Crossing borders

In 1974, master of the rolls Lord Denning wrote in his judgment in Bulmer v Bollinger that the European Treaty was like an incoming tide that cannot be held back. As he memorably put it: 'It flows into the estuaries and up the rivers.' He went on to say: 'In future, in transactions which cross the frontiers, we must no longer speak or think of English law as something on its own. We must speak and think of Community law, of Community rights and obligations, and we must give effect to them. This means a great effort for the lawyers.

'We have to learn a new system. The treaty, with the regulations and directives, covers many volumes. The case law is contained in hundreds of reported cases both in the European Court of Justice and in the national courts'¦ many must be studied before the right result can be reached. We must get down to it.'

But even Lord Denning is unlikely to have contemplated the changes that have occurred since, nor those now on the agenda.

In the past year there has been profound change on the European scene. The Treaty of Lisbon came into force on 1 December 2009. Just days before, the European Parliament had approved the Swedish EU presidency's proposals for EU justice and home affairs, the so-called 'Stockholm Programme' for 2010-14. Consequent on the elections to the European Parliament held in June 2009, the European Parliament elected a new European Commission on 9 February 2010, which will hold office until the end of October 2014. In advance of that formal election, the committees of the European Parliament had organised hearings with commissioners-designate.

The hearing with the then commissioner-designate for justice, fundamental rights and citizenship, Viviane Reding (her candidature was confirmed), was held on 7 January 2010. Among the three concrete priorities she identified in that hearing was the development of 'a truly European area of justice without frontiers'. Her other priorities were to strengthen fundamental rights and citizens' rights. The work of the Bar will be affected by each of those prioritised areas.

New developments

At the end of June, the Legal Affairs (JURI) Committee of the European Parliament voted to adopt its report on the five-year review of the operation of the Brussels I Regulation, 44/2001 (on jurisdiction, and recognition and enforcement of judgments in civil and commercial matters). The application of the regulation has been the subject of several ECJ judgments, notably Gasser, Owusu and West Tankers, which havecaused great controversy as regards the role of the court first seised (when not in accord with an express choice-of-court agreement), and whether the regulation applies to arbitrations.

In line with the views expressed by the Bar (and others), the JURI report has recommended that arbitrations should be excluded from the scope of the regulation, and that courts should have power to stay proceedings (so-called 'torpedo actions') commenced in other jurisdictions. The European Commission has now established an experts' group to advise further on the arbitration aspect. It is hoped the views expressed in the JURI report prevail.

The case of Akzo-Nobel, delivered on 14 September 2010, raised the question whether in-house legal advisers are covered by legal professional privilege (LPP). The ECJ concluded that 'economic dependence and the close ties with his employer' prevented an in-house lawyer from enjoying a level of professional independence comparable to that of an external lawyer. For that reason and others, the ECJ refused to extend LPP to in-house lawyers.

The judgment has caused widespread concern, particularly when (as was the case) the in-house lawyer in question was subject to the same rules of professional ethics, code of conduct and discipline as external lawyers. The UK government, echoing the clear view of both professional bodies in England and Wales and several interveners had argued that in-house lawyers, enrolled at a Bar or Law Society, were just as independent as an external lawyer. Although the judgment was not a total surprise in view of the earlier Advocate General's opinion, it remains unfortunate and regrettable.

Euro-justice

When looking at what Commissioner Reding has in mind, the keyword is 'mutual': 'mutual recognition', 'mutual assistance' and 'mutual trust' are all to be enhanced. So far, so good. But, when the detail of the proposals are considered, whether in criminal justice, or in civil and commercial law, it is there that the devil is to be found.

As for criminal justice, the principal proposals are: (1) to strengthen citizens' rights; (2) to develop a comprehensive system for obtaining evidence in cross-border criminal cases; and (3) to strengthen Eurojustice and develop a European Prosecutor's Office.

The protection of the vulnerable, including supporting victims of crime and protecting the rights of suspected and accused persons are unquestionably worthwhile and important initiatives. But the effect of 'mutual recognition' will go much wider under the Stockholm Programme.

Thus, it is said that it will facilitate 'the approximation, where necessary, of substantive and procedural [criminal] law' in the face of cross-border crime. It is also the principle that the European Council will rely on when considering 'the setting up of a comprehensive system for obtaining evidence in cases with a cross-border dimension'.

With regard to obtaining evidence, the European Commission issued a green paper in November 2009. In short, what is contemplated is an enlargement of the circumstances in which a European evidence warrant might be issued. As long as there are adequate and comprehensive procedural and substantive safeguards in place before the proposal is implemented, the Bar would broadly welcome the proposal because pre-trial preparation would be simplified.

However, the proviso is important. There are difficult issues over the proportionate use of such warrants, the compatibility with human rights law, whether (and when) it should be necessary to verify dual criminality before the execution of such a warrant, the circumstances in which bodily samples (blood, saliva, fingerprints) are obtained, the obtaining of intercept evidence, obtaining expert evidence, and the special position of certain categories of suspect (juveniles, the mentally disordered, prisoners in custody for other offences etc.).

For these reasons, the Bar has urged a measured approach, and continues to do so. Nowhere is this more necessary than with regard to any proposal to approximate criminal laws, or to create a pan-European Public Prosecutor (EPP). The cost (the value) of international crime that affects the Community's financial interests is unknown, but almost certainly runs to several billion Euros a year.

Everything that can be done should be done to reduce that sum. But would an EPP help? To operate the EPP would be a community authority with its own enforcement powers, with the responsibility for detecting, prosecuting and bringing to judgment those who committed crimes against the financial interests of the EC. The EPP would also be responsible for exercising the functions of prosecutor in the national courts of member states in relation to such offences.

The EPP would, therefore, be a supra-national appointee, acting through national institutions. The view has long been expressed that criminal prosecution should be essentially a national responsibility. It would not reduce the opportunities for,nor would it improve the ability to detect,fraud, and would result in a loss of national accountability for decisions as to whether to prosecute. It is obvious that the proposal poses acute questions over accountability. It might also be asked whether such a hybrid system promotes the 'cohérence' that is often the guiding light for European initiatives.

As regards civil and commercial justice, Commissioner Reding singled out contract law. She has signalled an intention to put contractual relations 'notably in business-to-consumer relations, on a more secure and coherent footing to facilitate cross-border transactions'. That might sound quite a modest proposal: the consumer acquis is already well-developed in EC law. Certainty, clarity and consistency are all laudable aims as regards statutory drafting, and the facilitation of cross-border transactions is the practical manifestation of the single market.

But matters do not rest there. In addition to work on standard terms and conditions and consumer rights (the Consumer Rights Directive and Consumer Collective Redress), Commissioner Reding proposed work on 'common principles of contract law, with the purpose of paving the way for one day developing a European civil code (which could take the form either of a voluntary tool to improve coherence, or of an optional 28th contract law regime or of a more ambitious project)'.

Whereas Lord Denning evidently saw English law, not 'on its own' when it comes to cross-border transactions but supplemented as necessary by European law, the 'more ambitious' possibilities of which Commissioner Reding has spoken would go much further.

Indeed, on analysis, there are several fundamental tensions in what she has proposed. First, the proposal is plainly part of a grander design: not limited to contract law, but with a civil code being expressly in contemplation. Second, a legal code is prescriptive: it contains substantive law. A code does not facilitate better legislative drafting; it is the law. Third, the commissioner did not initially draw any distinction between B2C contracts and B2B contracts, even though very different considerations apply.

The first points are not new. The European Commission published a communication on European contract law in July 2001, with an action plan in 2003, and a further communication ('The Way Forward') in 2004. The commission worked with teams of academic researchers, who built on work previously undertaken (including the work of the study group on a European civil code). The product of the research was published as a draft common frame of reference in an 'interim outline' edition in 2008, with the full 'DCFR' being published in six volumes in November 2009. The DCFR is undoubtedly a work of considerable academic merit, but it looks like a code and, without considerable adaptation, would also function like one.

While specific aspects of B2C contracts have been addressed in the directives already comprised within the consumer acquis (notably, sale of consumer goods and guarantees, unfair contract terms, distance selling, doorstep selling etc.), the development of consumer law, through the acquis, has been piecemeal and, in some respects, inconsistent and contradictory.

There is plenty of work to do in ironing out those issues, and it was specifically with that end in mind that the proposal for a Consumer Rights Directive (CRD) was published in October 2008. But the progress of that proposal has been chequered, with battles over whether harmonisation should be 'full' (uniform across the EC) or 'minimum' (member states should be able to enact more stringent consumer protection measures, so long as a minimum standard is met across the EC). The European Council of Ministers is likely next to examine the proposal in December 2010. It remains to be seen whether, and, if so, in what form, the CRD will be adopted.

The most recent thinking of the commission on contract law is to be found in its green paper of 1 July 2010 on policy options for progress towards a European contract law for consumers and businesses. The paper introduces a consultation that will run until 31 January 2011, and sets out seven options: (1) publication of the results of the academics' work; (2) use of that work as a 'toolbox'; (3) a commission 'recommendation' on European contract law; (4) a regulation establishing an optional instrument; (5) a directive on European contract law; (6) a regulation establishing a European contract law; or (7) a regulation establishing a European civil code. The range of options is, therefore, broad: as the green paper says, 'from a non-binding instrument, aiming at improving the consistency and quality of EU legislation, to a binding instrument which would set out an alternative to the existing plurality of national contract law regimes'.

The green paper also asks specifically for comments on the questions 'should the instrument cover both B2C and B2B contracts?' and 'should the instrument cover both cross-border and domestic contracts?' The first question is welcome. The second question is also important; obviously, the EU should act, if at all, only within the scope of its competence.

Treading carefully

The paper and the consultation are important, and the response of the profession (both from the Bar and from solicitors) must be nuanced. Consumer interests must be properly protected. The efficient operation of the single market should be facilitated. Measures which improve the clarity with which EU legislation is drafted should be encouraged.

But the EU must act within its powers, and the dead hand of unnecessary legislative overlay must be avoided. In an age of global competitiveness in the provision of legal services and in days of economic austerity, it is as vitally important to the UK, as it is to the whole EU, that we do not encrust the highly developed and world-renowned legal systems that exist in Europe with provisions that will make those systems unattractive, and even more costly. If that were to happen, non-European legal systems and centres for dispute resolution would benefit at our national, and Community, expense.