Common European Sales Law
(13 years ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
I beg to move,
That this House considers that the Draft Regulation of the European Parliament and of the Council to introduce a Common European Sales Law (European Union Document No. 15429/11 and Addenda 1 and 2) does not comply with the principle of subsidiarity, for the reasons set out in Chapter 5 of the Forty-Seventh Report of the European Scrutiny Committee (HC 428-xlii); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.
I will start by making some general contextual comments. I am pleased that this debate has been called because the proposed common European sales law is important both politically and legally. I know that it is of interest to Parliament and the public.
This debate makes use of article 6 of protocol 2 to the Lisbon treaty, the subsidiarity protocol, which enables national Parliaments to put forward a reasoned opinion challenging a proposal by the European Commission on the grounds that they do not consider that it complies with the principle of subsidiarity. I believe that this is the fourth time that this House has considered such a motion. The first three related to financial services and this is the first in the area of justice. I note with interest that a debate on the same proposal was held in the German Bundestag last week, where it was accepted unanimously that the proposal for the common European sales law was contrary to the principle of subsidiarity. I am sure that fellow member states and their Parliaments will listen with interest to what is discussed and concluded here today.
I should make it clear at the outset that the drafting of a reasoned opinion is a matter for Parliament, not for the Government. The European Union treaties have given the role of the supervision of subsidiarity to national Parliaments. It is therefore Parliament’s task to decide whether to present such an opinion to the European Union institutions. I should also say that the Government are considering a report by the Procedure Committee relating to the handling of reasoned opinions such as this. I hope that the House will understand if I do not speculate on what the outcome of those considerations will be.
Subsidiarity is a word that we hear much about when dealing with European legislative proposals. It may assist the House if I say a few words about it. The concept is defined in article 5 of the treaty on European Union:
“in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.”
It follows that subsidiarity is a specific legal and political concept. In simple terms, it means that decisions should be taken as closely as possible to the citizens whom they affect, and that the European Union should act only when outcomes can be better achieved at European Union level. Subsidiarity is different from the principle of proportionality, under which any action taken by the European Union should not exceed what is necessary to achieve the stated objectives.
Successive Governments have supported the principle of subsidiarity. I am told that the United Kingdom pushed for it to be strengthened in the Lisbon treaty. The treaty includes a requirement that all legislative proposals should include a statement making it possible to appraise their compliance with the principles of subsidiarity and proportionality. It also introduced the power for national Parliaments to transmit reasoned opinions relating to subsidiarity, such as that which we are debating today. The European institutions—the Commission, the Council and the European Parliament—are obliged to take account of all such opinions.
Moreover, if one third of the national parliamentary chambers throughout the European Union submit such opinions, the Commission must review its proposal. I do not think that any proposal has yet been objected to by a third of the national parliamentary chambers. If that did happen, it would represent a powerful political signal, which the Commission would do well to heed. It cannot be denied that one third is a high threshold. To achieve it will require a great deal of co-ordination between national Parliaments. As I have said, this is a matter for Parliament and not for the Government. I can only encourage the European Scrutiny Committee and other interested parties in Parliament, both in this House and the other place, to make the best use of their contacts with other national Parliaments in this regard.
Stephen Phillips (Sleaford and North Hykeham) (Con)
Will the Minister give way?
Stephen Phillips
I am extremely grateful to the Minister for giving way. Will he indicate for the House how many Parliaments, apart from the Westminster Parliament, have asked for a reasoned opinion to date?
Mr Blunt
My hon. and learned Friend was unhappily absent at the beginning of my remarks, when I reported to the House that the Bundestag gave a unanimous opinion last week that this proposal was contrary to the principle of subsidiarity. I am not aware of any other parliamentary chambers that have undertaken to do so. To illustrate the difficulty of achieving the level of one third of chambers taking a view and reporting a reasoned opinion, the Bundesrat has not taken a view. Therefore, of the two German Chambers, only one, the Bundestag, has taken a view. Only half of the German Chambers have taken a view, whereas the hurdle that has to be achieved is a third of national parliamentary chambers. My hon. and learned Friend will understand that it is quite a hurdle in those circumstances. Of course, it is a matter for the other place whether it takes a view on this matter.
