The Interpretation of European Private Law in the Light of Market Freedoms and EU Fundamental Rights

Published date01 September 2008
Date01 September 2008
AuthorMichael Schillig
Subject MatterArticle
15 MJ 3 (2008) 285
M S*
Recent initiatives in the area of European private law seem to rely ever more extensively
on very b road, general and vague provisions, in pa rticular the concept of ‘good faith and
fair dealing’, a concept already prese nt in the acquis communautaire. ese and simil arly
vague terms will on ly have an impact if interpreted autonomously and unitarily by a
central author ity. Despite its cautious approach regarding the a ssessment of the fairness
of contract terms, this task can rest only with the European Court of Jus tice. is articl e
explores whether and to what extent the four market freedoms regarding the free movement
of goods, person s, services and capital, as well as the fundamental r ights developed by the
Court’s jurisprudence, now laid down in the EU Charter on Fundamental Rights, may
contribute to the development of a n autonomous European method of legal reasoning.
Keywords: European Private Law; Interpretation; Fundamenta l Rights and Freedoms;
Non-discriminat ion; Freedom to contract
Ever since the Germa n Feder al Constitutional Cour t’s judgment in Lüth,1 t he
interpretation of national pr ivate law in the light of constitutiona l values, and basic
human rights in particular, has been a generally accepted method of Ger man legal
reasoning.2 e inuence that hum an rights exert on (national) pr ivate law is not an
* Lecturer i n International Com mercial and Financia l Law, King’s College London.
1 Entscheidungen des Bunde sverfassungsger ichts (BVerfGE) 7, 198, 204 et seq; for more recent decisions
see BVerfGE 89, 214, 229 et seq; BVerfG, Neue Juri stische Wochenschri ( NJW) 2001, 957, 958.
2 For example, F. Bydlinski, Juris tische Methodenlehre und Rec htsbegri (Springer, 2nd ed. 1991), 583; K.
Larenz, Method enlehre der Rechtswiss enscha (Springer, 6th ed. 1991), 289; D. Looschelders & W. Roth,
Michael Schi llig
286 15 MJ 3 (2008)
exclusively German phenomenon. Other jurisdictions in Europe and beyond face similar
problems and their courts oen rea ch similar results.3
At the level of EU law, however, the discussion regarding the ‘constitutionali zation
of private law’ is still in its infanc y. e use of open textured norms and standards at key
positions within European private law legislation has become ever more extensive in
recent years. For instance, pr incipal and commercial agent must act vis-à-vis e ach other
‘dutiful ly and in good faith’, according to Articles 3(1) and 4(1) of Directive 86/653/EEC;4
pursuant to Article 3 of Directive 93/13/EEC,5 a standard contract term shall be regarded
as ‘unfair i f, contrary to the requirement of good faith, it causes a signi cant imbalance
in the pa rties’ rights and obl igations arising under the contract, to the detr iment of the
consumer’; Article 5(1) of Directive 2005/29/EC6 prohibits ‘unfai r commercial practices’
that are ‘contrar y to the requirements of professional diligence’ and are likely ‘to
materially distort the economic behaviour of the average consumer’; the denition of
‘professional diligence’ in Article 2(h) of t he same Directive refers again to ‘the general
principle of good faith’. is trend will reach a new peak if the Commission’s vision of
an ‘overarchi ng duty for professionals to act in accordance with the principle of good
faith and fair dealing’ in a ‘horizontal instrument’, or Consumers Code, as sugges ted
in the Green Book on the review of the consumer acquis7 were to become reality.
ese developments neces sitate an autonomous and un itary interpretation by a central
authority; without this, it is very likely that these provisions will be interpreted dierently
in d ierent Member States. Despite its cautious approach regarding the assessment of
Juristisch e Methodik im Prozess de r Rechtsanwendung (Dunc ker & Humblot, 1996), 200.
3 See S. Stern, Das Staat srecht der Bundesrepu blik Deutschland, Ba nd III/1: Allgemeine Lehren der
Grundrechte (C. H. Beck, 1988), 1533 et seq.; the contributions i n D. Friedmann & D. Barak-Erez (eds.),
Human Rights in Private Law (Hart, 2001); A. C. Ciachi, ‘e Constitutionaliz ation of European Contract
Law: Judicial Convergence and Socia l Justice’, 2 Eur. Rev. of Contract L. 167 (2006); O. Cherednychenko,
Fundamental rights, contra ct law and th e protection of the weaker p arty: a compa rative analysis of the
constitution alisation of contract law, with emphasi s on r isky nanc ial transa ctions (Sel lier, 2007); C.
Mak, Fundamental Rights in European Contract Law: a Compari son of the Impact of Fundam ental
Rights on Contractual Relatio nships in Ge rmany, the Net herlands, Italy and England (Kluwer Law
Internationa l, 2008); and for English law i n particular C ampell v MGN Ltd. [2004] AC 457.
