Harmonising private law in Europe: a mission impossible?

The EU has harmonised many rules in the past decades. Private law, governing private and commercial transactions and used most frequently by most people, is not among these areas. What are the reasons for this? This project researched the role of two factors that may influence harmonisation efforts: national culture and the burdens for individuals of having to cope with different legal systems.

The challenge: national culture?

The European Union has been relatively successful in harmonising national laws between its member states. However, it has failed to obtain full support for its ambition to harmonise family law, contract law, property rights. This project investigated what explains the resistance to harmonizing the laws governing personal relationships and commercial transactions.

A first hypothesis is that private law is a part of national culture and this explains the resistance. This is not an easy issue for research. Many European citizens may identify with their respective national cultures. Nevertheless, citizens can also have local, regional or religious identities. The prevalence and the intensity of cultural identities is difficult to measure, as is the impact on policy debates in Brussels or elsewhere.

A historical analysis provided a partial answer. In most European countries, codification of private law coincided with the rise of the nation state in the 19th century. Having a civil code, was part of building a new nation. Therefore, it is not surprising that traces of ideologies from the nation-building era are still detectable in some of the arguments employed. For instance, the possibility of further harmonisation of private laws is objected based on the argument that private law should remain at the national level or that law is part of the national traditions.

The response


Burdens of having to deal with different systems

It is generally assumed that the unification of private law will positively affect the decisions of business and consumers (clarity about applicable law, less room for conflicts) leading to an increase in cross-border transactions. But how does diversity of legal rules affects the choices consumers and businesses make?

Based on organization theory and the psychology of decision-making, it is likely that different groups of consumers and firms exist on which the legal diversity has a different impact. One group will not consider at all transacting cross-border, or will have other reasons, such as an inclination to buy goods made at home. A second group will be boundedly rational, making choices based on a few criteria, such as price, quality or colour, neglecting other information such as the legal risks involved.

The only relevant group will consist of the ones who take into account whether there will be legal remedies against a foreign seller. But even for this group, it is uncertain whether it is actually more difficult to protect your rights in your own country compared to getting access to justice according to the laws of another country

Implications 

What are the implications for international organizations keen on simplifying and harmonizing the laws governing private transactions? It may be that the momentum for European harmonization has gone. In the decades after the war, there was a need to build a common European identity. Harmonization of private law could have become a goal of this movement.

On the issue of the burdens of differing legal regimes, more empirical research is needed. The research suggests these burdens may be lower than expected, which may part of the explanation why harmonization is not successful. Another possible reason is that the system of private law is used by a large group of lawyers, judges and businesses on a day-to-day basis.

Changing this system 'wholesale' means they all have to change their working methods, for gains that are hard to quantify. Harmonization of rules for a specific group of businesses has less overall costs. The benefits of changing the regulation for a company’s core business can be much clearer and quantifiable.

Project details

Project leaders:
Prof. Dr. Jan Smits (Maastricht University)
Prof. Dr. Martijn Hesselink (University of Amsterdam)
Duration: 2008 – 2012
Contact:

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