You will be aware, Mr Speaker, from reading the Government’s explanatory memorandum on this proposal that, provided that it is demonstrated that the difference in national contract laws is a genuine obstacle to cross-border trade, the Government’s view is that the subsidiarity test is likely to be met. The Government do, however, share the European Scrutiny Committee’s concerns about the necessity for this proposal in the first place. We question whether an optional common European sales law or one with such a wide scope is the right way to address this issue. These matters will form part of the consultation that the Government plan to hold. I shall therefore listen to Members’ views with great interest.
I will now turn to the substance of the proposed regulation. This proposal has a long history. The European Commission and the European Council have been engaged in the general issue of contract law for a decade or so. I believe that the European Parliament’s involvement stretches back even further. The European Union contract law project lay dormant for some time, but gained momentum again in July 2010 with the publication of a Commission green paper on options for progress towards an EU contract law for business and consumers.
The green paper set out various options for reform, including to continue with the development of a legislators’ toolbox. That would provide a common frame of reference, drawing together the most common concepts and terms used in contract law, which would be the commonly agreed basis to be used by the authors of future European Union laws relating to contract law. The aim of that would be to reduce or remove the current differences and the difficulties that they cause. The green paper invited views on seven options, from a specific directive or a regulation providing an optional European Union-level regime, right through to a mandatory black letter European code of contract law. The conclusion of the Commission green paper’s analysis, and of views received on a feasibility study published by the expert group in May, have culminated in the proposed regulation for a common European sales law.
More recently, the Commission’s proposal was published on 11 October. It contains a set of uniform contract law rules that parties to a contract could choose to govern their contract. The use of such rules would be optional, but that optional law would form part of the national law of each member state and could be used as an alternative to what is currently offered under national law. That alternative regime would be available for cross-border business-to-consumer and business-to-business contracts when at least one party was a small or medium-sized enterprise.
Although the Government intend to consult widely on the detailed policy implications of the proposed regulation, our initial assessment indicates that it would be neither simple nor easy to use. Although it is designed to be free-standing, it remains unclear what relationship it would have with other Union laws such as the Rome I regulation. It also seems that a range of matters that could affect the legal relationship between the parties have not been addressed in the proposed regulation. That has the potential to undermine the aim of removing the need for businesses to incur transaction costs on legal advice on another country’s law.
The scope of the proposal could prove difficult, with its wide application to business-to-business and business-to-consumer contracts whether they are concluded at a distance, away from business premises or on the premises. The Government are not sure whether such an all- encompassing regulation is the correct way to address the different problems that traders and consumers may experience. In addition, current arrangements already provide that any state’s law can be chosen as the law of contract. In that sense, a trader could already choose which law to apply to his or her contract, and in most cases that is likely to be their own. The anticipated net value of the regulation remains to be tested and quantified against the costs of introducing a new law.
The Government are also concerned about the treaty base used in bringing the regulation forward. The proposed legal basis is article 114 of the treaty on the functioning of the European Union. That basis is normally used for harmonising laws in order to further the establishment of the internal market. The Government have doubts about the appropriateness of that, particularly as most other optional instruments that operate in parallel to domestic law are brought forward on other legal bases.
The Government have been working closely with interested parties through the process leading to the proposed regulation. Indications so far are that opinion is divided. Some interested parties see an optional contract law for cross-border sales as a potentially useful tool for aiding the internal market, but others see such a new law as risky, over-complex and unnecessary.
The Government intend shortly to consult United Kingdom interests on the proposed regulation. The views received will be used to develop and inform the Government’s position on the likely impacts of such a regulation, as well as on any benefits or disadvantages that are likely to occur for the various sectors that it could affect. We will not form a concluded view on our approach to the proposal until after the consultation has been concluded and there has been proper time to analyse the results. For today, I am of course grateful for the chance offered by the debate to hear the specific concerns that Members may have.
Mr William Cash (Stone) (Con)
I am grateful to the Minister for his comments. As he knows, the European Scrutiny Committee’s conclusion is that the proposal does not respect the principle of subsidiarity. I heard what he said about the difference between the two chambers in Germany. We know that the Bundestag takes the same view as us, and the fact that the Bundesrat does not fails to alter the fact that there is a powerful reason for us to pursue the points that led to the reasoned opinion that we are submitting.
