinguishing between b2b and b2c contracts; if it’s b2b, the parties might have the same power so you don’t have to go in details and you can use default rules, but in b2c rules are mandatory because of the level of control needed to protect the consumer. However, it is a simplification: the consumer sometimes might have a lot of knowledge or small businesses might have to deal with big ones; making categories can simplify the rules. The definition of consumer is defined in the Eu is someone who is acting outside their business or activity; this can be tricky: e.g. buy a computer for private life or for work? Associations are consumers, professionals, or private? When there are these gray zones, we should look at the situation and the rationale of the rule; what is more, Eu law is the minimum standard, so it can be expanded. The consequences of an unfair clause can be to make only the clause ineffective (the contract stands and you drop that specific clause), as the Eu directive proposed, or to make the contract null. In most systems, if a term is unfair, usually a contract stands, because it is inefficient for the parties to make the whole contract void. The principle of ‘ freedom of contract ’ has traditionally been of paramount importance. In the 60’s, a new principle of contractual justice was developed. It is not confined to procedural fairness, but also to substantive fairness. One of ways to foster it is the protection of a contractual party against unfair clauses, in particular exclusion and limitation ones. The need is particularly pressing when these are part of standard terms. Courts used a number of general doctrines to control: doctrine of offer and acceptance (need to show the terms in question have been accepted), misrepresentation (slightly different from mistake: one party causes a mistake of the other misrepresentation the contract, e.g. clauses written small, …), prevention of application with particular types of breaches, rules of construction and interpretation (e.g. contra proferentem) and conflict with public policy, morals, reasonableness and equity. In several jurisdictions today specific statutory provisions apply; Directive 93/13/EEC on Unfair Terms in Consumer Contracts has provided for a common minimum standard. The general doctrines discussed above remain applicable and are important where statutory rules don’t apply. Control under general law: All these mechanisms involve a third party to intervene and decide, because of the link with public policy. The threshold of this external control has to be set. - Incorporation test: according to reasonableness (whether it is reasonable to put the term in the contract) and good faith/fairness (whether it is fair to put the term in the contract); it is a flexible test but it makes difficult to know the result ex ante, it’s vague. Good faith is used in this context in an objective sense (subjective: not being in bad faith, behaving fairly, e.g. usucapio; objective: not what you have in mind, but if you behave according to how decent people would behave). Gray lists are terms presumed to be unfair, unless you can show that they are ok in the context; black lists are composed of terms that are always unfair. Interfoto vs Stiletto (EN) A party who wishes to rely on a clause in standard conditions of contract which has not been signed by the other party must give the other reasonable notice and, if the term is unusual or onerous, must take steps to bring the particular term to the other party’ s attention. Following a telephone inquiry, a photographic transparency lending library delivered some transparencies with a delivery note with some conditions; condition n.2 stipulated that they had to be returned within 14 days, otherwise £5 per day had to be paid. They were not returned in time so the amount to pay was £3780. The Court held that the plaintiff was not entitled. For LJ Dillon because it was never part of the contract because of the failure of the plaintiff’s failure to give reasonable notice of the onerous terms, for LJ Bingham because the defendant was relieved of any liability connected to a notion of fairness. LJ Dillon wrote that the question is whether the condition was sufficiently brought to the defendants’ attention to make it a term of the contract; being the clause very onerous, the defendants could not have known, if their attention was not drawn to the clause; in the present case, nothing was done by the plaintiffs to draw the defendants’ attention. Bingham also used comparative law: civil law uses good faith (has there been an open dealing?), while English law doesn't use it, but if you look at reasonableness it is more or less the same. [reasonable notice vs fairness] It may not suffice to give the plaintiff general notice that the contract contains conditions; if the conditions contain any term which is particularly onerous, the plaintiff may have to be given fair notice of the existence of that term. The rate to be paid was exorbitant, not reasonable, and the reasonable notice was not given; the attention that must be given to the clause depends on how exorbitant the clause is (if it was lower, maybe the decision would have been different).Reasonable notice is a general standard that is highly flexible: it takes into account the situation at stake: nature of transaction, character of the parties, situation. Tragic flying lesson (FR) It was decided by the Cassation Civil, which is the highest court for civil and criminal matters; it decides how rules must be applied, it has no stare decisis but it’s highly influential. A limitation of liability clause not contained in a written contract will be binding on the other party only if it is shown that he knew. An instructor gave the pupil a demonstration of low-level flying. The aircraft crashed, killing both. The pupil’s widow brought an action against the aeroclub. The club argued that its liability was limited by a statute applicable to aerial transport, or by a notice which referred to the limitation of liability set out in this law and which therefore became part of the contract. The court of Appeal said this was not a contract of transport (lesson, not normal passenger) and the club failed to prove that the pupil knew of the notice. The Court of Cassation agreed. The reasons brought by the plaintiff were two: the statute of aerial transport and the notice of limited liability of the club. However, the case was not an object of aerial transport (lesson, not transportation) and the club had to prove the notice. This is a matter of formation of contract: if there is not at least a specific agreement on a delicate matter such as limited liability, you cannot say it is part of the agreement; delicate clauses require specific agreement. In this case it was not proven. Air passenger in a hole (FR) A regular passenger on an airline that has always publicized its conditions of carriage will be taken to know of them. The plaintiff was directed by an AirFrance employee to a way where he fell, so he sued AirFrance. The lower court said that the employee was negligent but the company was protected by the limitation of liability clause. The Cassation agreed. This could also be tort liability, but under tort you have to prove the fault, while under contractual liability non performance is easier to prove (also time is important: there is more time to bring a contractual action). The reasoning of the Cassation might be strange (frequent flier vs not frequent flier to distinguish if there is liability applies or not is not such a strong reasoning) but it’s done because probably AirFrance was not the true responsible so they tried a way to exclude its liability. According to the Court, the plaintiff was a frequent flier so he should have known the conditions of the company (also in It Civ Code: clauses are binding if the other party knew or should have known), since it always displayed its conditions in public spaces. Greedy accountant (DE) A standard term which strongly deviates from the statutory default rules and operates exclusively to the benefit of the supplier is not consistent with good faith. The standard terms in a contract between an accountant and a professional incorporated a clause saying that the standard terms of trade agreed by the profession would apply unless there was agreement to the contrary. The defendant did not react to this letter; however, he sought to revoke the mandate before the plaintiff had completed his work. The plaintiff claimed payment of the entire amount which had been agreed for his full performance. He pointed to one of the standard terms which was to the effect that the principal who revoked a mandate prematurely was liable to pay in full. It was held that a clause that makes a party liable to payment in full for premature revocation, without regard to the service provided, is contrary to good faith and so ineffective. It’s not about a limitation of liability, but only an imbalance (payment not proportional to the service). It explains how to interpret good faith (§ 242 BGB) when standard terms are involved: for the Court, it means taking into account the interest of the other party, like mimicking a negotiation (look to the reasonable protection of the interests of the future contractual partner), which is quite an intense scrutiny; the more you deviate from default rules, the more your standard terms must consider the other party as well. The argument didn’t follow notice, awareness, surprise, … but only the eventual balance (not balanced, so deleted). If there are standard terms, either you prove they’re fair or they go away and default rules, which can be supply elements if something is missing, apply. - Exemption and limitation of liability clauses: one party excludes or limits to a significant extent any liability for non-performance/damages. It is common that whoever is drafting the contract wants to avoid as much liability as possible. The decision is about how much you want to control: if the other party agrees, it might be fine but maybe they were not aware. - Surprising contract terms: they come up surprisingly. It is linked to the doctrine of notice: if someone wants to include terms that create imbalance, the other party has to be made aware. The Italian Civil Code was the first to realize that standard terms might be dangerous and so asked for the formalistic control (signed individually), but in case of signature, the judge couldn’t do anything for the weaker part; now this apply only to b2b contracts and in b2c contracts you need to be made aware. - Fundamental breach: if one clause limits the liability of one party, you should check if it amounts to a fundamental change to the balance, an essential obligation, if the contract is no longer what the parties decided. Rotting vegetables (FR) A clause seeking to exclude liability for breach of contract will be disregarded where the relevant breach of contract occurred intentionally or from gross negligence. One company contracted with another to import some vegetables; the temperature of the lorry was high and the goods were damaged. The plaintiff sought recovery from the damages but the contract contained an exclusion clause with regard to temperature. The Court of appeal held that the clause had to be disregarded. According to the Civil Code (art.1134 Fr and art.229 It), an exclusion of liability is valid only if it doesn’t imply intentional fault or gross negligence. The Court of appeal didn’t prove negligence, there was not sufficient evidence. Gross negligence consists in negligence of an extreme gravity, which shows an inability to accomplish the task. To assess whether there is gross negligence, two approaches are possible. The subjective approach consists in assessing the defaulting party’s behavior. The objective approach consists in examining the importance of the non-performance in relation to the contractual obligations; for years, this objective approach prevailed while in 2005 the Court de cassation made the return of the subjective approach. This case is about a fundamental breach (contract on transport with refrigerator, but refrigerator broken). Fundamental breach was developed in every country, but in France it was really successful also in b2b (in England it was considered a nonsense). An important thing in this case is the risk: in b2b, the assessment of the risk should be considered (who is in the best position to assure that the fridge works well); consumers are weak, not really able to know what the risks are. Limitation clauses are the flip side of insurance: if it’s there, insurance is not necessary. Insurances are the best way to get protection in most cases, because the insurance premium can be spread in the price of services. Contractual liability usually doesn’t consider negligence (only tort does). Chronopost (FR) A company wanted to participate with a bid but had to submit it in a short time. So, it went to Chronopost, a private delivery company, which promised to send it in time. It was delayed; they had a clause to pay back in case of failure the price paid but the company claimed bigger damages. The Cassation held that even in the absence of intentional fault or gross negligence, a clause that excludes liability for failure of performance of an obligation which constitutes the essence of the contract can be avoided. The Cassation judges this on the basis of fundamental breach but with the notion of cause. In France, cause is not connected to the contract, but to the obligation (obligation to pay has as a cause the delivery of the bid); the obligation in this case is without cause, so we keep the contract which is still valid, but it must not be considered that clause. The concept of cause was dropped. Since cause was abandoned by the 2016 reform, the notion of cause cannot be used to avoid an exemption clause. However, to achieve the same result as under the notion of cause , a party may invoke Article 1170 Code civil (any contract term which deprives a debtor ’ s essential obligation of its substance is deemed not written). You could reach the same arguing on fundamental breach (fundamental essence - which is pay more to have the parcel sent in time - don't exist here). Karsales v Wallis (EN) A breach which goes to the root of the contract disentitles the party from relying on the exempting clause. A buyer agreed to buy a car on credit terms. The car was in good condition and sold by the dealer to a finance company who in turn agreed to sell it to the defendant. Delivered by the dealer, it was in very poor condition. The finance company, which was quite unaware of what happened, claimed the price relying on a clause which stated that it was not responsible for the condition of the car. The Court of Appeal held that the finance company was not entitled to rely on the exemption clause and therefore could not claim the price. There are two connected contracts. LJ Denning says that this goes to the root of the contract so you cannot rely on it: there is no point in the contract with this clause. There is a reasonable expectation about the contract; if it fails because of the application of the exemption clause, it is not allowed to stand with the clause (the contract would be very different from what they had in mind). The printed exempting clauses do not avail him when he is guilty of a breach which goes to the root of the contract. Photo Production v Securicor (EN) LJ Denning was not successful in introducing fundamental breach in England; he was not mentioned but the reasoning goes against him. The questions whether, and to what extent, an exclusion clause is to be applied to a fundamental breach are simply a matter of construction of the contract. Carrying out a night patrol at the factory, an employee deliberately lit a fire in a company that sued for damages on the ground that they were liable for the act of their employee. They held an exemption clause in the contract that they were not responsible for damage caused by employees unless they could have been avoided by due diligence of the company. The Court of Appeal held that Securicor was in fundamental breach of contract, so not entitled to rely on the exclusion clause; the House of Lords held that Securicor were entitled to rely on the exclusion clause. The Court stated that there are ample resources in the normal rules of contract law for dealing with these without the superimposition of a judicially invented rule of law (reference to LJ Denning). It has passed the Unfair Contract Terms Act 1977 that applies to consumer contracts. The Parliament refrained from legislating over the whole field of contract. In commercial matters generally, when the parties are not of unequal bargaining power, and when risks are normally borne by insurance, not only is the case for judicial intervention undemonstrated, but there is everything to be said, and this seems to have been Parliament ’ s intention, for leaving the parties free to apportion the risks as they think There is a link between case law and legislation: the Parliament can change rules of common law, but if they don't, it means they're fine with that; the common rule is common law and legislation should say if it wants to change. The Parliament passed the legislation and it regulated the field making a distinction between b2b and b2c. The control on b2b is much less intrusive, so the court has to respect it. the will of the parliament, so a different standard applies. Judges don’t have the power to intervene on the will of the Parliament and on statutory legislation. In French law, there is abuse of contractual power instead of the division between b2b and b2c; this might be a good solution but it is way more to evaluate the actual bargaining power. - Interpretation of contracts (construction): how can the judge reconstruct the will of the parties to decide what was the initial intent? One of the rules applied in all legal systems is the contra proferentem rule, i.e. judging in favor of the party that accepted and didn’t negotiate the terms. However, there is a limit to stretching the words' meaning. There remains a key difference between the substantive and construction doctrines of fundamental breach; under the latter, but not the former, a clearly worded exclusion or limitation clause may apply even to very serious breaches of the contract. 2. Negotiated and non-negotiated terms: standard terms are not negotiated; other times, it doesn’t matter whether there is negotiation or not, the problem is imbalance of power (even if negotiated). The two can also overlap. 3. General clauses: good faith, fairness, reasonableness have a very wide application and by being so wide, the use is very difficult because you don’t know in advance what will happen. For example, the It Civ Code has three provisions, the Germ only one but the application in It is limited; court application depends on training of judges (e.g. in Germany they were obliged to use it in hyperinflation: contracts are usually valid due to the nominal value of the contract - the money established is the one to be paid even if the purchasing power changed). Some notions are unknown in some systems (e.g. good faith in Common law, where judges' intervention in hyperinflation would be crazy). 4. Black and gray lists: forbidden on to be assessed; grey lists reverse the burden of proof: they are presumed to be unfair, unless the professionals show that in the context it’s not unbalanced; the power is to the judge who has to decide.Gray list can be expanded, black list is only the starting point but at least gives homogeneity. 