This post was written by Felix M. Wilke, University of Bayreuth.
The new EU Sale of Goods Directive 2019/771 and its sibling, the Supply of Digital Content and Digital Services Directive 2019/770, understandably have attracted a lot of attention in the field of substantive private law. By contrast, to my knowledge, their (negative) private international law dimension has not been featured in any prominent way yet. In this post, I want to highlight and contextualize this aspect. Any input, e.g. regarding directives I might have missed or explanations different from the ones I offer, is very much welcome.
The Wonderful World of Conflict of Laws in EU Directives
When faced with the term “EU Conflict of Laws”, most people will nowadays immediately think of the different regulations in this area: Rome I to III, the Succession Regulation etc. But this is not the whole story. Some of the Union’s provisions with a direct impact on private international law can be found in directives. Beginning with Article 6(2) of the Unfair Terms Directive 93/13/EEC, many of such instruments on the protection of consumers required the Member States to take “the necessary measures to ensure that the consumer does not lose the protection granted [by the respective legal instrument] by virtue of the choice of the law of a non-Member country as the law applicable to the contract if the latter has a close connection with the territory of the Member States”. Other examples are Article 12(2) of the Distance Marketing of Consumer Financial Services Directive 2002/65/EC and Article 22(4) of the Consumer Credit Agreements Directive2008/48/EC.
Moreover, Article 12(2) of the Time Sharing Directive 2008/122/EC sets forth that, under certain conditions, “consumers shall not be deprived of the protection granted by this Directive, as implemented in the Member State of the forum” where the law of a third country is applicable. (While Articles 17–19 of the new Package Travel Directive 2015/2302 have an obvious connection to conflict of laws, they operate differently.)
All these provisions are still in force. National law of the Member States must contain respective rules – and these rules clearly must be conflict-of-law rules, as they have to affect situations in which the law of a third country would otherwise be applicable (mostly because of a choice by the parties).
A Change of Heart between 2008 and 2011?
Things are different for the new Sale of Goods Directive. While Article 7(2) of the old Sale of Goods Directive1999/44/EC was drafted along the lines of the examples just mentioned, any such provision is now missing from the directive repealing it. (The Supply of Digital Content and Digital Services Directive does not introduce a conflict-of-law provision, either.) The same fate befell Article 12(2) of the Distance Contracts Directive 97/7/EC when the Consumer Rights Directive 2011/83/EU repealed it. From this perspective, EU private international law has actually lost two provisions in the last decade or so.
As the EU legislator seems to have changed its stance on this issue between 2008 and 2011, two possible reasons from this period suggest themselves. The first concerns the new approach to harmonisation of substantive private law by directives, the second the emergence of EU regulations on conflict of laws.
The Distance Contracts Directive and the old Sale of Goods Directive were minimum harmonisation directives. The Member States could maintain or introduce provisions if they ensured a higher level of consumer protection. By contrast, both the Consumer Rights Directive and the new Sale of Goods Directive are full harmonisation directives. Unless otherwise provided, Member States may not maintain or introduce divergent provisions, whether less or more stringent.
Yet no clear link of this changed approach to harmonisation with the present conflict-of-law issue is apparent. True, it is now more or less irrelevant which national law of an EU Member State is applicable to a sale of goods to a consumer. The key rules will be the same across the board (also see Recital 10 Sale of Goods Directive). But this is not with what the respective old provisions and the remaining provisions in other directives were and are concerned. They were and are about protecting the consumer from the application of the (disadvantageous) law of a third country.
Rome I and Choice of Law (in Consumer Contracts)
For anyone interested in EU private international law, the years between 2007 and 2009 have, of course, special significance. In this time frame, the first EU regulations on conflict of laws were passed and became applicable. In particular, Rome I was passed in 2008 and has been applicable to contracts concluded as from 17 December 2009. So, are the rules found in Rome I on consumer contracts and choice of law in general the reason for the lack of conflict-of-law provisions in more recent directives?
As a matter of law, the answer must be negative. This is because the scope of application of Articles 6(2) and 3(4) of the Rome I Regulation on the one hand and of the conflict-of-law rules in the directives on the other hand do not perfectly overlap: The provisions in the directives have not entirely become redundant once Rome I entered into force. For one, Article 6(4) of Rome I excludes certain contracts. For another, even the relatively broad requirement of “directing activities” in Article 6(1)(b) of Rome I only pertains to the Member State in which the consumer is habitually resident. A consumer concluding a contract in another Member State may not be protected even where Article 6 Rome I would encompass a consumer habitually resident in that country. Finally, Article 3(4) Rome I is too narrow to catch all cases subject to the conflict-of-law provisions in directives.
As a matter of policy, however, one can assume that Rome I was a big factor. The Commission’s Proposal for the new Sale of Goods Directive does refer to the protection of consumers under Rome I, although only in the context of compatibility of the draft with EU private international law. (See also Recital 65 Sale of Goods Directive.) When the Commission states that the legislative proposal “does not require any changes to the current framework of EU private international law”, it is not clear whether it took the actual change it proposed to make to EU private international law – eliminating a conflict-of-law provision – into account.
Is there Reason to Mourn?
Life is easier without conflict-of-law provisions in directives, to be sure. Nothing to transpose for national legislators, and no reason for courts to even think about special national conflict-of-law rules favouring consumers. Does this offset the detriments to consumers? One can certainly think so. While the exclusion of some consumers from the protection offered by Article 6 Rome I can lead to some strange results, they only affect a very small number of situations. The practical impact of the conflict-of-law provisions in directives does not seem to have been very big, anyway. As far as I can tell, the Court of Justice only had to deal with any of these provisions once: Case C-70/03 (Commission v. Spain) concerns Spain’s too restrictive transposition of Article 6(2) of the Unfair Terms Directive into its national law.
In any case, the death of conflict-of-law provisions in directives should not be silent. Unlike during the legislative process leading to the Consumer Rights Directive and the new Sale of Goods Directive, the EU legislator should openly communicate that – and preferably also why – it considers such provisions unnecessary. And this not only from a scholarly perspective: In the highly complex realm that is EU (substantive) consumer law, a national legislator might simply miss that a conflict-of-law provision transposing one of the old directives has now lost its base.
Many thanks, Felix, for this excellent post! So when does the ‘death of conflict-of-laws provisions’ in directives actually matter? Suppose consumer A, living in Vienna, goes on a trip to Budapest, where B offers in the pedestrian zone – i.e. outside a shop – smartphones, with the contract being submitted, according to a standard term in the agreement, to California law. Would this choice of law now be valid? If I am not mistaken, the Unfair Terms Directive still retains its conflicts rule in Art 6(2) UTD. What does this mean for choice-of-third-country-law clauses in standard terms? And if the case ended up in a court in Budapest, e.g. because B lives there, and Hungarian law, still faithful to the old Doorstep Directive, retains its national conflicts rule, would that be still compatible with Rome I, now that the special conflicts rule in EU law and therefore the conditions of Art 23 Rome I have fallen away? Best wishes, Matthias
Thanks, Matthias, for your questions. I’ll try my best.
1) Why does the death of conflict-of-law provisions matter in your example? When we leave out the issue of standard terms for the time being, the provisions of the Consumer Rights Directive will probably not apply to this situation, unless the requirements of Article 6(1) Rome I are met. B would have had to direct its activities at least also to Austria for Art. 6 to work. Taking the example one step further: Assume B is actually from a third state and has a business established (only) in Hungary. Hungarian consumer H would now benefit from the Consumer Rights Directive because of Art. 6 Rome I, whereas B still would not. I think this would be the strongest case for keeping conflict of laws in directives alive; situations like this are probably rare, though?
2) If we now take standard terms into account, we can somewhat safely say that the substantive standards set forth by the UTD (what is allowed, what is not?) should actually apply to the contract between A and B even when Art. 6 Rome I does not apply. What does that mean exactly? Depending on one’s reading, it could mean that Californian and Hungarian Standard Terms Law must now be compared to see which one is more favourable regarding the specific issue – or that Hungarian law will prevail no matter what. – There is the elephant in the room of the CJEU’s jurisprudence on the effect of the UTD on choice-of-law clauses specifically, but I would leave that for another day.
3) Indeed, I would argue that national private international law may not go beyond the protection of consumers in Rome I unless provided for in Directives. Therefore, the national conflict-of-law provision still in the books would have to be disregarded in this situation. Even more reason to alert national legislators to changes in this regard!
Many thanks, Felix! I agree with all three points you made, and also with leaving the Amazon decision for another day :-).
Many thanks Felix for your very interesting post!
Articles 22 (for the Sales Directive) and 21 (for the Digital Content Directive) provide for the mandatory nature of the harmonised provisions. For me, these provisions are a matter of private international law (lato sensu). We can follow a classical reasoning in B2C international dispute: 1° regarding PIL instruments (Brussels I bis and Rome I): applicability of the consumer protective regime; 2° regarding the applicable law, either the law of a MS is applicable (i.e. the directives transposed into national law); or the law of a third country is designated and it should be (at least partly) set aside, in favour of the mandatory EU consumer law (i.e. relevant provisions of the two directives mentioned here, including the “more protective” mandatory law of a MS). What do you think?
Thank you in advance for your feedback! Best wishes, Marion
For another interesting perspective, cf. in Journal of PIL, an article from Johannes Ungerer titled “Explicit legislative characterisation of overriding mandatory provisions in EU Directives: Seeking for but struggling to achieve legal certainty”, Published online: 20 Jan 2022, https://www.tandfonline.com/doi/full/10.1080/17441048.2021.1970702
I completely agree with your point: The respective standards set forth by the directives are mandatory for the purposes of Article 6(2) (and Article 3) Rome I. Therefore, any consumer covered by Article 6(1) Rome I will also benefit from the protection afforded by the consumer directives, and we do not need any additional rule in the directives themselves or in national law.
The point I tried to make under the heading “Rome I and Choice of Law (in Consumer Contracts)”, however, is rather that there is a slim area where Rome I and its reference to mandatory provisions does not work – but where conflict-of-laws provisions in directives would have worked. In my reply to Matthias’ comment above I tried to give an example of such a situation. Here, despite the mandatory nature of EU consumer law, the choice of the law of a third state would not only be valid, but also not subject to EU consumer law. Therefore I believe that any policy decision on whether or not to keep conflict-of-law provisions in directives would have to start with the assessment of how many of these cases there are and how worthy of protection we deem the affected consumers.
And yes, to designate the respective rules as overriding mandatory provisions would, of course, be another way out of the problem. Just one I would hope the EU legislator uses rarely.
Another example: Draft Directive on Corporate Sustainability – COM 2022 71
Theer are reasons for the anti-conflict rules developments: (1) As much as directives are intensively substantial, there is no need for conflicts rules. (2) Don’t forget that mot of thes directives have unilateral conflicts rules in respect of their scope of application – This is sufficient.
Thank you for your comment and the reference to the Draft Directive.
I am sorry to say that I am not sure to which unilateral conflicts rules in the respective scopes of application you refer with your second point. My main examples are the Consumer Rights Directive and the new Sale of Goods Directive: would you say that they, too, contain such unilateral conflicts rules?