foundations of private law from a EU perspective, Appunti di Diritto Privato Comparato

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THE SCOPE AND BOUNDARIES OF PRIVATE LAW SMITS, The aims and contours of private law private law: field of law that deals with the rights and duties of individuals with respect to one another → freedom of the people to pursue their own goal without any need for others’ authorisation 5 major branches: property, contract, tort, family, succession law → backbone of civil society AUTONOMY is the starting point of private law, though it may at times be limited in the name of other compelling interests such as those of third parties or public interests (e.g. principle og non discrimination, equality) → private law is an interaction between private autonomy and other societal interests field of great academic interest both in civil and common law, where it developed differently Private law develops progressively with the development of society and economy ACTORS IN THE MAKING OF PRIVATE LAW → legislators, courts, academics, private actors producing private law norms at a national and supranational ( → European, e.g. ECHR, ECJ) level, also broader international level → Convention on Contracts for the International Sale of Goods 1980 main sources: civil law → civil code, common law → case law codes usually require interpretation in the light of case law, however Academics: comment on the development of private law as related to the development of society in general increasingly important role of rules drafted by others than official actors → SOFT LAW, e.g. restatements, guidelines, principles etc., not binding but useful texts for the analysis and interpretation of existing law → identification of common principles, though private law mainly develops at a national level THE AIMS OF PRIVATE LAW doctrinal system of private law: investigation of its nature → 2 different schools of thought 1. private law as an instrument to reach an external goal, e.g. economic efficiency (enactment only of contracts promoting social welfare), influencing people leading them towards a certain behaviour, reaching distributive justice through private law (fair allocation of resources such as wealth) → criticism: why should these be the objectives of private law? Potential answer: to reach social justice → then, wouldn’t it be pointless to have a body of private law norms? All of these goals deal with the relationship between state and citizens, which is already regulated by public law 2. private law as guiding people’s behaviour → this view has two important advantages: - involvement of social norms in legality → reflection of changes in society in the law - importance to legal doctrine hypothetical case: Erasmus student in Rome during pandemic restrictions rents a flat contract includes following clauses: - term no. 6: no hosting people that aren’t family members - term no. 7: no parties - term no. 8: fines and liabilities for potential private gatherings in the apartment will be charged on the tenant - term no. 9: the estate company renting the flat won’t be liable for damage to private persons resulting from any sort of private gathering in the apartment → the contract is translated into English by the estate agent responsible for it, but only clauses 6 and 8 are translated properly The student throws a party, resulting in a fine imposed on the owner by the police + several cases of COVID as one of the people at the party had recently tested positive → issues arising from this case are all related to private law. PRIVATE LAW PERSPECTIVE: 1. responsibility of the estate company because of the poor translation of the contract that had been provided → contracts: typical arrangements between private parties, which in order to function need to be fair and clear for all parties to understand. Through contracts, private parties can arrange their interests; there are 2 sides that come with the signing of contracts: 1. exercise of private autonomy and freedom, 2. binding rules defining how we should use the tools that private law provides us 2. the tenant has responsibilities as well: she has hosted people that weren’t family members (term 6) and organised a private gathering (term 8), going against clauses that were very clear → clause no. 9: pivotal importance, takes all responsibilities away from the company but the tenant wasn’t aware that she would be responsible instead → What is the tenant actually liable for? These are all examples of problems typically arising in private law 3. The case at stake involves both private and public interests, which are often blended and both involved in cases labeled as private law cases → private relations can involve public interests; we an use private tools to address public interests and issues; in this case, there was a certain liability on the part of a private party to help contain the spread of a disease, which is a public interest public law: relates to the organisation of the state private law: relates to the interests of individuals → in fact, the distinction between the two is quite blurred. Private law uses a different approach when dealing with public interests 1st step of a private law approach: acknowledgement of the autonomy of private parties → awareness that freedom may have to be limited because of general public interests What type of relations may be defined private? → differently from public law, where there is a public authority imposing rules on people, in private law relations there is usually equality between the parties involved → paritarian relations The possible roles of private law - acknowledgement of fundamental rights and freedoms related to private autonomy → libertarian view - enabling and fostering parties’ autonomy to reach efficient outcomes - limiting or regulating parties’ autonomy as to accomplish social justice - balancing conflicting interests and tuning social and market interactions upon fundamental values of our society [reading: Collins, Cosmopolitanism and Transnational Private Law] private law: pre constitutional role, defines the interactions between individuals → how is private law broadly accepted by a community? How is it legitimate? What are its sources? → principles of private law as expression of national unity and the authority of the state However, we can identify general cosmopolitan principles recognised at a broader level than the national one → e.g. European private law constitutions are a source of private law → private law legislation is supposed to conform with the State Constitution, on fact all private law norms are revised in the light of the constitution Art. 6(3), TFEU: Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms as they result from the constitutional traditions common to the Member States shall constitute general principles of the Union’s law → importance of constitutional traditions common to the member states → they become ground principles of the EU, they’re a source of private law as well → the ECJ stated that many of these principles can actually be directly applied in private relations without the mediation of actual legislation → How do constitutions possibly influence national private law? - conforming interpretation - judicial review of private law’s conformity with State Constitution* - direct application of principles to ‘horizontal’ relations → * Italian Constitutional Court: established that non-economic damages can be compensated and granted only if there’s a breach of fundamental rights protected by the constitution → blurred boundaries between private and public law European civil codes: similar content, different structures e.g. the French code revolves mainly around contracts, the German code around laws of obligation, the Dutch code is more fragmented and the Italian one is kind of in-between the French and German ones → usually there’s a relation between the civil code (very comprehensive, regulates all the main elements of private law) and special-scope legislation → further legislation complementing the code. The code gives general rules, then specific law will specify it. There are also laws implemented at a national level with the aim of enacting EU directives at a domestic level → this happens with consumer law, labour law, ‘digital’ law → What should be done if these pieces of legislation following EU directives clash with the civil code? Should it be changed? → usually, we look at special-scope legislation without touching the code, but at times there are attempts to modify it However, nowadays we face a new issue regarding civil codes: the code is supposed to reflect a given country’s sense of justice, but it often disregards some aspects of private law only regulated by special scope legislation which are of fundamental importance (e.g. digital law) The role of international law in private law matters → useful to deal with cross-border situations; is there a supranational form of private law to help us solve these matters? When cross-border situations arise, we’re faced with two possibilities: 1. PRIVATE INTERNATIONAL LAW → subject to national law, but which one? 2. INTERNATIONAL LAW AS SUBSTANTIVE LAW → definition of a set of rules applicable to these specific situations → they’re not alternative, but complementary solutions. The second approach is generally the one to have, but in some specific cases we need to go further with the first one The role of private international law B is based in the Netherlands and has a longstanding business relationship with S, in Italy. S supplies food and vegetables according to certain production standards. S is requested by B to deliver products produced according to more stringent standards; the product is delivered and transferred to B’s processing company in Denmark, P. After starting the processing P discovers that part of the lot is defective and as a result B refuses payment to S and seeks damages. → Can B actually seek damages? → What is the applicable law? Private international law addresses 3 main issues: 1. which substantive law is applicable 2. which national court has jurisdiction over the case 3. which procedural rules should be applied by this court The structure of a private international law provision 1. legal qualification of a case (tort, breach of contract, contract of sale, service…) 2. linking/connecting factors → seller’s place of business, place of loss occurrence, etc. → 3. on the basis of the linking factor, definition of the applicable law e.g. Art 3.1(a), Reg. (EC) No. 593/2008 on law applicable to contractual obligations: “A contract for the sale of goods shall be governed by the law of the country where the seller has its habitual residence” → in the above case of B, P and S the case is to be regulated according to Italian law, S’s residence Choice of law by the parties: could parties identify applicable law by themselves deviating from private international law’s default rules? → at times, limitations are imposed on this possibility because it may create great inequalities. However, normally this is the approach used in contracts, unlike in many other areas of private law → Who establishes the norms of private international law? There’s no uniform private international law in the world; usually, each court has its own private international law, so the norms applied depend on the jurisdiction the case is assigned to → issues arise in deciding the competent court for a given case. The issue depends on the fact that not always the parties assume they’re going to have to go to court to solve a certain issue Difficulties may also arise for judges, who may as a result have to apply foreign law → because of this, attempts to have a higher level of coordination have been made: - international conventions* or principles of private international law - EU law in the area of private international law → aim of harmonising private international law → these are also sources of private law, though usually private law is mainly defined at a national level → * the Hague Conference of Private International Law, 87 member states Important role of EU law in private international law → art. 81(2)(c), TFEU on judicial cooperation in civil matters: “The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures, particularly when necessary for the proper functioning of the internal market, aimed at ensuring: (...) (c) the compatibility of rules applicable in the member states concerning conflict of laws and of jurisdiction → EU Parliament + Council have as an objective the harmonisation of private international law in the Union, in accordance with the creation of a common market EU law in the area of private international law, examples: - Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations - Regulation (EU) No. 650/2012 of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession - Regulation (EC) No. 593/2008 on the law applicable to contractual obligations (Rome I) - Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II) EU law regarding private international law consists of regulations → binding for member states immediately, without any need for them to be transposed and implemented through domestic law ( → this is what happens with directives, where states have more freedom and discretionary power) How is private international law related to certainty of law predictability of outcomes trade investments functioning of global markets protection of fundamental rights evolution of legal systems (specialisation or convergence)*? → private international law ultimately leads to the law of a specific national legal system → * if we choose to introduce a higher level of harmonisation of private international law principles, as a result national systems will end up having to give up a great deal of sovereignty International law as substantive law → Can substantive rules of private international law be directly provided by international law instruments, such as conventions among states, general principles, etc.? → yes, they can, such instruments do in fact exist; a notable example of this is the 1980 Vienna Convention of the UN, a convention dealing with the international sale of goods (94 contracting states) Other examples: - 2005 - UNCITRAL United Nations Convention on the Use of Electronic - 1994 - UNCITRAL Model Law on Procurement of Goods, Construction and Services - 2007 - UNCITRAL Legislative Guide on Secured Transactions Communications in International Contracts ! However, it is also possible for states to agree to a convention but openly choose to disregard some minor aspects → not that easy to harmonise provisions at an international level [traditionally, private international law is mainly procedural: gives solutions indirectly, pointing out the applicable law. It is the applicable law that provides an answer as substantive law] International law as substantive law is: - scope-specific (! conventions may not regulate on certain aspects or topics) - uses means of soft ( → not directly binding, e.g. EU directives, which need to be implemented) rather than hard law - flexible The removal of obstacles arising from the differences in private law existing in the member states, e.g. about consumer protection, payment times… would be the easiest approach, promoting uniformity, however this cannot be the case since the EU actually