5. Core terms: if they touch the main subject matter; art.4 of the Directive excludes price/remuneration from this. These are two cases which are treated differently. In the second as well we could say that the rating exchange is a core term. The ECJ said it was not, if it was not enough, it had to be made intelligible. It makes sense from the consumer's side that you have to be able to understand, but it’s a complex matter for the professional: it requires a big effort, information must be tailored to the needs of consumers, it’s a high burden. The ECJ was really strong in protecting consumers. Office of Fair Trading v Abbey National (EN) Relevant charges in the form of unpaid item charges, paid item charges, overdraft excess charges and guaranteed paid item charges levied when a customer gives instructions or undertakes a transaction without having sufficient funds to back it are regarded as being part of the agreed price or remuneration in exchange for which the banks undertook to provide their whole package of services and therefore fall outside the scope of the Unfair Terms in Consumer Contracts Regulations. Contracts between the defendant banks and their consumer customers provided that consumers might overdraw their accounts, but if they did so without prior authorisation the consumer would have to pay a significant charge to the bank. The Office of Fair Trading claimed that these and other charges made by the banks were unfair. This is a case of imbalance to the detriment of the consumer. The Court should check if it’s part of the object and price, because if it’s the case, no intervention is possible. The charges made formed part of the price of the services provided by the banks and their amount was not subject to review under the Regulations. The English Supreme court wrote: “In the present case, we are concerned with a relatively simple sentence, using simple and basic concepts, and the scope for different readings of different language texts seems very limited. Language treats the ‘price or remuneration ’as axiomatically part of the core bargain and so immune from scrutiny for reasonableness. Bearing in mind the general Community aim of legal certainty, the likelihood of the Court accepting the Court of Appeal’s approach to the interpretation of Article 4(2) seems to me remote indeed.” The Court could refer this case to the ECJ but since it could change the outcome, being the ECJ very protective of consumers, it didn’t; in theory, it was obliged to refer in cases of doubt, so it stated that it was all clear. Overdraw could be considered as scrutinizable by the ECJ and all courts, consequently, should have followed that decision. Not using preliminary rulings might lead to different outcomes and case law. Art. 4.2 is the exception to the general rule that is interpreted narrowly: overdraw is not the main object, we must assess if there is an imbalance. Arpad Kasler v Jelzalogbank (EU) A core term of the contract concerns an essential obligation of that agreement which characterizes it. Under the transparency principle included in Article 4 (2) and Article 5 a term must be drafted grammatically correct and the consumer must be able to foresee the economic consequences for him on the basis of clear, intelligible criteria. Mortgage is a property right to secure that you pay back the loan (bank can sell sth of you). In this case, the buying rate in Swiss francs was different from the return rate which was calculated in the rate of exchange. Buying rate is lower than selling rate so the party had to pay more money; unfairness was claimed. It was held that the expression the ‘main subject-matter of a contract’ covers a term, incorporated in a loan agreement denominated in foreign currency concluded between a seller or supplier and a consumer and not individually negotiated. Such term contains pecuniary obligation but cannot be considered remuneration ’ the adequacy of which as consideration for a service supplied by the lender cannot be the subject of an examination. The requirement that a contractual term must be drafted in plain intelligible language is to be understood as requiring not only that the relevant term should be grammatically intelligible to the consumer, but also that the contract should set out transparently the specific functioning of the mechanism of conversion for the foreign currency. The Supreme Court referred to ECJ: is it a core term? Is it plain and intelligible? The Law Commission in Uk had taken for granted that it is never intelligible by consumers. This is a speculative contract, since the foreign currency is extremely likely to change; if you’re a professional you have some info and take the info. The ECJ replied that assessment is for the national court, the ECj can only give the interpretation of EU law. This case is not about core terms, so it can be analyzed by the Court. What is more, drafted in plain intelligible language must be understood as requiring not only that the relevant term should be grammatically clear but also that the economic reasons for using that term and its relationship with other contractual terms should be clear and intelligible to him. This is a missing part in the national implementation, which is insufficient since there is a lack of a fundamental part of the Directive. The consumer can foresee, on the basis of clear, intelligible criteria, the economic consequences which derive from it: it is not enough that the grammar is clear. 6. B2B and B2C contracts: differences 7. Individual and collective redress mechanisms: collective by consumer and producers associations (matter of competitivity) 8. Public law controls include a variety of national models: association (Italy), class actions (several individuals affected by the same clause), public body for control (office of fair trading, Uk) and combination of all. Eu directive allows States to choose. Supervening events The longer the contract is, the more likely it is that something can change (and go wrong). Supervening events alter the contractual balance so they have effects on contracts. Important elements are the lack of fault; unforeseeability; impossibility or difficulty of performance. The effects might be discharge, termination, or adaptation of the contract; agreement of the parties or intervention of the judge. and contracts are about expectations. There is a conflict between pacta sunt servanda (you take up an obligation and are bound to that; legal certainty) and rebus sic stantibus (if things changed significantly, the contract is no longer as it was expected; fairness). A balance must be found, so, even if contracts are fixed, still they can provide for the possibility of some changes. Some systems (common law) are quite rigid in this, others are more open. Another distinction is between real impossibility (theater burning down: technically impossible to host a performance there) and change of circumstances (Suez Canal closed: technically possible but really different from the beginning). It is possible to regulate all this in advance: domestic law has default rules to regulate uncertain things but parties can also contractually specify “what happens if” in hardship clauses (coming to action and applied if something goes wrong, if a hardship arises), very common for changes of prices. Usually, these clauses are allowed. There is a variety of terminology: force majeure is French but it is still used. It consists of so overwhelming external happening that parties can’t do anything, so it’s impossibility due to an external event. In English law there is frustration: contracts are no longer able to fulfill the goal the parties had in mind; it also covers changes of circumstances (technically speaking it is still possible to perform, but different), so it has a wider meaning: both change of circumstances and impossibility. In Eu there is excuse due to an impediment (PECL): we look at the effect, not at the cause (you are excused because of an external event). French law speaks of force majeure; German law has unmoeglichkeit; English law has frustration; Italian law has impossibilità sopravvenuta (in synallagmatic contracts it frees from liability: if there was a partial performance there is the right to get it back) and excessive onerousness (narrow part of change of circumstances), two different forms. In the international environment, there are similar rules: art. 79 CISG on discharge for impossibility that frees from, as the Italian system); art. 8:108 PECL and art. 3:104 DCFR with excuse due to an impediment: due to an external impediment, excused from performance; art. 7.1 PICC on force majeure and impediment. There is an effort to try and harmonize these rules. A distinction is drawn between circumstances or events which render the performance of the contract impossible and those which merely make it more difficult or onerous. The position of French law on this question used to be clear-cut: it was all or nothing. Either there was total impossibility and the debtor was freed on the ground of force majeure (fortuitous event) or else he had to perform the contract, however onerous its performance had become. The new Code civil now recognises both impossibility (force majeure, Art. 1231-1, 1351) and imprevision, which means that the judge is given the power to revise or terminate the contract if it has become excessively onerous for one of the parties and the parties are not able to agree on an adjustment (Art. 1195). German law distinguishes various categories of impossibility and also allows the courts to adapt contracts in the event of change of circumstances. In English law, impossibility of performance includes the notion of that which renders the contract ‘ something radically different from that which was in the contemplation of the parties’, which arguably goes further than force majeure. However, unlike French and German law, English law does not allow the courts to adapt contracts in the event of change of circumstances. French law In the original version of the code, there was nothing about it; force majeure was derived from damages for non-performance. In practice, case law and doctrine allowed impossibility but didn't have any remedy for change of circumstances (highly inefficient). The 2016 reform of the Civil code added a new art. 1218 c.c. on force majeure and art. 1351 on force majeure as an exception: discharge/ extinction of the obligations. Article 1351: Impossibility of performing the act of performance discharges the debtor to the extent of that impossibility where it results from an event of force majeure and is definitive unless he had agreed to bear the risk of the event or had previously been given notice to perform. Article 1218: In contractual matters, there is force majeure where an event beyond the control of the debtor, which could not reasonably have been foreseen at the time of the conclusion of the contract and whose effects could not be avoided by appropriate measures, prevents performance of his obligation by the debtor. If the prevention is temporary, performance of the obligation is suspended unless the delay which results justifies termination of the contract. If the prevention is permanent, the contract is terminated by operation of law and the parties are discharged from their obligations. Operation of law means that it is not necessary to go to court, it is automatic in theory (in practice, if parties don’t agree, they often go to court). The requirements of force majeure (no liability, excuse) are: - impossibility of performance: physically impossible - event unforeseeable at the time of conclusion of the contract: not ex post and with reasonableness standards - external to the debtor: lack of control or lack of assumption of risk (some things must be assumed at the time of contract) In cases of negligence, you might be liable for damages; if there is no negligence and impossibility is recognized, there is discharge of everything. (theater burnt because the owner didn’t check the electric equipment → might be liable). It must be legally relevant but in practice it is complex. Reasonableness in assessing the risk has to be used. Sometimes, impossibility is temporary: suspension or automatic termination? It works on delay: delay in performance is a specific instance for non-performance and you might be liable for damages. Usually, this delay is excused if impossibility is temporary, but the other party still has damages. There is always a significant margin of discretion of the judge in assessing the circumstances of the case. Saint-Tropez robbery (FR) Impossibility of resisting the event in itself constitutes force majeure where to foresee it does not enable its effects to be averted. At 5 am, four wrongdoers managed to gain access to the hotel where they forced the staff under the threat of arms to open the safe, which they emptied. A customer brought proceedings against the Hotel des Lices company and its insurer. According to the hotel, this was force majeure. For the Court, however, the hotelier ought to have carried out stricter controls of entries and exits and ought to have drawn up an inventory. Unforeseeability is a relative concept and not absolute in nature; sufficient weight should be given to the normal unforeseability of armed aggression carried out by ruse in the hotel, and again it deprived its decision of any legal basis. Link with foreseeability and negligence. Saint Tropez is for the rich, so you know that criminals might be attracted. A better control of who is getting in and out, especially at 5 am in the morning, should have been done. If something is foreseeable, you must take precautions. If you don't, you are negligent, so you are not discharged of the damage. The action was also against the insurer: sometimes, there is a waiver of liability in hotels (not liable for damages) but in this case, there is insurance (if you know it might be possible) that is however costly. It’s always a question of who should bear the risk of this external event: client (bad luck)? Hotelier? In economic terms, the hotelier is in the best position to assess the risk. The EDF strike A strike of a party’s own workforce is an internal event except when it affects the public as a whole. The company entered into a contract with the French public utility Electricité de France (EDF) for the supply of current. It brought proceedings against EDF claiming payment by way of compensation for the loss caused by those interruptions. EDF countered that those interruptions were the result of a strike led by part of its staff, constituting a case of force majeure. Striking is a constitutional right, you cannot forbid it and in this sense, it is an external factor. However, why did they strike? Because you don't protect them? The Court distinguishes between the level of the strike: national or company? Again, foreseeability and assumption of risk are relevant (in some specific sectors, you have to declare it in advance). For the assumption of risk, if it is your company, you have the instrument to negotiate with workers, it's up to you not to have disruption; if it’s national, the single company doesn't have power so it is force majeure. It makes sense, but it depends on who can bear the risk: in the case of force majeure, the company without electricity can't produce and bear the risk. A strike by employees of an undertaking does not normally constitute a case of force majeure even if it is unforeseeable and impossible to avert, because it is an internal event for which the head of the undertaking must be called to account. It is otherwise where the strike, as in this case, affects the whole of the public and nationalized sector. On that account it is extraneous to the undertaking. And it is certainly impossible to avert, since wages in that sector are determined by the government and not by the undertaking. It is to be noted that foreseeability, which could not be denied in this case, was not even raised because EDF could do nothing to avoid the strike. German law There is a focus on effects and several classifications: initial/subsequent; objective/subjective; temporary/definitive; full/partial. What is relevant is the subsequent event not amenable to something foreseeable and controllable by the parties. It was first developed in case law and legal doctrine and later introduced with the reform of civil code: new rules specifically say that if it’s not amenable, foreseeable and controllable, there is a discharge of obligations (no damages and automatic termination). The role of good faith is also relevant: imposing damages would be against the good faith, it wouldn’t be fair. It gives very wide powers to judges to adapt the contract in a quite unique manner; judges can step into the shoes of the parties (not at all in England). Illuminated sign Where contractual obligations become impossible to perform, the obligor is released from its obligations, and the other party may reclaim any payment made. A trader desired to advertise by means of an illuminated sign. She contacted a company and ordered a sign to be mounted on the roof of her factory. During negotiations both parties agreed that such an installation in a protected area needed an administrative authorisation which would not be easy to obtain. The company confirmed the order and the customer made an initial payment. The administrative authority refused the request for authorisation. The trader brought an action in order to obtain reimbursement. There is legal impossibility: if no sign is needed, no payment has to be given or reimbursement. However, to discharge the obligation means that the loss is on the producer which might have started/made the sign. To work with risks, you have to work through conditions: I pay you only if I can have the sign; it’s a matter of negotiation, but this case is a decision on how to apportion risks that are not under control of the parties, this is why force majeure was used. The impossibility of performance is not to be borne by either of the parties. Consequently, the selling company is released from its obligations and loses its right to its side of the bargain. Furthermore, since the trader has made a payment, she is entitled to claim reimbursement. However it doesn't seem unforeseeable: both know the risk; it’s strange because one of the crucial elements (actually, in all legal systems), unforeseeability, is missing. Also, it is not factually impossible to make the sign, it is simply useless. The bad harvest One cannot be required to do more than one can reasonably perform considering good faith requirements and exceptional circumstances. Due to a drought, a company lost ⅘ of the foreseen harvest and was not able to deliver the expected quantities to clients. It decided to divide the quantity among all clients, to apportion the loss to all parties. If force majeure applies, is this a good way to solve the problem? Impossibility is definitely present. Drought at that time was out of control of the parties and not foreseeable (nowadays things might be different). The division among parties again follows good faith: not simply dealing correctly but also fairly; if no one is responsible for this act of god, everyone should bear a small part. However, insurances exist, especially for the agriculture sector. In this case the court focuses on this specific case and