Introducing European transnational private law – A conversation starter

The last 20–25 years have seen a steadily increasing interest in European private law, whether as attempts to codify European civil law or identify common core and common principles, to understand regulatory intervention through private law, or to conceptualize fragmentation and plurality in European private law. Yet the effect of such European private law beyond the EU, a ‘Brussels Effect’ ¹ of EU private law, was only marginally touched upon in these debates. This changed with the recent global geopolitical shifts and, relatedly, internal transformations in the relation between the institutions in the EU. ² The Brussels Effect is in the limelight and makes it ever more complicated for the EU to exert its regulatory power. This is evident in the EU’s controversial efforts to create a legal framework for the digital economy and society, ³ but also for the conversion of industrial production to sustainability. ⁴ In this context, we can identify a strong reliance on private law to expand the global reach of EU regulation. Think of the recent debates on global regulation of the EU through the AI Act, through legislative tools found in product regulation (such as certification and standards) ⁵ and closely related debates on a ‘Brussels effect’ through core private law concepts, such as (AI) liability, ⁶ the metaregulation of non-EU labelling schemes as part of the proposed Green Claims Directive, ⁷ as well as the heated debate about civil liability in the EU Due Diligence Directive. ⁸ European private law thus becomes a prominent and debatable vehicle for extending the regulatory power and influence of the EU beyond the frontiers of its internal market. ⁹ In fact, these debates around the EU's global regulation through private law recently intensified within and outside the EU. Within the EU, we observe efforts to compartmentalize by rolling back sustainability legislation – keyword Omnibus ¹⁰ – specifically on its private law (liability) dimensions and, simultaneously, to insist on enforcement of the digital policy legislation as an instrument to regulate companies outside the EU. And from outside, these global regulatory efforts are not only ‘received’ but become actively contested through ‘alternative’ interpretations and legislative attempts to limit their scope. ¹¹ EU private law thus becomes a core point in global political discussion and a reason for geopolitical conflicts.

This is not to say that private law had no genuine political heritage before; on the contrary, regulatory private law had a strong connection between the institutions of private law and regulatory intervention. ¹² Yet the current situation shows much more openly how such regulatory power through private law is used on the global level. To analyse this phenomenon and put it under a common research theme, we have recently suggested the concept of European transnational private law (ETPL). ¹³ The concept starts from the above-described observation that looking more closely at the field of private law allows us to trace a powerful, yet regularly invisible, ordering mechanism for global markets. It also suggests placing the focus on an instrument that regional organizations, including and specifically the EU, use to exercise power beyond its own territory. Because of its power but also its contestable implications on territories and spaces outside the EU, it is a mechanism that, as we suggest, requires further inquiry. This is what we aim to do with a proposed conceptual apparatus of ETPL. In this concept, each term – ‘European’, ‘transnational’, ‘private law’ – has its own theoretical pedigree. We use this introduction to discuss each term separately before inviting debate on the overall concept.

1. European

The emphasis on ‘European’ in ETPL has several meanings; it adds to the term ‘transnational private law’ a distinctly public dimension and it suggests that ‘transnational private law’ may have different variants depending on what regional or national regulator one may connect it to. Despite the long heritage of treating ‘transnational private law’ as a field beyond, outside or without the state, ¹⁴ our conceptual proposal of a European version of transnational private law implies that we need to connect private law to the specifics of regional power-centres. This is not only re-situating transnational private law in the public domain – a claim that has accompanied the debate on transnational private law for a long time ¹⁵ – but to recognize the distinct and separate regional heritages of such state-infiltrated transnational private laws that may be competing. This is similar to the discussion in international law about variations and comparisons of regional versions and understandings of this field of law. ¹⁶ In this regard, it is also a conscious choice to place the European first in the concept – and speak of a European transnational private law rather than a transnational European private law – a choice that Chantal Mak will discuss and see differently in her contribution. ¹⁷

The ‘European’ in ‘European transnational private law’ points to a specific conceptual understanding of private law that is taken to the global level. Beyond merely representing sites of implementation of EU rules and being viewed comparatively from the perspective of different ‘legal families’ and traditions, European private law has a heritage of its own. In fact, one may conceive of private law as we understand and research it as having a distinctly European origin. Despite current approaches with the aim of de-Europeanizing legal scholarship, private law is not free from the conceptual heritage of 19th- and 20th-century European scholarship. Furthermore, the main monuments of nation-building in private law, namely European private law codifications, have until today been central parts of legal communication with a global dimension. With increasing international trade and communication, not least with European colonialism and the considerable growth of academia, (ideas of) codes have circulated from Europe to the world, where they influenced national and regional legal systems. A wider, global perspective has demonstrated that the internationalization of law and legal scholarship led to what was called the ‘Europeanization of the world’. ¹⁸ As a consequence, studies of the reception of European law and references to expert cultures and elite networks have until today dominated legal history and private-law scholarship, for instance in Africa, Latin America and Asia. ¹⁹ Therefore, with an emphasis on European perspective on private law, we want to pay due respect to the fact that the concept of private law that we investigate in its transnational ambitions in and of itself originates in Europe but not necessarily in the EU.

Yet the European perspective also refers to the very particular law-making process of the EU that becomes exported globally. Already on the level of the EU, it is insufficient to equate private law with the perspective of a European civil code of which the Draft Common Frame of Reference ²⁰ or the Common European Sales Law ²¹ are understood as building blocks. The Draft Common Frame of Reference suffered from serious shortcomings, such as missing rules on relational contracts, ²² where the parties engage in long-term commitments in contrast to one-shot transactions; ²³ on network contracts, which play a dominant rule in the energy, telecommunications, transport and financial services sectors; ²⁴ and on contract governance, which cuts across relational and network contracts. ²⁵ The same holds true of the many open questions with regard to the so-called optional model on which the Common European Sales Law was based. ²⁶ As is well known, the two projects failed, as did academic proposals to build a European Civil Code from the bottom up rather than the top down. ²⁷

European private law – this is the lesson to be learnt – should be conceived of as a genuine legal order which remains largely distinct from the national private law orders – an order which is autonomous in its ‘own right’ and self-standing. ²⁸ This private law is understood as economic law, ²⁹ covering not only contract and tort as institutions but also public and private regulation of the economy. At the forefront is regulation of services, such as telecommunications, postal services, energy, transport and financial services. In that respect, the new path of private law on a European level consisted of a regulatory private law that is inherently linked to the European Union understood as a market state. ³⁰ With a focus on the possible global reach of such regulatory private law, we also seek to emphasize that the European version of transnational law is one where the EU is leaving its distinct regulatory private law imprint on transnational ordering. ³¹ This is also a point that Poul Kjaer takes up and even takes further. Maybe we do not only have a specific European heritage that is the basis of the regulatory model that the EU imposes on the world; we could even see the EU as representing that type of model, understanding regulation through private law as the distinct ‘Europeanization’ of the world through regulation. ³²

2. Transnational

Notwithstanding the emphasis on the European and EU dimension in ETPL, the concept contains a reference to ‘transnational’. This indicates explicitly a focus on the transnational rather than an exterritorial ambition of European private law. The move from territory and sovereignty to transnational, at its core functional, ambitions suggests that our search for the influence of the European and the EU private law needs to be found not only in the public law-making processes elsewhere in the world (what Anu Bradford has called the de jure Brussels effect) but also in impacts on private and hybrid fora of transnational market ordering. The paradigm of transnational law is increasingly capturing the imagination (or re-imagination) within law and legal thought nowadays. Driven by widespread and fast-evolving modes of normative ordering that have emerged in the context of cross-national commercial, political and cultural activities, this ascendancy is manifested in an exponential range of publications on the topic in all genres of legal scholarship. ³³ Yet transnational law is not only a scholarly or pedagogic endeavour. Even more importantly, it has started to permeate the legal consciousness of all those participating in these perceived transnational legal orders, inciting concomitant claims to legal/political authority, responsibility and contestation. ³⁴

These developments have proceeded alongside ongoing transformation of the international economic and political order from multilateralism to segmented coalitions, which go hand in hand with the internal transformation of the nation state, ³⁵ adding a new layer of complexity to the phenomenon and the scholarly debate. In addition, from the perspective of private law, processes of financialization, digitalization and the rise of global value chains have propelled a new discussion on the role and function of different areas of private law. These phenomena have started a debate on the extent to which legal categories and legal institutions, contract in particular, ³⁶ but also torts, ³⁷ fit these new forms of global economic organization. The result is not only a de-territorialization of private law in the functional use of contracts and contract law by private actors along the value chain across borders, but also fundamental changes within core legal distinctions which the notion of transnational law intends to capture. This is apparent in the vanishing of the product/process divide that governs international economic law and old, taken-for-granted principles in contract law, such as privity of contract. This all sits uneasily on the legal concept of extraterritoriality, the predominant understandings of economic organization and, indeed, with the very concept of boundaries in transnational regulatory terrains. ³⁸

This focus on transnational legal problems has innovatively challenged traditional doctrines of legal sources by illuminating the extent to which several legal situations and positions are purportedly governed by modes of rule-making or adjudication that transcend the frontiers of any single state. This insight underpins the emblematic definition of transnational law advanced by Jessup as encompassing ‘all law which regulates actions or events that transcend national frontiers’, including public and private international law as well as ‘other rules which do not wholly fit into such standard categories’. ³⁹ In this sense, the notion of transnational law has become disruptive. It undermines several pillars that had traditionally sustained modern legal imaginaries, such as assumptions of hierarchy, territoriality, universalization and what counts as ‘law’ through the inclusion of private regulation. It also breaks the taboo regarding the ultimate legal and political authority of the nation state by highlighting how several states perform as agents rather than as principals within broader modes of transnational legal orderings. ⁴⁰ In that context, it is Damian Chalmers who carefully traces the European order as such specific agent to ground and institutionalize the global market order. ⁴¹

We suggest that such genuine transnational ordering of markets through the EU may be found and require investigation in concretely the dynamic public-private circles of creating technical standards, ⁴² global private rule-making for financial markets ⁴³ and in the increasing functional regulation of the EU in relation to the governance of global value chains. ⁴⁴ The idea of linking European private law-making, in both its European private law concepts and the EU regulatory private law, to transnational law of course invites further analysis of other phenomena that still require to be studied.

3. Private law

Investigating private law at the intersection of the European, EU and the transnational not only suggests a particular connection between the European and the global but also results in a specific and multi-faceted understanding of law and private law. The inherent conceptual suggestion within ETPL is to expand our understanding and include in our discussions three major understandings of private law: formal, regulatory and societal. With this expansion, we deliberately broaden the concept of what qualifies as part of private law. ⁴⁵ And in this context, we further argue that this broadening of private law, which builds on an existing apparatus in private law debate, ⁴⁶ deepens when we consider private law at the intersection of the European and the global.