doesn’t have exclusive private law competences. Divergences in private law do exist, and at times they actually obstruct the free circulation of goods among member states → this is when EU law is important e.g. Tobacco Advertising Case, Case C-380/03 Directive on tobacco advertising: tobacco advertising was allowed and used by many newspapers, as it was very profitable, however it was much more difficult to use for other businesses. A EU directive prohibited the advertising of tobacco products for all companies, putting them all on the same level, also because of the fact that promoting the sale and purchase of tobacco may lead to public health issues → This directive however ended up not being approved: the prohibition on tobacco advertising undermined the prosperity of many businesses such as newspapers and was also considered a limitation on freedom of expression → the ECJ in this respect decided that the EU can intervene in private law matters only when there are direct limitations on the creation of a single internal market → INTERNAL MARKET-DRIVEN APPROXIMATION OF NATIONAL LAW AS AN OBJECTIVE OF THE EU ACTION, also in the area of private law → this is usually done through the use of REGULATIONS* and DIRECTIVES: very general guidelines to be implemented by member states individually through legislation. They have to be transposed within a certain time, before this, they barely have any effect The aim of harmonising private law in these situations is NOT to develop a common body of private law; there is always space for discretion left to the single member states. *regulations are less frequently used than directives in this respect. At a national level, they do not have to be transposed via domestic law, though they may be complemented by national legislation. Moreover they don’t leave any room for the exercise of discretion by the single states → e.g. General Data Protection Regulation, Reg. EU/2016/679 → The harmonisation at a state level is different depending on whether we enact a regulation or a directive. → MINIMUM HARMONISATION vs FULL HARMONISATION - minimum: (e.g. duty of information before the conclusion of a contract) the minimum level that has to be provided as of the directive is required of all member states and must be provided, though national states may choose to provide a higher level of harmonisation - full: the level of harmonisation decided by the directive must be the same for all states, to avoid differences which may cause issues in the functioning of the market → full harmonisation is imposed when a precise rule is needed Obviously, harmonisation is only applicable to matters covered by the directive Though they usually leave room for discretion, at times directives may be more precise and scope specific, leaving no room for the states to exercise freedom However, even in cases of full harmonisation when the text of the directive can’t be touched at all, it’s possible for states to enact ordinary legislation dealing with topics related to but that are not specifically covered by directives The role of general principles [see Van Gerven] → Are they accepted by a large enough number of states in the EU? They are at times; when this happens, they constitute an important source of EU law To be considered general, the principles have to be accepted by the prevailing opinion in a sufficiently large number of member states → among these principles, some have been identified and developed by EU courts. The ECJ has played a fundamental role in their definition e.g. equivalence, effectiveness, non-discrimination in the application of EU-based rights Further drivers and consequences of approximation → cross-fertilisation between EU law and national law, both in lawmaking and case decision making → cross-fertilization between EU and national case law member states have to take EU law into account at all times; theur legislation must be in accordance with it. On the other hand EU has to consider its members’ national law to develop its principles of law → also influence between national and EU courts and among EU courts themselves (ECJ-ECHR) → When does EU law create rights enforceable in private law relations (horizontal effect → relations between private persons)? Can private law be affected by EU law to the point that it creates rights for individuals and organisations both enforceable in relations among states and private individuals (e.g. employer-employee)? Yes; e.g. Costa v Enel → originated as a matter arising in the context of a horizontal relation between a customer and a company. It produced a DIRECT VERTICAL EFFECT (supremacy of EU law over national law), but also had an INDIRECT HORIZONTAL EFFECT as a result of the principle of supremacy of EU law → Is it possible however for EU law to have a direct horizontal effect? YES, in some cases e.g. Defrenne v Sabena, C-43/75: male and female employees should receive an equal pay → private law implication. Decision taken on the basis of art. 157, TFEU, on equal pay for men and women e.g. Courage v Crehan, C-453/99: anticompetitive contract between a business and a beer supplier, where the business couldn’t freely choose the most competitive supplier and was instead always bound by the same one Based on art. 101(2), TFEU on the nullity of anticompetitive agreements the ECJ established that such contracts should be declared void and annulled; moreover, those who happen to be involved in such situations should seek damages e.g. Walrave case, C-36/74: freedom of movement as a limitation of private autonomy of organisations setting rules on nationality of professionals operating in sports events (International Cycling Union Case) → fundamental importance in a EU setting of the principle of freedom of movement of persons and services Some principles establishing fundamental rights, such as the principle of non-discrimination (Art. 21, CFREU: Egenberger [C- 414/16] and IR v. JQ cases), apply directly. Their application is possible because they’re very precise further examples of principles having direct horizontal effect: Art. 31, CFREU: right to an annual period of paid leave (Bauer case, C-569-570/16) Art. 47, CFREU: right to an effective remedy before a court (IR v. JQ and Bauer cases → principle of nondiscrimination) Methods of horizontal application - application of general principles as such, implementation of open-ended principles in national law: to reinforce other open-ended principles already present in domestic law - harmonious interpretation of national law in accordance with EU law: principle of the supremacy of EU law established with Costa v Enel. It may happen that national courts have to disregard their own domestic law and follow provisions of EU law instead → when in contrast with EU law, national law is set aside An example of disapplication in the area of contract law: Delhaize case (C-47/90) Spanish seller does not comply with delivery obligation in a wine sale contract with a Belgian buyer. He invokes force majeure based on national legislation prohibiting him from exporting the wine. The buyer finds this prohibition being against art. 35, TFEU (prohibition of quantitative export restrictions). The Court finds that national restriction may not be applied. Therefore, breach is not excused and seller must perform → Can horizontal effects refer to directives? directives: secondary sources of law. Because they need to be transposed there’s always room for discretion, so it is very rare that a directive applies in a state in a way which is equal to how it applies in another. As a result it is rare for them to have direct horizontal effect e.g. C-684/16, Max Planck v. Shimizu: “76. even a clear, precise and unconditional provision of a directive seeking to confer rights on or impose obligations on individuals cannot of itself apply in a dispute exclusively between private persons” → clear, precise and unconditional principles included in directives can apply directly to vertical, state-private individuals relations e.g. Faccini Dori (C-91/92): consumers may not enjoy rights to repudiate contracts concluded out of business premises, if the directive that introduces this consumer right within the limitations therein specified, has not been implemented by national legislation → the directive can apply only if it has been implemented through national legislation → However, it’s possible for private parties to seek damages from the state because of the fact that it failed to transpose the directive in a way which successfully protects fundamental rights (Francovich, C-6/90) → Does EU law influence private law only as regards rights or also remedies? Remedies are required when a right is breached → this requires the intervention of a court. Remedies: ‘classes of action intended to make good infringements of the rights concerned’ → they can at times be found in EU legislation, e.g. they’re included in the GDPR; however usually they’re to be defined by national states and are subject to limitations: you can as a state define remedies but not with full freedom, as remedies are subject to the principle of effectiveness → art. 19(1), TEU: Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law. art. 47(1), CFREU: directly applicable in horizontal relations according to the ECJ → right to effective judicial protection (this however only applies to some specific fields), to an effective remedy and a fair trial “Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article. (…) In the absence of Community legislation in this area, the rules implementing the principle are a matter for the national legal order, in accordance with the → usually this action is bound by a contract, so how can we act to have control over our data? → We should try and balance fundamental rights when dealing with issues involving competing rights; in balancing, a very important principle to keep in mind is PROPORTIONALITY Fundamental rights may imply limitations for private autonomy, which may also have an impact on contractual freedom and limit the exercise of other fundamental rights → rights protection usually relies on open-ended, general principles; they are not homogeneous, nor are they absolute → most of them may be limited partially in the name of compelling public interests as health and security The balancing is made by the Constitutional Courts, so rights protection is typically judge-made law ECJ cases involving the protection of fundamental rights: 16th Feb. 2017, C-578/16 PPU, C.K. v Republika Slovenija: request for international protection issued by citizens of a third country or stateless persons, according to the Dublin III regulation → prohibition of inhuman or degrading treatment or punishments, as stated in art. 4 of the CFREU. This right is of fundamental importance to the point that it’s absolute: closely linked to respect for human dignity, included in the 1st article of the Charter 27th Feb. 2020, C-836/18, Subd. del Gobierno en Ciudad Real V RH: dispute about the rejection by the Subdelegation of an application for a residence permit of RH as a family member of a Union citizen → the Court has previously accepted that the derived right of residence under art. 20 TFEU isn’t absolute since member states may refuse to grant it in certain specific circumstances; thus the Court has previously ruled that art. 20 TFEU doesn’t affect the possibility of member states relying however on an exception linked, in particular, to upholding requirements of public policy and safeguarding public security → not absolute right What are the legal grounds for rights protection at a national and supranational level? NATIONAL: national constitutions, fundamental laws → relevance of the activity of Constitutional Courts INTERNATIONAL: Universal Declaration of Human Rights (1948, UN Assembly) ECHR (Rome 1950, Council of Europe) CFREU → even at an international level, courts have a very important role, e.g. ECHR in Strasbourg The parties appearing in front of the Court of Strasbourg are usually states, which have disregarded individuals’ or organisations’ fundamental rights → states are liable in the field of fundamental rights → ECHR usually is the last resource for private parties, they should first refer to all possible lower courts → private citizens can sue States in front of the ECtHR if states fail to protect fundamental rights ECJ: in charge of interpreting EU law, of course in a way which protects human rights, while the interpretation of national law is up to national courts. What we may ask in this respect is whether national law is supposed to conform with the ECHR and CFREU, making them part of national law; the ECJ can also deal with fundamental rights when assessing if EU law conforms with them → last resource FOR COURTS; citizens can’t appeal the ECJ The CFREU includes provisions recognising the sovereignty of States and constitutions, while at the same time stating universal principles having the ambition of setting common values to be considered sort of a European constitution → delicate balance → art. 6(3), TEU: Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union's law. The effects of the Charter upon national law → can the ECHR be applied to both vertical and horizontal relations within a national system? Issue addressed in art. 51(1), CFREU: 1. The provisions of this Charter are addressed to the institutions, bodies, offices and agencies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing Union law. They shall therefore respect the rights, observe the principles and promote the application thereof in accordance with their respective powers and respecting the limits of the powers of the Union as conferred on it in the Treaties. art. 51(2): 2. The Charter does not extend the field of application of Union law beyond the powers of the Union or establish any new power or task for the Union, or modify powers and tasks as defined in the Treaties. → differently from a national constitution, the Charter isn’t always applicable Horizontal effect → e.g. ECJ case C-569/16 and C-570/16 (Bauer) Art. 51 doesn’t directly address the question on individuals; as a result, it doesn’t preclude the possibility of direct effect for individuals where it may be appropriate that they’re directly required to comply with the Charter other issue: difference between rights and principles? Art. 52(5); CFREU: → provisions of the Charter including principles can be implemented by legislative and executive acts → no direct application of principles, neither at a Union nor at a national level → it is possible to enact rights directly, but not principles, which are much more vague Typically, principles have vertical effect while rights have horizontal effect → However in some cases, if principles are clear enough and there are the necessary interpretative systems to do so, they may apply to horizontal relations too → e.g. IR v JQ case (C-68/17): Employment relationship between a catholic hospital and a doctor → the doctor didn’t get a divorce from his wife but instead simply broke up with her and then got a new partner, which is unacceptable for the catholic church; as a result he was dismissed → He took the case in front of a German court; the German legal system traditionally never challenges decisions taken by religious institutions taken on the basis of religious principles A European