Opinion of the Economic and Social Committee on the "Report from the Commission on the implementation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts"

(2001/C 116/25)

On 27 April 2000 the Commission decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the "Report from the Commission on the implementation of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts".

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 8 November 2000. The rapporteur was Mr Ataíde Ferreira.

At its 377th plenary session (meeting of 30 November 2000), the Economic and Social Committee adopted the following opinion by 85 votes to 38 with 11 abstentions.

1. Introduction

1.1. The traditional principles of contractual autonomy, equality of the parties and freedom to bargain, as summed up by the Latin tag "pacta sunt servanda", are common to all European civil law systems, whether or not they derive from the Napoleonic code. They were designed to regulate contractual relations justly and equitably, particularly those with private individuals. The insufficiency of these principles came to light in the industrial era with the emergence of standard or predetermined contracts(1). Such contracts are distinguished (a) by the fact that one of the parties occupies a superior economic position to the other which enables it to dictate the terms of the agreement, (b) by the unilateral nature of the terms, which are drawn up specifically in the interests of the stronger party, and (c) by the fact that the wording of the contract cannot be changed, so that the only choice open to the weaker party is to take it or leave it(2). This type of contract raises various problems, notably as regards contractual autonomy and content, as the content takes the form of general terms which are not negotiated.

1.2. Various European countries have framed specific provisions, either as separate pieces of legislation or as parts of their civil codes, to end the unfairness caused by the use of certain types of contractual clauses which created an imbalance between the contracting parties. These provisions are aimed more especially at the "general terms and conditions" of predetermined contracts. Examples include the Danish law on trading practices (1974), the German "AGB-Gesetz" (December 1976), the UK "Unfair Contract Terms Act" (1977), the Irish "Sale of Goods and Supply of Services Act" (1980), the Luxembourg law of 1983 identifying 20 types of unfair terms; and the 1985 Portuguese law on general contract terms.

1.3. At European level, the Council of Europe drew up a recommendation on unfair terms in contracts as long ago as 16 November 1976(3). At EU level, the matter was first raised in the first consumer policy programme(4); in the second programme (1981) the Council explicitly asked the Commission to draw up a discussion paper on the subject(5). The Commission responded with a communication to the Council on 14 February 1984(6).

1.4. The Commission issued its formal proposal on 27 July 1990. This subsequently became Directive 93/13/EC of 5 April 1993(7).

1.5. The preamble and Article 1 of Directive 93/13/EC clearly state that its purpose is "to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer", it being necessary to "remove unfair terms" from such contracts, according to "assessment criteria" or "uniform rules", "in order to facilitate the establishment of the internal market and to safeguard the citizen in his role as consumer when acquiring goods and services under contracts which are governed by the laws of Member States other than his own".

1.6. The Directive expressly excludes:

- contracts concluded between sellers or suppliers;

- contracts concluded between consumers;

- employment contracts;

- contracts relating to succession rights and rights under family law;

- contracts relating to the incorporation and organisation of companies.

1.7. The minimalist approach enshrined in Article 8 of the Directive gave Member States the option of excluding the following from their transposition provisions:

- terms which had been negotiated individually;

- terms which reflect mandatory statutory or regulatory provisions and the principles or provisions of international conventions;

- terms relating to the definition of the main subject matter of the contract or the adequacy of the price or remuneration in relation to the goods or services supplied, provided the terms are in plain intelligible language.

1.8. The Directive also contains an indicative and non-exhaustive list of "the terms which may be regarded as unfair" if they meet the conditions described in Article 3(1), i.e. if "contrary to the requirement of good faith, [a term] causes a significant imbalance in the parties' rights and obligations" ("grey list").

1.9. Lastly, the Directive states that Member States are to ensure that "adequate and effective means exist to prevent the continued use of unfair terms", including provisions whereby "persons or organisations, having a legitimate interest under national law in protecting consumers" may take action "before the courts or before competent administrative authorities for a decision as to whether contractual terms drawn up for general use are unfair, so that they can apply appropriate and effective means to prevent the continued use of such terms".

