Competitive markets

ICC urges Members of the European Parliament to remove B2B sales from scope of Common European Sales Law

  • 8 July 2013
Business & the UN

ICC has asked Members of the European Parliament (MEPs) to remove B2B transactions from the scope of a proposed regulation on Common European Sales Law (CESL) when they vote on the adoption of a draft opinion on CESL on 9 July. The removal would limit the reach of the law to B2C transactions.

The proposed CESL regulation would put into place an optional system of contract rules identical in all European Union (EU) member states, with the aim of facilitating cross-border trade within the EU for companies. It would also provide a high level of consumer protection in B2C sales through clear consumer rights. However, ICC believes that the application of CESL to B2B transactions would not add value for business and indeed would create confusion and additional costs for companies trading across the EU.
The ICC Commission on Commercial Law and Practice has been involved in the discussions on the development of CESL for a number of years and has repeatedly expressed its concerns about application of the project to B2B contracts, most recently in a statement issued in July 2012, ICC position on the EC proposal for a common European Sales Law, responding to the October 2012 proposal for the CESL regulation.

In light of the important upcoming vote in the European Parliament, an ICC delegation met with individual MEPs in Brussels in June and circulated a letter to members of the Parliament’s Internal Market and Consumer Protection Committee setting out four reasons why B2B transactions should be removed from the scope of CESL.

They are:

1. CESL will not add value to businesses.

Contrary to the assertions of the European Commission, ICC has found no evidence that companies, including small- and medium-sized enterprises (SMEs), are being hindered significantly in cross-border EU business activities as a result of the different legal systems among EU member states, provided that national legal systems have a foundation in the principle of freedom of contract. Given that, ICC does not believe that an additional optional contract law system would facilitate the conduct of intra-EU trade for businesses.

2. CESL risks increasing legal uncertainty and transactions costs.

The addition of a new, optional sales law instrument risks considerably increasing legal uncertainty for companies, rather than reducing it. Contract law requires a great degree of legal interpretation and companies, particularly SMEs, would likely face significantly increased costs while seeking guidance on the legal implications of an additional optional instrument and its coexistence with the existing European legal systems.

3. Freedom of contract for companies should be preserved.

ICC has long promoted the principle of freedom of contract for B2B transactions. It is a determining principle of contract law in all European legal systems that enables businesses to conduct cross-border commercial transactions based on self-negotiated contracts or standard contracts and general terms and conditions of businesses relatively easily. Unlike consumers, companies should not need to be protected from one another and thus the application of CESL to B2B contracts is not warranted.

4. The UN Convention on the International Sale of Goods (CISG) already exists.

The need for CESL for B2B cross-border sale contracts is further diminished by the existence of the CISG, which is a useful ‘optional instrument’ that already provides considerable freedom of contract. In ICC’s view, adding another such instrument would cause more confusion for those contemplating cross-border transactions and thus create new requirements for advice. Ratification of the CISG by the few EU members who have not done so would better benefit B2B trade than a new optional sales instrument.
Proposed limitations of the scope of CESL to ‘online’ or ‘digital’ contracts will not ameliorate ICC concerns, as most companies conduct business that would fall within such a restricted scope. A preferable solution would be to exclude B2B transactions entirely from the scope of CESL.
Read the policy statement entitled ICC position on the EC proposal for a common European Sales Law