directive, Dir. 2000/78/EC regulates this issue in art. 4, stating that there should be equal treatment in employment and occupation → the case was taken to the ECJ; could in this case the directive be interpreted in the light of art. 21, CFREU (principle of non discrimination)? → judgement of the ECJ: CFREU should have precedence over national law, in accordance with the principle of primacy of EU law. Here, we have the application of a directive, namely a source of EU law so according to art. 51, CFREU the Charter applies despite Germany usually complying with decisions taken by catholic institutions → therefore, application of art. 21 (non discrimination) → Before the Treaty of Lisbon entered into force the principle of non discrimination derived from common constitutional traditions; therefore, non discrimination is and was a mandatory general principle of EU law, sufficient to confer rights upon individuals When talking about horizontal effect, principles are usually clear and precise, so usually there is no clear distinction between them and rights → acknowledged and applied by Courts To sum up: - Fundamental rights are widely acknowledged by general principles and constitutional norms at a national and supranational level - They should be respected both in vertical and horizontal relations* * Usually, they have to be transposed and implemented through legislative acts, but if they’re clear enough they may also apply in horizontal relations directly → horizontal effect may also be limited, depending on the States’ competences/margin of appreciation - They’re not homogeneous + not all of them are absolute, but may be limited/balanced against other fundamental rights/general interests - Courts, both national and international, play a major role in the identification, safeguard and balancing of fundamental rights Data Protection → ECJ, case C-131/12 of May 13th, 2014: Google Spain SL, Google Inc. v AEPD, Mario Costeja Gonzales Mr. Gonzales filed a complaint to the AEPD against La Vanguardia Ediciones SL, which publishes a daily newspaper with a large circulation, and against Google Spain and Google Inc. because if you searched his name on Google the first results were links to La Vanguardia articles of 19th January and 9th March 1998 on which an announcement mentioning Mr. Costeja Gonzales’ name appeared for a real-estate auction connected with attachment proceedings for the recovery of social security debts In this circumstance we can identify many compelling fundamental rights: - data protection, respect for private life → Mr Costeja Gonzales - freedom of expression/press, freedom to conduct a business → La Vanguardia - right to information → public audience Google: plays a fundamental role, as it is the subject providing and organising the information, mainly according to algorithms → search engines: intermediaries facilitating access to information → data processors → according to a 2000 directive, they’re not liable unless it is pointed out that they’re providing illicit content → as moderators, they still retain a certain responsibility For the Spanish court presented with the case, only the newspaper should be responsible, not Google → however, it’s Google who makes the information available Effective remedy requested is to change the algorithm so that the articles are not the 1st result you get when looking up Costeja Gonzales, which is actually the least intrusive remedy; it is not even against the right to press/information because there’s no request for the information to be deleted Decisions of the ECJ: Concerning the obligations and duties of the operator of a search engine, the court held that in the present case Article 7(f) of the directive, relating to legitimacy of processing, requires a balancing of the opposing rights and interests of the data subject (González) and the data controller (Google), taking into account the data subject's rights deriving from articles 7 (respect for private and family life) and 8 (protection of personal data) of the Charter of Fundamental Rights of the European Union → right to be forgotten (…) Differences in the level of protection of the rights and freedoms of natural persons, in particular the right to the protection of personal data, with regard to the processing of personal data in the Member States may prevent the free flow of personal data throughout the Union. Those differences may therefore constitute an obstacle to the pursuit of economic activities at the level of the Union, distort competition and impede authorities in the discharge of their responsibilities under Union law. Such a difference in levels of protection is due to the existence of differences in the implementation and application of Directive 95/46/EC. 10: In order to ensure a consistent and high level of protection of natural persons and to remove the obstacles to flows of personal data within the Union, the level of protection of the rights and freedoms of natural persons with regard to the processing of such data should be equivalent in all Member States. Consistent and homogenous application of the rules for the protection of the fundamental rights and freedoms of natural persons with regard to the processing of personal data should be ensured throughout the Union. Art. 1, GDPR: Subject matter and objectives 1. This Regulation lays down rules relating to the protection of natural persons with regard to the processing of personal data and rules relating to the free movement of personal data. 2. This Regulation protects fundamental rights and freedoms of natural persons and in particular their right to the protection of personal data. 3. The free movement of personal data within the Union shall be neither restricted nor prohibited for reasons connected with the protection of natural persons with regard to the processing of personal data. → What is intended by data protection in EU law? The right to privacy was first born as a negative dimension, namely as the so-called right to be forgotten → being free from external interferences, creation of a private sphere; however, data protection is much more than this, it means that in the flowing of data we should have full control of it, we should know who owns it, what they’re doing with it etc. → stated in art. 8 CFREU* (this matter isn’t addressed in the ECHR, which only mentions privacy as the creation of a private sphere of rights) 1. *Everyone has the right to the protection of personal data concerning him or her. 2. Such data must be processed fairly for specified purposes and on the basis of the consent of the person concerned or some other legitimate basis laid down by law. Everyone has the right of access to data which has been collected concerning him or her, and the right to have it rectified. 3. Compliance with these rules shall be subject to control by an independent authority → What is intended by ‘personal data’ in EU law? Any information relating to any identified/identifiable person (name, identification number, location data…) → art. 4(1) GDPR ‘Personal data’ means any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person Art. 4 also includes the definition of controllers and processors - CONTROLLERS: determine the purpose and means of data processing, e.g. search engines, administrators of Facebook pages… - PROCESSORS: process* data on behalf of the controller → art. 82, GDPR: liability of both controllers and processors, but controllers are more liable → *processing: any operation or set of operations which is performed on personal data or on sets of personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction (from art. 4, GDPR) → Why is data protection a fundamental right? Art. 9, GDPR: 1. Processing of personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, and the processing of genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health or data concerning a natural person's sex life or sexual orientation shall be prohibited. 2. Paragraph 1 shall not apply if one of the following applies: (...) processing is necessary to protect the vital interests of the data subject or of another natural person where the data subject is physically or legally incapable of giving consent; (...) processing is necessary for reasons of public interest in the area of public health, such as protecting against serious cross-border threats to health or ensuring high standards of quality and safety of health care and of medicinal products or medical devices, on the basis of Union or Member State law which provides for suitable and specific measures to safeguard the rights and freedoms of the data subject, in particular professional secrecy. Data protection is linked to other fundamental rights, such as - right to privacy - right to (non-)information - right to self determination - right to personal identity and reputation - right to non-discrimination → the fact that some specific data is available may lead to discrimination in some contexts. Data protection may also conflict with some fundamental rights, e.g. freedom of expression, freedom of conducting business, e.g. for search engines like Google (see art. 9(2) GDPR) Rules and principles of EU data protection → GDPR, art. 5 - lawfulness, fairness, transparency - purpose limitation - data minimisation - accuracy - storage limitation → no more data than needed should be processed - security of personal data, integrity and confidentiality - accountability of the controller Other legal grounds for processing: GDPR, art. 6 Lawfulness of processing Processing shall be lawful only if and to the extent that at least one of the following applies: a. the data subject has given consent to the processing of his or her personal data for one or more specific purposes; b. processing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract; c. processing is necessary for compliance with a legal obligation to which the controller is subject; d. processing is necessary in order to protect the vital interests of the data subject or of another natural person; e. processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller; f. processing is necessary for the purposes of the legitimate interests pursued by the controller or by a third party, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of personal data, in particular where the data subject is a child. → conditions for consent: GDPR, art. 7 1. Where processing is based on consent, the controller shall be able to demonstrate that the data subject has consented to processing of his or her personal data. 2. If the data subject's consent is given in the context of a written declaration which also concerns other matters, the request for consent shall be presented in a manner which is clearly distinguishable from the other matters, in an intelligible and easily accessible form, using clear and plain language. Any part of such a declaration which constitutes an infringement of this Regulation shall not be binding. 3. The data subject shall have the right to withdraw his or her consent at any time. The withdrawal of consent shall not affect the lawfulness of processing based on consent before its withdrawal. Prior to giving consent, the data subject shall be informed thereof. It shall be as easy to withdraw as to give consent. 4. When assessing whether consent is freely given, utmost account shall be taken of whether, inter alia, the performance of a contract, including the provision of a service, is conditional on consent to the processing of personal data that is not necessary for the performance of that contract. - controller shall be able to demonstrate that the data subject has consented to the processing of their data - written consent must be clearly distinguishable from other matters, easily accessible and written in a plain and clear language (e.g. in a written contract) - consent must be easily withdrawable → A sensitive field for consent on data processing is social networks; usually in this respect data subjects are protected by national Data Protection Authorities → e.g. they took action against WhatsApp (and Facebook) because there was no effective choice for users when accepting their Terms and Conditions → at times, even Consumer Protection Authorities intervene in this field Case C-210/16 The case concerns a fan page created by a company to offer educational services and hosted by Facebook. As administrators, they obtained statistical information on visitors to the fan page via Facebook Insights offered by Facebook free of charge under non-negotiable conditions of use. without having to pay with no limitations, implying that the efficiency of said field would decrease → if we do not limit accessibility to property the quality and/or quantity of the object decreases, not everyone will benefit from it in the same way though technically everyone is entitled to it in the same way. Therefore, introducing exclusive property rights work as an incentive for people to invest in the market, because if they don’t they won’t be able to benefit from a certain good → this applies when resources are scarce and rival ( → classical resources, there’s traditionally a rivalry in their use) The only way to successfully conclude exchanges and trades is the acknowledgement of property rights, especially of ownership ! This is definitely not always the case. Graziadei: The assumption according to which a strong protection of property rights is a precondition for economic development cannot be supported unconditionally. The institution of property is a peculiar form of regulation of the economy Example: land grabbing by multinationals & communities’ rights over lands land grabbing: big corporations claim property over land not used by anybody, most typically in underdeveloped countries and use it for the production of their goods Property questions are fundamental: who do these lands belong to? Nobody? Local communities? Who can claim ownership over them? → depending on the answer, the role of multinationals changes: they can either play an important role in helping the local communities develop or be unlawful exploiters → issue which is based on the discussion on property but actually goes much further The case of cannabis market → in this case we need the market to be regulated, the protection of property rights is not the only kind of regulation needed for an effective development of the market → competing interests European Parliament Resolution: allows the use of cannabis for medicinal purposes, though defining some limitations on it EU General Court’s judgement of 19.12.2019 → registration of a cannabis trademark in the Netherlands as contrary to public policy and therefore unlawful ECJ case C-663/18 → interpretation of art. 34 and 36 TFEU (free movement of goods in the Union) should preclude national legislation prohibiting the market of cannabidiol lawfully produced by another member state when extracted from the Cannabis sativa plant, unless the legislation aims at protecting public health Canadian legislation: Cannabis Act of 2018 → legalisation of possession up to 30 grams Property law and its different regimes We can have different property regimes depending on the object of the property OWNERSHIP v POSSESSION → different definitions provided by the Draft Common Frame of Reference (VIII-1:202, 1:205(1)) Ownership: most comprehensive right that a