4 Council D irective 86/653/EE C of 18 December 1986 on the coordination of the laws of the Member
States relatin g to self-employed commercial a gents, O.J L382, 31/12/1986, 17.
5 Council Direct ive 93/13/EEC of 5 Apr il 1993 on unfair terms in con sumer contracts, OJ L 095,
21/04/1993, 29.
6 Directive 2005/29/EC of the European Parli ament and of the Council of 11 May 2005 concerning unfa ir
business-to- consumer commerci al practice s in the internal market and amending C ouncil Dire ctive
84/450/EEC, Direct ives 97/7/EC, 98/27/EC and 2002/65/EC of the Europ ean Parl iament a nd of the
Council and Regulat ion (EC) No 20 06/2004 of the European Parliament and of the Council (‘Unfa ir
Commercial Pr actices Direct ive’), O.J L149, 11/06/2005, 22.
7 Green Paper on the Review of the Consumer Acquis, COM(2006) 744 nal, 08/02/2007, 11, 17 et seq. e
Commission’s Propo sal for a D irective of the European Parliament a nd of the C ouncil on Con sumer
Rights, COM(2008) 614 na l, 08/10/2008, does not contain an ‘overarching’ provision on good fait h
and fair dea ling.
e Interpretation of E uropean Private Law i n the Light of
Market Freedoms a nd EU Fundamental Ri ghts
15 MJ 3 (2008) 287
unfairness of contract terms,8 the European Court of Justice (ECJ) wil l have to take on
this task. In order to guar antee the u niform, consistent a nd predictable inter pretation
and application of European law i n the face of an ever increasing workload and a mu lti-
chamber system, a general ly accepted method of interpretation is urgently needed.9
is article tr ies to explore how t he four market freedoms10 and EU fundamental
rights11 can, as European constitutional values, contribute to the development of an
autonomous European method of legal reas oning. Whereas the inuence of both set s of
rights on national private law has been analyzed ,12 their argumentative force in the context
of the interpretation of European private law remains under-conceptualized. Both market
freedoms and EU fundamental rights have in common the granting of enforceable rights
to market participants and the imposition of corresponding duties on the Member States
and/or the Community and its institutions. In that sense both sets of rights const itute
Hohfeldian claim-rights.13 ey do not, however, have ‘peremptory force’ in the sense
that t heir invocation s tops deliberation14 a nd allows for the immed iate deduction of a
concrete result in a particular cas e. Rather, they require being weig hed and balanced as
against conicti ng rights, interests and values. In that sense and because of their variable
weight, depending on context, they are (constitutional) pr inciples in the D workinian
sense.15 ey provide good reasons for t he adoption of a specic interpretation but may
be outweighed by more important reasons under the circumstances in the case at hand.16
At the same ti me, as will be seen below, the argu mentative force of both sets of rights i s
interlinked wit h and depends upon the allocation of compete nces between Community
and Member States. is renders the use of market freedoms and EU fundamental rig hts
as a tool for European legal reasoning a rather complex aair. e contribution of market
freedoms and EU fundamental rights i n this respect w ill be analyzed separately, and
then the interaction of bot h sets of rights can be explored.
8 Case C-237/02, Freiburger Kommun albauten, [2004] ECR I-3403, pa ra. 21–24; Case C-168/05, Mostaza
Claro, [2006] I-10421, par a. 22. For possible reason s, see M. Schillig, ‘Inequalit y of bargai ning power
versus market for lemons: Legal pa radigm change and the Cour t of Justice’s jurisprudence on Directive
93/13 on unfair contrac t terms’, 33 Eur. L. Rev. 336 (2008).
9 See D. Chalmers et al, Eu ropean Union Law (CUP, 2006), 309.
10 Free movement of goods, Ar ticles 28–31 EC; free movement of pers ons, Articles 39– 48 EC; freedom to
provide serv ices, Articles 49 –55 EC; free movement of capital a nd payments, Artic les 56–60 EC.
11 Origina lly develope d as f undamental principles of EU law by the Europe an Cour t of Just ice,
subsequently incor porated into the European Union Charter of Funda mental Rights and, in the futu re,
possible into a new Treaty it self.
12 O. Cherednyche nko, ‘EU Fu ndamental R ights, EC Fundamental Freedoms a nd Private Law’, 14 Eur.
Rev. of Private L. 23 (2006); Cherednychenko, Fundament al rights, contract law and the protection of the
weaker part y, chapter 4.
13 W. N. Hohfeld, ‘Fundamental Lega l Concept ions as Applied in Judicial Reasoning’, in W.W. Cook
(ed.) , Fundame ntal Legal Conceptions as Appl ied in Judicial Reasoning and other Le gal Essays by Wesley
Newcomb Hohfeld (Yale Univer sity Press, 1966), 38.
14 H.L.A. Ha rt, Essays on Benth am (Clarendon, 1982), 253.
15 R. Dworkin, Taking Ri ghts Seriously (Duc kworth, 1977), 26.
16 R. Alexy, eo rie der Grundrechte (Nomo s, 1985), 92.

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