It seems that some of the English lawyers who are opposed to the idea that the Common European Sales Law (CESL) should apply in business-to-business (B2B) contracts are thinking that their case would be strengthened if the United Kingdom were quickly to ratify the United Nations Convention on Contracts for the International Sale of Goods (CISG). This is worth considering.
It would be a good idea for the UK to ratify the CISG in any event. As of 24 February 2012 78 States were parties to it, including practically all the UK’s major trading partners. Within the EU only the UK, Ireland, Portugal and Malta are not parties. Croatia is already a party: so its accession to the EU will simply increase the number of CISG States within the union. It is distinctly odd for a major trading country like the UK not to be a party to the CISG and it is difficult to think of any rational reason for this situation. It has been suggested that the main reason is a lack of Parliamentary time and a lack of any strong evidence that businesses regarded ratification as a priority. See Sally Moss, “Why the United Kingdom has not ratified the CISG” 25 Journal of Law and Commerce (2005-06) 483-485. We might legitimately suspect also a lack of ministerial vision and drive.
Would ratification of the CISG really strengthen the argument that the CESL should not apply to B2B contracts? Yes, it would. There is not nearly such a strong case for the CESL in relation to B2B contracts. The argument that the CESL would enable businesses to escape the mandatory application of local consumer protection laws under article 6(2) of the Rome I Regulation, and therefore contract under one set of laws instead of many, simply does not apply in B2B cases. Many commentators have pointed out that most of Europe already has a uniform opt-out sales law, which also happens to be a global law, in the form of the CISG. One of the arguments for nonetheless applying the CESL to B2B contracts is that not all EU countries are parties to the CISG. If ratification by the UK were to be followed by ratification by Ireland, Portugal and Malta then this argument would disappear.
There are, however, other arguments for making the CESL available in B2B contracts. For example, the CESL would have an institutional framework behind it for interpretation and amendment. It would be regularly reviewed. It could be more readily adapted to evolving business and customer needs. Its coverage would be wider than that of the CISG. Its terminology would fit better into the wider European legal framework.
At a practical level, it would be inconvenient for those offering goods on a website to have to offer two sets of laws – one if the customer was a consumer and another if the customer was a small business. And it could be difficult or impossible to tell which was which. Indeed the same individual could order from the same supplier’s website, in one and the same transaction, some goods as a consumer and some as a trader. There could be one “basket” of goods, one total price, one delivery charge and one delivery date. It would make no sense at all to try to split up such a transaction or to place any impediments in its way. The objective is to help businesses, not to hinder them.
Also, it is not clear why the CESL should not be made available in B2B contracts. What is the objection? One argument apparently is that it would be confusing if this extra choice were available but, given that businesses can already choose the law of any country in the world, it is difficult to see that one extra option would be so bad. There would not be a strong case for creating an alternative to the CISG if the CESL applied only to B2B contracts but, as the work is being done anyway for business-to-consumer (B2C) cases, and as the functional distinction between B2B and B2C cases is not always clear or satisfactory, and as the instrument would be optional, it seems reasonable to give it the maximum application consistent with the principle of proportionality. On proportionality, article 5(4) of the TEU provides that "the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties". There could be an argument that extending the content of the CESL to B2B contracts goes beyond what is necessary but it could also be argued that "content and form" should be read in a general way and that here the content (basically sale of goods law, vital for the functioning of the internal market) and form (an optional instrument, which leaves national laws in place) are well within the principle of proportionality.
The truth is that there is not an overwhelming case for applying the CESL to B2B cases and not an overwhelming case for not applying it. This could be a situation with potential for diplomacy, negotiation and a bit of creativity. Perhaps, for example, the CESL could apply primarily to B2C contracts but also to all other contracts concluded via a website (or other means of distance communication) which offered goods to any customer whether or not a consumer. It would not be so problematic to disapply it in the case of other B2B contracts of a bespoke nature.
If practical problems could be solved in some such way, an outcome in which the whole of the EU had the CISG on an opt-out basis for B2B contracts and the CESL on an opt-in basis for B2C contracts (and a few other contracts added in for compelling pragmatic reasons) could be seen as efficient and appealing. A government which wanted to do everything it could to remove barriers to trade and to make its country seem trade-friendly could, deservedly, get a lot of credit for strongly supporting such a solution.
My personal preference, however, would be to have both the CISG and the fully applicable CESL. I can see no good reason for depriving people of a potentially useful option.