person can have over property. Exclusive right to use, enjoy, modify, destry, dispose of and recover property → so extended that it looks like a bundle of rights*; it includes a series of powers which the owner can exercise [*rights: legally recognised powers acknowledged by the legal order] Possession: when we speak about it we refer to a factual rather than to a legal dimension; it refers to the exercise of physical control over some goods → physical control doesn’t necessarily imply ownership We can identify different types of ownership regimes depending on whom the powers/rights/liabilities deriving from it are assigned to: - individuals - groups of individuals (closed groups/open communities) - public in general - individuals/institutions in charge of holding the property in the interest of one of the above → this implies a difference between private and public ownership, which is not actually always that clear Another difference is the one between individual v collective ownership/co ownership → also identifiable by looking at the owner → by looking at the goods: differentiation between private v public goods. Public goods may, at times, be assigned to private persons → in this case the resulting private ownership rights may be limited, if the ownership of a public good entails public interests* Protection of general interests: - Public authorities, in the domain of publicly owned property, have duties defined by the law and pursuing general interests - these interests are to be pursued in privately owned property too at times (e.g. buildings of historical interest)* The constitutional dimension of property rights Property as a right is enshrined in most modern national constitutions and also in supranational Charters and Conventions e.g. French Declaration of the Rights of a Man and Citizen: property is inviolable and sacred, no one can be deprived of it other than for public necessity German Federal Law, art. 14: property shall be guaranteed, the law shall define its contents and limits. It entails obligations and its use should always serve the public good Italian Constitution, art. 42(2): private property is recognised and guaranteed by law, which prescribes the ways it is acquired, enjoyed and its limits in order to ensure its social function and to make it accessible to all → supranational level: e.g. CFREU, art. 17: 1. Everyone has a right to property. Nobody can be deprived of their ownership*, except in the public interest subject to fair compensation. The law may define limitations to property in the name of public interest. 2. Intellectual property shall be protected. ECHR, Protocol I, Art. 1 ( → added later, property wasn’t originally included in the Charter): Everyone is entitled to peaceful enjoyment of their possession*, which nobody shall be deprived of except in the public interest *CFREU: ownership, ECHR: possession → more vague definition in the ECHR, less technical terms. There are also some similarities in the two provisions → similar concern for balancing between private and public interests → fundamental role of the ECHR and CFREU in the field of property is linked precisely to the balance between private/public interests. We can see that in many ECJ and ECtHR cases, such as - Case C-56/13 (avian influenza case) - Beyeler v Italy, ECtHR Application no. 33202/96 - J.A. Pye Ltd. v The UK, ECtHR Application no. 44302/02 Public v common property: the new frontiers of the sharing economy R. Smith: the only way to avoid the tragedy of the commons is to end the common property regime by creating a system of private property rights → against common property There’s a difference between open access to property/common property - open access: no one has a legal right to exclude anyone from using a resource - common property: the members of a clearly defined group have a legal right to exclude the non-members from using a certain resource → relates to the concept of OWNERSHIP: 2 or more co owners own undivided shares in the whole good and each co owner can dispose of their share by acting alone, unless otherwise provided by the parties involved (see: Ostrom reading) → Common property is sort of a middle ground between open access and private property; it can be used as a way to organise property rights, the use of resources etc. without having to resort to private individuals Other solution: complementing open access with other regulations, established e.g. by public state authorities In current society, many experiences of sharing one’s property have developed, also thanks to modern and advanced technologies → sharing implies at least a minimum degree of common property involved, there are at least some aspects which are similar to common property experiences: usually, private ownership of a good and shared, common property, co ownership of some spaces/parts of it (e.g. apartment buildings → each apartment has an owner, then some areas like the stairs or elevators or parking are shared) → in these situations, when dealing with experiences of co ownership, not only ownership rights are shared but also liabilities and responsibilities. Sharing can be regulated by contracts among those taking part in the sharing community An example of a contract regulating this kind of sharing is a LEASE CONTRACT: through this, one becomes the DETENTOR* of a given object *the detentor holds control over an object but is completely aware and accepts that he has no property rights over it → different from possession, where we have physical control of a For goods different from cultural objects, usually a doctrine is applicable in national legal systems → bona fide: typically, to rightfully become the owner of an object a contract must be signed. In order to sell something, one of the parties involved must be the owner of said objects, thus having the right to sell it → this is not always the case: it may happen that the seller has acquired possession of the object unlawfully ( → stolen the object) → the buyer however generally assumes that the seller is always the owner; usually buyers are protected when the seller is not the legitimate owner of the object being sold, so that after the contract is concluded they can remain the rightful owner even if it’s discovered that the seller was not the owner and had no right to sell the object (doctrine generally applying in civil law system → English law tends to protect the original owner who was deprived of their property rather than the bona fide purchaser) Cultural objects always constitute an exception, which is now regulated in national law thanks to the influence of EU law: bona fide doesn’t apply → the object has to be necessarily returned to the legitimate owner The transfer of property rights via succession → Typically, there are succession laws at the national level regulating this field. From a supranational point of view, how can we identify relevant rules? → EU regulation n. 650/2012*; typically, even though someone may have assets located in a different number of places we choose to apply the law of the State where the succession is open → if we applied principles of private international law then too many different national laws could be applied potentially → *importance of European coordination given the right of free movement in the territory of the Union How do we understand where a succession is actually open? → succession can be planned in advance through choice of law: Art. 22, EU Reg. n. 650/2012: A person may choose as the law to govern their succession as a whole the law of the State whose nationality they possess at the time of making the choice or at the time of death → choice shall be regulated in a written document → quite flexible criterion: one may have more than one nationality/citizenship among which they can choose → As a result, we have one single applicable law for the whole succession → objective of the Regulation: the transfer of property rights is ensured both for transfer by will and through intestate succession (succession with no will → goods are automatically transferred to the legitimate heirs) Numerus clausus and national sovereignty in the definition of property rights → it is possible to transfer a number of property rights, not only ownership; how is this transposed in the Regulation on successions? Recital 15: “This Regulation should allow for the creation or the transfer by succession of a right in immovable or movable property as provided for in the law applicable to the succession. It should, however, not affect the limited number (‘numerus clausus’) of rights in rem known in the national law of some Member States. A Member State should not be required to recognise a right in rem relating to property located in that Member State if the right in rem in question is not known in its law” e.g. it’s controversial whether/how trusts can be transferred and recognised in European countries The need for adapting property rights across member states → Art. 31: “Where a person invokes a right in rem to which he is entitled under the law applicable to the succession and the law of the Member State in which the right is invoked does not know the right in rem in question, that right shall, if necessary and to the extent possible, be adapted to the closest equivalent right in rem under the law of that State, taking into account the aims and the interests pursued by the specific right in rem and the effects attached to it” Some aspects related to the rights in rem are however excluded from the scope of Regulation n. 650/2012 → Art. 1(2) Excluded from the scope of EU Regulation: 1. the nature of the rights in rem 2. the recording in a register of property rights, including the legal requirements for such recording and the effects of recording or failing to record such rights in a register → as a result, in accordance with art. 31, the closest existing right must be picked Kubicka Case C-218/16 Aleksandra Kubicka: Polish citizen married to a German man and living in Germany, where they as a family own property When she decides to write her will she goes to a Polish notary and makes a statement that she’d like her property to be transferred to her husband and children under Polish law → she’d like her property to be transferred by means of legacy by vindication, not by damnation*, as damnation implies a much longer and more complex procedure *LbV: an asset, to which the legacy relates, shall pass to a specified person upon the opening of the succession LbD: the heir has an obligation to transfer the right in the property to a legatee ! In Germany, where the property was actually located, legacy by vindication isn’t recognised and instead only legacy by damnation is valid → the question referred to the Court was, Can legacy by damnation be considered as the closest equivalent right in rem to the Polish legacy by vindication? → Kubicka was told by the notary that the closest possibility she had was choosing the most similar right in rem recognised by German law, namely legacy by damnation → however, she took the case in front of the ECJ against what the opinion provided by the notary was The ECJ ultimately decided in favour of Kubicka → LbD and LbV are only TRANSFER METHODS whereas the substantive right in question is OWNERSHIP, which is recognised both in Poland and Germany → the case doesn’t fall under numerus clausus because ownership is recognised in both cases → According to the Regulation, Mrs Kubicka as a Polish citizen is entitled to choose the mode of transfer she prefers as covered by Polish law; as a result the choice of LbV is acceptable → What about registration? The ECJ states that: Under German law there should still be a way to register this right to ownership since it’s a property right recognised by German law, even if the mode of transfer isn’t really recognised/regulated in Germany. Consequently, Mrs Kubicka’s will shall be respected EU law and security rights → security rights: property used to protect the rights of a creditor → property law crossing law of obligations Property guarantees to make sure that a certain obligation will be fulfilled → these guarantees may be either personal (a person who trusts te debitor guarantees they will fulfill the obligation) or granted through assets → e.g. mortgage, hypothec → REAL RIGHTS: attached to the object and enforceable against anyone Real rights are different from personal rights → they remain attached to the asset even when it is transferred to a new owner Dir. 17/2014/EU* on credit agreements for consumers relating to residential immovable property: Art. 3(1): Scope. This Directive shall apply to: (a) credit agreements which are secured either by a mortgage or by another comparable security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property; and (b) credit agreements the purpose of which is to acquire or retain property rights in land or in an existing or projected building. → the situation is more complicated for security rights over movables → e.g. pledge. They’re usually determined by means of possession, thus the creditor shall detain the movables personally Assets to which a security right is attached can be transferred to another creditor having right to benefit from such rights and with whom the owner has a debt *the Directive deals with agreements secured by mortgage on residential immovable property → typically, the creditor in these situations is a bank → important role in market regulation Art. 28(4): Member States shall not prevent the parties to a credit agreement from expressly agreeing that return or transfer to the creditor of the security or proceeds from the sale of the security is sufficient to repay the credit Even national law has an impact on secured transactions and security rights. E.g. art. 2744 Italian Civil Code (divieto di patto commissorio): it’s impossible to make an agreement according to which, in case of default of payment by the established term, the debtor can repay their debt by transferring the ownership of the asset over which the creditor holds security rights ( → usually mortgage or pledge) → What happens when a debt is extinguished? → either the asset is returned to the owner (protection of ownership) or in case there are other creditors, the security rights are transferred → equality of creditors/equal rights of creditors: if there are many creditors, security rights/assets are divided equally among them Though national provisions in this field do exist, even here European directives provide a common framework and standards on security rights for all member states to respect To sum up: - In principle, no competence of EU law in the field of property law (art.345 TFEU), absence of a harmonised property law at EU level - Indirect impact through the application of general principles and freedoms, especially free movement of persons, capitals and goods - EU law as a means for member states cooperation in ensuring the protection of national cultural heritage - Free movement of persons and the impact on circulation of property rights via succession - Internal market and credit markets: the impact of EU law on secured transactions therefore cover the right to compensation for actual loss and for loss of profit, plus the payment of interest. 