The UK Government has rejected the EU proposal to introduce a new regulation aimed at facilitating cross border trading.
The European Commission’s proposed Regulation for a Common European Sales Law (CESL), published in November 2011, presents an alternative legal regime in the form of an optional instrument available to cross border business-to-consumer (B2C) and business-to-business (B2B) contracts covering goods and their related services. In B2B contracts it applies where at least one of the businesses is a small or medium enterprise (SME).
But following an extensive consultation with key stakeholders, the Government has decided that the proposal is too complex, lacks legal certainty, and is unworkable. Ministers feel that their recent attempts to harmonise consumer retail laws are more likely to deliver the Commission’s aims than a new, voluntary contract law. Instead the Government is asking the Commission to carry out a careful and specific review of the barriers to cross-border trade, considering the most appropriate solutions to them, before proceeding any further with negotiation of this proposal.
E RADAR's Will Roebuck, a member of the Ministry of Justice's Stakeholder Group said:
"This has been a difficult call for the UK government.
One of the key principles behind CESL is to reduce the high failure rate of EU cross border e-commerce transactions - one of the Single Market's more subtle problems which is hindering UK online business. Whilst the regulation aims to provide standard contractual terms to help encourage business enterprise and support consumer confidence, it is badly written. Coupled with the current economic turbulence across Europe, this current draft proposal does nothing to help provide legal and (more importantly) market certainty here at home."
Economic research estimates that the UK internet ecosystem is worth £82 billion a year, of which £45bn relates to e-commerce. The UK already has the highest level of e-commerce in Europe with 12% of the retail market already online (compared to 7.8% on average in the EU). It is argued that e-commerce could represent 15-20% of GDP growth by 20152.
The consultation sought views, and more specifically, evidence from UK interest groups affected by the proposal, particularly in terms of whether: the Commission’s assessment of the barriers to cross-border trade were accurate; the principle of CESL was necessary and workable; and the proposal as drafted was something they could support.
However, while the responses to the consultation have demonstrated that there is broad support for the objective of increasing cross-border trade most UK stakeholders did not see the creation of an optional contract law, as a viable way of achieving that aim.