Law Society seeks to address concerns over framing of European contract law

6 January 2011

Concerns amongst England and Wales solicitors regarding a European Commission proposal to reform contract law across the EU has prompted the Law Society to host a contract law forum for solicitors, barristers, in-houses lawyers and representatives from industry and the judiciary.

England and Wales legal professionals fear the new instrument, contained in an EU Green Paper on policy options towards a European contract law for consumers and businesses, could hinder international trade by weakening the strength of English law. This could result in contracting parties switching to another non-EU common law system (e.g. New York law) with the consequent loss of economic activity and export earnings for the EU as a whole. There is also uncertainty regarding the scope of a new instrument, which could also include consumer protection provisions and issues relating to e-commerce.

The purpose of the discussion forum, which took place in London this morning, was to offer Law Society members and England and Wales legal professionals an arena to share their concerns regarding the proposals and co-ordinate their responses to the European Commission. The Law Society aims to prepare a strategy of engagement while the EU initiative develops and to agree constructive input on the substance of a future EU instrument, should it go ahead.

Responding today to the profession's concerns regarding the Green Paper, Law Society Chief Executive Desmond Hudson said, "the initiative for a non-binding “toolbox” could serve as a guide for use by European legislators to improve the quality, coherence and consistency of contract law across the EU.

"However, there is an urgent need for an impact assessment of the key options in the Green Paper. England and Wales practitioners would like to be included in the discussions and drafting processes taking place in the European institutions. The profession has great experience working with other jurisdictions and on cross-border contracts and could offer valuable expertise. The Society is concerned that the Expert Group, established to advise in this process, is mainly comprised of academics and some practitioners from civil law systems and would welcome the direct involvement of common law practitioners in the drafting process, after all they are the people who will draft the contracts."

The Society remains deeply concerned that the benefits of this proposal have not yet been demonstrated. The Society is examining alternative solutions to improve cross-border trade. English contract law is widely used across the world for international trade and this provides substantial benefits to "UK PLC". This is a competitive market - a key competitor is "New York law". We are working with members in seeking to ensure that there are no disadvantages for "UK plc".

The Law Society responded to the Ministry of Justice's consultation on the Green Paper at the beginning of December after consulting as many sections of its membership as possible. The Society urges other organisations and law firms to put their views directly to the Commission to ensure the voice of the profession in England and Wales is heard.

Notes:

View the Law Society response to the Ministry of Justice consultation on European Contract Law: http://international.lawsociety.org.uk/node/10470

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