3. Full compensation under this Directive shall not lead to overcompensation, whether by means of punitive, multiple or other types of damages. → the ECJ at times has imposed punitive damages in antitrust cases, based on the content of the directive → it also imposed punitive damages in cases dealing with the equal treatment of men and women and infringements of copyright The sources of tort law and European tort law → What does tort law regulate? What are the national/international sources of tort law? What is the role of private international law? What is the role of EU law in tort? → Tort deals with the concept of wrongful/unlawful acts → as a result of these acts, damage is caused. In tort law, we define unlawful acts by their result; the main purpose of tort is to put a focus on COMPENSATION → the nature of actions is defined by looking at damages, and it can deal with any kind of right THE CONTENT OF TORT LAW → qualification of unlawful acts based on what they produced in terms of right violation; it establishes whether a claim of tort should be based on the wrongdoer because he’s at fault or because of other reasons, e.g. he’s the owner of the object which has caused damage. Usually, liability is based on fault but we can observe many cases in which an objective criterion is used to attribute liability Tort law also establishes the link between the unlawful act and damage → CAUSAL LINK ! different from the accountability criterion; if there’s a causal link or not, we’ll act in different ways, and the connection isn’t always that easy to identify There are many defences which can be used to deny/reduce the liability of the wrongdoer → Where do we find substantive rules of tort law? Usually these rules define what kind of wrongful acts may count as a basis to define tort liability → rules to be found in national law; there are also many provisions regarding tort in EU law → environmental liability, data protection… They exist in very specific fields, but there are also other provisions on tort at a European level which are more general. However, there’s no harmonised general European tort law, though European institutions have provided general rules on the application of private international law in the field of tort → Rome II Regulation (EU/2007/864) → in the EU, in cross-border situations, the main rule is that APPLICABLE LAW IS THAT OF THE COUNTRY IN WHICH THE DAMAGE OCCURS, irrespective of the event leading to the damage/the indirect consequences → e.g. ECJ dealing with the damage caused to the family members of the victim of a traffic accident (C-350/14) → the claim was dismissed because it was defined as ‘indirect consequences’, not covered by the Regulation → is the EU competent in the area of general tort law? “Can harmonisation be said to ‘improve the conditions for the establishment and functioning of the internal market?’” (Giliker) → preamble to the Product Liability Directive: divergences in national law may DISTORT COMPETITION and AFFECT THE MOVEMENT OF GOODS in the common market and entail a different degree of consumer protection against damage Environmental Liability Directive: objective → PREVENTION AND REMEDYING OF ENVIRONMENTAL DAMAGES AT A REASONABLE COST TO SOCIETY → principle of subsidiarity, this purpose is better achieved at a Community level General tort law: regulated at a national level Specific cases of tort: dealt with nationally and in EU law → the choice depends on the area of law, some are regulated at a EU level while others at a national one In which more specific areas of tort law has EU law emerged? (tort is primarily dealt with through secondary sources of law at a EU level) 1. liability of EU/Member States institutions → Art. 340, TFEU: In the case of non-contractual liability, the Union shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties → does this deal with fault-based or strict liability? Shall citizens provide evidence of the institutions’ fault? → a breach of EU law must be identified to open a case, very objective criterion → strict liability rule → in this field the ECJ should make an effort to identify a core of general principles of tort law in the various member states → parallel judge-made rules have developed for Member States liability for breaches of EU law - Francovich (C-6/90, 9/90): liability of lawmakers → States have a duty to implement EU directives, if this is not done citizens may seek damages - Brasserie du Pêcheur SA v Federal Republic of Germany (C-46/93, 48/93): liability of States (all powers) → if rules are applied at a national level which go against the content of EU directives, citizens losing profits because of it can claim damages - Traghetti del Mediterraneo SpA v Repubblica Italiana (C-173/03): liability of judges → violation of EU law as a source of negligence-based liability of judges; national judges must know EU law because they’re due to apply it → in all cases, strict liability rules apply There are fields in which tort is regulated uniformly at a EU level: - PRODUCT LIABILITY → Directive 85/374/EEC. European product liability encourages the free movement of goods and the functioning of the internal market; strict liability ensures effective consumer protection - ANTITRUST DAMAGES → Directive 2014/104/EU. Art. 3: right to full compensation - DAMAGES IN DATA PROTECTION → GDPR, EU/2016/679. Art. 82: right to compensation and liability 1.Any person who has suffered material or non-material damage as a result of an infringement of this Regulation shall have the right to receive compensation from the controller or processor for the damage suffered. (...) 3.A controller or processor shall be exempt from liability under paragraph 2 if it proves that it is not in any way responsible for the event giving rise to the damage. - ENVIRONMENTAL LIABILITY → Directive 2004/35/CE. Art. 8: prevention and remediation costs The operator shall bear the costs for the preventive and remedial actions taken pursuant to this Directive. (…) - MOTOR LIABILITY INSURANCE → Directive 2009/103/EC. Art 3: Each Member State shall, subject to Article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. Art. 18: direct right of action Member States shall ensure that any party injured as a result of an accident caused by a vehicle covered by insurance as referred to in Article 3 enjoys a direct right of action against the insurance undertaking covering the person responsible against civil liability. To sum up: - Lack of EU competence in the field of general tort law - The relevance of EU law in the mentioned areas (distinct legal grounds) and its possible impact on national tort law: 1. Wider space for liability of public authorities 2. Expanding role of strict liability 3. Protection of non-economic interests (data protection) and recovery of economic losses (antitrust damages) 4. Making access to remedies easier: the role of insurance and the direct claim against a third party Defective product liability → The EU Product Liability Directive (Dir. 85/374/EEC): best example of EU private law, it has influence upon national private law and provides substantive rules on tort OBJECTIVES of the directive: providing a liability rule which enables to shift losses from the person suffering them to the producer of the defective product → losses caused by a defect will never stay with the victim. Producer liability is intended to protect the interests of users → protection against physical injuries (physical integrity), interest in having an object working properly (integrity of the object) → these interests are not only important for the users but also for all those surrounding them Another interest to be covered is the integrity of objects surrounding the user; the avoidance of moral damages is also important → Why do we need EU tort law if states have product safety regulations and public enforcement already? → for purposes of HARMONISATION: uniform level of consumer protection ensured at a Union level. Tort law has a complementary function in this respect: it reinforces the effect of the product safety regulation → its deterring function is reinforced by tort law: if one doesn’t comply with certain standards he will be liable to public authorities because of the content of the regulations + will have to pay damages to the victim as a result of tort law ECJ: the production of the fluid is however actually a business/economic activity transferred to the control of the service provider, which is an entity independent from the producer; even if by putting the product in a chain of supply the owner doesn’t lose control of their product it still counts as the product being put into circulation and therefore the producer is liable. Putting a product into the market doesn’t necessarily mean that it should be made available to everyone → wide conception of putting something in the market THE OBJECTIVE SCOPE: THE NOTION OF PRODUCT Art. 2: “For the purpose of this Directive 'product' means all movables, with the exception of primary agricultural products and game, even though incorporated into another movable or into an immovable. 'Primary agricultural products' means the products of the soil, of stock-farming and of fisheries, excluding products which have undergone initial processing. 'Product' includes electricity.” → products are usually tangible, however art. 2 also includes electricity. Since the Directive applies to tangibles only this has caused some problems, e.g. softwares: not tangible. The concept of product is quite extended but not too much Strict and fault-based liability There is a difference between strict liability and fault-based liability There’s damage which is caused as a result of trying to avoid doing something which shouldn’t be done, and this damage may be excused → no liability in a situation of this kind → however we may have strict liability imposed on public entities such as a State in a similar situation, e.g. Marc causes an accident by trying to avoid a wild animal with his car which was crossing the road → strict liability of the State, responsible for control over the territory Typically in tort FAULT is enough for a wrongdoer to be liable, whereas INTENTION is necessary for criminal cases. In case of defective product liability, if more than one producer is involved in the creation of a product usually there’s joint liability → fault, intention and strict liability can be used as accountability criteria strict liability: objective case described by the law as the basis for the establishment of a tort case → assigning liability: Who should bear the consequences of accidents if not the victim? → Calabresi: many criteria may be used 1. economically oriented → who can get the best insurance? 2. regulatory oriented → which type of activity/level of protection should be encouraged/discouraged? 3. fairness oriented → when is it fair to allocate the costs of accidents to a person rather than another? → There are many different policy considerations behind the choice to apply either a fault or strict liability system FAULT → general basis for tort liability in many systems definition in the Draft Common Frame of Reference, related to the concept of negligence: A person causes legally relevant damage negligently when that person causes the damage by conduct which either: (a) does not meet the particular standard of care provided by a statutory provision whose purpose is the protection of the person suffering the damage from that damage; or (b) does not otherwise amount to such care as could be expected from a reasonably careful person in the circumstances of the case. Some critical aspects of fault-based liability: - Objective v subjective criteria to assess fault: are individual competences relevant, namely should fault be addressed differently as regards a professional? - Should the costs of precautionary measures be taken into account? STRICT LIABILITY: no need to provide proof of negligence for someone to be responsible → the defendant may not excuse liability by providing evidence of their care. They may also not be excused by force majeure. There are objective elements which allow to attribute liability to the defendant due, e.g. to the fact that they: - own an object/animal and have control over it - carry out a specific activity → usually applied to inherently dangerous people/goods/activities - have a special relationship with another person entailing some degree of control Legal systems diverge as to the list of situations falling within strict liability; some prefer strict liability but typically fault-based liability is preferred as a general rule and strict liability constitutes an exception. The choice of one or the other depends on the objective we’re trying to reach: fault-based liability requires the production of evidence so it makes it harder for the victims to actually get a remedy, while strict liability ensures that a remedy will actually be granted rebuttable presumption of negligence: the court automatically assumes that the defendant is at fault unless they’re proved to be innocent → many examples in civil codes: - Italy: on dangerous activities and parental tutors’ liability over minors and incapable persons - Germany: parental liability - France: teachers’ liability ! parental liability in France is strict, not fault-based Dir. 85/374/EEC, Recital 2: (art. 1, 4, 6.1, 6.2) Liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production → The choice of strict liability for the producers under the Directive has pushed producers to choose a certain level of activity which doesn’t exceed the level of risk they can assume economically → strict liability encourages caution in production THE NOTION OF DEFECT The producer is deemed to be liable by the defects which are present in their products (art. 1), namely when the consumer isn’t effectively protected against the risks potentially arising from the use of said product → legitimate expectation* → The presence of a defect in a product is what is needed for liability to arise → objective reality as evidence of the producer’s negligence *LEGITIMATE EXPECTATION TEST: normative, not factual → we expect that a product is safe because we’re entitled to expecting so ! the legitimate expectation isn’t necessarily supposed to be that a product is 100% safe The role of industry standards: relevant aspect, however compliance with these doesn’t exempt producers from liability Boston Scientific Case (C-503,504/13) → More litigations coming together before the ECJ: defective pacemakers and defibrillators → defects in the functioning of these products are a very serious matter, they’re actually life endangering. The very risk that they could be not active is extremely serious and dangerous → very high legitimate expectations because of the great vulnerability of patients in need of these products. The case deals with a batch of products only some of which presented defects; how can one prove that their own specific device is defective? One would have to remove the pacemaker → in this situation, to make legislation effective the notion of defect according to the ECJ is adjusted to the vulnerability of patients so it is just assumed that a product could be defective and therefore dangerous just because they’re part of a batch where some devices have presented problems → assumptions are necessary and thus accepted The role of INFORMATION: e.g. medicines always include leaflets with all possible side effects → when using these products we are aware of and accept the risks. This info should always be easily accessible and clear to understand The producer should always presume and expect a certain degree of reasonable misuse by the consumer and provide a degree of safety covering for such misuse too. It may happen that research + scientific evidence produced after the release of a product shows that the product is unsafe → in this case the producer isn’t liable → PLD, Art. 7: EXEMPTIONS → cases in which the producer may escape liability The producer shall not be liable as a result of this Directive if he proves: (a) that he did not put the product into circulation; or (b) that, having regard to the circumstances, it is probable that the defect which caused the damage did not exist at the time when the product was put into circulation by him or that this defect came into being afterwards; or (c) that the product was neither manufactured by him for sale or any form of distribution for economic purpose nor EU tort law and Defective Product Liability: damages and causation Defective product liability: other case of strict liability, which in Europe is regulated at a Union level by the PLD → Which damages may be recovered under tort law and the PLD? Which type of causal link shall exist between the defect and damages in order to establish producer liability under the Directive? The notion of damage: Art. 9: For the purpose of Article 1, 'damage' means: (a) damage caused by death or by personal injuries; (b) damage to, or destruction of, any item of property other than the defective product itself, with a lower threshold of 500 ECU, provided that the item of property: (i) is of a type ordinarily intended for private use or consumption, and (ii) was used by the injured person mainly for his own private use or consumption*. This Article shall be without prejudice to national provisions relating to non-material damage.” *PLD doesn’t cover damage caused by defective products used during any sort of business or economic activity → it appears very clear that the purpose of the Directive is to protect CONSUMERS → Keeping in mind this definition of damage provided by the Directive, are Member States totally free to define the notion of damages? → the Directive doesn’t specify what kind of damages by death or bodily injuries shall be protected by the Directive, so this type of damage shall be acknowledged and defined by national legislation → the definition of non-material damage is left to the discretion of individual states → Boston Scientific: case dealing with non-material damages → what is the actual damage in this situation dealing with the implantation of potentially defective pacemakers? Should we wait until the defect actually manifests itself? → NO; the surgery for the reinstallation of a new, non-defective pacemaker already constitutes a damage resulting from the use of defective products → broad conception of damage rather than a strict one preferred by the ECJ, the maneuver to replace the product is already a damage caused by the defective object because the victim isn’t granted the level of protection they would be entitled to expect Causation in tort law → What is the role of causation in tort law? To establish a causal link between tort and damage → it’s a way which is normally used to FIND OR EXCLUDE LIABILITY, and in some cases it may even be used to reduce the amount of damages What are the main criteria used to establish causation and the existence of a causal link? → starting point, though rarely applied as such: conditio sine qua non, we remove the actual tort and see if the damage could be a result even in absence of it → Principles of European Tort Law, Art. 3:101: An activity or conduct (hereafter: activity) is a cause of the victim’s damage if, in the absence of the activity, the damage would not have occurred → too wide of a rule, may be used as a starting point but carefully → the rule is usually moderated, shift from factual to legal causality: we search for causal links from a legal point of view rather than just by looking at the facts → assessment of ADEQUATE causality, attempt to reduce the scope of causation and make it more precise Important role of foreseeability in the assessment of causation → also limits its scope, assessment of normal/foreseeable consequences of a given conduct to decide whether there’s a causal link between a tort and a resulting damage Not all causation links are legally relevant → courts have developed different theories to decide when to accept a certain causal relationship, one of which is namely foreseeability. Others include the wish to protect the victim and to punish the wrongdoer only when his conduct can actually be blamed → attempt to strike a balance in tort law between the interests of the victim/tortfeasor The liability of the defendant will be greater if he’s acted intentionally or in a very negligent way There are exceptions to the rule of foreseeability → cases dealing with physical harm or death: as-found victim rule → liability regardless of who the victim is, it doesn’t make a difference what the starting physical conditions of the victim are or if the damage caused wasn’t foreseeable, here the wrongdoer is liable no matter what and has to pay damages → Draft Common Frame of Reference, VI.4:101(2): In cases of personal injury or death the injured person’s predisposition with respect to the type or extent of the injury sustained is to be disregarded. However, the compensation due will change depending on who the victim actually is → not all people are the same PLD: doesn’t define what is actually classified as a causal link, this was developed through ECJ case law → conditio sine qua non is normally not used strictly → Is scientific certainty needed to causally link defects and damages? → this question relates to Art. 4, PLD: the injured person shall be required to prove the damage, the defect and the causal link existing between them → the fact that a person develops a disease after getting a vaccination unaccompanied by any other details constitutes a presumption that said vaccine is what caused the disease → fact explained with a non-fact → can presumptions be effective links between a defect and damages? Sanofi case (2017): the ECJ tries to strike a balance → proof solely based on scientific/medical research may be too strict of a criterion to refer to in order to establish a causal link in a tort case, however the evidence provided to prove the existence of said causal link should be sufficiently serious, specific and consistent to assess that a certain fact seems to be the most plausible explanation for the occurrence of a damage. → Joint liability question: should causation be assessed having regard to the material contribution of every single source of risk or as if each source was a sufficient source of material increase of risk, therefore establishing adequate causation between tort and damage? 2 different possible rules can be used: 1. PROPORTIONALITY RULE → assessment of the role of every single producer involved depending on their involvement in the market and their shares, e.g. USA 2. REBUTTABLE PRESUMPTION OF JOINT LIABILITY → they’re all equally liable unless they provide a counter proof that they’re not, e.g. Netherlands ( → DES daughters case, book p. 54) To sum up - Causation as a tool for establishing/excluding liability - Sometime relevant for reducing the amount of damages due - Assessment requires the use of open-ended concepts and often implies discretion upon courts - The choice of assessment criteria may be driven by policy considerations concerning the nature of the interests at stake as is the case for personal interests CONTRACT LAW Contracts: legally binding agreements entered into by private individuals voluntarily to obtain products and services → people are free to choose how to shape their legal relations thus choosing which goals they want to pursue. They can be written down or not As a result of the Industrial Revolution, we now have contractual freedom → the binding force of a contractual agreement depends on the parties’ consent only, so as a result the parties are free to decide what rights and obligations they have towards each other Contracts are as binding as legislation made by legislators → once one enters a contract he’s bound by it in its entirety, but this is true only for the parties concluding it The conditions under which contracts are entered may be flawed, therefore this field cannot be self-regulated at all times → it may happen that the law has to intervene through courts to protect a disfavoured party → attempt to reestablish a balance and equality between the contracting parties Courts also have to make sure that contracts do not go against mandatory rules, public order or good morals → expected to set the boundaries of contractual freedom Courts also provide contracting parties with default rules defining those aspects of the contractual relationship not expressly specified, which apply unless they specifically agree to different terms Why are contracts binding? Different theories: 1. meeting of the minds ! implementation of these directives at a national level was actually quite difficult → ratified in different ways, the only thing that matters is that minimum standards of protection defined by the Directives are ensured Rome I problem: Rome I Reg. art 6(2) → a consumer is entitled to mandatory rules of Law of State of habitual residence → parties may choose the applicable law → traders face an issue, they actually have to be familiar with all States’ national laws Action Plan on European Contract Law → Communication on European Contract Law (2001), Action Plan on a More Coherent European Contract Law (2003) → improvement of the acquis by using PECL → Since 2003 there’s been an effort to make things easier for traders by encouraging cross-border sales and removing barriers to business. Also, directives have been reformed and there has been a switch from minimal to full harmonisation → national law must necessarily comply with what the Directives say EU Commission: encouraged different research groups working on PECL to come together → network of excellence → CoPECL: includes various Principle Drafting Groups, evaluative groups, databases and conferences → this led to the final version of the Draft Common Frame of Reference in 2009 Commission Green Paper in 2010 to decide what should be done by them in this field: - decided against a EU civil code - adoption of a toolbox Common Frame of Reference to assist them in the revision of the acquis by providing common fundamental principles of contract law and defining key concepts The DCFR can be helpful in the definition of terms whose definition is often not clearly defined It can also be useful for interpretation of national rules and the decision of cases and the creation of model rules → applicable to contracts concluded between businesses or private persons + applicable to contracts concluded between a business and a consumer The DCFR also provides a series of fundamental principles which can guide and provide suggestions to legislators on how to balance → DCFR, PECL: provide essential background information for legislators drafting Directives, namely telling them what is needed in Directives and how to draft Directives that will effectively fit national law The DCFR is broader and much more complex than PECL → deals with special contracts and non-contractual liability too → PECL is aimed at business persons, uses a simpler language; the DCFR is aimed at legislators and is thus much more technical Consumer Rights Directive → at first, in 2008, 4 proposals were made for 4 different Directives: full harmonisation directives providing little consumer protection in respect of what was already granted → failure because it would’ve actually reduced consumer protection in many Member States. The final version was narrowed in scope and it mainly deals with distance and off-premises contracts The Commission also proposed the creation of a Common European Sales Law, not replacing national legislation but which could be used instead of it → 2nd regime of contract law which parties may choose for cross-border contracts, providing a high level of consumer protection and not replacing domestic contract law The proposal for CESL was made in 2011 and shall be valid for - cross border contracts - sales of goods, supply of digital content and related services such as installation - moreover it may optionally require agreements prior to its application - it has its own mandatory rules to be respected → the project was withdrawn by 2014: though approved by the EU Parliament, Member States weren’t convinced it was a good idea → new proposals were made instead, more specific → Directives on Digital Content and Sales → Online Sales Directive: full harmonisation, also covers online sales Nowadays there’s little prospect of the adoption of general legislation; restatements remain mere models to be influential for reforms, they’re useful for discussing different principles and the differences existing in law with a comparative approach RESTATEMENTS OF EUROPEAN CONTRACT LAW → attempt to identify common principles regulating contracts; there are many different legal families in Europe → these restatements are realised with a functional approach: one ignores terminology and different concepts existing in the various legal systems and only looks at the principles regulating the system and the outcomes → in many cases the outcomes are the same, e.g.: to conclude a contract we always have an agreement including an offer and an acceptance, the contents and rights of parties involved + the damages against which they’re protected are the same → this is partly a result of the fact that legal transplants between different legal systems are quite common However there are some areas of significant differences; in these cases the research groups drafting restatements must make a choice on which principle to consider and they sometimes must reach a compromise → What are the key differences in contract laws? - liability for breaking off of negotiations - relief for unilateral mistakes of fact → if self-induced, not caused by other parties; can one party commit fraud by remaining silent on certain matters, namely is there a duty of disclosure? - control over unfair terms in a B2B contract - whether there’s specific enforcement - whether a contract can be adjusted after a change of circumstances - good faith → These are the topic which have required a choice by research groups GOOD FAITH IN CIVIL CODES France: duty to negotiate, form and perform contracts in good faith Germany: duty to perform in good faith → good faith requirements are however used differently in different legal systems - Germany*: give the court the authority to develop doctrine to cover new cases, e.g. of unfair terms + provides standard for how parties should behave → must have reasonable regard of each other’s interest - Dutch law: good faith can be applied directly, more general use *the use of good faith in Germany is very specific: - during the contracting process → liability for breaking off negotiations, duties of disclosure, controls over unfair terms - in performance → contra proprium factum: one must act consistently with what