The phrase ‘European contract law’ often sets alarm bells ringing in common law circles. Those bells will have begun shrieking in the relevant brains after the hearing before the parliament of the new EU commissioner for justice, Viviane Reding. In relation to her priorities in the new job, she submitted the following in her written answers – indeed it was the first priority she mentioned:

‘As regards civil and commercial justice, I want to help put contractual relations in our internal market, notably in business-to-consumer relations, on a more secure and coherent footing to facilitate cross-border transactions. I therefore intend to work on the three first building blocks of a coherent European contract law, namely standard terms and conditions, consumer rights and 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).’

I don’t think that anyone needs worry much about a voluntary tool to improve coherence or an optional 28th contract law regime (which means it is an option beyond the current 27 different contract regimes in the 27 member states). But talk of a more ambitious project for a European Civil Code usually brings UK politicians and lawyers out in a flutter. Here is the former Lord Chancellor, Lord Falconer, addressing a conference in 2005 about the subject:

‘… blanket harmonisation across the EU of contract law, or any other sphere of law, will not work. A single law imposed across the whole of the EU, whether by regulation or directive, is not an efficient and effective way to resolve problems in civil law and justice.’

He was quite straightforward about the reasons for this – more money for English lawyers and the UK – or as he put it a little more elegantly:

‘… the English law of contract is the international law of choice over a wide range of areas, particularly in finance, shipping, and insurance. It contributes significantly to the earnings of the UK and thereby promotes the prosperity of the EU…Make no mistake, any weakening of the suitability and attractiveness of the common law of England as the most popular law for the conduct of commercial business throughout the world would be disastrous and would be seized upon by rival jurisdictions such as New York and Geneva. The EU would be the poorer as a result.’

The main achievement to date in the development of European contract law has been a draft Common Frame of Reference (CFR). The CFR is a long-term project that aims at providing European legislators with a ‘toolbox’ or handbook to be used for the revision of existing – and the preparation of new – legislation in the area of contract law. This toolbox is intended to contain fundamental principles of contract law, definitions of key concepts and model provisions. Among the working group drawing up the CFR is Professor Hugh Beale of Warwick University, a former law commissioner, who is doubtless aware of the ‘alarm-bell’ common law views of the exercise.

The preparatory work for the CFR has already served as a starting point for a consultation on EU consumer law, undertaken by the European Commission in February 2007. The response to this by the Council of Bars and Law Societies, plus our other work in this area, can be found here.

There are European lawyers who support further developments in European contract law, even to the extent of the introduction of a European Civil Code. Their motivation is best put by the commission itself: ‘The exchange of goods and services is governed by contract law. Problems in relation to using, agreeing, interpreting and applying contracts in cross-border transactions may therefore affect the smooth functioning of the internal market.’

I predict that, if commissioner Reding proves as good as her word in pushing this item of her agenda vigorously forward, we are in for tempestuous debates ahead.

Jonathan Goldsmith is the secretary general of the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies