The Commission of the European Union is promoting a new regulation which, if passed, would create a “28th jurisdiction” for the 27 Member States. Intriguing.
At the moment if you buy and sell something entirely within your own country then typically and fairly obviously your own laws of contract will apply. Why wouldn’t they? However, when you buy or sell anything internationally it is normal for the contract to spell out which country’s laws will be used to resolve any disputes, should they arise. Usually this is a decision the vendor takes although, in theory, it can be a matter for negotiation.
I think the phrase “in theory” is rather important here. Certainly if you are buying over the internet the notion that you might have a discussion about the applicable law is entirely fanciful. The vendor will choose the law, take it or leave it.
It appears many of us decide to leave it. We are reluctant to buy goods and services from businesses based in other EU Member States. This is because we are anxious that we will otherwise be caught out by the exotic and very different laws of the “funny foreigners”, as likely as not written in a language we cannot read or speak.
All a bit of a worry
Seemingly people believe that in some EU Member States if you buy cabbages after 12 noon on any Thursday in Lent the vendor can claim your first born. But which states and who or what is “Lent” some might ask? OK. That was a joke, but I hope you get the point. In order to avoid any risk of anything like that happening people continue to purchase their cabbages locally. They might pay twice as much for them but it’s worth it for the resulting peace of mind.
According to the Commission’s estimates trade worth an extra 26 billion Euros could be generated by dismantling these kinds of perceived or actual barriers to intra-Community trade. In a survey 71% of European companies said, if they could choose, they would use a single European contract law for all cross-border sales to other EU countries.
The Commission’s simple idea to address this challenge was to create the 28th: a set of laws governing the sale of goods and services which could work on an EU-wide basis. Businesses will be able to choose to opt in to these laws in preference to their own local or anyone else’s national laws governing contracts.
Customers from another country thinking about buying something would be reassured, so the theory goes, because there will be certainty about the relevant rules. At a very practical level these rules would be available in every EU language. Any citizen who can read one could check out the material terms for themselves. Nobody would have to pay lawyers’ fees just to make sure there is nothing in there about their first born or Lent.
Anyway I can see the logic of the Commission’s arguments. I can see how such a proposal might help perfect the single market and stimulate free trade. The lawyers in many jurisdictions might not like it but I’ve already said enough about why I’m in favour.
It’s meant to be a model law as well
Seemingly a subsidiary purpose of the new contract law the EU is devising is that it could act as a model law or benchmark of some kind which different jurisdictions might borrow from or adapt, either as a whole or in part.
I’m afraid if I could vote against the proposals in their present form I would. What is being suggested is a long way from being perfect in my book. The draft does not recognize some pretty obvious dangers to children which, absent any countervailing measures, are inherent in any projected increase in transnational commerce.
A question of age
The Article 29 Working Party has discussed the position of children in relation to data privacy and data collection practices in several papers which it has published down the years. In 2009 in WP 163(para 4) the Working Party said that it
…..encourages further research on how to address the difficulties surrounding adequate age verification and proof of informed consent…..
However, the Working Party fell short of recommending the adoption of a single EU-wide age standard for these purposes. I’m told everyone assumes that such a move would rub up against deep seated cultural sensitivities although I have never seen this documented or discussed at length anywhere.
EU Commissioner Reding seems willing to jump in where the Article 29 Working Party feared to tread. In her proposed new data protection Directive, at Article 8, 13 will become the new EU-wide minimum age, below which any company providing online services will need to obtain parental consent before collecting any personal data from a child.
But what about the question of age when it comes to commerce, 28th or otherwise? For a start I’m not sure anyone in the Commission knows what the spread of relevant ages are within EU Member States in relation to engaging in various types of commercial activities. They certainly didn’t the last time I asked. Admittedly that was a few years ago. I wish I had the resources to gather in these data myself, but I don’t.
A convergence around 18?
I suspect there may be more of a convergence in relation to age and commerce than many people suspect. 18 is probably the most commonly adopted age standard. It applies almost everywhere for things like alcohol, tobacco, gambling, weapons and so on. Of course there are several other age points which are relevant for these purposes e.g. in the UK we have legally defined restrictions which are tied to the ages of 12, 15, 16 and 17.
In the UK breach of the rules relating to sales of some of the items governed by the age laws can result in either criminal or civil sanctions, or both.
Not so difficult when you can see the person in front of you
Before the arrival of the internet there was generally, at least in principle, little difficulty in enforcing these provisions. The person wanting to buy the product or service would normally be standing in front of you. If you had any doubt about their age you would ask for proof and if the person could not provide it the transaction would be halted. When selling over the internet this approach is simply a non-starter.
Many companies in many national jurisdictions have been struggling to find solutions to this age verification problem in relation to online sales made and completed entirely within their own borders. It is not hard to see how anything they might put in place at a company or national level could be completely undone, or at any rate substantially undermined, were transnational trading in age restricted goods and services to get going on any appreciable scale.
Kids have their own methods for paying for things online
An increasing number of children and young people, perfectly legally and properly, have their own independent means of paying for items online and offline. So for example country A allows the sale of aerosol spray paints to persons aged 14 or above. Country B specifies 17. Can companies in country A lawfully sell spray paints to 14 year olds in country B?
Conflict of laws
The general rule is that in the event of any conflict of laws the law of the purchaser’s or receiving country should prevail. But in relation to matters of this kind how would a company in country A know or be able to find out what the relevant law or provisions were in country B and how would they be able to check the age of a purchaser in country B?
Thus before the Commission goes charging off deliberately seeking to increase international trade it ought to have an answer to questions of this type. When I enquired I got a very dusty brush off. I was pointed to the Commission’s explanatory paper and to the substantive proposal especially paragraphs 27 and 28 of the recital (pp 19 & 20).
These paragraphs indicate an intention to side step the issue. In paragraph 27 they say, for example,
All the matters of a contractual or non-contractual nature that are not addressed in the (the proposed new law) are governed by the pre-existing rules of the national law….. or any other relevant conflict of law rule. These issues include legal personality, the invalidity of a contract arising from lack of capacity…..
The question of a person’s age is about their “capacity”. In other words the draft regulation the Commission is proposing will not take a stand on the question of age related commerce. And just in case you were in any doubt, in paragraph 28 the following appears
The (proposed new law) should not govern any matters outside the remit of contract law…..for example, information duties which are imposed for the protection of health and safety or environmental reasons should remain outside the scope…..
Thus the Commission brings forward a draft new law to promote more international trade but then says it cannot be held responsible for any of the plainly foreseeable undesirable consequences. Am I missing something somewhere?
If, or rather when, kids from country B find out, as they surely would, that it was so easy to ignore their local law, and get the items delivered to their homes by a company based in country A what do you suppose they will do? Parents, school janitors, park keepers, shop owners and the police in country B will be furious. Meanwhile the vendor in country A enjoys bigger profits drawn from this extra, illicit trade.
Law enforcement attitudes
I doubt that international extradition warrants will apply to the sale of spray paints to under age purchasers. It is quite likely that whoever had to fill in the relevant forms will just decide the cost and the paper work involved is disproportionate to the benefit likely to be gained by transporting a recalcitrant seller of spray paints across the frontier. In other words the illegal sale of spray paints, and its consequences, will slip into the background noise of modern life and we will all just have to learn to live with it. Now think about the position if the sale was not of spray paints but of some of the other age restricted items I have mentioned.
A bold proposal
For these sorts of reasons I hope people will lobby for a clause to be inserted in the new law which specifically refers to the transnational sale of products and services which are controlled by reference to the age of the person intending to buy them. Such a clause could be in two parts:
1. Instructing the Commission, at the very least, to compile, publish and maintain a list of all products or services which are the subject of any kind of legally prescribed age-based restriction relating to their sale in any and all EU Member States. In the UK we have only about 30 such items in total. I don’t imagine many other states will have very much larger lists so this ought not to be too difficult for a body like the Commission.
2. If the Commission wished to go a step further it might then think about creating a legal obligation on anyone trading transnationally in products or services on that list to have regard to the relevant law in the receiving country. It could even take another step and oblige all companies that trade transnationally in any item on the list to demonstrate that they had put in place systems to enable them to comply with the new rule.
If the Commission wished to be even bolder it could even think about introducing a licensing scheme of some kind i.e. to trade transnationally in any product or service on the list the vendor would require prior approval. Such a licence would only be available to companies which could show they had systems to ensure they were not breaking the law in the receiving country
An alternative measure might be to disregard all the national rules on age restrictions and establish a single list of items the transnational sale of which would be restricted on an EU-wide basis.
I imagine such a “Brussels list” would include all those items currently restricted in every Member State to people who are 18+. Alcohol, tobacco, gambling and weapons are the most obvious first candidates. There may be others.
There is no logical reason why we should not also add to the list items which are tied to ages other than 18 e.g. certain classes of video games or movies. However, here we have to recognise that, at the moment, there could be substantial practical barriers. Unlike with adults the relevant online databases of sub-18s simply do not exist. This is not to say there would not be challenges with the 18+ category but they will be minor in comparison.
If there is a better or different way of achieving the ends I have described in this blog please let me know. In the meantime I guess the message to the Commission is clear: by all means find new ways to promote transnational trade within the EU, but make sure you cover all the bases. So far you haven’t.