Many organisations have been consulted or have offered evidence on the matter, and their evidence is very powerful from a practical point of view. I have in mind the evidence of Which?, Consumer Focus, the Federation of Small Businesses and the Law Society. It would be invidious to go through each of the objections and arguments that they have made, but in general there are questions about whether there is clear evidence that the regulation is needed and about legal uncertainty, cost and potential confusion.
There is no doubt that throughout the whole business community, there is grave concern about the range and extent of such a provision. In a nutshell, the question whether there is compliance with the principle of subsidiarity is essentially one of practicality as much as of constitutional propriety. The whole object of subsidiarity is to determine whether a matter is better handled at national level than under the aegis of the European legal framework. It remains to be seen whether other national Parliaments enable us to reach the threshold necessary for the matter to be returned to the Commission, but all the evidence that we have received demonstrates that the UK should adopt the reasoned opinion and send it to the presidents of the Commission, the Council of the European Union and the European Parliament before 12 December.
All the arguments are set out in the papers that are in the Vote Office. As I said, I do not think it is necessary or desirable to take the House through every jot and tittle of them—they are so powerful that I really do not think there is any need for me to do so. I would, however, say that it is axiomatic that an optional sales law common to all member states is something that can be better achieved at EU level than at national level. However, that is to assume that the proposed common sales law is necessary and will produce clearer benefits by reason of its scale and effect than action by member states. Based on the evidence to which I have referred, the European Scrutiny Committee doubts whether either requirement has been met.
In addition, the Committee finds that the Commission has again failed to prepare a detailed assessment, in accordance with article 5 of protocol 2 to the Lisbon treaty. That is a very important point. It makes it exceedingly difficult for national Parliaments to determine whether there has been compliance with the principles of subsidiarity within the eight-week period. We were greatly assisted in this case by the submissions that we received from the organisations in the UK to which I have referred. Where their concerns overlapped, we found that there was a convergence of views. That was particularly instructive and helpful to the Committee, and we are grateful for that. In fact, I would go further and say that I wish more business organisations would make submissions more frequently on many such matters that come before my Committee. It is one thing for us to form a judgment, but it is also extremely important to know that it is based on firm practical considerations.
The Commission’s failure to provide a detailed statement amounts, in our view, to an infringement of the essential procedural requirements laid down in protocol 2. We therefore recommend that the House adopt a reasoned opinion to be sent to the Presidents of the Commission, the Council and the European Parliament before the deadline of 12 December. We retain the draft regulation under scrutiny pending a further update on the negotiations, and we are particularly interested to hear the outcome of the discussions on the appropriate legal base. As far as we are concerned, the communication itself can be cleared from scrutiny.
I therefore submit that the draft reasoned opinion of the House should be adhered to and submitted accordingly, and that we should do all in our power to get as much support as possible from other member states, because of the serious breaches of the procedural arrangements and because of the breach of the subsidiarity principle. I look to the Government to do that.
Tom Brake (Carshalton and Wallington) (LD)
I rise briefly to highlight some concerns with the proposals. The perspective of Which? and Consumer Focus is that the different contract laws do not stop consumers or businesses from cross-border trading to any significant degree. It is not clear that the proposal would lead to an expansion of such trade, and it could lead to greater complexity and therefore increase business transaction costs.
There is no legal certainty that the measure would be applied uniformly across the EU. It therefore has the potential to create legal uncertainty and confusion for customers, and it would not provide them with choice, because they would continue to be limited to accepting the contract offered to them by the supplier.
There are grave reservations in relation to the potential for the measure to lead to back-door harmonisation of contract law. I am sure that if my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) had been in a position to stay for the whole debate, he too would have made those points.
I understand the Government’s perspective of subsidiarity, but the measure is an optional change, not an imposed one. Can subsidiarity in all cases overrule something that is optional and not mandated? The Minister rightly said that the regulation would not be simple to use and that complexity is involved, but have the Government assessed whether the proposal is more complex than the current legislation? Do they recognise that the Federation of Small Businesses says that small businesses need to be able to afford to compete in different markets in the EU?