1.10. Member States were to transpose the Directive by 31 December 1994.

1.11. Some five years later, on 1 to 3 July 1999, the Commission launched a public debate to assess the situation and future prospects regarding the Directive. The conference, held in Brussels, brought together 300 specialists in contract law and consumer law, representatives of the Member States and of interested consumer and trade organisations, and officials of the Community institutions(8).

1.12. Article 9 of the Directive requires the Commission to present a report to the European Parliament and the Council by 31 December 1999 "concerning the application of the Directive". This report was published on 27 April 2000, and forms the subject of the present opinion.

1.13. The Commission's report has two objectives: (a) to make a critical analysis not only of the arrangements set up to harmonise legal provisions on the definition, prevention and penalising of the use of unfair terms in consumer contracts, but also of the way in which they are transposed, implemented and applied in the Member States; (b) to launch a public debate and call for contributions to the revision and possible reformulation of the existing arrangements.

2. Assessment of the Commission report

2.1. The report is of a high technical standard and is well documented. Its publication is timely, even though - as the report itself acknowledges - certain Member States which transposed the Directive only very recently have little experience of the arrangements.

2.2. The Committee also notes the report's effort to summarise the various points made during debates at the abovementioned conference of 1 to 3 July 1999, and especially the listing of key issues as they emerged from those debates.

2.3. The Committee appreciates the work the Commission has carried out over the years, not only with the sectoral analysis of the decisions of relevant national bodies which have judged certain types of terms in contracts to be unfair (their work too is acknowledged) but also through the setting- up of the CLAB(9) database, which is proving useful for mapping the situation at Community level. When the Committee gave its views on the draft directive in 1991(10), it thought it essential to develop a notification system to monitor the application of the arrangements to be set up; it is therefore especially pleased to see its proposal vindicated.

2.4. The Committee broadly supports both the Commission's critical approach to the arrangements set up under the Directive (even if it does not endorse all the strands mentioned) and the careful and judicious way in which questions are posed throughout the report.

2.5. It is clear that at EU level, notwithstanding the late transposition of the Directive by some Member States:

a) the transposition provisions have not led to real harmonisation of the different national legislations;

b) Member States have made differing interpretations of the nature and scope of the Directive's precepts;

c) the transposition provisions are not applied equally effectively in all Member States.

2.6. Consumer protection thus continues to vary significantly depending on the law governing consumer contracts. The differences are heightened by the minimalist approach of the Directive which enables some Member States to set up stricter (but unharmonised) consumer protection regimes. Such a situation is hardly conducive to completion of the single market.

2.7. The Committee should focus not so much on the information about existing arrangements and their application, but rather on considering proposals to amend and reformulate the system. At the same time, it should take into account, among other issues, the various questions raised by the Commission(11) and reaffirm (or, if necessary, abandon) its previous positions on the issue(12).

2.8. In keeping with its past views on these matters, the Committee cannot accept that the review of the Directive be used as an excuse to weaken the protection which it has afforded EU consumers, as such a step is prohibited by the Treaty (Article 2 and Article 153(1)).

2.9. In this context, the present opinion analyses the following key issues:

a) field of application of the Directive;

b) definition of the general underlying principles;

c) typology and nature of the list of terms considered unfair;

d) nature of the offence and its legal consequences;

e) arrangements for penalising the use of unfair terms;

f) role of dialogue between professionals and consumers;

g) importance and future of CLAB.

3. The field of application of the Directive

3.1. The first issue that must be raised concerns the scope of the arrangements in question.

While it is understandable from a historical point of view that protection against the use of unfair contract terms was originally intended exclusively for consumers in their dealings with professionals, Article 65 of the Treaty of Amsterdam(13) today provides a legal basis for considering the issue in its wider context.