A historical investigation of ETPL may lead to a stronger focus on formal private law, as an expansion, through formal and informal channels, of a particularly European thinking of modern private law in terms of codification or the global spread of the common law. Yet, at the level of the EU, we do need to integrate as part of private law a strong regulatory dimension. ⁴⁷ This is most visible in the sectoral rules in regulated markets, such as telecommunications, postal services, energy, transport and financial services that are also embedded within global market ordering. In addition, it is also present in the increasing constitutionalization of European private law through the Court of Justice of the EU. Largely unnoticed, the CJEU has used the economic freedoms and competition to develop an autonomous understanding of the key concepts underpinning private law. Plenty of cases affect the concepts of contract, of property, unjust enrichment, tort, state liability, prescription periods and procedural rules. ⁴⁸ The second strand of constitutionalization goes back to the Charter of Fundamental Rights, which was made legally binding in the Treaty of Lisbon. The case law of the CJEU illustrates the impact of fundamental rights on economic freedoms and on secondary EU law. In labour law, social security, migration law and even in consumer law there is a certain tendency to apply the Charter in a non-economic, non-market-driven, context. Tendencies to overstep the boundaries of the internal market rationale are sometimes interpreted as a move to genuine European statehood. ⁴⁹ However, in the core of private law relations, contract and tort – ‘traditional private law’ – the instrumental market-driven use of economic freedoms and fundamental rights clearly dominates.

By far the most visible Europeanization of private law matters has happened through secondary EU law, first through directives which had to be implemented and later ever more often through directly applicable regulations. It all started with the two unanimously agreed consumer policy programmes in 1976 and 1981. In the late 1960s the Member States had begun to react to the rise of the consumer society by adopting laws on consumer credit, on consumer safety and on unfair terms. The decline of the welfare state goes along with the rise of the EU to boost the development of consumer law as a means of completing the internal market in the aftermath of adoption of the Single European Act. ⁵⁰ For nearly 25 years – until the adoption of Directive 99/44/EC on Consumer Sales in 1999 ⁵¹ – building a European consumer contract law remained largely unnoticed. It remained a domain for consumer lawyers around the globe, disconnected from traditional private law scholarship. After the adoption of the Consumer Sales Directive, the European scene changed dramatically. Academics and politicians began to realize that the Europeanization of consumer law had led to a growing body of rules which steadily and ever more intrusively affected national private law orders – much more than the Brussels and the Rome Conventions. Closely connected to consumer law are attempts by the EU to harmonize labour law and in particular non-discrimination law. Two phenomena stand out. First and foremost is anti-discrimination law, which started in employment law and social security, but which entered into the private law domain to the dismay of some sections of legal academia, but largely supported by politics. Today, non-discrimination is a common European value which cuts across all areas of law. ⁵²

The third, and more covert, path of European regulatory private law comprises: (1) network markets and network law; (2) commercial practices, intellectual property rights and contract law; (3) competition law, state aid and public procurement; and (4) health, food safety and regulation of services. These four areas of European private law create new principles, new modes of concluding contracts, new remedies, new forms of contractual standard-setting and new liability standards. The overview aims to demonstrate the vast areas of regulatory private law which are shaped by the EU and which are downgraded in analysis of European private law. It is here that the clash between the traditional concept of private law and modern market state concepts is most visible.

Besides, the inquiry into European regulatory private law, whether horizontal like consumer law or sector-related like that of regulated industries, leads us also into new forms of rule/law-making and new devices for enforcement. A common regulatory technique in European private law is co-regulation. Secondary law sets the statutory frame, which is then completed by rules which are either developed by private bodies (comitology, for example European and national standards bodies) or by European and national enforcement authorities (the Lamfalussy procedure). Whether and to what extent these rules affect private law is mainly a matter of empirical research. ⁵³

These new forms result from the ever-increasing importance of European regulation, which typically mixes national with European regulatory approaches. The key players are national and European agencies as well as the European Commission, which intervene in law-making and law enforcement, often in a grey legal zone. This refers to boundary shifts in the division of competences between the EU and the Member States, typically in formally non-binding rules that nevertheless enjoy a wide de facto reach. These new forms of governance oscillate between law-making and law enforcement and are not limited to market regulation, but spill over into the relationship between private parties. Sometimes national and European actors intervene jointly in ongoing contractual relations. The rise of these new modes of governance presupposes the existence of a dense net of national and European agencies, which reach out to all relevant parts of the market.