circumstances. It is common ground that harvests were very bad. In light of good faith and the exceptional circumstances, the defendant cannot be required to do more than he can reasonably perform. Thus he was entitled to treat his customers on an equal footing and to sell his seeds on a pro rata basis in accordance with quantities ordered. English law The doctrine of frustration is a judge-made law. There is varying terminology (impossibility, act of God, discharge by supervening illegality) all referring to events that make the contract something radically different from what was contemplated by the parties («root of the contract»). The requirements are unforeseeability; impossibility of an essential obligation (implied condition); lack of control; reasonableness. It has more limited application compared to French and German law, with an «all or nothing» approach: lack of power of the judge to adapt the contract and no notion of partial frustration or temporary impossibility. The impact of assumption of risk is reflected in the possibility of insurance. Fairness in the sense of justice is used. discharged. Generally there is a strict application of the validity of contracts as originally agreed by the parties: there is possibility of hardship clauses, but no margin for autonomous judicial intervention (refusal of judicial power of adaptation or renegotiation). The Law Reform (Frustrated Contracts) Act 1943 introduced the adjustment of rights and liabilities of parties (payments + restitution) and a little bit of space for judges (e.g. if you had expenses in anticipation of the performance, you might be compensated). Stradfordshire Area Health Authority Lord Denning revised money obligations in case of mounting inflation (minority opinion) with the abandonment of the principle of nominalism. The facts were similar to those in the Canal de Craponne judgment: the contract provided that water was to be supplied at a fixed price ‘at all times hereafter’. The majority allowed the contract to be ended by the water company on a construction of the parties’ intentions that the contract was a contract for an indefinite period which could be brought to an end after a reasonable period of notice. Lord Denning decided the case on a different ground. The majority’s solution was reached by construing the words ‘at all times hereafter’ as meaning that ‘the obligations granted and accepted by the agreement were only intended to persist during the continuance of the agreement; and the agreement was determinable on reasonable notice at any time’. Lord Denning’s approach is not generally accepted, but the case remains interesting because the majority seemed to have strained the natural meaning of the contract to reach the result that the water company could escape from it. It is possible to detect a new principle emerging as to the effect of inflation and the fall in the value of money. In the ordinary way this does not affect the bargain between the parties. We have since had mountainous inflation and the pound dropping to cavernous depths. Here we have in the present case a striking instance of a long term obligation entered into 50 years ago. It is likely to increase with every year that passes. Is it right that the hospital should go on forever only paying the old rate of 50 years ago? So here the situation has changed so radically since the contract was made 50 years ago that the term of the contract “ at all times hereafter ” ceases to bind: and it is open to the court to hold that the contract is determined by reasonable notice. Covid19 pandemic In all systems, there is the principle of nominalism: if you express a value in monetary terms, the fact that the money value changes shouldn’t matter. Since inflation is common, the decision was to go with the principle of nominalism. In cases of extreme changes of value, legal systems have to decide what to do: private solutions (hardship clauses), public solutions (e.g. covid, war). Covid 19 pandemic HAD effects on existing contracts (impossibility or change of circumstances). There was interpretation by the courts and special legislation, with a variety of national responses. Italy had eccessiva onerosità sopravvenuta: the only option is to ask for termination; if the other party doesn’t want to terminate, it can propose changes; however, you might want to keep the room. There is a need for remedies that can keep the contract alive, rather than terminate it: see proposal of reform of the Italian Civil code of 2019 (rimedi ablativi/rimedi manutentivi): duty to renegotiate the contract in good faith. ELI (European Law Institute) drafted the Covid Principles 2020, much wider than contract law (e..g democracy requirements in states of emergency, …) but made to provide non-binding guidance. Art. 13, on the application of force majeure and hardship rules, refers to good faith, introducing the duty to renegotiate (even if not provided in the law or in the contract), solidarity and apportionment of risk. With Covid, several options were used to solve problems in terminating contracts: bilateral/individual contract (ask parties to solve), collective element, e.g. trade unions, consumers associations ask for collective changes (e.g. voucher with the value lost), original decisions by courts, legislative intervention (in Italy, loans were freezed). The more serious the problems are, the more there is a variety of solutions. There can be general norms that lead to different outcomes, or specific norms, better for specific problems but risking to be outdated quickly. War in Ukraine was a stress test for legal rules on impossibility and change of circumstances, with a strong potential role of EU law. German law There was no specific provision in the original BGB concerning change of circumstances. The development of these doctrines developed in 1920, was used after ww2 and also in the reunification, all events causing definitely big changes. The starting point was the hyperinflation in 1920 (not only in Germany, also in France where it was dealt in a different way). The Reichsgericht adopted a doctrine of economic impossibility on the basis of the principle of rebus sic stantibus: adaptation of the price and disapplication of the principle of monetary nominalism. This was due to the gravity of the inflation of that time (that later led to nazism, just to mention). The 1919 inflation case (1922) The value of certain components was completely different because of inflation. The question was whether you can let the contract stand as it was originally envisaged by the parties. The court held that the most important question was whether the rule “rebus sic stantibus” applies or not, whether the contractual basis has disappeared. The court defined the limits of the rebus sic stantibus principle. The concept that the court developed to tackle this problem was to create a notion of contractual basis (in common law they call it the “root of the contract”) meaning that, if you can assess that the basis on which the contract was concluded does not stand anymore due to a change of circumstances, the parties are entitled to revise the contract (if the court thinks that there is the loss of the basis of the contract, the contract cannot stand as it was originally envisaged). In case of exceptional circumstances going to the roots of the contract, the judge is entitled to revise the contract and should try not to terminate it. The parties will have to enter fresh negotiations before the courts which will have to take account of the disappearance of the contractual basis. However, the courts must be careful to ensure that the defendant M does not avail himself of that opportunity to withdraw completely from his contractual obligations. The courts must seek to maintain the contract whilst adapting it. That obligation arises from Article 242 concerning good faith. In Italy we have a similar case law doctrine which is not established in the cc but it is present in the case law and in the legal doctrine. It is called presupposizione (i.e. if what stands at the basis of the contract, even though it was not made explicit, does not exist anymore, the parties can terminate the contract). In Italy, if the contract is not longer as the parties expected (eccessiva onerosità soppravvenuta), they have to terminate it. From the 1940s, Italian law was influenced by German law. However, the Italian approach is not entirely reasonable. In Germany they have an obligation to renegotiate the contract if the basis of the contract no longer exists, since everything is based on the notion of good faith. There are similar notions in other systems (e.g. in English law they have the root of the contract doctrine) but the consequences are different because most systems do not allow courts to intervene or do not set the obligation to renegotiate the contract (e.g. France law began with a very rigid attitude in the Canal de Craponne case whereby they held that the contract had the value of the law. But when the French cc was amended, it was put in line with the German approach and as a result now the parties have to try to renegotiate the contract, if they fail, they can go to court). In the long run, the German solution seems to be the best one. In Italy we are still with the termination of contract but there have been proposals for change. Farmer’s stocks case (1922) Where hyperinflation has rendered a literal application of the terms of the contract wholly inappropriate, the contract terms should be adjusted to reflect the original economic balance between the parties’ obligations. There was a contract for lease on land on which stock of animals were present. At the end of contract, a payment of the equivalent and value of animals. At the end of the lease to sell the stock had to be sold for consideration in kind and for its actual value. The payment was much lower than the value of the animals, due to inflation. The plaintiff requested the court to declare that, on return of the stock, the component animals are to be assessed on the basis of their intrinsic value on the date of their return, and thus, if the estimated value is greater or less than the original amount, in the former case the defendant is obliged to compensate the plaintiff on account of enrichment and in the latter case the opposite solution must be adopted. Due to the changes, does the contract stand? The court said that due to the war and the inflation, the pecuniary valuation of the stock undertaken at the beginning of the lease by the lessor and the farmer must be compared to the value of the stock on its return. The collapse of the German currency is so major that governing lease arrangements according to the provisions of § 589(3) makes stock maintenance impossible. The gold mark which served as the basis for valuing the stock and the paper mark on the basis of which compensation is to be calculated are in no wise comparable, notwithstanding the financial parity established by the law (i.e. the principle of nominalism can no longer be applied because it is as if it was another type of currency although we are still taking about German marks). Neither the legal provisions nor contractual provisions enable the dispute to be resolved. The courts must be creative and deliver a judgment which accords with equity. The guiding principle must be that an equitable adjustment of the interests at stake must be made. The motives of the parties in light of the pre-war economic situation must be taken into consideration. In the present case, the extent of the stock was not in itself altered (that is to say neither increased nor diminished). Thus the lessor may not be obliged to pay sums greater than one million RM on return of the stock solely on account of the impressive rise in prices. The value of the stock increased by only 2%. It is that added value in respect of which an obligation arises for the lessor: the original agreement of the parties does not matter because the factual situation has to be taken account: the value of the stock has had minor changes over time however the value of money has decreased, therefore there is the need to re-balance this situation and in doing so the court must be creative. Neither legislative nor contractual legal provisions are enough to tackle this issue: the court has to step in and take an equitable and creative decision (most shocking part). After Covid, the response by courts was different depending on the legal systems. In Italy courts did not intervene much, the legal system tackled this situation by means of collective agreements and legislative actions. Unlike in other systems, many cases did not reach the court. The role and the impact of the court depends on how it perceives itself as having the possibility to change contractual provisions as well as the will of the legislator to do so vis a vis the respect of the principle of autonomy of the parties (e.g. during Covid in Italy the legislator stepped in to regulate banking loans). This case is similar to a French case (of the same period). Stock contract: lease of land + animals on it, value decided at the beginning. In the end, they asked for more money because the value of animals had increased. The decisions in France and Germany were opposite (France: too bad, it was a risk that the parties took; Germany: radically different, incomparable, so equitable adjustment must be made). What happened to (commercial) contracts during and after German division in two states which had different legal rules? Both cases that we will address contain an major external disruptive events: in the Berlin blockade (1953) goods could no longer be shipped, in the case of reunification, the economic plans that were publicly controlled in Easter Germany were no longer so in the newly formed state and thus the economic obligations at the basis of the contract could no longer be fulfilled. In these cases, the courts were willing to say that these events had an impact on contracts Berlin blockade (1953) According to the theory of the disappearance of the contractual basis, judges seek to adapt the contract equitably, on the basis of the respective interests of the contracting parties. A company established in West Berlin which had for a long time conducted business relations with the plaintiff, ordered some drill hammers saying it would organize a convoy to collect them. Between the issue and receipt of the order letter, the Berlin blockade occurred. Pursuant to the order, the plaintiff initially manufactured 200 drill hammers and proposed to deliver them. It went on to manufacture more hammers and started production of the remaining. The defendant neither took delivery of nor paid for those hammers. So, there was a company that made the hammers and was asking for money and the other that could not take them so it didn’t want to pay. Both the previous cases considered that the contractual basis was the delivery and sale of the drill hammers. That analysis is legally questionable. Certainly the manufacturer will often know the purpose to which his products are to be put, but the purpose of the contract as far as the works contractor for buildings is concerned does not constitute the contractual basis as far as the two parties are concerned. Each party must bear the risk of the disappearance of the subjective purpose of the contract. The parties agreed, in spite of the existence of the blockade on the date when the contract was created, on the manufacture and delivery of drill hammers in the Eastern zone. The expectation of the parties was not realized. The question arises whether the contractual basis existed on the creation of the contract. It was only after the conclusion of the contract that it was agreed that the sale could not be realized. Consequently, that cannot entail nullity of the contract but its adaptation in accordance with the provisions of § 242. The court reasons on the unforeseeability of the event, which does not make manufacturing the goods impossible, nonetheless it makes it radically different than what the parties expected: it’s a condition subsequence, which happens afterwards and makes the contract conditional on that solution. The court stresses the need to adapt the contract (the court modified the value of the contract and held that the defendant is obliged to pay the cost of the work representing 1/4 of the amount). The court decided for an implied condition consequence that says that if something was going to apply, everything would be ended. However, this solution would cause the end of the contract, as in Italy, and it’s not possible, because good faith has a role: the event was not controllable but maybe they could foresaw that. The Court (itself!) decided to spread the losses among the parties. German reunification case (1992) The DDR existed at the time in which the contract was concluded, but at a certain point the two states were reunified. Thus the new applicable law became the legislation of Western Germany, with a strong emphasis on art.242 on good faith (GF and Western German rules were applicable to contracts entered into force before reunification). The theory of the disappearance of the contractual basis should be implemented in order to save the contract, taking into account good faith requirements. The parties are former state undertakings in East Germany which were transformed into private limited companies. A contract was entered into for the importation of a pressurized milling machine and the delivery of the machine was to form part of a reconstruction plan envisaged by the state. The plaintiff called for payment of the agreed price and the defendant endeavored to secure the financial aid provided for under the plan. It obtained only a part of the credit facility and the defendant could secure no subsidy and was informed that it would not be receiving any additional credit facility. Both parties had in mind on the creation of the contract that the acquisition of the machine formed part of an economic plan and that it would be financed to 50% by a subsidy (this is the contractual basis, dependent on the economic plan). As a result of the failure of the plan and of the consequent impossibility of seeking the subsidy, the contractual basis disappeared. With the disappearance of the subsidy, performance of the contract at the agreed price constitutes an unforeseeable burden for the defendant. After transformation of the parties into share-capital companies, the requirements of good faith make it inappropriate to allow such a burden to be imposed on the defendant. Whilst the BGH was entitled to consider that refusal of aid did not amount to disappearance of the contractual basis, it should be emphasised that the defendant had no freedom of choice and had to implement the plan. On the adjustment of the contract the requirements of good faith have to be taken into account. It is a question as a matter of principle of upholding the contract as far as possible and of adapting it in the interests of the parties to the new circumstances. If the external event was not foreseeable and was not under the control of the parties, the best solution is to keep the contract valid by re-negotiating the contract or, if the parties are not able to do so, the court will step in. Adaptation may be made in various ways: lessening performance in kind, price reductions, postponement of due dates, or performance by installments, compensation, etc. The Western company imported machines from Austria and gave them to the Eastern company. The sale was done through a loan and funds from the State, so what happens if those money are not granted? It’s not something under the control of the parties. The court didn’t consider the loan (about private parties), but the subsidies affect the circumstances of the contract: both parties were aware of the planned economy background and with the reunification, it is a major change. The 1920s and 1990s (post WWI and reunification) cases have the same rationale: wide application of the principle of good faith and the use of the root of the contract principle. Only if the contract cannot be adjusted, it should be terminated. The reasoning of these cases is applied to extraordinary economic and political situations, but it is also applied flexibly, in more ordinary solutions. The german system reacted well, but this might not work everywhere (e.g. England: legal certainty is prevalent). However, there is a tendency in legal systems to keep and modify the contract rather than cancel it; how to change? mainly through renegotiation. Contrary to fears expressed, particularly by French academic writers, judicial revision in the event of disappearance of the contractual basis is not a threat to legal certainty because the German courts use it conscientiously and with moderation. That is why the German model has been followed and codified in a number of national laws and adopted in certain harmonizing instruments (PECL, DCFR, UNIDROIT PICC,) which, in this respect, distance themselves from the CISG. While the German legislator only took this step in 2002 (new § 313 (interference with the basis of the contract) – codification of case law), the solutions adopted by the German courts were codified in a number of European jurisdictions from the 1940s onward. Italian law Art. 1467 c.c. eccessiva onerosità sopravvenuta: exceptional or unforeseeable event → termination of the contract. In continuing or periodic contracts, or where performance is deferred, if performance by one of the parties has become excessively onerous as a result of the occurrence of exceptional or unforeseeable events, the party liable for performance under such conditions may apply for termination of the contract which will entail the effects laid down in Article 1458. Art. 1463 c.c. impossibilità sopravvenuta Arts 1218 and 1256 c.c. on obligations; difference with contratti aleatori (risky contracts) in Art. 1469 c.c. (speculative contract, contratto aleatorio): The provisions of the preceding articles shall not apply to contracts which are speculative in nature or according to the intentions of the parties. Presupposizione: developed by case law and legal doctrine; similarity with German law (Wegfall der Geschaeftsgrundlage) Proposal of reform of the Civil code in 2019 introducing remedies that keep the contract (rimedi manutentivi) Hardship clauses are clauses agreed by the parties regulating future events that might disrupt the balance of the contract. They are relevant especially in international contracts and long-term contracts. Model clauses are contained in e.g. International Chamber of Commerce, ICC. They can lead to a variety of consequences (renegotiation, conciliation, arbitration, …). These clauses present many advantages: higher degree of certainty, more contractual equilibrium, best endeavors to renegotiate and adapt the contract. Indexation clauses are clauses regulating future fluctuation of prices of commodities; the principle of monetary nominalism is relevant in issues related to currency applied to the contracts. Control of indexation clauses in relation to public policy elements looks at the difference between internal and international situations. Although the nominalist principle continues to be the underlying rule, it has been modified by that case law. In Germany, therefore, indexation clauses are less important than elsewhere. developed by IATA, the e-Yellow Card by the WHO and the Digital Green Certificate present even more complicated problems than already exist regarding data in a Covid-19 app. Both present problems about who has control over data, meaning who has access, may exclude others from access, alter, port, transfer and delete such data. With regard to vaccination passports. The app does not merely create data about a mobile device owner by digitally mirroring encounters in the “real” world, but it presents a copy of data already existing about the owner and which through the app are now co-generated on his or her mobile device. However, what the Covid-19 app and the Corona vaccination app have in common is that both provide very personal data about a person’s health. What is meant by data “ownership”? The English terms ownership and property are, therefore, inherently ambivalent and can only be properly understood from their context. Furthermore, it matters whether the question is being asked from the viewpoint of personal data and privacy protection (public law) or from the standpoint of marketability (private law). A public law approach will favor creating a distance from the market, not allowing parties to conclude contracts on personal data. If a private law and, consequently, market transaction approach, would be followed, this would facilitate individual choices to contractually waive a right to privacy and data protection. A public law approach will be aimed at preventing the latter and in such an approach giving property entitlements (such a “ownership”) to those whose data should be protected does not fit well, because ownership would imply freedom to transfer. A private law approach, on the contrary, would begin by looking at any value exchange that might be taking place. A public law approach, therefore, would be more inclined to start by denying any “ownership” rights, whereas a private law approach would be more likely to begin by accepting that at least some type of ownership. It is precisely this mixture of public and private interests which is giving rise to growing acceptance of the idea that rights regarding data might very well be both: in some respects public and in some other respects private. Still, we should not miss an essential point here: the nature of data as such. From a legal perspective data are non-defined, non-categorised and non-specified objects. In order for the law being able to regulate, data must be categorized and, for purposes of private law, even specified. But even when data can be specified the fact that, though perhaps limited, copies may exist. Whether to approach data ownership from the perspective of public law or private law, is pointless. We need to rethink, in light of the very nature of data, what we mean by “ownership”. (1) who would be the subject of such an entitlement, (2) who would belong to the considerable and relevant group of other subjects against whom the right can be affected, (3) what would be the object of such a right and, of course, (4) the content of the right itself. We need to revisit our existing legal categories. Regarding data we are faced not only with a very different nature of the object, but also with questions regarding who could be subject/right holder, against whom could such a right be invoked and to what degree is the content of the right not only strictly private, but also public? The Common Law tradition never had this strict separation between personal and real rights: these were more notions than hard and fast categories. In this tradition a separation between private and public law only came later than in the Civil Law. It is also interesting to note that in the recently enacted reform of Belgian property law also a less dogmatic approach to property law. A multi-perspective view. Data rights are a multi-perspective type of rights, in a borderline region in between private and public law and in the middle of personal and real rights. Looking at their content, data rights provide control, both positive and negative, rather similar to traditional property rights. Positive control, as they provide their holder with the power of access, use, modification, erasure, portability. Negative control, because they allow others to be excluded and prevented from exercising these positive powers. This multiperspectivity is not static, but dynamic and in its final outcome resembles more a (de facto) management than a (de iure) entitlement approach. That control can be of a personal nature, but also be used for commercial purposes or in the general interest. On the whole, data rights resemble more a legal status than a primary property right. As to the status of the manager we can distinguish primary managers (“data owners”), such as the data producer. Next to primary managers there are secondary managers (“data stewards”), for instance the government in the interest of public health. Finally, we can distinguish tertiary managers (“data users”), for example in the case of tracing apps one can think of health care providers, academic researchers. Subject who is a right-holder. We can differentiate between various stakeholders: individual citizens, governments and medical health providers, also passenger transport services, organizers of public events, and the tourism and hospitality industry. The difficulty is that the interests of all these parties do not come into existence at the same time and their interest, which will be foremost access to data, is affected by providing them with a copy of the data. The more copies of data exist the less it becomes possible to control data. The position of the data subjects changes over time, depending upon who else now has a copy of the data object. Subjects who can be excluded. As long as data are not shared by copying them, any other subject can be excluded from control over these data. The processing of personal data is only allowed as far as this remains within the purpose for which the data subject gave its consent.However, such a consent can, under the regime of the GDPR, be withdrawn. Content of the right. The content of the right has, as is the case with traditional property rights, a positive and a negative aspect. Looking at it from a positive side, the position of the subject/right-holder depends upon the rights of other subjects/right-holders. From a negative side it means that the possibility to exclude others is also relative. Also the nature of the data will be relevant and also this nature can change. Under EU law personal data are treated in a fundamentally different way from non-personal data. Data law - Final lecture These four fault lines: mass migration, climate change, pandemics and disruptive technologies develop against a backdrop of a growing, yet vague, feeling of overall insecurity. We already accept that intangibles such as monetary claims and government licenses can be an object of property law, that products of human creativity can be owned as intellectual property. However, we have great difficulty accepting that digital (virtual) intangibles (electronic data) could also very well be things of value that can be “owned”. In the Civil Law tradition we still continue to argue from a post French Revolutionary and anti-feudal perspective that, as a matter of dogma, property law focuses on ownership as the right of one particular subject, who for an unlimited duration of time can exercise sole and full power over a physical object and who can exclude anyone else. We see two elements here. The first is positive, but it includes the second negative aspect, because freedom cannot exist whenever others can interfere. This definition of ownership is centered around a physical object, based on a subject’s factual control (“possession”) over that object. So in light of the fault lines and considering how the Civil Law tradition struggles with its academically inspired desire for dogmatic correctness where we now urgently need practical and workable solutions. A first problem which we encounter is that the gathering, analyzing, processing, sharing, porting, transferring and deleting of data is governed by a web of multi-level contracts. These contracts are also of a multi-level nature. The patient is the primary data source, but not the sole data creator. Given this web of contracts, private and public law come together. A web has a spider in the middle, but who is the spider? In fact, here it is neither a human being or a legal person, nor an animal, but in the middle of the web is data, waiting to become active when accessed by the various parties involved. The spider in the middle is, therefore, not a subject, but an object. Data management is needed here, making insight in an orderly, efficient and effective way who has access, control, is entitled to portability, the possibility of erasure and who has the power to share, pool and transfer the data. Approached in this way the problem becomes a question more familiar to property lawyers than contract law scholars. Do data transfer contracts only create personal rights and duties or do they express a deeper insight into what, in effect, are rights and duties regarding an object between a subject and a relevant and considerable group of other subjects depends on our point of view? The leading value underlying contract law is freedom of contract as an expression of the ideals of the French Revolution: Equality, Liberty and Fraternity. Nevertheless, it was observed correctly that in the 19th century only the first two ideals were at the forefront, focussing on formal equality and liberty, ignoring situations of unequal bargaining power. The leading idea behind any contract is that you gain what you desire. This is why in the world of data transfers the preferred option is contract law, not property law. The only way to break through this practice is by shielding weaker parties through mandatory law provisions which are given extra-territorial effect. By doing so, contract law becomes just as mandatory as property law. As a result the leading values in property law became long term predictability and certainty, secured by a closed system of mandatory law. What gradually became problematic in that approach was the blind focus on the unitary concept of ownership as the most complete right over a thing in the hands of one person for an unlimited period. Data, by their very nature, are fluid, intangible and non-rivalrous. Even from a contract law perspective it is difficult to adequately describe which data are the object. The entitlement to data is just not the same as ownership of a physical thing. It is, first of all, access. And only those data can be an object according to property law if they can be accessed and it is clear who has access, against whom access can be claimed and what access in a specific case means. The term “digital asset” is more a notion than a concept, as its delineation is still vague and floating, but it is not too vague to function as a workable legal notion. If a digital asset qualifies as a legal object, we can now have a further look at who can be a legal subject. Traditionally we distinguish between natural and legal persons and it will be obvious that they can be legal subjects holding rights concerning digital assets. But could also autonomously operating and AI driven computer systems qualify as legal subjects? The final step is how to describe the right which a legal subject can have vis-à-vis other legal subjects concerning data. Any property law system has one set of rights which, depending upon the object, give its holder the maximum of rights, powers, privileges and immunities. Whether the apex of data rights is called “ownership”, “management” or any other term, the debate on data rights should be on content and it should be realistic, pragmatic and taking into account differing interests of stakeholders. These are most importantly private persons who need protection of their personal data in a diffuse and global environment dominated by global tech companies looking for profit maximization by dealing in data and states desiring to regain sovereignty. The focus historically of property law was on land (both common and civil). English common law developed around land, and we still see feudal concepts even today: there is a need to distinguish: land (common law (rights in land = estates, tenancy)- equity (interests) differences), movables, monetary claims, … The land cases were about the land and the one owning it; tenancy: one person own the land = king, the person hold the right from the crown that is the ultimate owner; it comes from french law with the battle of Hastings; the content of the right is called estate (estate can be land and building, but also the right in the land, right regarding the land, estate has different meaning depending on the context). Estates were complicated until 1925 (in Ireland til 50y ago), after 1925 there are 2: freehold and leasehold. Freehold was a term not used in the statutes that talk about estate in fee simple absolute in possession: it’s a common law right in land in fee, historically feudal and granted from the crown, and is simple, you can do what you want, and absolute in possession. Leasehold is an estate in term of years absolute; you can use the land for a period of years and you can do what you want but when the time is over the right is gone and the original freeholder gets all of his right back). Equity was developed by prime secretary Charles to correct the harshness of common law (advice of what to do to the Crown in bad cases) and developed as an independent branch; it was administered by a separate court. Here judges are more free, judging according to what they think is right. The 2 courts merged in the 1870s (application of the two at the same time by the same judge), so cases need to be analyzed by the 2 perspectives. An example is the following: 2 women live together, only one owns the house (to keep the social security fund, it’s a social security fraud) but they both pay the mortgage. They split, what to do? A bought the house, B paid off the mortgage but no owner of the house. B: I paid so it's also my house. At common law level, only the one registered in the land registry has freehold, B is irrelevant here (at maximum she can claim a sum of money back). In equity they are both entitled, since the economic interest was shared; A managed the property for B (property entitlement not just for yourself but also for someone else benefit, you are someone else manager), B is the beneficiary; this is called trust (property entitlement not only for yourself but also for someone else who is managing it). When A sells, the sale price needs to be splitted, so money also goes to B. In civil law you cannot say that they are both owners but when A sells the house she makes profits, so it is treated as an unjust enrichment for civil lawyers. In England this is a trust so B is entitled to some money. For movables, there is no concept of estate, the primary concept is title (the stronger right to possession, relative in English law, relationship with a particular person), you do not own it, you can only have a claim on title. English law on data is difficult because the focus of property was/is on land: data fit in this system? Also civil law focused on land before the French Revolution. On the continent we saw a refusal of the feudal system. There are no positive burdens for 3rd parties (e.g. servitudes: the neighbor needs to accept, cannot be forced to do something, just force him to accept). In the French Revolution approach there is also a strict separation between contract/tort (obligations) and property; in French law the contract is a mixture of property and contract, delivery is due because of the contract, not separated. In German law, when I sell you something, the contract only obliges me to make you the owner of the furniture,there is no proprietary effect, property only passes when I deliver the object. For English law, when it’s sold it’s sold, no need to wait for delivery. The values underlying property law is that it wants to create certainty for the future, a long stable environment (ex. when someone buys me a bottle she makes me the owner). There is a difference between concept and notion: German lawyers will approach property as a concept, instead a French as a notion (more open approach). However, there are 3 types of property rights anyway: primary (most extensive power, 2 types: ownership and freeholder title); secondary (gives management rights as trust, but you don’t own it at all; 3 types: use, security, management); tertiary (mix of contract and property, typical of Chinese law where the individual citizen has the right to live in a flat but no ownership because under Marxism only the state can own; the contract gives strong rights so the person has the right against anyone except the state, it gives contractual rights which bind 3rd parties). The leading principles are three: 1) numerous clauses: any property law system limits the number of holders of property rights; it’s not up to citizens to create new property rights. The number and content are limited and also substance and procedure. Numerus clausus also limits the objects, the subjects and the transfer (meaning who can possess, natural and legal person but as we saw there are developments): in German law: no you cannot own data (ownership only of physical things, effective definition of the object). Under French law property is a notion so you can have a debate about data. 2) transparency: if I have a right against everyone, how can others know? Specificity (THIS bottle), publicity (signals that is mine, for more valuable things you need to register). Privacy might be opposite to publicity; sustainability is also to be considered. 3) hierarchy: property rights have conflicts between strong rights. HR prevails on private law; property rights prevail over contractual rights; primary rights on secondary; older property rights on younger one). These principles are the foundation of property law. Round Table: Managed Retreat Managed retreat identifies areas considered of intolerable risk and reduces or eliminates exposure to extreme weather events. It enables people to relocate their houses, activities, and sites of cultural significance away from at-risk areas within a planned period. Combating climate change entails four stages: avoid (lowering CO2), protect (building a dam, dyke), accommodate (isolation of houses), retreat (final stage: all else failed). There are several examples of situations where property is at risk because of climate change: Italy (Venice and Lake Resia), England (in Torquay landslides cause enormous damage), Netherlands (what happens if the dams and dykes and levees break/will no longer be enough?). The Republic of Vanuatu successfully led a global coalition of 132 Co Sponsoring countries adopting a UNGA Resolution calling for an Advisory Opinion on Climate Change from the ICJ. There are various aspects to consider: people, nature, (agricultural and urban land, buildings), human rights, damages (destruction of objects, lower valuation) for example through insurance and government support, property rights. Climate change is a physical process, but highly impacted by human behavior (as digitalisation); human behavior can be influenced and regulated: role (and rule) of law. For the property law aspects, does existing law still function well, need adaptation or do we need new law? We have to look at 1) ownership and 2) land use rights. 1) Ownership is linked to sovereignty (expropriation). What is ‘ownership’: unitary or fragmented, private or public, or all of this? Ownership is a right but might also become a source of social duties. Expropriation as a consequence might be seen as a ‘taking’ or as a source of government duty: financial support, relocation, … Redefining ownership would be useful to create access to resources (parallel with digitalisation and data). 2) Land use rights: sharing property rights (‘commons’) cause the interface contract/property (private law) and also refers to obligatory shared housing. We might have new types of secondary rights (e.g. conservation servitudes, different approach to accession principle). Managed retreat is an “ultimum remedium”. Balancing unavoidability, human rights (personal and proprietary consequences), sharing the burden (private law impact of the principle “égalité devant les charges publiques“, public burdens must be borne by the community, not an isolated citizen or groups of citizens) might be the solution. Rethink existing law might be against the need that we may have to act fast. H. Beale - Sustainability: goods and associated services For sold goods, the focal points are: eco-friendly production, economize on energy when running, durability, enabling and encouraging repair (in and beyond liability periods), second-hand and refurbished goods, repairable, recyclable, role of consumer information. There is both existing (Ecodesign Dir 2009/125) and proposed (Ecodesign Reg, Green Transition Dir, Repair Dir) legislation; there is also the Circular Economy Action Plan. Eco-friendly production: it is hard for MSs to monitor. Current legislation is Dir 2014/95 that requires non-financial information on environmental policy from large companies. Environmental efficiency: the Ecodesign Dir 2009 imposes mandatory production requirements for energy-related consumer goods, to reduce resource consumption and environmental impact and the labeling for white goods. Durability: there are some problems: 1) how long: durable/semi-durable/perishable? Need to establish average lifetimes. 2) Initial fault or later mis- or over-use? Burden of proof on traders is for only 1 year; the remote monitoring may reduce problems for traders. 3) Cut-off periods: MS may limit to non-conformity appearing within 2 years; limitation: start when appears or on delivery? Planned obsolescence: designed to wear out quickly through “constant updates”. Second-hand goods: by Ts: ensure Cs have adequate rights (CSD: MSs may limit liability period to 1 year; in the NL (2 years), with a stronger market than DE (1 year). By Cs: MSs give B different rights (but is it within Art 114 TFEU?). Refurbished goods: growing market, especially electronic goods, but what should C reasonably expect? Functionality as new? Encouraging repair: in case of initial non-conformity shorter than the liability period, S must repair unless cost > replacement. If the defects come up later than the liability period, producer/ distributor/ importer must provide repairs if possible, with penalty if not; producers must inform consumers; MSs must provide a platform for consumers to find repairer. Queries and doubts: What is covered? “Defect”: meaning < period? “Damage”: accidental damage? Does C have the right to demand? Competition from other repairers: for vehicles, the type approval requires: diagnostic equipment, repair information, proposal to ensure IPR do not prevent third party repair. Repairable: spare parts, access to repair information available to professionals (Ecodesign D): large domestic appliances; 7-10 years; must be available in less than 15 days; but no rights for C. Repairability is also a question of design. Proposed Ecodesign Reg: Compulsory standards for each product? The Commission may regulate (a) durability; (b) reliability; (c) reusability; (d) upgradability; (e) reparability; (f) possibility of maintenance and refurbishment; (g) presence of substances of concern; etc, MS must have penalties for infringements. What about voluntary standards? Consumer information: regulated by the Green Transition Dir which add to UCPD greenwashing, false claims on durability, repairability; add to CRD information on producer’s commercial guarantee of durability (or if not provided and goods are energy-using, that not provided), period software updates will be provided and repairability. Information overload might arise, since there is heavy reliance on information: improve consumer awareness, competitors can police false use of symbols and consumer associations and regulators can monitor complaints. The Proposed Repair Dir Art 8 1. Mss shall ensure that adequate and effective means exist to ensure compliance with this Dir. 2. The means referred to in par.1 shall include provisions whereby one or more of the following bodies, as determined by national law, may take action under national law before the courts or before the competent administrative bodies to ensure that the national provisions transposing this Dir. are applied: (a) public bodies or their representatives; (b) consumer organizations having a legitimate interest in protecting consumers; (c) professional organizations having a legitimate interest in acting. Monitoring of complaints is done through repair information platforms (traders who perform poorly excluded) that can be required to have feedback system and to separate and keep data on complaints. “Ethical business regulation” was developed by Chris Hodges, Law and Corporate Behavior: the relationship between Ts and regulator (R) should go from “them and us” to collaboration (not deterrence via fines); R aims to help T dealing with complaint fairly, meeting standards in future improve its reputation and in the enforcement action for worst cases. The “ideal sequence of reactions to adverse events” according to him is: 1. To identify an issue as quickly as possible. 2. To identify the root cause. 3. To share information on the problem and to discuss and agree the appropriate response. 4. To implement the right response, and share it. 5. To apologize for harm caused, and repair it or provide redress. 6. To monitor the situation and see if changes need to be made in the initial response. Bermuda Triangle - certain but not all documents must be registered (insecure registration): French approach; historical reasons: the registration began as registration of mortgage only. Contract of sale transfers the ownership, so you are immediately the new owner but no one knows; this opens the risk of fraud (sell to many people), so the land registration protects the person registered against future buyers (if your are the second buyer on good faith and the first was registered, you are not protected). If the contract is not valid, the transfer remains in the registry but the transaction is void; this is why the system is called negative: at least, no one else becomes a new owner (only certainty). In practice, it is slightly different: there is the primary task to repair and correct the registry, so the system is not completely insecure. - all documents must be registered (more secure), called a positive system. There is the abstract transfer and the duty to register all documents. Without a registry, you have no right at all, this is why there is an administrative judge. In Trentino Alto Adige there are both, the Austrian (Germany) and the Italian (French). In Italy there is the French approach but the Austrian registration. In practice, the distinction is not so sharp. If you buy a house in France, of course you don’t want to be the owner immediately, so the transfer of ownership is delayed. So, there is a pre-agreement, an agreement to sell, a contract to contract. With this contract, you can go to the notary (who will research: are there mortgages, is the seller the real owner, …). The German system is abstract (invalid contract has no impact on transfer), but this is not completely true. If the contract is invalid for really serious reasons, e.g. fraud, this also affects the legal agreement for the transfer; in the case of fraud, the German system is no longer abstract in practice. This is to show that there is a movement, starting points are clear but the technicalities are not. Valuable movables are treated like immovables (land, houses). Valuable movables historically are ships and planes, but now there are also railway rolling stock and space objects. In the registration, you register the object (for land, the piece of land, measured by technical people, identified by borders, with notes on whether there is something on it). For ships or aircraft, the registry starts with a description of the object. The way of transfer is really similar (formal deed, ship registry, …). Nowadays the registration of aircrafts, traditionally national, is getting globalized, especially the registry for mortgages on aircrafts, and digitalized (global property law). There is also a global registry for railway rolling stock and space objects, done by the Unidroit (Rome), the last remaining institution of the League of Nations (there is also Uncitral in Vienna and New York, they work closely). In some States, registration is getting privatized (e.g. Australia and Canada), e.g. to investment funds. Why? Data: you get a lot of data; also, registration fees went down. Google tried to do the same with the Dutch registry. The system is not so good: it’s a public interest given to private entities. In case of secession, which law governs your inheritance? By your national law, wherever the goods are; where the goods are located and for movables, the law of where you lived; … International secession can be extremely complicated; in the past it was only for rich people but since we all travel today, it’s gettin more common. Eu is constantly trying to make MSs agree on a common law or to decide at least which law to apply (Eu private international law). For secession law, there is Secession Regulation: law of last habitual residence (or nationality if chosen by the person). However, there are technical differences: if in France you have to apply German law, … The answer from Eu politicians was that this concern was purely academic and not relevant. However, a case came up: in Germany, a Polish couple went to a notary in Poland, choosing Polish law that said that if there is a legacy, the person to whom it is given becomes immediately the owner the very moment you pass away. This is not compatible with German law: automatism is not possible. Can Germany argue that its rules can set aside the Polish one? The ECj said no, so Germany had to apply a system that was impossible for its own citizens. This creates reverse discrimination: foreigners have more rights than nationals. This can create political tensions. What are secondary property rights? Management, use and security. What are ‘use’ rights? They’re the right to use your property. There is neighbor law; they can be created also with contract (problematic: only between two people, personal) and property. Under property law: common law has easement and servitude; civil law has usufruct, use and habitation, emphyteusis, superficies. In the Chinese civil code, the contractual right has effect against third parties (contract person-State to a house, but effect with third parties). In some systems, this is under tort law: I gave you the contractual right to park and I give you the duty to say to new owners that you can still park and so on (chain clause); when such clause is broken, you can sue on the basis of tort law (not contract because there is no contract between the two). In this way, people can create quasi-property rights. Servitudes are in English law and have the same problem with use. In Leicester Square there were houses owned by people with a freehold that could use the park in the middle of the square; there was a contractual duty to include in a new contract in case of sale the duty to take care of the park. When London grew and this area was no longer rural but urban, selling without this clause was much more worth, so it was done. What is the legal nature of the clause? Tort law was not possible for English law, so equity was used (under equity, the new owner is bound by the duty). By doing so, a new property right was created in equity, the restrictive covenants. Tertiary ‘use’ rights are for example software licenses (e.g. a right to use that copy for an unlimited period). Tokenization and digital use rights How to transfer things that are non movable and not immovable things, like cryptocurrency, data, …? Many lawyers say that cryptocurrency from a legal pov is nothing, but this means that the legal system can’t respond to what happens in the economic sector and it’s really problematic, so this opinion is not followed and we speak about digital assets. A japanese man said that we could use data that can be seen as money. If something can be copied for free eternally, it is worthless. How to create economic value out of something that can be copied eternally? It was decided to make the content permanent (not possible to “open” and change); in this case, the content is “I am money” and it’s called “bitcoin”. The problem is that it can be copied, used twice so they created a software setting up a community of users; in their computer it’s stored who has which bitcoin (to which computer a bitcoin is attached: it's a computer talking to a computer). If you want to transfer a bitcoin, you have to refer to the community and ask; if the majority says yes, the computer starts a “smart contract” which deducts the bitcoin from it and adds it to the other computer. If you try to sell the same again, the community will say no: thanks to the community, although technically it can be copied, the copy is worthless within the system. The idea behind is anarchy, to blow up the system (against banks, governments, …). However, you need the state to recognize this to effectively be protected (see later need for regulation). In the magazine “Extropy” a man proposed to go away with contract law: if somebody agrees on something, no one can change it; the moment you conclude the contract, there is automatic performance, so no possibility of non-performance. It must be remembered that 10% of all bitcoin is reserved for the person/group that created it (no one knows who is behind the software); there is the risk that at a certain time they will come up and take it. Lawrence Lessig said that “code is law”; he meant computer code is law: when writing software, we create our own set of rules. In a sense, it is true but this is dangerous. Sometimes, more data is needed than what the system has, so you need input. An example is softwares for insurance for flight delays (insert flight and name which are stored, if flight is delayed you get money/cyber currency). Your name and the flight number are stock in what is called block, a no longer changeable, immutable document. The computer has to calculate whether it was true, so it uses outside data to see if it was delayed; the computer gets information from another website. This system is called oracle. Block has several names: bitcoin, token, cryptocurrency, … but it’s technically the same: an immutable document. You need a smart contract to sell. The data of the contract is saved, so there is a trace of where the bitcoin goes. These blocks composed of these infos are linked through cryptography and they’re called a block chain. There is a huge debate on the legal nature of cryptocurrency: what is a block in the legal sense, a movable, immovable, registered movable, what? The transfer of blocks is machines talking to machines or a legal transaction? Computers speak of transactions but not meaning the legal validity. It was concluded that these are legally valid contracts (e.g. insurance for delays: it’s not gambling as someone said, but a valid contract). Today tokenization is happening. What is tokenization? You have a registered building with registered apartments and you want to transfer immovable without notaries (happening in Us). You create a company owning the building and you register it; you create a block for each apartment and you call it a token (block that says “I am unit A”). At the land registry there is one owner, in practice there are as many owners as the tokens. If you want to buy an apartment, the transfer is done by smart contract on blockchain; however it is not registered in the registry; these smart contracts are called recardium contracts and are written by computer engineers and lawyers. Tokenization is the name of all this. Token represents both the right to ownership and the object you can have the right on; it can be split and in this case no one knows what is happening. Problems arise when the company becomes insolvent and its assets must be sold: there are people who are owners of the units. What sort of right is a token? From inside the computer system, token owners have absolute rights: they can do whatever they want. From the outside world, a token is a personal right. There is a conflict with traditional contract law and property rights created by tokens. Even more complicated is the situation for crowdfunding, called (DAO: decentralized autonomous organization), a legal person created in this way, putting together smart contracts and blocks. Dao divides the money in the several fields that need fundings. Flight insurance developers were scared of dao, so they introduced an emergency button to stop the system (so not completely a smart contract because they could intervene). How to protect consumers with smart contracts? The Eu, which intervened and regulated this field, said that if needed, emergency buttons must be put. Tokenization is dangerous because normal people have no idea of what is going on. There is an enormous need for regulation and Eu is doing so. (Revolute: Lithuanian bank only through an app; many currencies including cryptocurrency. Cryptocurrency are not money because they’re not recognized by a bank, have no official value; if you paid by them, it’s because of mutual agreements only). All of a person’s assets are liable for all of a person’s debts. It applies to all subjects (private, corporate, state (e.g. Greece), banks): if they’re insolvent, they have more debts than credits. There is ‘paritas creditorum’, no priority for time. If you are an ordinary creditor, you won’t get much in practice, so people want to have priority. There are the contractual and property techniques. When the payment of a debt is made certain by concluding a supplementary contract with another debtor, who promises to pay the debt for someone else, there is suretyship. It’s a contractual security rights (not interested in property, wants the money) Usually banks want more: a contractual promise does not give the creditor direct access to certain specific assets of a debtor and does not give the creditor priority. What a strong creditor wants is looking at assets and saying they’re only of them, a claim to assets to have absolute priority, absolute right. For immovables, you have a mortgage (notary, deed, registered); for movables, you make a pledge (monetary claims). What about crypto assets? Can you use them as security? Some crypto assets just have values as such, intrinsic value (e.g. bitcoin). Others have external value (token representing an apartment; value depends on external object). Traditionally, if a security right allows you to split off the assets and get some, it must be precisely defined (no “everything you have and will have”). In practice, you can say everything is mine if you’re a bank (floating charge) in England; some civil law systems are influenced by trust (one is the owner for someone else). Is crypto asset specific enough? How to create security right? Bitcoins mean you have access to them. Data access is usually done through username and password; for bitcoins you have a public and private key (public like username, private like password). If you don’t pay back and have to give away the bitcoin there is only one option. If you transfer the private key to the bank, you make it the owner (but this is a primary right); usually, you transfer it to an xro, an account with third party that is under contract to repay/retransfer to you if you pay back or to the bank if you don’t. This is done and it’s possible to be done. The only problem is value. The value of bitcoin fluctuates: what is the bank entitled, the bitcoin or the value? And what value, the original money that should be repaid or the new one? If to the original and it gets more, does it have to pay you back the difference? A security right rests on specific objects and secures repayment of a claim. The objects are corporeal/tangible assets, incorporeal/ intangible assets (claims, also cryptoassets?) and intellectual property rights; sometimes, it’s on all objects (floating charge). A security right rests on specific objects (you can separate from the rest of the asset and sell it) and secures repayment of a claim; the claim must be specific, so are “all claims” clauses allowed (sometimes you give security to secure everything). When the claim is paid? There are two approaches: - the moment you paid off, the security right vanishes, extinguishes (accessority) - the security right remains (non-accessority), in theory the bank could still sell the security even if it has nothing to claim for you. This is the German approach (copy of the cake); people create a right of mortgage on your own house for your own benefit (owner’s mortgage) at a notary; the mortgage on the house is what secures and at the end the mortgage will be given back but it will not extinguished (in theory, you can use it again). There are main types of security rights. Limited property rights can be: - Possessory: put the object out of control of the person (e.g. pledge of sth small);if he doesn’t pay back, you have sth in hand. It might be problematic (e.g. if you have a shop you cannot sell anything) - Non-possessory: rest in possession of the debtor; this is mainly for house that are registered Often, creditors don’t trust debtors and still feel insecure even if they have a security right. The best way to secure it is to get the ownership of the asset: creditors prefer the maximum of rights over a debtor’s assets. Ownership as security looks like ownership as management, but not for some other person’s economic benefit. There are two types: retention of ownership or the transfer of ownership for security purposes. A long debate on the possibility of making a pledge on bitcoin, data, … If bitcoin cannot be owned, you cannot make a pledge. It depends on how you define ownership. In France there is ownership, possession and detention. In Germany there is no detention (possession: factual control of the thing, but two types: for someone else or for yourself): in factual terms, possession for someone else looks like detention but conceptually they’re different. Digital assets are a substantial part of the secession asset (online bank account, …) and this is a problem: you have to know if they had one, the access to the mobile phone, … Sometimes, access is completely blocked. What is more, there are more “digital assets”: a social media account of an influencer might be one but the problem is the value of such an account, what happens if we have to sell, is it possible to sell it (contract with Youtube might prohibit it). Contractually when you open an account you cannot do many things. When we speak of crypto assets, we speak of assets of crypto currencies, but there is a debate on whether you can own such assets (back to the definition of ownership); currently worldwide it looks more like control (back to pre-Revolution concept). The ELI Principles on the Use of Digital Assets as Security gives some definitions. Digital asset means any record or representation of value that fulfills the following criteria: (i) it is exclusively stored, displayed and administered electronically, on or through a virtual platform or database, including where it is a record or representation of a real-world (tokens), tradeable asset, and whether or not the digital asset itself is held directly or through an account with an intermediary; and (ii) it is capable of being subject to a right of control, enjoyment or use, regardless of whether such rights are legally characterized as being of a proprietary, obligational or other nature; (it doesn’t matter if for the legal system it is contract or property) and (iii) it is capable of being transferred from one party to another (possible only if you respect the principle of specificity), including by way of voluntary disposition. It does not matter, for the purposes of this definition, what the design and operational features of the relevant platform or database are, nor whether the relevant digital asset’s protection against undue replication, transmission and/or use is dependent on the use of cryptography, nor whether the relevant digital asset represents a monetary claim on, and correspondingly a liability of, an identifiable party as issuer, custodian or controller thereof nor whether the asset in question fulfills the functions of money or currency. There was the Draft EU Regulation on Markets in Crypto-asset. The Eu is the first to at least try to regulate all this. They tried to give definitions in art.3. The Commission Proposal started: (1) ‘distributed ledger technology’ or ‘DLT’ (it is the technical name for blocks) means a type of technology that support the distributed recording of encrypted data; (2) ‘crypto-asset’ means a digital representation of value or rights (it can be a block that represent the right to something) which may be transferred and stored electronically, using DLT or similar (to keep the definition up to date, since things are moving quickly) technology. The Council Draft quotes: (1) ‘distributed ledger technology’ means distributed ledger technology as defined in the DLT Pilot Regime Regulation (already changed because of technical changes); (1b) ‘distributed ledger’ means a distributed ledger as referred to in the DLT Pilot Regime Regulation, (1c) a ‘consensus mechanism’ means a consensus mechanism as defined in the DLT Pilot Regime Regulation (community has to consent to the transfer of a block) (2) ‘crypto-asset’ means a digital representation of a value or a right which may be transferred and stored electronically, using distributed ledger technology or similar technology; (3) ‘asset-referenced token’ means a type of crypto-asset that is not an electronic money token (no intrinsic value) and that purports to maintain a stable value by referencing to any other value or right or a combination thereof, including one or more official currencies (e.g. tokenization of immovable property); (4) ‘electronic money token’ or ‘e-money token’ means a type of crypto-asset that purports to maintain a stable value by referencing to the value of one official currency. The problem with the software is that the bitcoin ledger is bigger than the storage space in the computer (not only all bitcoins but also all transactions). So, normal people buy bitcoins through intermediaries that work as banks: there are contractual personal rights (intermediaries have bitcoins, people are entitled to that), not property. Mining and data centers also need an incredible amount of energy (sustainability). Summary Rights can be real, absolute or personal; there is contract, property, … The distinction is more for didactical purposes than for reflecting reality. Property rights are long term relationships, to have stability and legal certainty but climate change and migration are going to challenge this stability; we are entering a period of instability (started already with digitalization). In any property system, there is a balancing of interests: some systems protect ownership (e.g. French law), others protect commerce and business (e.g. transfer takes place anyway), the general interest should also be considered (property of a private person vs of the government). There is an eternal triangle of the interests of the owner, the thief and an innocent third party (A steals B’s car and sells it to C): usually, third parties are protected by legal systems except when the good was stolen. The Equity’s darling is in common law; if there is a freehold (A managing property for its own and B’s interest) sold to a person, can B argue against the person (proprietary rights, so against everyone)? It’s impracticable: trust is secret so equity intervenes: if the person didn’t know, it can ignore B’s rights; proving negligence or recklessness), e.g. you got cancer because you were exposed to nuclear radiation (although there was nothing wrong in the way in which the power plant was handled). TL is about bringing the parties in the same position that they would have been if the damage did not occur (≠ CL is about bringing the parties in the same position as if the contract was performed). However, this is not always possible (e.g. a photographer gets hit in the face and can no longer see). The assessment of the level of damages depends from system to system. The nexus of causation concerns the physical damage itself, not on the economic consequences that follow from the damage. The notion of contributory negligence holds that the consequences of the act might not just be attributable to one party but to all parties involved (e.g. Ski accidents, car accidents: in Italy there is a presumption of contributory negligence, if you do not want this to apply, you have to prove that the fault was entirely carried out by the other party). Negligence is the starting point: all systems started from the idea that you are liable when negligent. However sometimes applying just this notion can be unfair because fault sometimes cannot be established: to tackle this issue the idea is either to shift the burden of proof (in certain situations you presume that there was fault and the wrongdoing party has to prove that it was not their fault, e.g. Donoghue v Stevenson is a landmark case in TL because there were no contractual relationships between the injured party and the manufacturer. It is a relevant case from two points of view 1) it is the forerunner of product liability: the bottle was closed and the barista was not at fault, the producer should have known, the producer is liable because there was a proximity between the producer and person, 2) the notion of the duty of care). In the case of product liability, there is a presumption that if there is a damage, that damage is due to the fact that there was a negligent behavior by the producer (this is not strict liability because we still find the notion of negligence, nonetheless negligence is presumed and the other party has to prove that there was no negligence. This constitutes a bridge between fault and strict liability because there is negligence but you have only to prove that there is a link of causation between the damage and the product, and the other party has to prove that there was no negligence. This is referred to as the reversal of the burden of proof, irrefutable presumption). The main principle still remains fault liability. All cc contain rules on fault liability. Usually there is a general clause and particular forms of liability (liability for things under your control, for animals, for vehicles). In parallel to this, we find strict liability for dangerous activities (aviation, nuclear energy, …) because in these situations, society needs to assess costs and benefits: if costs are above benefits, there is the possibility to ban the activity, but many of these activities are beneficial. In the balancing operation, you want to allow that activity but if there is a high risk of accidents, the liability for those accidents should fall on the people responsible although they were not at fault. The underpinning principle here is not fault but rather risk (if you undertake a risky activity then you are liable for the consequences). Another way to avoid that the damaged party bears the cost of the damage are insurances, done exactly to calculate the probability of a risky event to happen and the extent of the consequences. Nowadays legislation combines tort liability (general) plus specific clauses on strict liability. Nonetheless in the latest years there is more and more legislation on strict liability (e.g. EU directive on product liability). Often this liability is limited to physical injuries or damages to property and does not apply in relation to pure economic losses (cannot make any profit from a situation in which you were expecting to get some money) because the former are more important social value. These two forms of liability (strict and fault based) exist everywhere but their boundaries are not easy to set. From the point of view of policy choices we need to understand which is the best one in order to put the burden on the correct party so that everybody will behave in the best possible way: under tort liability, parties know that if they do not behave in the socially correct way they will bear consequences; under strict liability, the society should take care of all the losses that are around (in New Zealand, there is a system of no fault liability for all kinds of damages). In the end, it is a matter of political choices. What about a self-driving car? It depends on how independent is the driving of the car and on what you were doing. Who is liable for the car: the producer of the car or of the software? Semi intelligent cars and smart objects (internet of the things) which are partially controlled by individuals and partially controlled by technology, have an impact on the existence of fault liability. Pure economic losses Pure economic losses are losses which only have a financial value but do not touch neither the physical integrity of persons nor their property (material or immaterial, movable or immovable). We will deal with a specific aspect which is liability for wrongful information and advice. Under the German cc and the English common law, pure economic losses are not covered by tort liability. German law In German law art.823 cc deals with fault liability: (1) A person who, intentionally or negligently, unlawfully injures the life, limb, health, freedom, property or some other right of another person is liable to provide compensation to the other party for the damage arising therefrom. (2) The same duty is incumbent on a person who commits a breach of a statute that is intended to protect another person. If, according to the contents of the statute, it is possible to violate it also without fault, then liability to compensation only exists in the case of fault. It holds that you are liable if you infringe the right to life, personal integrity, property, and other rights of another person. This is a closed list that covers fundamental aspects of life but the case law can widen the scope of this list. Most of the times, case law and legal doctrine