The proposal raises many more questions than it resolves, and therefore a detailed and extensive consultation is required.
Mr Speaker
Order. There is some confusion here. I think the hon. Gentleman either thought or hoped he was intervening on the right hon. Member for Carshalton and Wallington (Tom Brake), but the latter is signalling that he has concluded his remarks. I am sure that that fact will be of close and abiding interest to the hon. Member for Stone (Mr Cash), knowing what a great interest he takes in the observations of other hon. Members.
Stephen Phillips (Sleaford and North Hykeham) (Con)
I rise to make a short contribution to the debate, and to make some of the points that were made to my hon. Friend the Member for Stone (Mr Cash) and others on the European Scrutiny Committee by the City remembrancer of the City of London, who has provided us with a briefing that contains a number of salient observations on the measure, which are important for the House to consider in deciding whether the motion should carry.
The first and most worrying of those observations—I attribute these views not at all to the City of London or the City remembrancer; these are my words—is that there is considerable concern that the measure is the thin end of a uniform contract wedge that is being deployed by the Commission in an attempt to undermine the universality of English contract law, which is used in transactions not only between businesses within the EU but across the world, where, alongside New York law, it is the predominant way in which international trade is regulated. I should like to hear more from the Minister on that.
Were there any doubt that the Commission has in mind that the proposed regulation is the thin end of a uniform contractual wedge, it would be removed by article 15, which makes clear that the Commission would be obliged to review the measure after five years,
“taking account of…the need to extend the scope in relation to business-to-business contracts, market and technological developments in respect of digital content and future developments of the Union acquis.”
Given that the Justice Commissioner has already indicated that he plans to announce consideration of a European common insurance law next year, there ought to be grave concern on both sides of the House that the measure is the first step in an attempt to impose upon this country a uniform European contract law. I suspect that many hon. Members would be extremely concerned about that.
The second concern to which it is worth drawing the House’s attention is the speed with which the draft regulation was drawn up. It was drawn up in a very short period of some 11 months by a so-called expert group which, I must tell the House, consisted predominantly of academics. It consisted for the most part not of those who actually practise law or indeed of those who would have the option to use this contract law were it to be introduced. In those circumstances, if the proposals were to go ahead, there would, in my respectful view, need to be a much greater consideration of what practitioners have to say on the subject of contract law and the draft regulation, and a much greater consideration of what business wants.
Those are two initial concerns about the regulation, but there are others. Essentially, the regulation would establish an optional contract law that would lie alongside national contract law, but that could cause conflict between almost identical contractual situations as they apply between those who are negotiating within the EU, and possibly even between those within member states. The position would essentially be that someone who selects the option of the EU contract law might gain greater rights than someone who does not do so—the latter, through the application of conflict of laws rules, would have the contract containing his rights and obligations subjected to some wholly different system of law. That must be a grave concern, because it could result—naturally—in different decisions being taken by national courts in relation to precisely the same facts, depending on which law applies. That might be acceptable when the laws that apply are of different nations, which would be selected pursuant to established conflict of laws rules, but it cannot, in my judgment, be acceptable when the laws in question are on the one hand common law, as in this country, and on the other hand an optional community contract law, both of which none the less hold sway in the same jurisdiction. That is therefore a very great reason why the measure is not in the interests of the City of London, or of this or any other European country.
Establishing a new contract law—even one that has been written by a group of academics—is, moreover, destined to lead to much greater litigation, uncertainty, increased costs, and increased transactional costs, because there will be no established body of law and no binding juridical opinion by reference to which those who are obliged to be consulted on difficult legal problems arising out of contracts can form settled views as to the correct answer in respect of their clients’ rights, entitlements and obligations.
Growing that body of law—it could grow only in this country, where we have a system of precedents—could take several decades. If small and medium-sized enterprises, and perhaps even larger businesses, adopted the optional contract law, their rights and obligations would necessarily be unclear during that time. That is not only most unsatisfactory from the perspective of those who seek to do business in international markets, but wholly unsatisfactory from the perspective of the development of the law.