3.2. In some types of contract there is a contractual imbalance and material inequality between the concluding parties, as their content is proposed by one of the parties and the other party can merely accept or reject its wording. This situation is found not only in relations between professionals and consumers, but in all those relations where contracts of this type are used and where one of the parties does not have the option of changing its content, as an equal. It particularly affects industrial and commercial SMEs, and other professionals and associations.Moreover, some Member States have already adopted legislation on unfair contract terms which is much broader than that envisaged in the Directive, covering relations between private parties which do not constitute consumer relations, as well as relations between professionals.

3.3. It does not, therefore, seem justified that existing arrangements for preventing and punishing the use of unfair terms should be limited to consumer relations. They should be extended to all types of contractual relations with such characteristics, as the Committee already pointed out in its aforementioned 1991 opinion(14).

3.4. If the Commission intends not to significantly extend the scope of the Directive in this light, it should, as a first step, at least provide for mandatory "reflex-application" in those cases where a clause which is abusive in a "consumer-business" contractual relation is also part of a "business to business" contractual relation at an earlier stage in the distribution chain.

3.5. This does not mean, however, given the special nature of consumer relations, that contracts in which one of the parties is a consumer should not be treated differently, as both the type of terms considered unfair and the degree of protection may be different. A distinction may be made, for example, between absolute prohibitions and relative prohibitions or arrangements for identifying unfairness (unofficial recognition by the relevant authority or reversal of the burden of proof).

3.6. Furthermore, the Commission rightly considers some of the exclusions(15) found in the current arrangements to be unjustified.

3.6.1. This applies in particular to exclusions concerning contractual terms which have been individually negotiated by the consumer, "mandatory" provisions and contractual stipulations relating to the price and subject matter of the contract. Most Member States, however, have not transposed these exclusions, to the clear benefit of ensuing consumer protection arrangements.

3.6.2. The fact that most Member States do not apply the exclusions aggravates the legislative divergences at Community level (unharmonised national legislation). This impedes the smooth operation of the single market, notably as regards competition(16).

4. Definition of general principles

4.1. Where the system's general principles are concerned, one must first consider the importance that should be accorded to certain fundamental concepts of contractual negotiations.

4.1.1. This is the case with the principle of transparency, the notion and function of which are not entirely clear in the current wording, especially in terms of its consequences for the course of the contract.

4.1.2. Clarity would be improved if the Directive stated unequivocally that:

a) terms which are not individually negotiated can only be considered as being accepted by the consumer if the latter has had the opportunity to study them and understand their implications before concluding the contract; and

b) contractual terms must be drafted plainly, clearly and unambiguously, so that they are understandable to the average consumer applying the normal diligence of a "bonus pater familias"; if terms do not meet these requirements, they must be considered null and void(17).

4.1.3. In the interests of transparency, the legislation should specify the obligations incumbent on contracting parties who fail to meet the obligation to provide pre-contractual information in cases where non-negotiable general contractual terms are proposed. This is particularly important in the case of distance selling, for example with the use of new technologies. The Committee drew the Council's and Commission's attention to this, without success, in 1991(18)(19).

4.2. More importantly, however, the principle of good faith and how it relates to the notion of contractual imbalance also need to be clarified at Community level if its transposition is not to lead to different, if not divergent, national provisions, as occurs today.

4.2.1. At the July 1999 conference, there was much discussion about the various possible meanings of the expression "contrary to the requirement of good faith" in Article 3(1) of the Directive. The translations of this expression in the various language versions differ, and in some cases are diametrically opposed(20).

4.2.2. It is also not clear what constitutes the "significant imbalance" that is mentioned as a further requirement, above and beyond the requisite "good faith".

4.2.3. Lastly, the whole concept of "good faith" is ambiguous as it varies according to the legal traditions of the Member States. This raises the fundamental question of whether it is appropriate to continue to use this concept as a supplementary criterion for determining whether a term is unfair. Although theoretical, this question has obvious practical implications when applying the relevant legislation.