considers that pure economic losses are not part of this list, but there is one important specification which is art.826: A person who, in a manner offending common decency, intentionally inflicts damage on another person is liable to the other person to provide compensation for the damage. It holds that liability can also be established if you act against good morals with the intent to inflict damage. Thus, if there is an intent to create damage, you can also be liable for pure economic losses. This is about policy considerations: the system considers that you have fault liability for fundamental individual rights, but if the other part acts against good morals and wilfully inflicts a damage, then the balance is changed and by acting intentionally that person takes the responsibility and becomes liable for pure economic losses (it is a balance between protection of important legal goods and the intent to produce damage). Most of the times gross negligence (colpa grave) is equated to intent The starting point is clear: pure economic losses are considered less important than physical integrity and property. However, everywhere a question is being debated: what to do in case of the delivery of wrong information? We might have an intersection between TL and CL. The info that is provided can be due to a contractual relation or not. There are cases in which the parties that use and produce the info are not in a contractual relation, like the case of banks, which give to investors info and advice concerning the credibility of businesses. In these circumstances, if liability is established it is considered TL liability because there is no contract. However in some systems this is a quasi contractual relationship (as if the contract existed). The way in which you define the borders between contractual and tortious obligations is not automatic (e.g. in some systems pre contractual liability is considered tortious liability but this is not the case in Germany where it is contractual). The difference between framing this aspect under TL or CL is relevant also from a procedural point of view: in Italy the time frame to take a contractual action is different than for TL. Under TL liability, you have to establish liability for fault (you provide evidence that the other party was at fault in giving the advice). To sum up, most systems have limitations in allowing remedies for pure economic losses (they are less relevant than other damages) but most systems consider that giving the wrong info may lead to liability and therefore to remedies/compensation; depending on the legal system, this mechanism can either be purely tortious or of a quasi contractual nature. The elements that all systems take into account are similar. We need for sure a request for info/advice to a third party outside a contractual relation, reliance on the info/advice and damage related to the wrongful nature of the info/advice, but also we look at: - presence of fault/recklessness: the business providing the info should have known that there was something wrong in the advice) - presence of economic advantage: if the person providing the info does not get anything in return, then legal systems are more lenient in applying liability. However, banks usually are not paid for the info that they provide, but is it really for free? If banks want to have economic transactions being performed (and thus make money) part of this business of fostering economic transaction deals with providing concerning the credibility of businesses, thus this is an activity which has an economic nature which indirectly leads to an economic advance, even though no contract is present. - professional nature of the provider of the info: if you are a bank employee you are supposed to know and you must be aware that the another party will trust you and rely on the info you give. There are issues concerning the assessment of the position of the other party and consequently its reliability (all systems talk about reasonable reliance: it is a factual assessment that relies on legal elements, e.g. if you rely on what a fortune teller tells you to do, you cannot ask for damages for pure economic losses). The professional character and the expertise are relevant for assessing the reasonableness of the reliance of the other party. - fiduciary/previous contractual relation between the parties: if I provide info about the credit-worthiness of a business and this info is spread to many people, where does it stop? To whom am I liable? All systems talk about a relation of proximity (the case Donoghue v Stevenson is also about the notion of the duty of care which is formulated with the famous neighbour principle → you owe the duty of care toward all people who are in a position that are going to be affected by your action. The definition of who is your neighbour is crucial, proximity is crucial (you are liable towards people that you should expect that will get the info). Legal systems require a sufficient level of proximity. This is not a contractual setting and it is not for money (banks are not paid for info) BUT since they are professional and since they should know the quality of info that they give out, they should be liable (in the USA the bank is not under a duty to provide info, thus there is no liability, but if they give out info they must make sure that the info is true and reliable). This area is tricky and it is in between TL and CL. We need a balance between protecting people at large against a profitable activity but at the same time we should not enlarge too much liability for an activity which is not contractual in nature. English law Candler v. Crane (1951) A case concerning an accountant (a professional in terms of tax matters who shall know the financial resources of an entity) liable for the detriment caused by relying on false information given by her concerning an investment. Lord Denning's dissenting opinion convinced the House of Lords. The majority held that there was no liability but Denning dissent. Tort of negligence was born with the case Donoghue v Stevenson: you have to establish if there was duty of care, if so, the person is a liable for damages, however generally speaking, German and English law say that in the tort of negligence, liability arises for body injuries and possession, only in specific cases there is liability for purely economic losses. Denning said that it would be unjust not to get damages: they are professionals and they know there are other parties that might use the info; according to the neighbour principle idea the duty of care is directed also towards employers, clients and third parties, i.e. all potential investors (‘equivalent to a contract’, they’re not strangers) but it cannot be expanded to strangers. Liability extends further than the contract (otherwise it would be pointless). So, there is recklessness (you have to know if the info is right or wrong), there is no contractual link (the info given to third parties was for free but at the same time it was a professional activity), there was proximity because the other party relied on the info given by the accountant concerning the economic credibility. The argument of Denning is about proximity and duty of care under a public policy perspective holding that it would be unjust to consider that there is no liability because there was no contract (nonetheless the rest of the court decided that there was no liability because there was no contract). Hedley Byrne & CO V. Heller & Partners (1964) It was about the credit-worthiness of a client of a bank. The case involved a contract for advertising between a business and an advertising agency (it was a contract for producing advertisement on tv and newspapers). Before concluding the contract the agency went to the bank and asked for the credit-worthiness of the company. The bank said that the business was economically sound and therefore it was not too risky to conclude the contract but the business was not in a good financial shape and the contract concluded by the advertising agencies was not paid back. This case concerns pure economic loss due to the info provided by the bank, the problem though is that the info provided by the bank did not entail a contractual relation between the info provider and the recipient (it is a tortious and not contractual setting). The HoL overruled Candler v. Crane by relying on the standard of reasonableness of Donoghue v Stevenson (proximity between parties and the expectation that your action will have an effect on other parties). In the end there was no liability because the bank, in providing the info, put a clause stating that it bears no liability (if something goes wrong the bank is not at fault). There might be liability for wrongful info but if the bank inserts into the info a disclaimer stating that it avoids liability, this is enough to discharge liability. In the Swiss cc we find the notion that disclaimers are against GF and they cannot be applied. The emphasis here is put on the will of the parties. The distinction between the first and second case is not the outcome. In both cases there is no liability for the accountant (first case) or bank (second case), the distinction lies in the reasoning of the court. In the first case, because of the fact that this is not a contractual relation, it must be a tortious relation; however, pure economic losses are not covered by tort of negligence. In the second case, the court accepted the dissenting opinion of Denning delivered in the prior case: there was a “sufficiently close relationship” between parties and even though this is tort, it can be recoverable; the court applied the Donoghue v Stevenson neighbour principle (even though there is no contractual obligation, there is liability) and the problem was the disclaimer (exclusion of liability) which was put by the bank and accepted by the other party. Usually, systems don’t allow exclusion of liability for intention or gross negligence, but in this case, we shouldn’t assess whether this is pure or gross negligence (probably this is not gross negligence): the issue at stake is that the duty of care that derives from proximity (he’s a professional, so its information is relied on by people). The Court says that there is no contract (no consideration), but this doesn't matter: the important thing is that there is a duty of care nevertheless, even without the contract. (the obligation of having a certain behavior: you have to prove that you were not negligent ≠ obligation not to reach a certain result: you have to prove that the info was correct → illicéité de comportement/obligation de moyene ≠ illicéité de resultat/oblig. de resultat) On the possibility of using a disclaimer or not, there are arguments pro and against it. The bank gives partial info that turns out to be wrong, but this is not a contractual relation and the bank is not paid to give it, so a more lenient standard could apply (the bank is under no duty to provide info). In some cases, it might make sense not to accept liability for that info. If you want professional knowledge, you pay for it and the other is responsible for it. Even if the info is for free, providing info by professional is part of business in general: they will lead to further transactions that will give you profits. Free transport and accidents: standards for liability are different if you are in a friend's car or a hotel's car (free transport to attract customers, so part of economic activity, not purely gratuitous). The general rule is that if pure economic losses are tortious, they are not recoverable. But there might be exceptions to the general rule: a regular activity that is profitable in general terms for the sector (gratuitous but not void of economic value) and with reasonable reliance (e.g. because asked info to professionals). Disclaimers are a gray zone: if allowed, banks will always use it; if not allowed, customers are skeptical to ask so may pay. Producing info is costly (time, so also money): who should bear costs and risks of info? A bank knows better if it’s reliable and complete but the economic interest involved is of the customer that must decide how much to risk. Again, it’s a matter of balancing lawful interests. From these cases it is clear that different outcomes can be in the same system (e.g. English: before, court of appeal, then house of lord). There are very few cases where bank liability was accepted because usually, disclaimers are very frequent. USA law The Restatements on Torts (1979) is not a code, it is a formulation of rules extracted from case law, with comments and illustrations. The elements of the provider of info are a professional activity and pecuniary interest (≠ remuneration: the bank might not be paid but might have an interest). The recipient must rely on that info in a reasonable way (there is a link between reasonableness of reliance and the fact that on the other side there is a bank carrying out a professional activity). § 552 Information Negligently Supplied for the Guidance of Others: (1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. (2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered: (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. Following this second paragraph, the scenario is: an advertising agency asks the bank the reliability of the company, the bank provides the wrong info, there is a loss because the company cannot pay back the advertising agency. There are four parties: the advertising agency that wants to conclude a contract with another company, the company that wants to advertise its own activity, bank A (the one that supplies the info to the advertising company), bank B (the one which owns the info on the advertising company). Liability shall be established between A and B (bank B did not provide info directly to the advertising company). Does it matter the nature of the relationship with bank B? Yes.All systems turn on the same elements: professional character/special expertise, foreseeability that the info will be used for economic purposes, lack of contract, reasonable reliance. In English law it is framed under the proximity rule (i.e. liability towards all the people that you could expect to be influenced by your action). Whether B knew or not the nature of the transaction concluded by A is not relevant. They should have known that the info was going to be given to the customers of the bank. Here it is tricky because you need to assess whether the bank knew how the other party was going to use that info. The professionals knew or should have known about how the info provided was going to be used. It may make a difference because the way in which the rule is formulated in the American restatement (which is not a code but it reflects case law), this standard is more stringent and this is one of the reasons that lead to the decision of the case in the court of appeal in Florida. Reimsnyder v. Southtrust bank The issue in this case involves the liability of a bank to a third party concerning a reference as to one of its account customers. The bank officer said that its customer was a reputable company, which the third party contends was wrong. The third party invested in the company, and six months later the company was ultimately investigated for fraud. The court granted summary judgment in favour of the bank. Section 552 has been interpreted as limiting liability for the supply of false info to those entities that are in the business of supplying a particular type of information: those who have a pecuniary interest in the transaction to which the information. However, when the information supplied is "gratuitous," no liability attaches. "The user of the information is not justified in expecting the supplier to have used care in giving the information.". The supplier is only charged with the obligation to "speak in good faith and without consciousness of a lack of any basis for belief in the accuracy of what he says.". In other words, the standard is one of §552 (standard of honesty because if you want good info, you can pay for it). Court of Mississippi It argues in terms of policy terms (you should assess the whole machinery of providing info which is carried out by banks). Berkline endangered person, or to the fact that the actor is aware of the fact that he will cause damage even though his interests are necessarily valued lower than those of the victim. Art. 4:102 (Required standard of conduct) (1) The required standard of conduct is that of the reasonable person in the circumstances, and depends, in particular, on the nature and value of the protected interest involved, the dangerousness of the activity, the expertise to be expected of a person carrying it on, the foreseeability of the damage, the relationship of proximity or special reliance between those involved, as well as the availability and the costs of precautionary or alternative methods. Good faith has a role. If the loss was serious and it alters your life, this shall not matter in absolute terms (a loss is a loss) but you may consider that in balancing the situation this is a relevant element to take into account. In terms of evidence, showing that the bank was aware that info was going to be used for a certain purpose (it was foreseeable loss), it might make a difference as opposed to another bank asking you and you not making an inquiry. This knowledge might make standards of liability more or less stringent (there is a variety of elements: neither statutory rules nor case law establish standards: if it is not an absolute right you have to balance in order to define how much give protection, in order to do so you have to assess a number of elements: expertise, position of other party, riskiness of info, the damage to the other party → the decision always takes into account the circumstances of the case). DCFR art. VI:2:207 is on loss due to incorrect advice or information: reasonable reliance on incorrect advice or information causes liability if it is provided by a professional or trader, and the provider knew or should have known that there was reliance. The general principle is that there is no liability for advice and information, unless the provider is a professional (but no need of remuneration or a contractual relation) and reliance by the other party is reasonable (e.g. not for information by fortune tellers. We can conclude by saying that pure economic losses are in the middle way between contract law and tort law. Environmental damages This is at the border between private and public law. The development which has taken place all over the world (Chinese law as well) is that environmental concerns have become more and more important because environmental protection has an impact on other rights. Typically the environment is a public good in economic terms (public good means that it is open to everybody, non rival in consumption and non excludable in use) which leads to the tragedy of commons (the tendency to over-use public goods, e.g. fishery). For this reason, collective governance of public goods is the best way to make sure to make good use of these goods. When environmental law developed in the 70s, it was regulated through public law instruments (the state or some agencies determined the rules for using and protecting the environment). Public law instruments however are not enough. It may be wise to use private law instruments to protect the environment. Private law instruments are built for individual