Mr Cash
On the question of legal base, does my hon. and learned Friend recall that originally the Secretary of State for Justice took the view that he had doubts over whether article 114 was appropriate? There was then the question of whether article 352 might not be more appropriate. Unfortunately, because of the enactment of the European Union Act 2011, primary legislation had to be passed before the Government could give their consent to the adoption of the proposal on article 352. Therefore, there is a serious question over whether there has been complete compliance not only with the principle of subsidiarity but with the legal base.
Mr Speaker
The principle of subsidiarity is important, but there is also a very important principle of interventions, and that is brevity.
Stephen Phillips
I am extremely grateful to my hon. Friend for his intervention, brief or not. I will not fall into his elephant trap of discussing what precisely is necessary under the European Union Act 2011, but I will say that I agree with him. It is right that there is no justifiable legal base under article 114, not least because the European Court of Justice has itself made it clear that that article cannot be used for the harmonisation of laws within the European Union.
I was on the point of saying that there is a real problem with running in parallel two systems of contract law, particularly where that might lead to different results and where one has not been the subject of extensive judicial consideration. In such a case, it is inevitable that there would be differences of opinion among those who are called on to provide advice on the rights, obligations and entitlements of parties to contracts, and they are the ones who are subject to this new system of optional contract law were it to be in place. For those reasons, it must be entirely right that we should not seek to accommodate the Commission’s proposals to have in place two parallel systems of contract law in this country. That would be detrimental to the interests of the United Kingdom and consumers and businesses all over the European Union. For those reasons, I urge the Minister to make those points as strongly as he can to his colleagues in Europe, and I make those points, albeit through you, Mr Deputy Speaker, to the other national Parliaments who really need to require the Commission to justify its proposals.
Robert Flello (Stoke-on-Trent South) (Lab)
This is not a new matter. In European Committee B, which met on 24 May, the Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly) noted that European contract law had been more than 10 years in its formation. Indeed the Minister has referred to that again today. Despite the length of that period, the actual draft law has been put together in some haste.
In the Committee, I raised a number of concerns and expressed the view that the Commission had not come up with any reliable evidence for its proposals; that many other barriers to trade need to be addressed as more of a priority than this issue; and that adopting another set of contract rules was unnecessary and possibly harmful.
The Committee was supportive of the toolbox approach, but not more. According to the Hansard report of that Committee, I said that I was concerned that the exercise on the Commission’s part, namely the green paper and the whole thrust of things, seemed to be a way of trying to push through option 4 instead of doing what it should be doing, which was putting together the toolbox. I therefore urged the Under-Secretary of State to go back to the Commission and make representations in the strongest terms to get things back on track and promote the toolbox and not the draft contract law. What has changed since May? Sadly, I think nothing positive has changed and so the Opposition agree that a reasoned opinion should be sent to the presidents of the European institutions, in effect, to reject the draft regulation.
The draft European sales law has caused a great deal of concern for many individuals and organisations and little support appears forthcoming from any quarter. Let me be gently mischievous here and suggest that other than the Lord Chancellor—whose generally Europhile stance accords with that of his party—I am not aware of any quarter where this particular proposal has received any positive comments at all.
The aim of the proposed regulation seems laudable enough. It is to reduce what the EU perceives as barriers to cross-border trade and thereby improve the ability of traders to exploit the common market and help consumers gain access to products across member states. That is all very laudable in theory, but let me explore that aim.
The evidence base from the European Union seems flimsy to say the least. Evidence from UK representative organisations shows just how weak the EU research appears to be. The survey of the Federation of Small Businesses demonstrated that just 18% of its members thought that a European Union sales law would make their life easier, but that seems to me to be a very low figure given the aims of the regulation.
The consumer organisation Which? opposes the regulation, saying that the proposed law would not contain a satisfactory level of consumer protection, that there would be a risk to consumer protection both cross-border and domestically, and that there would not be a resultant increase in cross-border trade to benefit consumers.
That view is supported by various Eurobarometer and Flash Eurobarometer surveys that show fairly comprehensively that the problem is not the absence of a common EU sales contract. Consumer Focus does not support the Commission’s proposals because of insufficient evidence of need, legal uncertainty and cost. We know, therefore, that there is no proven case for bringing in this regulation.