4.3. The Commission report does not adopt a specific stance on this. Despite the inherent technical and legal difficulties, the Committee urges the Commission to reach a position on the matter so as to clarify the meaning and content of these basic concepts, so that the Directive can be transposed into national law unambiguously and in a properly harmonised manner.

4.4. The Committee also asks the Commission and the Member States to jointly explore the possibility of adopting a new approach to this whole area, drawing on US experience with the drafting of framework or standard laws. The aim should be to make more substantive progress towards real convergence of national legislation, at least as regards sectoral aspects (e.g. insurance, banking, transport, general interest services) and thus to help overcome the difficulties caused by the existence, within the EU, of legal systems based on differing concepts.

5. Typology and nature of the lists of unfair terms

5.1. The types of general contractual terms that are prohibited and the drafting of the respective list also need to be revised, by classifying terms as either absolutely prohibited (black list) or "relatively" prohibited (grey list).

5.1.1. Rather than increasing the number of examples of unfair terms, the Committee considers that the list should be tightened up and simplified.

5.1.2. The Committee thinks that the black list should be restricted to cases in which the unfair nature is unanimously recognised in the legislation of all Member States as violating generally accepted principles, in any type of contract.

5.2. Irrespective of their indicative or binding nature, the black and grey lists should be transcribed in full in the legal acts transposing the Directive.

5.3. The binding nature of the black list and the purely indicative nature of the grey list should be clearly specified in the legislative text. The current situation is unsatisfactory, as the Committee has already pointed out(21).

5.4. The content of the lists should also be revised in the light of experience. Lists of terms could also be drawn up according to the main types of contract concerned (e.g. banking services, insurance(22), time-shares, package holidays, etc.)(23).

6. Nature of the offence and its consequences

6.1. As the Commission acknowledges in its report, current arrangements fail, in particular, to give a proper legal definition of the offence of using unfair terms and its consequences.

By merely stating that unfair terms "shall not be binding on the consumer", Article 6 of the Directive allowed Member States to establish different penalties for the use of unfair terms, according to their particular legal traditions (e.g. non-existence, nullity, revocability, voidability, non-recognisability or unenforceability of the terms concerned).

6.2. Just as the civil penalty systems vary, so do their consequences, notably as regards binding the parties, the time when the effects are produced, and the possibility of automatic recognition by the courts(24).

6.3. The Committee therefore recommends that the revised Directive include a clear definition of the type of civil penalties that may be imposed for using unfair terms, their effect on contracts that include them (total or partial invalidity, unenforceability, reduction, etc.), and the possibility of automatic recognition by the courts.

6.4. The Committee does not think that the Commission's suggestion of reinforcing civil penalties is justified under present circumstances. However, it considers that, insofar as the use of an unfair term is in itself damaging to the interests of the other party, the burden of proof for demonstrating the causal link and existence of damage should be reversed, although it should be up to the wronged party to prove the actual degree of damage.

6.5. Lastly, the establishment of additional penalties in the form of a "mandatory financial penalty" only appears justified if the person proposing the terms, after receiving an injunction, wilfully continues to use or recommend terms which have been definitively banned by a court ruling(25).

7. Arrangements for preventing or stopping the use of unfair terms

7.1. Limitations of the legal system and possible ways of improving it

7.1.1. In most Member States, the only way of preventing the use of unfair terms is through the courts. At the July 1999 conference, specialists all agreed that the legal controls implemented in the various countries are unsatisfactory and ineffective for stamping out the use of unfair terms in contracts.

7.1.2. The main problems were felt to be:

a) the slowness of legal proceedings, even when a special accelerated procedure is used;

b) the general rules governing the scope and effect of each case, which in theory are limited to the contract or term involved and the seller or supplier who has used it;

c) the possibility that, in the course of the injunction procedure, the proposers of the contract could alter the content, frustrating the action by claiming that a decision was no longer needed and opening the way to new legal cases for as long as the proposers could think up new wordings or even just alter the numbering of the general terms of the contract.

7.1.3. The Committee therefore thinks that encouragement should be given to the Commission's efforts to:

a) prevail on the Member States to ensure swifter and more effective legal mechanisms for outlawing unfair terms in contracts;

b) explore the possibility of defining - in line with the new civil law guidelines being developed in the Member States - the conditions in which a legal decision regarding a type of term that has been ruled unfair by the courts can be made binding on all identical contracts proposed by the same party and, with the necessary procedural guarantees, by other sellers or suppliers in the same sector, or even by any party to a contract in general;

c) at the discretion of the judge and having considered the advantages gained from the infraction, oblige sellers or suppliers who have been condemned by the courts for using unfair terms to publicise the terms ruled unfair in the media, insofar as such a step may help in due course to prevent the use of unfair terms and provide information for interested parties;

d) make provision for appropriate financial support mechanism for the abovementioned measures.

7.2. Administrative checks

7.2.1. Without prejudice to the points made above, the Committee thinks that action is needed at Community level to establish administrative arrangements empowering an independent, competent body to rule on the unfairness of certain terms and prohibit their use, in general, whilst still allowing the parties concerned to contest the administrative decision in the courts.

7.2.2. Experience in Member States which have this type of system, such as the UK (Office of Fair Trading), France and Belgium (Unfair Terms Commissions), or the Consumers' Ombudsman in the Nordic countries, fully justifies the Commission vigorously pursuing the path described in 7.2.1 above.

7.2.3. Conversely, and consistent with the position taken in its 1991 opinion(26), the Committee opposes the establishment of a Community ombudsman for this field because it does not think that a body which is removed from the daily life of consumers and economic operators in their respective countries or regions can promptly and effectively settle the type of disputes caused by the use of unfair terms.

7.3. Administrative authorities who rule on the unfairness of contractual terms should be able to advise on how the offending terms could be reworded in a fair way(27).

8. The role of dialogue between professionals and consumers

8.1. It is clear that preventing the use of unfair terms must take priority over applying sanctions after they have been used. Furthermore, with the single market, contracts are increasingly being concluded across borders and standard general terms and conditions appear in different contracts and in different Member States. It would, therefore, seem appropriate to consider setting up a system for extra-judicial cooperation based on dialogue at Community level between representatives of consumers and professionals, and among representatives of the latter, in order to draw up joint agreements(28).

8.1.1. However, care will be needed to ensure that these agreements cannot be considered as concerted practices which infringe competition rules. At all events, a systematic and targeted interpretation of the relevant Treaty provisions is unlikely to lead to condemnation of such agreements on those grounds.

8.1.2. A key issue here will be the encouragement of voluntary mechanisms for drawing up codes of conduct including standard contracts which have been vetted for unfair terms, particularly in certain more problematic sectors such as general interest services and financial services, especially when they are negotiated at a distance, e.g. via the Internet.

8.2. Extra-judicial systems could also be set up for mediation and arbitration, and for resolving disputes concerning the use of general terms and conditions, particularly in cross-border contracts and those negotiated via e-commerce. Voluntary mechanisms can more easily be started or achieved when they are associated with extra-judicial systems for mediation and arbitration.

8.2.1. The Committee believes, as a rule, that it is inappropriate for contracts to be subject to prior control by administrative regulatory authorities, unless essential general interest services are at stake, as this would be extremely bureaucratic and would in no way guarantee that these contracts did not contain unfair terms.

8.2.2. However, assuming that the bodies mentioned in 7.2.1 are set up, the Committee acknowledges that they should be empowered to approve the general terms and conditions submitted to them voluntarily by the persons proposing the terms(29).

9. The CLAB database

9.1. The Committee once again stresses the importance of the CLAB database initiative and the efforts of the Commission to keep it up-to-date. It is not only the scientific community that benefits from this database, but also the European institutions and the judges, lawyers and other administrative authorities who are responsible for interpreting and implementing the domestic law deriving from the transposed Directive. The database thus makes a key contribution to comparative law studies, opening the way to the framing of standard legislation (see point 4.4).

9.2. However, the Committee believes that rather than merely collecting and posting more data on the CLAB database, the Commission should make better use of the data that have already been entered, i.e. by making them available in all the Community languages(30) and drawing up and distributing global, sectoral or thematic research into the guidelines offered by European jurisprudence on this subject(31).

9.3. It would be helpful if, at appropriate intervals, the Commission could draw up a report on the operation of the CLAB and submit it to the Council, the European Parliament and the ESC.

10. Conclusions

10.1. Rather than merely "approximating" legislation, the main objective of any future revision of Directive 93/13/EC - which is hopefully not far away - must be to truly harmonise and standardise legislation in the Member States in this area, especially in fundamental areas such as the very concept of "unfair term" or the drawing up of a "black list" of terms.

10.2. An essential aspect of such a revision will be to redefine the Directive's field of application so that it also includes contracts between professionals which have considerable contractual imbalances and inequalities, particularly when standard or predetermined contracts are used.

10.3. Current exclusions should also be removed so that the Directive can also apply to contractual terms negotiated individually, general terms and conditions arising from "mandatory" provisions and contractual stipulations relating to the price or the subject matter of the contract, providing that these terms meet the requirements to be classified as unfair.

10.4. All necessary steps must be taken to ensure transparency in contractual relations. This means declaring all ambiguous, unclear, incomprehensible or illegible contractual terms to be null and void. Particular attention should be paid to the compatibility of this regime with existing directives that already make it obligatory to provide information (e.g. distance selling, e-commerce, etc.)

10.5. The whole concept of "unfairness" needs to be redefined objectively in terms of "contractual imbalance". The effect - if any - of the notion of "bad faith" on the concept of an unfair term also needs to be clarified.

10.6. As for the list of terms considered unfair:

10.6.1. a "black list" of terms that will always be considered unfair, irrespective of the specific circumstances surrounding the contract or contracting parties, should be drawn up;

10.6.2. a revised indicative "grey list" should be kept, to be used by the authorities who are responsible for ruling on the unfairness of listed terms, according to the circumstances of the contract in which they are found;

10.6.3. separate indicative lists should be drawn up for contracts between professionals and contracts with consumers, and according to specific sectors of activity or essential services;

10.6.4. these lists should be transposed in full into the relevant pieces of national legislation.

10.7. The nature of the offence committed by using unfair terms and the legal measures set up to deal with it should be clarified, as should the possibility of automatic recognition by the courts.

10.8. When a particular unfair term has been the subject of an injunction, it may be appropriate to consider extending the decision to other identical cases, without prejudice to the appropriate procedural guarantees.

10.9. Member States must be prevailed upon to ensure effective and efficient legal mechanisms for prohibiting the use of unfair terms.

10.10. At the discretion of the judge, sellers and suppliers who have been condemned for using unfair terms must be obliged to publish the relevant legal decisions in the media, wherever such a step is likely to help prevent the terms being used again.

10.11. Member States should be encouraged to set up mechanisms allowing independent authorities to carry out administrative checks on general terms and conditions. These authorities should be empowered to rule on the unfairness of these terms, prohibit their use and recommend the correct wording, while still allowing the parties concerned to contest the administrative decision in the courts.

10.12. Arrangements for extra-judicial cooperation should be set up at national and EU level in order to i) encourage dialogue between representatives of the interested parties, ii) eliminate unfair or less fair clauses in general terms and conditions and iii) facilitate the establishment of standard contracts or codes of conduct. This is particularly important in the case of general interest services and financial services, and in contracts that have been negotiated at a distance, e.g. via the Internet.

10.13. Member States could adopt uniform standards of reference or "framework laws" for defining standard sectoral contracts, either on their own initiative or with appropriate Commission involvement. This possibility needs to be assessed.

10.14. Finally, encouragement should be given to maintain the CLAB database and ensure it is continually updated, while exploring its true potential and improving access to it, notably by increasing the number of languages in which data are available.

Brussels, 30 November 2000.

The President

of the Economic and Social Committee

Göke Frerichs

(1) The French jurist Saleilles coined the term "contrats d'adhésion" in 1901 for proposed contracts in which the content was predetermined and non-negotiable. The term is now firmly established in the Latin countries, while countries with common law systems use the term "standard form contract".

(2) This is the definition of Carbonnier, in "Droit Civil", 6th ed, T4, 1969, p. 53.

(3) Council of Europe Resolution 76(47) of 16.11.1976.

(4) Approved by Council Resolution of 14.4.1975.

(5) Point 30: "The Commission will submit, as a first step, a discussion paper in which it will set out all the problems which this subject involves and the various options open with a view to harmonising those aspects of competition which may be affected by disparities in this area." (Bulletin of the EC 5/81).

(6) COM (84) 55 final - Bulletin of the EC - Supplement 1/ 84.

(7) OJ L 95, 21.4.1993.

(8) The conference proceedings can be consulted on a 356-page Internet site http://eu.int/comm/dgs/health consumer/events/event 29 01.pdf). The conclusions, summarised by the Head of Unit of DG XXIV, can be found on pp. 232 ff.

(9) Database on unfair terms.

(10) OJ C 159, 17.6.1991, pp. 34 ff., point 2.1.4.

(11) A closer scrutiny shows that the 22 questions on which the Commission report encourages debate and invites opinions and suggestions are in fact 33. As already noted, the Committee should not answer each question but adopt a stance on the most important ones.

(12) Cf. in particular the Own-Initiative Opinion of 1998 on Consumers in the insurance market, OJ C 95, 30.3.1998.

(13) Measures in the field of judicial cooperation in civil matters having cross-border implications, to be taken in accordance with Article 67 and insofar as necessary for the proper functioning of the internal market, shall include:

(a) improving and simplifying:

- the system for cross-border service of judicial land extra-judicial documents;

- cooperation in the taking of evidence;

- the recognition and enforcement of decisions in civil and commercial cases, including decision in extra-judicial cases;

(b) promoting the compatibility of the rules applicable in the Member States concerning the conflict of laws and of jurisdiction;

(c) eliminating obstacles to the good functioning of civil proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States.

(14) OJ C 159, 17.6.1991, point 2.3.3.

(15) Listed in point 1.7 above.

(16) The answer to the questions posed under Question 1 of the Commission report is thus "yes" and the position is also clear on the case for extending the Directive's field of application to all contracts, irrespective of whether one of the parties is a consumer. This is in line with various suggestions made at the July 1999 conference.

(17) As the ESC stated in point 2.5.3 of the abovementioned opinion.

(18) ibid. point 2.5.

(19) The Committee has thus answered Questions 3, 4 and 5 of the Commission report (p. 18-19 of the English version).

(20) A Portuguese lawyer at the conference commented: "What, in the final analysis, does 'contrary to the requirement of good faith' mean? ... Is good faith to be understood subjectively or objectively? And if it is objective, can the term be unfair (because it creates 'a significant imbalance ... to the detriment of the consumer') and still be in good faith?" (Prof. Pinto Monteiro).

(21) 1991 opinion, point 2.8.

(22) Aforementioned ESC opinion of 1998, referred to many times in the report in question.

(23) The Committee has thus replied to the points raised in Question 2 of the Commission report (p. 17).

(24) Cf. the important Court of Justice judgment of 27 July 2000 (cases C240/98 and 244/98).

(25) The Committee has thus answered Questions 6, 7 and 8 (p. 20 of the report) and Questions 13 and 14 (p. 24).

(26) Op. cit., point 2.1.7.

(27) The Committee has thus answered Questions 9, 10, 11 and 12 (p. 23), 16 (p. 25) and 17 (p. 27) of the Commission report.

(28) Cf. point 2.5.4 of 1991 opinion.

(29) The Committee has thus answered Question 15 (p. 25) and Questions 18, 19 and 20 (p. 28) of the Commission Report.

(30) Cf. the Commission Proposal for a Council Decision adopting a Multiannual Community programme to stimulate the development and use of European digital content on global networks and to promote linguistic diversity in the Information Society.

(31) This answer to the Commission's Questions 21 and 22 is considered the most appropriate institutionally.

APPENDIX

to the Opinion of the Economic and Social Committee

The following amendments, which received at least one quarter of the votes cast, were defeated during the debate:

Points 3.1 to 3.5

Replace with the following:

"The 1993 directive addresses unfair terms in consumer contracts. The question arises as to whether the directive's scope should be extended to cover unfair terms in contracts governing relations between professionals.

There are several reasons why such an extension would be undesirable.

Contractual freedom must be allowed between professionals. Otherwise, the system of ordinary contract law could be totally undermined. Moreover, it would be totally misguided to extend to professionals a text that was designed exclusively from a consumer protection point of view."

Reason

Relations between professionals are totally different from those between professionals and consumers: the parties are on an equal footing and ordinary contract law should apply.

The fact that one or other of the Member States may depart from this rule does not justify an extension to the entire European Community.

Even if regulatory measures were envisaged, they would have no place whatsoever in the directive in question; all the more so if the plan was to include individually negotiated terms.

Result of the vote

For: 48, against: 51, abstentions: 4.

Points 3.6 to 3.6.2

Replace with the following:

"A further question on the agenda in this context is that of whether individually negotiated contract terms should be excluded.

Here, it should be noted that the directive applies to contracts covering all products and services, including those that are not mass produced.

In the case of the latter, in view of the way in which the market in question is organised, the consumer can negotiate the terms himself, or even have the seller accept his own terms. Such terms must be excluded from the scope of the directive. Broadening application to all terms with no distinction could lead to a paradoxical situation where the consumer, noticing that the contract that he himself proposed is open to differing interpretations, could choose to apply the one most favourable to himself, although it was he who had drafted the term."

Result of the vote

For: 63, against: 66, abstentions: 2.

Points 4.2 to 4.3

Delete.

Reason

Good faith is a well-known, fundamental principle of ordinary contract law in the Member States, and of common law. This concept does not require special treatment in the directive. Point 4.3 refers to inherent technical and legal difficulties that explain why the Commission is not taking a stance on the matter either.

Result of the vote

For: 52, against: 70, abstentions: 7.

Point 4.4

Delete.

Reason

US experience with the drafting of framework or standard laws cannot be transposed directly to the European Union. In contrast to the European Union, the United States share uniform legal concepts.

Furthermore, a sectoral approach could generate more confusion than clarity for the consumer in certain sectors.

Result of the vote

For: 46, against: 73, abstentions: 6.

Point 6.4

Delete the second sentence.

Reason

There is no need to reverse the burden of proof to demonstrate a causal link and the existence of damage in favour of the consumer. Such a move would go beyond the liability system established by the product liability directive, which states that it is up to the victim to provide proof of a fault in a product, of damage and of a causal link between the two.

Furthermore, this type of provision has no place in a directive that is not concerned with damage compensation.

Result of the vote

For: 48, against: 67, abstentions: 8.

Points 7.1.2. b and 7.1.3.b

Delete.

Reason

The principle that a judgment is binding on the parties to the proceedings and not on others is an essential legal principle in most Member States and must be upheld.

Furthermore, the Commission cannot be asked to look into this issue as it has no power to intervene in civil procedure (see paragraphs 2 and 3 of Article 3b of the EC Treaty).

Result of the vote

For: 51, against: 74, abstentions: 6.