rights and interests that must be proven. For what concerns environmental goods there might be a general interest but it is difficult to prove that there is a private interest. The first problem is in terms of procedural law: one of the things which was witnessed is that those cases, even if they are private law cases, are handled by public entities (≈ unfair contract terms and consumer associations: they are general problems, thus collective redress are more effective). Many people are affected when environmental problems emerge, thus we find public agencies and environmental associations. We can also work on individual rights. We may have fundamental/constitutional rights related to protection of health as well as collective rights, however biodiversity and protection of species may be protected in terms of private/individual rights. This is a good area to test private law instruments in relation to collective rights. Climate change litigation (brought by individuals or associations) against agencies or public entities that did not provide enough protection for the environment can claim compensation as well as trying to change the action of both private and public bodies. If it is a pecuniary loss, you want a pecuniary remedy. But when it comes to environmental damage, it is not about money but about protecting biodiversity. Nonetheless, monetary remedies are a way to put pressure because as a way to ensure that dangerous and damaging behaviors do not take place. In this sense, monetary compensation is helpful. But often in these situations you ask for injunctions (to stop the defendant from an action and/or to oblige the defendant to do something). In this area, private law rules are stretched to get other remedies. There is a need to define which damage can lead to liability and compensation: how is the measure of damages assessed? Non-monetary damages are injunctions for cessation, removal/elimination, restoration of the previous state (restoration in kind). Often, private law actions are due to the fact that public actions are not enough (e.g. States have not taken actions to comply with the obligations of the Paris agreement, therefore, private litigation is a way to force action by public bodies). There is also an overlap between public and private damage. Environmental damage is a damage to both private rights/interests and general interest in the environment. Pure ecological damage is a damage to an environmental good independently from any private rights/interests. It’s a hybrid situation where associations and foundations are devoted to environmental protection that is a public interest litigation but using private law instruments. Public law has an ex ante control and prevention, while private law does an ex post control and gives compensation; the boundaries are gradually blurring. Environmental law is essentially public and administrative law. There is a EU directive 2004/35 on environmental liability but in that area, the possibility to take action is just given to public bodies. There are issues of standing, which are problems in many legal systems which require an infringement of a legally protected right or interest to bring a claim (see also EU law), so an individual dimension (or pooling of individual situations: class actions). A relevant role is the one of NGOs that has participatory rights in administrative procedures and can stand to challenge decisions before the courts (see Aarhus Convention 1998); they are gradually recognized by national and international law. Do environmental associations have standing to bring a claim for damage to a public good, as pure ecological damage? E.g.: Dutch law: public interest standing – class actions and pure public interest. There are significant variations among legal systems. Swiss law La fondation X (2004) A foundation (collective body of private law) is involved in an international project for reintroduction of predatory birds into wilderness (≈ bears in Trentino). At one point, one animal was shot by a hunter. There was an action against the hunter and the association claimed damages for the loss of the animal. The Federal Act on the Protection of the Environment in art. 55 is on the standing of environmental associations to bring a claim against administrative procedures damaging the environment; the requirements are established by the law (non-profit organization, national scope, registration). The Federal Law on Hunting and Protection of Wild Mammals and Birds provides compensation for damage to wild animals by cantons, municipalities and tenants of land for hunting, caused by violations of the statute (art. 23). The court did not grant damages. This was a criminal offense and inside this criminal procedure there was a civil action. Not all systems allow this mechanism (if there is a civil damage stemming from the criminal case, you have to start a separate civil action). In Swiss (but also Italian and French) law there is the costituzione di parte civile (inside the criminal action you say that if criminal liability is established there is also civil liability). The foundation was neither the owner of the birds nor there was no possession. The infringement of individual right was protected by rules on tortious liability. However, there were no property rights. Birds are considered res nullius because no one can have possession over them. The court said that wild animals do not belong to anybody. There might be public property but not private property. The right of property of the association was not infringed because it was not the owner of the birds. The association argued that it was about possession: the association was breeding the birds, the public authority granted to the association the power to free those birds, thus even if they were not the owners they had possession. The court rejected this claim because possession is legally recognised by the system therefore it has to have certain characteristics. Since they did not have control, there was no possession. No proprietary rights means no damages. The court compared Swiss and French law. If the legislator wanted to introduce a new possibility it could have done so but the legislation in Switzerland is limited to public bodies and persons having a right on that, if this does not exist, the rules on tortious liability apply (Art.23 Protection and Hunting Act) and in this case are not broad enough to protect this interest. There might be a public interest in relation to wild animals, but not private parties (the association was a private party). Etats de Friburg v Fibres de verre (1964) The case decided by the federal Supreme Court of Switzerland concerning pollution of a river that led to the death of fishes. The plaintiff was a public entity (it was the canton of Fribourg), thus there was no problem in terms of standing. The arguments made in relation to the remedies that the court can grant are interesting: there were no property rights. What they could claim were the expenses undertaken to restock/reintroduce the fishes in the water. The plaintiffs' reduction in patrimony is substantial, a fact which is not disputed by the defendants. Nevertheless, the latter may only be held liable for this loss insofar as there exists an adequate causal link, in other words, the loss must have occurred with protection of valid public interest in mind. This condition is fulfilled. In looking to replenish a natural resource which is under the protection of the federal and cantonal authorities the plaintiffs did indeed act in the public interest. For this reason, their claim can generally be deemed valid insofar as the plaintiff is requesting the funds required to restore the resource to its previous state This Court arrives at the conclusion that the cost of the fish must be compensated in its entirety. If you can say that the association (in the previous case) was pursuing a lawful activity (recognized by law, sustained by public fundings, …) you can say that although there is no property right you can say that you have undergone expenses to restock the bird. They could claim not the damage to property but rather the damage for having incurred expenses due to the behavior of the other party. This is to show how difficult it is to use private remedies in relation to strict legislation. 2004: no property rights, no possession = no right to damages for expenses related to the reintroduction 1964: no property rights but right to compensation for the reduction of the patrimony due to the expenses for restocking (public interest) The Netherlands There is a distinction between public interest litigation and collective actions, such as class. Collective actions are actions for all the class, such as customers; they’re still about individual rights which are put together because they are similar from a factual point of view. It is about pulling individual rights together (e.g. smoking and cancer). In public interest litigation you recognise that under certain conditions private entities are representing a collective interest. You claim that something is good for the common good and not for the single association, but rather for the collective interest. Here there is the overlap between the private and public side, while in the previous cases (Swiss law) it was about private interests. In public interest litigation the association/foundation do not act for their own interest but for the collective interest of a community. Here you cannot get damages but injunction because it is not about money but about protecting collective interests There are three positions: purely individual (the original idea of private law), purely public (e.g. the canton acts for collective rights) and the intermediate situation (private collective parties that may act for their own private interest but also for a collective interest). The associations must be registered in a public register and you have to respect certain characteristics (field in which you work, you have to protect collective rights for the whole population, the association is stable and was founded in a certain year, …): the association represents a quasi-public law agency and needs to show that it really protects public interests. The Dutch cc dates back to the 1990s. The collective dimension of rights has become increasingly important. A new provision (Art. 3:305a) of the Dutch cc from 1994 allows for associations to start private law actions for general interests: they get no monetary compensation, but the possibility to recover incurred costs; there is injunction and declaratory judgements. The association can start claims for its own rights (e.g. bird cases: I want money back because I spent money for reintroducing them in the environment) but also for collective rights (e.g. in the Netherlands the new legislation says that the association does have a standing but can only ask for injunction and not ask for damages as such, but it depends on the legal system, for example in Switzerland this is not allowed). It is in between public and private law. The association can act as a quasi public body and there are limitations on the requests and the remedies that can be granted. If the association acts as a private body, it can ask for damages. This is because the public interest is by definition an interest protected by the public body, but sometimes they do not do so because they have no means or no idea of the problems occurring. This is why the systems allow for private bodies to intervene (more efficient). In the NL (unlike in Switzerland), the association can have a standing not to protect its own rights but also to protect the public interests. In the area of climate change litigation, the NL is one of the most important systems in the world. In the Urgenda case, the association claimed that the government did not take enough action to protect the environment and consequently the health of the people (this case reached the Supreme Court). The Urgenda Climate Case against the Dutch Government was the first in the world in which citizens established that their government has a legal duty to prevent dangerous climate change. On 24 June 2015, the District Court of The Hague ruled the government must cut its greenhouse gas emissions by at least 25% by the end of 2020 (compared to 1990 levels). The ruling required the government to immediately take more effective action on climate change. In the Royal Dutch Shell case, the court awarded liability for non taking action in relation to pollution (it is an important case that established liability against private parties with private litigation instruments). These are public interest actions with increased relevance and impact in environmental protection, different from group/class actions. Rechtbank Rotterdam (Borcea case) In the general interest for the conservation and protection of species; there was injunction + compensation. A ship lost oil in the sea. The case was owner of the polluting ship vs association for the protection of seabirds. Although seabirds are res nullius (no property rights), it is a public interest to protect them. Given the mission of the plaintiff's association and the (undisputed) activities it has carrier out in this respect for over 90 years, this public interest is also to be regarded as the plaintiff's own individual interest; consequently, if such interest is infringed, the plaintiff not only require an injunction but also has the right to claim compensation for any damage suffered in limiting the effects of such infringement. Both dimensions are recognised: it is a collective and private interest (protection of wildlife: injunction + damages for losses paid by the association in order to set good the damage done by the defendant). In this case private and public interests are merged. There is reference to the Aarhus convention (Danish town) is an international convention at EU level signed by EU MS and the EU. It establishes that environmental protection is not just a matter of public bodies but also a private interest. Private parties can take part in the lawmaking procedures. Moreover, associations have standings to take action if environmental legislation is violated. There is a lot of discussion on how rules at EU level shall be challenged (case law at ECJ does not allow private associations to challenge the validity of EU law). This international instrument is used to claim that private associations shall have a standing in public cases. It recognises the role of private entities in environmental matters in terms of participation in decision making and getting redress before administrative and judicial bodies. Belgian law There is a broad provision for tortious liability under art 1382: Any act of a person, which causes damage to another, obliges the person by whose fault it occurred, to compensate it. Court of Cassation (2013) On the admissibility of a claim for compensation by an environmental association in a criminal action for violations of regional planning rules: immaterial harm to a collective interest. It’s on the misapplication of statutory rules and claim for civil compensation inside a criminal procedure. Constitutional Court (2016) A legal entity association for environmental protection starts a civil law claim for damages related to wild birds (damaged by a criminal activity). The damages were assessed as 1 euro (nominal damages): you recognise liability but there is no way in which you can assess the real damage. You are liable and that is it because wild birds are res nullius (no individual right can be claimed). But a more general interest is involved (right to protection of the animals) but the association cannot prove that it had an entitlement. The court found that there is liability but you cannot claim damages, so nominal damages apply. Each and every citizen has an interest in protecting birds (res nullius), but there is a difference between the possibility of a citizen and an association in the starting of a litigation for the protection: normally, citizens have no direct private interest in such protection. On the other hand, the association for sure has suffered non-material damages. This damage cannot be assessed by assigning a specific value to each bird affected by the attested incident (it’s not about the sum of birds, but about the protection of the species) and can only be assessed in line with the interest which each and every citizen has in this preservation. Since the standard is that of the interest each and every citizen has in the preservation of natural heritage, the outcome must be that infringement of this non-material interest can only result in a nominal sum being awarded. If the courts were to award a plaintiff a substantial amount in compensation, such reparation would have to be decided on an arbitrary basis, which would not be viable in practice. Recognising that a right has suffered infringement, the Court thus awards non-pecuniary damages of € 1. It is true that much like a legal entity set up to protect the environment, each and every citizen has an interest in preserving nature - in the present case preserving a wild bird population. Nevertheless, there is a key distinction to be drawn between the citizen and an association such as this as regards initiating civil proceedings to claim compensation for damage suffered to an environmental resource which is res nullius (belongs to no one). The case reached the constitutional court which held that the ruling was unconstitutional (deprive the party from the protection of the legally recognized right). The court says that you cannot apply nominal damages. It merges the rule of tortious liability and constitutional rules for the protection of the environment (which entails protection of wild life). This is called a constitutional oriented interpretation of private law rules. It is not about expenses but about the value of protecting wilderness. It’s not about expenses (which are private), but about the value of protecting general goods. Although it is impossible to precisely assess the damage occasioned when a person damages an environmental resource which is res nullius, and although the non-material harm suffered by the legal entity (personne morale) does not correspond to the actual ecological damage occasioned to the environment, this does not prevent the judge from assessing the nonmaterial harm suffered by the environmental protection association in concreto. The judge may very well decide in any given case, after examining the damage in concreto, that non-pecuniary damages of € 1 are sufficient. However, to interpret Art. of the Code civil as meaning that damages of more than € 1 are to be refused when legal entity suffers infringement to its collective non-material interests is to go against the requirements of this provision (namely, that damages be qualified in concreto and reparation be awarded in full) without having objective and reasonable grounds for doing so. Placing a restriction such as this also disproportionately affects the interests of environmental protection associations which play an important role in defending the Constitutionally protected right to a healthy environment. Thus, by interpreting art 1382 of the Code civil in such a way as to prevent a entity (personne morale) acting on behalf of a collective interest (such as the protection of the environment) from being able to claim damages in excess of a sum of € 1 following the violation of the collective interest it was