Technical standards have also acquired a very special significance. Here state and private actors closely co-operate, typically in a constant exchange across national and European regulatory levels. This form of co-regulation is supplemented by constantly growing due-diligence obligations. The law on financial services is the forerunner in a development where the EU imposes on companies ever more sophisticated obligations which have to be implemented through internal or external compliance mechanisms, and supervised and monitored by national and European enforcement authorities. In the Digital Services Act, ⁵⁴ the EU regulator went one step further in promoting, as one form of compliance, the elaboration of codes of conduct in which companies are encouraged to involve stakeholder organizations. Functionally, European technical standards and state-induced codes of conduct take on the role of a non-existent European contract law in business to business (B2B) relationships. ⁵⁵ They form a regulatory underground, which is accomplished through the supervisory superstructure. In that sense, B2B-relations are sandwiched between EU regulation both from above (regulatory intervention by public actors) and from below (private regulation by the industry through standards).

However, there is more: in this increasing focus in the EU on new modes of regulation, including combinations of public and private modes, we encounter a move towards recognizing rules from ‘below’, as made by private actors. In technical standardization, this may still present itself as a form of hybrid, public-private rule-making. But in the spread of codes of conduct and reliance on private due diligence procedures, we observe a shift towards private forms of law-making that may also become relevant for global market ordering. The due diligence requirements for companies to govern their value chains and technical infrastructures – think of the requirements in the Digital Services Act, the Deforestation Regulation or the EU Sustainability Due Diligence Directive – may probably be the best example. Those create, as Salminen, Rajavuori and Eller emphasize in their contribution, a private-driven extension of the internal market to discipline various actors and regulate by proxy. ⁵⁶ With this shift, we also have to adapt our concept of private law. It requires expansion to also include new forms of rule-making by private regulators. ⁵⁷ In that sense, ETPL is also a call for an understanding of private law that encompasses societal forms, ⁵⁸ including the difficult path of developing methodologies for researching such invisible society-driven private law. ⁵⁹ Researching European transnational private law requires looking at global private governance mechanisms and identifying the impact of European rule-making and it is a commitment to diving into those invisible spaces where the ‘European way’ of ‘regulating things’ is subject to contestation. ⁶⁰ In that context, it is Thomas Wilhelmsson who suggests that thorough researching of ETPL requires methodologies that do not stay at the surface but move into the legal culture of what he calls the ‘receiving’ order. ⁶¹

4. Debating the concept

Researching the European dimension and influence on transnational law understood in its private law orientation – this is the core agenda that we put forward. The ambition of the concept is high and its delineation, potential and constraints – where and how can ETPL be applied – need to be determined. Therefore, with this debate section, we put the concept to a first test and have invited responses and critique. It is clear that the concept may provoke critique precisely because of its European-centric focus, a point that Chantal Mak addresses in her contribution. ⁶² We also need to consider the consequences of our expansive understanding of private law, both in terms of reframing the public/private divide and the occupying of a specific legal academic field. This is a critical point that Kaarlo Tuori's response is raising. ⁶³ Damian Chalmers has taken up the task to critically situate the proposal of European transnational law in the European ordering of global markets by provocatively drawing upon the tradition of economic sociology. ⁶⁴ And European transnational private law certainly needs to stand the test of time in a turbulent world characterized by different views on the world and the prevailing hegemonies. Poul Kjaer rightly asks what future of the world of European transnational private law has and what alternative views may become reality in a world where private law becomes a matter of geopolitics and a European regulatory imaginary is on the defence. ⁶⁵ Finally, the question on methodology remains to be addressed. How can we research what we claim to be the invisible spaces of European reach? How deep into legal culture and beyond the surface do we need to go to truly understand both the global impact of European private law and the contestation? This leads to hard methodological and theoretical questions on researching transnational law that Thomas Wilhelmsson addresses. ⁶⁶ We are very grateful for these five contributions, which put the emphasis on some of the core aspects that require further thinking in delineating the concept and its usefulness for understanding the role of the EU in the world in private law.