Let me now turn to the issue that has vexed many commentators and is the basis of the reasoned opinion—subsidiarity. Subsidiarity is crucial, and I will not repeat the Minister’s explanation of this term, which was very good. As I have said, the evidence from the Commission is poor, and that lack of evidence in itself breaches the requirements of article 5 of protocol 2 of the treaty on the functioning of the European Union. As well as breaching the procedural requirements, the proposed regulation breaches the principle of subsidiarity. We are clearly on unsound foundations when looking at this proposed regulation and we all know what happens, especially in a European context, when things are built on insufficient foundations.
I hope that other Parliaments take a similar view and that they hear the views expressed today. Will the Minister assure the House that the Government will actively seek to persuade other European Union member Parliaments that they too should approach this matter in a similar way?
I could explore the issues around legal complexity and legal uncertainty. I could elaborate on the impact on domestic contract law where cross-border trading puts domestic traders at a competitive disadvantage. I could raise the damage that may arise to consumer rights from bringing in this proposed EU sales law, which would actually set back the improvements that we have seen. However, given that the House seems to be unanimous in wishing to see this draft regulation sent back to the European institutions with the reasoned opinion opposing it, I am content to draw my remarks to a conclusion.
In closing, may I commend those who have served on European Committee B and urge the Government to apply pressure at a European level—perhaps with the support of others in Europe—to ensure that we do not have to consider poorly evidenced proposals again? On that basis, let me say I do not wish to delay the House any further or object to this motion.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
With the leave of the House, Mr Deputy Speaker, let me reply to the points raised in the course of this debate. I have taken careful note of all the points raised and they will of course further guide our work as we consult on this proposal in the next phase. As the House is aware we will have a proper public consultation on the proposed regulation in the new year. I know, however, that our general approach to this dossier has to date been supported by the scrutiny Committees in both Houses.
Let me pick up the particular points that have been made this afternoon. I commend my hon. Friend the Member for Stone (Mr Cash) and his Committee for the work that they have done on this instrument. I particularly welcome his contribution to the debate today. He drew attention to the contributions that have already been made by Consumer Focus, the Federation of Small Businesses and the Law Society. I want to answer the Opposition spokesman’s characterisation of the position—he said that absolutely no one out there thinks there is any merit in this measure apart from the Lord Chancellor—which is wrong on both counts. However, I will return to that and correct him.
My hon. Friend the Member for Stone made a substantive point in an intervention on my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips), who confirmed that he was entirely right to say that if article 352 were used, the European Union Act 2011 would require an Act of Parliament before a Minister could agree to it. The legal base is therefore important, and I have made clear the Government’s views, including our doubts about whether article 114 applies, which is an entirely open question.
My right hon. Friend the Member for Carshalton and Wallington (Tom Brake) asked whether the Government had assessed whether the new law would be more complex than that which currently exists, whether businesses could choose to opt into the process and whether that would leave them in a better position. There is a concern that having two alternative regimes could lead to confusion. It might also be too complex for many consumer transactions. The existing common law emphasises certainty—a point made by my hon. and learned Friend the Member for Sleaford and North Hykeham—but the law proposed in this case does not appear to have that emphasis. Again, this is an area where we need detailed legal analysis, which is ongoing. We will consider the views of interested parties, many of whom have significant expertise in this area.
That is an appropriate note on which to turn to my hon. and learned Friend. He drew on the remarks of the remembrancer of the City of London, who has suggested that the proposed measure might be the thin end of a wedge intended to introduce European contract law, thereby undermining the universality of English contract law. It is important to draw attention today—when Her Majesty is opening the Rolls building, a new and impressive commercial court—to the extremely extensive service that the legal profession in London provides to the entire world of commerce. That point ought to be given importance in our consideration of this matter.
As to whether this measure is the thin end of the contract wedge, I should point out that the scope of the draft regulation has been narrowed since the initial discussions began some years ago. The proposal that we are discussing covers the sale of goods and does not extend more widely into contract law. We would have to address any such proposals carefully, and will watch extremely closely if any proposals are made to widen the scope. Each will be considered on its merits. I can also reassure the hon. Member for Stoke-on-Trent South (Robert Flello), who spoke for the Opposition, that my right hon. and learned Friend the Lord Chancellor and I—and, indeed, the whole of Her Majesty’s Government—see no need for a general system of European contract law.
The tenor of the argument produced by my hon. and learned Friend the Member for Sleaford and North Hykeham was extremely clear, as was the expertise that he used to make it. He made a powerful point about the potential for increased transactional costs, not least because lawyers would face considerable difficulties in giving clear advice to small and medium-sized enterprises. He very properly pointed out to the House that if the measure were introduced, the cost of growing case law in this area to provide the necessary certainty would lead to a process that might take decades. The businesses using this form of law would bear the costs, as they would find out—either to their cost or otherwise—through the legal process of testing its bounds.
Finally, let me repeat, so as to make it perfectly clear, that the hon. Member for Stoke-on-Trent South wholly misrepresented the views of the Lord Chancellor. [Interruption.] I am grateful to hear the hon. Gentleman’s sedentary reassurances on that point, but it would be a service to the House if in future he did not seek to misrepresent positions that he plainly does not appreciate or understand. He then said that absolutely nobody was in any way positive about this measure. He was wrong about that as well.
Robert Flello
I am sure that the Minister normally follows every word I say very closely, but sadly he must have been distracted when I said that there was very little support outside. I did not say that there was no support, because the Federation of Small Businesses has said that it supports the measure. However, I reiterate the point that only 18% of people think that it would make a difference.
Mr Blunt
I am grateful for that intervention, because I had misheard the hon. Gentleman and would not want to mischaracterise his arguments. He makes the point that I was coming to, which is that the Federation of Small Businesses says in its submission that it sees an argument in principle for the measure, a point that was reflected in what my hon. Friend the Member for Stone said. In a sense, it is axiomatic that, at the European level, there would be a case for such a measure. The FSB has made it clear that its support for a common European sales law is dependent on its being clear and simple for small and medium-sized enterprises to use, without placing unreasonable burdens on business. We will look closely at those details in the consultation.
I can assure right hon. and hon. Members that any development in the Government’s position on the dossier will be made on the basis of good evidence of need and a robust analysis of the impacts. The Government will pay particular consideration to whether the proposed regulation is a proportionate response to the problems envisaged by the Commission, whether that response complies with subsidiarity and whether the treaty base is appropriate for the measures proposed. We will work with all those most affected by the change, engaging with business and consumer groups in particular. I hope and expect that we will incorporate contributions from Governments in other member states and from the European Parliament.
Let me answer the point made by the hon. Member for Stoke-on-Trent South, who suggested that Her Majesty’s Government should go around trying to encourage Parliaments in other member states to take an interest. We do not think it proper for Her Majesty’s Government to do that. Indeed, he will have heard the suggestion in my opening remarks to the effect that parliamentary groups and authorities should take up the challenge that he has thrown down to them. Given the law of unintended consequences, I fear that if the Government tried to do that, it might be less convincing than fellow parliamentarians trying to act on other national Parliaments, which might be rather more effective.
Henry Smith (Crawley) (Con)
It is indeed important that our Parliament should liaise with EU Parliaments on that point. Last week I had the pleasure of meeting some Danish parliamentarians—my counterparts on their equivalent to the European Scrutiny Committee—who are also opposed to this European measure. It is important that those representations are made through you, Mr Deputy Speaker, to other European Assemblies.
Mr Blunt
I think you have just had a request for action, Mr Deputy Speaker, from my hon. Friend the Member for Crawley (Henry Smith). I commend the work done by members of the European Scrutiny Committee, who have done a particularly good job here. We are going to work with Members here and in the other place and, of course, with the European Scrutiny Committee in taking forward work in this area.
Question put and agreed to.
Resolved,
That this House considers that the Draft Regulation of the European Parliament and of the Council to introduce a Common European Sales Law (European Union Document No. 15429/11 and Addenda 1 and 2) does not comply with the principle of subsidiarity, for the reasons set out in Chapter 5 of the Forty-Seventh Report of the European Scrutiny Committee (HC 428-xlii); and, in accordance with Article 6 of Protocol (No. 2) of the Treaty on the Functioning of the European Union on the application of principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.