was decided previously - in exercising remedies → no termination for slight breach in order to escape unprofitable contracts English and Irish law: no good faith doctrine because of reasons of different legal technique → judges develop the law case by case, looking at specific instances, so there are no overriding principles PECL Art. 1:201→ good faith and fair dealing: Each party must act in accordance with good faith and fair dealing. The parties may not exclude or limit this duty → this principle is controversial with common lawyers, moreover it is problematic to have this general doctrine of good faith at a European level since it’s not clear how it can fit with more specific rules The concept of AGREEMENT: Agreement must be sufficient → parties must agree on enough elements of the contract that it’s clear what their respective obligations are; is it a subjective or objective concept? Shall it necessarily imply an actual meeting of the minds or is an apparent agreement enough to become binding? → it depends on the system: in France, an apparent agreement doesn’t count as an agreement, while in Germany a contract can be concluded even without an actual meeting of the minds, though it can be exited for reasons of mistakes France: voluntarism → contractual obligations depend on the will of the party Germany (and common law): theory of declaration → outwards manifestations create legal effects. It suffices that one of the parties believes there’s an agreement → it doesn’t matter whether the party communicating the intention to be bound actually had the will to make or was even conscious of making a declaration aimed at a legal transaction → Old francs v new francs: Cass Com 14 Jan 1969 (5.11(FR)) While culpa in contrahendo is used in civil law as a basis for liability for breach of good faith in negotiations, in common law the breaking off of negotiations is regulated as a matter of fraud → no ad hoc liability exists for this kind of situation → What if there’s a failure to reach an agreement even though it’s nobody’s fault? → generally speaking there’s an entitlement to break off negotiations, so no liability parallel negotiations are also generally permitted unless there’s an agreement/one of the parties is reasonably led to believe that the negotiations are exclusive → e.g. Manoukian case: misleading request to modify some aspects of a contract, leading the buyer to believe that there are no negotiations going on with anyone else → Once a party has induced or encouraged in another an expectation that a contract will be concluded, the breaking off of negotiations without a good reason will give rise to liability to compensate the other for damage suffered as a result of his reliance on the expectation Germany: full liability for breaking off negotiations with no good reason France: need to satisfy the requirement of good faith → Common law: case of liability in tort (negligence) to create liability for breaking off negotiations → Box v Midland Bank Ltd → vicarious liability for negligence In English law, an agreement which is simply a promise by a party to another is not binding → doctrine of consideration: something must be done as an assurance that the promise will be honoured → bilateral contracts are recognised while other types of contracts such as donations are looked at with suspicion The object of the promise must have some economic value and it must go beyond what they’re obliged to do by the contract already → this rule can be gone round easily, e.g. through nominal consideration/promise in a deed → ways to avoid consideration Not all common law systems are the same → US: Ricketts v Scothorn: the defendant left her job on reliance on a promise of a gift by her grandfather → grandfather: liable → estoppel: impossibility for a party who has made a promise to go against their words. If the other contracting party relies on the promise, the promiser will be held liable → doctrine of promissory estoppel Estoppel is also used in the US in cases of breach of negotiations English law has adopted the doctrine of promissory estoppel in cases of already existing rights proprietary estoppel: developed under English law as a different way to create liability in cases where negotiations are broken off at the last moment, when A indicates they will definitely grant land to B and B relies on this promise → A will be liable → e.g. JT Developments v Quinn Cobbe v Yeoman’s Row: draft agreement that the defendant would transfer flats to the claimant who would build houses instead. D would get £12m plus 50% of profit above £24m, while C got planning permission → still ‘subject to contract’ D then demanded £24m plus 40% > £40m → against their word, so the claimant took action House of Lords: Not clear what interest C was to get → parties hadn’t finished negotiating, contract wasn’t binding yet so the claimant should not have relied on it. Moreover, other than for these reasons proprietary estoppel couldn’t apply because of the peculiar form of the contract → estoppel doesn’t apply to written forms → no liability Australia: Walton Stores v Maher No general doctrine such as that of good faith in English law → many specific, scattered doctrines Remedies In civilian systems all that can be recovered is the out of pocket loss → amount lost as a result of the breach of negotiations → recovery of the sum which would’ve resulted if the contract had been concluded Plas v Valburg → Dutch case → Dutch Supreme Court distinguishes three stages of negotiating 1. parties entirely free to break off negotiations 2. still free to break off negotiations, but if they do they have to pay the expenses the other party has incurred 3. parties are no longer free to break off negotiations though the contract hasn’t been finalised yet → at this stage the breaching party may have to pay compensation in the positive interest → all the amount that the other party would’ve gained from the conclusion of the contract → liability for expectation loss, bad faith De Ziener case (Gerechtshof Amsterdam): Widow of a writer, through the defendant, entered negotiations concerning the right to make a film on the basis of a famous novel. The widow rejected the proposed script on various minor grounds → claims: a) That D should not do anything to prevent filming (b) Order prohibiting D’s from entering into negotiations with any person other than appellant and/or from giving any other party the right to film De Ziener. (c) Order requiring D’s , within 2 days after service of judgment to enter into reasonable consultations with appellant with a view to bringing into existence an agreement concerning the filming of De Zeiner. → the defendant granted claims b and c, thus providing the widow with expectations that a contract would be concluded ‘The duty of pre-contractual good faith may give rise to a duty to continue negotiations, and where that duty is not complied with a court may order that the relevant negotiations should take place.’ Oolitic stones case, BGH → Defendant asked for tenders to supply a particular type of stone, Plaintiff submitted compliant tender, but Defendant accepted a tender from another company to supply stone of a different type Held by the BGH: Defendant liable for profit Plaintiff would have made on contract → similar results reached in an English case based on different grounds: Blackpool Aero Club Ltd v Blackpool Borough Council Tenders to provide flights from Airport had to be submitted by set time; P’s bid was delivered by hand, not considered because incorrectly believed to have arrived after deadline (the mailbox wasn’t checked though the bid was already submitted). If considered, it would have won. English law doesn’t have a doctrine of good faith, so how was the case solved? The Court held that it was provided by an implied contract that proper tenders would be considered: the claimant’s bid had been submitted properly but it wasn’t considered → the defendant was at fault Damages not determined, but there were very strong hints that the approach should be similar to that of the BGH in the Oolitic stone case → the defendant should cover for loss resulting from the non-consideration of the bid → different kinds of arguments (good faith, implied contracts…) used to reach the same results ultimately PECL: has adopted the civil system going much further than English law, though there are hints that English law might actually catch up and eventually reach the same level of protection of losses in contract law Fraud, mistake and nondisclosure → mistakes in contractual processes: a party enters a contract on the basis or either incorrect or incomplete information and if it had not been for the wrong information they wouldn’t have entered the contract. Mistake is attached to different doctrines depending on the legal system we’re considering → many doctrines may come into play: fraud, strict doctrine of mistake, culpa in contrahendo, duties of disclosure… There’s a difference between: - mistakes about the terms of the contract - mistakes about the facts of the contract How do misapprehensions arise? - deliberately caused - unintentionally caused - self-induced → known - self-induced → unknown - shared assumption Fraud: when one deliberately tricks the other contracting party into believing something that is not true while contracting → positive statement of fact that is known to be untrue Most cases of fraud relate to the facts of the contract but may also be about the contractual terms → in these situations the frauded person is allowed to get out of the contract and in addition there will almost always be liability for damages → compensation for reliance loss MISTAKE in the French Code Civil (art 1132) Mistake of law or of fact, as long as it is not inexcusable, is a ground of nullity of the contract where it bears on the essential qualities of the act of performance owed or of the other contracting party. → nullity: not automatic, one party may apply to a court to have the contract annulled (relative nullity → the contract has to be challenged by the victim) Germany (BGB sec 119) (1) A person who, when making a declaration of intention, is in error as to its content, or did not intend to make a declaration of such content at all, may avoid the declaration if it may be assumed that he would not have made it with knowledge of the facts and with reasonable appreciation of the situation. Although it allows the mistaken party to avoid the contract, German law provides in sec 122 BGB that: If a declaration of intent is void under § 118, or avoided under §§ 119, 120, the declarant shall, if the declaration was required to be made to another party, compensate that party, or otherwise any third party, for the damage which the other party has sustained by relying on the validity of the declaration, not, however, beyond the value of the interest which the other or the third party has in the validity of the declaration. The obligation to compensate does not arise if the injured party knew the ground of the nullity or rescission or did not know of it due to negligence (should have known of it). English law: mistake as to terms → no separate rules, we only find provisions dealing with whether a contract was formed or not Before the Cciv reform of 2016: distinction between objective/subjective importance of the object of a contract - objectively important (e.g. the very material of the subject matter): The defendant will be deemed to know of the matter, and therefore it is easier to avoid the contract - subjectively important (e.g. what are you using the subject matter for): There will only be erreur and nullity if the defendant is aware of this → since 2016, art. 1133: The essential qualities of the act of performance are those which have been expressly or impliedly agreed and which the parties took into consideration on contracting. France: Poussin case A family owned a painting believed to be by Poussin. An art dealer advised them that it was not and sold it at an undervalue to the dealer. A national museum exercised its right of pre-emption and exhibited the painting as a Poussin. The family sought to set the sale aside. Was there a mistake as to substance or merely as to value? → Where a party has been advised that a painting is not the work of a particular painter and therefore believes that the painting was painted by another, the party will be mistaken as to an essential attribute of the thing and will therefore be entitled to avoid the contract. This was even though there were still uncertainties as to the painter. Mistake as to substance/facts in Germany → see: sec. 119 BGB para. 1 Para. 2: An error as to those characteristics of a person or thing which are regarded in business as essential is regarded in the same way as an error as to the content of a declaration → mistake as to substance may lead to annulment of a contract just as one as to the terms, when the mistake is essential in business The Mozart notebooks case The seller sold a bundle of various notebooks for 10DM, and she didn’t realise that she had included in the bundle a notebook by Mozart. The seller wants to avoid the contract. But the court said: Where a party mistakenly includes in a lot for sale an item she had meant to reserve because of its value, there is no mistake as to the declaration under s 119(1) BGB and no mistake as to the essential characteristics under s 119(2) BGB. Therefore the buyer is not under an obligation to disclose the fact that the bundle includes a valuable item. → in Germany, avoidance is generally allowed for one-sided mistakes Limits on relief for mistake BGB: mistaken party who avoids a contract must compensate the other party UNLESS the other knows/was supposed to know about the mistake Cciv: inexcusable mistake on the buyer’s behalf doesn’t lead to relief English law: no relief for mistake, just for misrepresentation by the defendant → if the defendant gives incorrect info to the claimant, even if there was no fraudulent intention on the part of the defendant unless the defendant can show they were in good faith and wasn’t trying to deceive the claimant → reasonable ground for believing the wrong fact was actually true → right to damages for careless misrepresentation, reverse burden of proof (defendant must prove they were unaware of the mistake) → Misrepresentation Act 1967 Liability in damages for carelessness: Civil law equivalents → Cciv Art. 1240: Any human action whatsoever which causes harm to another creates an obligation in the person by whose fault it occurred to make reparation for it German law: culpa in contrahendo used to develop liability in damages for careless misrepresentation English law: NO REMEDY FOR SELF-INDUCED MISTAKE, even if the victim is aware of the mistake and the actual intention of the mistaken party whereas in Germany and France it is possible to avoid contracts even for this kind of mistakes Fraud by silence → according to most civil law systems it is possible to be fraudulent even by just keeping quiet about important info in contracting process However this isn’t recognised in common law France: the pig farm case An agent acting for the buyers contracted to purchase a house and some land for 95,000 FF, of which 10,000 FF was paid on account. Sellers would be entitled to require completion of the sale, or retain the 10,000 FF paid on account by way of penalty. The sellers had not told the buyers that a pig farm was to be built next door. The buyers would never have agreed to buy the house had they known about the piggery. → Held: deliberately keeping quiet = fraud Art. 1137(2) Cciv (2016): The intentional concealment by one party of information, where he knows its decisive character for the other party, is also fraud Seeking a remedy for fraud rather than mistake may be advantageous → in particular, if the defendant was fraudulent the plaintiff will not have to show that the error went to the substance of the thing contracted for → 2018 amendment to the French Cciv: It is not fraud for a party not to reveal to the other contracting party his assessment of the value of the act of performance → Is there a duty of disclosure beyond cases of fraud? In French law there are many examples of duties of disclosure imposed by statute → contractual and precontractual obligations of disclosure, just to make sure that the other party knows what they’re doing and there’s actual meeting of the minds → all available information of decisive importance must be disclosed BEFORE concluding the contract (art. 1112-1 Cciv) decisive importance: information has direct and necessary relationship with the content of the contract or the status of the parties German law: obligation to make disclosure of certain fact in contractual relationships → enforced by a number of provisions in the BGB ! duties of disclosure don’t always apply → it’s actually quite hard to predict when a court will declare there’s an obligation to disclose some information Principles to predict whether or not there’s a duty to disclose: 1) Questions must be answered truthfully; 2) A partial concealment is as good as a lie; 3) An imbalance in skill or access to information leading to significant reliance on the part of the challenging party is likely to lead to a duty to disclose; 4) Increasing complexity of the transaction is also likely to lead to such a duty. English law: no general duty of disclosure contrarily to France and Germany Fraud in the PECL: no general duty of disclosure → Art. 4:107: A party may avoid a contract when it has been led to conclude it by the other party's fraudulent representation, whether by words or conduct, or fraudulent nondisclosure of any information which in accordance with good faith and fair dealing it should have disclosed → though there’s no general duty to disclose info, there is liability for incorrect information under PECL → art. 4:106: A party which has concluded a contract relying on incorrect information given it by the other party may recover damages in accordance with Article 4:117(2) and (3) even if the information does not give rise to a fundamental mistake under Article 4:103, unless the party which gave the information had reason to believe that the information was correct As for the recognition of mistakes in contracts, PECL adopt an approach in between that of civil and common law → compromise, art, 4:103: (1) A party may avoid a contract for mistake of fact or law existing when the contract was concluded if: (a)(i) the mistake was caused by information given by the other party; or (ii) the other party knew or ought to have known of the mistake and it was contrary to good faith and fair dealing to leave the mistaken party in error; or (iii) the other party made the same mistake, and (b) the other party knew or ought to have known that the mistaken party, had it known the truth, would not have entered the contract or would have done so only on fundamentally different terms. (2) However a party may not avoid the contract if: (a) in the circumstances its mistake was inexcusable, or (b) the risk of the mistake was assumed, or in the circumstances should be borne, by it. → Should there be a general duty of disclosure in the PECL? Lots of academic discussion on the matter Kronman: if the buyer has to invest money in discovering information and cannot use this information because it would have to disclose it to the seller, the buyer will have no incentive to make investigations in the first place, so disclosing would cause a loss of efficiency. But K argues that this would not apply when acquiring information was not costly → Kronman would require information acquired costlessly to be disclosed. Controls over fairness and the terms of B2B contracts Every system seems to recognise in case of unfair contracts the possibility to get out of a contract Specific forms of unfairness: - fraud - duress → threats of wrong/illegitimate threats (blackmailing) → recognised in the French Cciv, BGB, PECL General controls over fairness Germany: very broad provisions/doctrines about unfairness English law: no general doctrine but specific doctrines → undue influence, unconscionable bargains French law: there’s both a general clause and more specific doctrines (lesion, duress by circumstances) LESION: very narrow doctrine deriving from Roman law → if a contract is very unfair I can avoid it → used in French law in very narrow situations: where a seller of land has lost more than 7/12 of the price of the land he’s entitled to apply for the rescission of the sale → BGB: allies rescission for unfair substance of a contract → e.g. transactions contrary to public policy are void, also transactions by which a party exploits and takes advantage of the other → this is applied very narrowly, they won’t allow rescission just because a contract is unbalanced To have a contract declared void there must be conscious exploitation Lord Denning: doctrine of fundamental breach → if there’s a serious enough breach of contract that it would justify termination, the exclusion of liability clause doesn’t apply even if clearly established and acknowledged → too general, not applicable to consumer contracts only → doesn’t distinguish between unfair clauses/clauses which are fair and simply imply a reasonable assumption of risks by the parties, who are aware of what they’re doing → Denning was overruled German law: good faith ‘The person who relies on standard terms asumes for themselves control over the general freedom of contract as far as the content of the contract is concerned. He’s therefore obliged at the stage of drafting those terms to look to the reasonable protection of the interests of his future contractual partners. If he brings to bear his own interests only he abuses the freedom of contract which to this extent is limited by 242 BGB’ → this principle has now been incorporated into legislation: control over substance → sec. 307 BGB: provisions in standard business terms are ineffective if contrary to the requirement of good faith they unreasonably disadvantage the other party to the contract with the user. An unreasonable disadvantage may also arise from the provision not being clear and comprehensible → applies both to B2C and B2B contracts For B2C contracts the BGB includes a gray (terms that have to be fair) and a black (terms that are always invalid no matter what) list of invalid terms Always under sec 307 of the BGB an unreasonable disadvantage in case of doubt is to be assumed to exist when a provision 1. is incompatible with essential principles of the statutory provision from which it deviates 2. limits essential rights or duties inherent in the nature of the contract… → very broad controls in Germany Control over consumer contracts at a EU level Directive 93/13/EC on Unfair Terms in consumer contracts → art. 3(1): Terms not individually negotiated → will be regarded as unfair if contrary to good faith it causes a significant imbalance in the parties’ rights and obligations arising under the contract → very similar to German law art. 4(2): assessment of the unfair nature of terms shall relate neither to the definition of the subject matter of the contract nor to the adequacy of the price and remuneration Implementation of the Directive: Germany → none needed France → Code de consommation UK → Unfair terms in Consumer Contracts Regulations 1994, 1999, then Consumer Rights Act 2015 → in France and UK the provisions transposing the Directive relate to negotiated terms too, not to standard terms only → beyond Germany ECJ: assesses unfairness by using a fairness test based on the significant imbalance of the parties’ rights and obligations in a contractual relationship → same thing as the test used in German courts B2B contracts: Germany → same control as B2C contracts France → ‘non-professionnel’ contracts: when a business is buying something not bought regularly by them for their professional activity the contract is regarded as a B2C contract and subject to the same control as B2C ones → this doctrine was subsequently reversed, instead however articles of competition law were introduced in the Code de consommation: → producers, traders, manufacturers and other traders committing offences such as subjecting or seeking to subject a trading partner to obligations creating a significant imbalance in their right of obligations shall be held liable and obliged to make good the damage caused Protection over B2B contracts was broadened with the Cciv reform of 2016 (see art. 1170, 1171) UK: Unfair Contract Terms Act 1977 → originally covered B2C and B2B but since 2015 covers B2B only, more specifically clauses excluding or limiting liability arising from negligence, non-conformity of goods (subject to control even in negotiated terms) → in written standard terms of business excluding and restricting liability clauses can’t be used for liability resulting from other breaches nor to allow performance in a way substantially different to what is reasonably expected A business can’t exclude liability when as a result of negligence there’s a death/physical injury scope of application of the Act: applies to B2B only to listed types of clause, not to international supply contracts → imposing English law on international contracts may discourage foreign businessmen from wanting to arbitrate their disputes in England PECL: restatement of the principle expressed in the Directive enlarging the scope of application to B2B contracts too → art. 8:109: Remedies for non-performance may be excluded or restricted unless it would be contrary to good faith and fair dealing to invoke the exclusion or restriction There are many remedies available for breach of contract: - enforced/specific performance (some systems distinguish between non/monetary obligations) - withholding performance until the other party performs - termination - reduction of price ( → EU legal order) - damages for the victim - restitution to prevent unjust enrichment of the faulty party French Cciv, art. 1217: lists all available remedies for breach of contract Specific performance France: available after having given notice to perform, the creditor may demand performance of an obligation unless that obligation is actually impossible. Alternatively one creditor may seek damages if they don’t want to go through with specific performance Delivery of goods: if a seller doesn’t deliver goods in time the purchaser may apply for avoidance of the sale if the delay is a result of an act of the seller → WHat if the obligation by contract is more than just delivery and the obligor doesn’t perform? What is the sanction going to be? Court-developed remedy of astreinte: payment of a penalty to the creditor aimed at ensuring compliance, the amount of which must take into consideration the circumstances of the case if it’s impossible to deliver the exact same goods requested, it is possible to supply equivalent goods instead Germany: an obligee is entitled to claim performance from an obligor → this claim is excluded if impossible. If the obligor breaches a duty arising from the obligation the obligee may demand damages, unless the obligor isn’t responsible for the breach Legal transfer: if there’s failure to transfer property by the seller the court can intervene and through a court order the creditor automatically becomes the legitimate owner of the land ZPO (civil procedure code): when an action depending exclusively on the debtor can’t be performed and a petition has been filed the court of first instance may impose on him a coercive penalty payment or coercive punitive detention → same goes for preventing the debtor from doing something Both French and German law PERFORMANCE BY A THIRD PARTY is a recognised remedy when a debtor can’t perform their obligation under a contract → in Germany this is actually the first remedy that shall be sought English law: very different → allows monetary remedies only, specific performance is an equitable remedy → developed in equity, can be used only if damages aren’t an adequate remedy → e.g. unique goods such as land: impossible to find an equivalent to be delivered instead. In fact, in contracts for the sale of land specific performance is a routine remedy → land will be transferred through court orders English law doesn’t require that for the transfer of property over some goods delivery orders are given → damages equivalent to the value of the thing that wasn’t delivered is enough Even though performance by third parties isn’t technically recognise we can get a very similar result by terminating a contract, finding a substitute for the debtor and having him perform instead → Consumer Sales Directive (1999/44/EC): buyer must always have the right to have non-conforming goods repaired or replaced → in England this has been transposed through the Consumer Rights Act 2015 BGB: recognises rights of the customer in case of defects Consumer Rights Act: introduced specific performance for consumers related both to defective goods and services → ‘repeat performance’, the trader should perform again. English law is moving away from its traditional approach in the consumer area, namely by recognising the possibility of specific performance However, in non-consumer law specific performance is in no circumstances allowed if it would require supervision by the court → Lord Hoffman: waste of resources to require specific performance when damages could be awarded instead In countries allowing specific performance, such as Germany, it is legitimate that a debtor is required to perform an obligation all over again if it is the only way to fulfil the obligation (insulated window case → the builders had to redo the whole work again because they didn’t comply with the request of their clients); since the BGB has been reformed a new clause has been introduced which states that specific performance won’t be allowed when the costs are disproportionate related to the advantages that the client is going to get from the performance → a similar principle applies in English and in French law: France however used to be different → performance should be given whenever it is possible, but now it takes into consideration disproportions between costs and interests of the creditor The PECL have adopted this approach too. Their view on specific performance is actually quite similar to the English one → if remedies other than specific performance can be granted we should give those instead Monary obligations England: if the creditor has performed they can claim the price in case the defendant doesn’t perform However if the creditor hasn’t performed yet and the debtor no longer wants to be bound by the contract, there are different options: