Olha O. Cherednychenko

Financial Consumer Protection in the EU: Towards a Self-Sufficient European Contract Law for Consumer Financial Services?

The rapid expansion of European contract law in the field of consumer financial services gives rise to the question to what extent it is self-sufficient. A self-sufficient European contract law presupposes the existence of an EU-made and EU-enforced contract-related legal order which is largely distinct and independent from national private legal orders. In order to understand to what extent European contract law for consumer financial services reflects this pattern, the author explores the interaction between this supra-national regulatory legal order and traditional national private legal orders, and the consequences of this interplay for the extent of financial consumer protection. The author concludes that the self-sufficiency of European contract law is a matter of degree rather than an absolute; besides, a high degree of its self-sufficiency is not a must for ensuring a high level of consumer protection in financial services.

Cooperative or Competitive? Private Regulators and Public Supervisors in the Post-Crisis European Financial Services Landscape

Abstract This article explores the interplay between private regulators and public supervisors within principles-based regulation and meta-regulation in the post-crisis European retail financial services landscape. It shows that the way in which the compliance with such regulatory frameworks is supervised and enforced may determine the type of relationship between private regulators and public supervisors — cooperative or competitive — that prevails at a specific moment in time. While there is evidence of both cooperation and competition between the two in the post-crisis era, a predominantly competitive relationship between private regulators and public watchdogs may severely undermine the practical importance of co-governance arrangements. A significant degree of cooperation between private regulators and public supervisors is key to ensuring their effectiveness. Public supervision and enforcement must therefore be responsive to the peculiarities of co-governance arrangement.

Freedom of Contract in the Post-Crisis Era: Quo Vadis?

This article explores to what extent the future development of European financial services contract law will be determined by the information paradigm in the post-crisis era. By using the examples from the field of investment services and consumer credit, it shows that the regulatory measures affecting financial contracts are becoming increasingly more interventionist incorporating elements of ‘hard’ paternalism. The latter is associated with mandatory substantive rules which aim to stop individual behaviour which may result in significant harm for a private party and/or be detrimental to the public interest. The author argues that we are currently witnessing a major shift from ‘soft’ towards ‘hard’ paternalism; a shift which implies major limitations on freedom of contract in financial transactions and poses major new challenges to regulators.

Private Law Discourse and Scholarship in the Wake of the Europeanisation of Private Law

In its approach to the regulation of the internal market, the EU has never accepted the traditional conception of private law as it has evolved in national legal systems. Whilst national private laws have been primarily concerned with justice between market participants rather than the pursuance of specific public goals, the EU has viewed private law as an instrument for achieving the collective objectives of European integration. This contribution explores the implications of the on-going process of the Europeanisation of private law for the traditional private law discourse in national legal systems and the role of private law scholarship. My argument, in a nutshell, is that the Europeanisation of private law reinforces the role of policy considerations related to the common good within a private law discourse, not only in areas that fall within the scope of EU law but also far beyond, further putting the traditional idea of private law under pressure; whilst public goals pursued by the EU are often compatible with the traditional private law concerns of doing justice between the parties, at times the two may come into conflict with each other. In its turn, the tendency towards the instrumentalisation of private law presents new challenges for the private law scholarship, strengthening the need for legal scholars to play a more pro-active role in shaping (European) private law than in has played so far.

Conceptualising Unconscionability in the Context of Risky Financial Transactions: How to Converge Public and Private Law Approaches?

While financial services are essential for the everyday life of EU citizens and for the EU economy at large, some of them entail very high risks which may particularly affect the vulnerable in financial transactions. Thus, for example, the provision of investment services by the bank may lead to huge financial losses beyond the client’s ability to pay. Similarly, the provision of a business loan to one family member on the condition that another family member stands as a surety for the whole debt may result in financial ruin for the latter. The information asymmetry and huge risks involved in some financial transactions give rise to the question of how and to what extent the vulnerable must be protected (against themselves). At present one can trace several contract-related methods of protecting the vulnerable against unconscionable financial transactions, some of which even going beyond private law. On the one hand, the influence of public law can be seen in the recourse to fundamental rights with a view to rebalancing contract law (e.g. the Burgschaft case in Germany) and in the adoption of the financial supervision legislation in some areas containing extensive duties of care on the part of financial service providers. On the other hand, contract law itself has developed concepts which protect the vulnerable against unconscionable financial transactions. This contribution critically analyses these methods and a possible interplay between them. It is argued that recourse to fundamental rights cannot effectively resolve the problem of contractual unfairness. What is needed is a further development of contract law concepts of unconscionability taking into account the contract-related rules in the financial supervision laws and, possibly, even the integration of the two. Special attention in this respect must be paid to the role of the vulnerable at the (pre-) contractual stage.

Towards the Control of Private Acts by the European Court of Human Rights

This contribution critically analyzes the current approach by the European Court of Human Rights to the applicability of fundamental rights enshrined in the European Convention on Human Rights to private acts. It explores the recent case law of the Court primarily through the case of Appleby and Others v. The United Kingdom (Appleby)1 and the case of Pla and Puncernau v. Andorra (Pla)2, looking at its implications for the relationships between private parties under the private law of the States parties to the Convention and, in particular, the role of the doctrine of ‘margin of appreciation’ in limiting the control of private acts by the Court as to their compatibility with fundamental rights.

Fundamental Rights and Contract Law

Abstract Originally, contract law was considered to be immune from the effect of fundamental rights, the function of which was limited to being individual defences against the vigilant eye of the state. This traditional view, however, has recently been put under pressure as a result of fundamental rights increasingly becoming relevant for (European) contract law. The relationships between private parties under contract law have started losing their immunity from the effect of fundamental rights. It is argued in this essay that the major question at present is no longer whether fundamental rights may have an impact on contract law, but to what extent this will occur, and that the answer to this question will determine the future of (European) contract law.

Fundamental Freedoms, Fundamental Rights, and the Many Faces of Freedom of Contract in the EU

As a result of the growing involvement of the EU in regulating private conduct and private law relationships, EU law increasingly affects the scope of freedom of contract. In this way, it shapes the European model of freedom of contract based first and foremost on the internal market rationale, sparkling tensions with the concepts of freedom of contract that have evolved in the national contract laws of the Member States. Whilst EU secondary legislation plays a major role in this context, the understanding of freedom of contract can also be profoundly affected by EU primary law. This contribution seeks to determine the reach of EU free movement law in the contractual sphere, with a particular focus on (financial) services. It explores the conceptualisation of freedom of contract in free movement law in light of the concept of ‘formal’ freedom of contract and that of ‘substantive’ freedom of contract in national contract laws, as well as the notion of the freedom of contract regulated in the name of the internal market in EU secondary legislation. Particular attention in this context is given to the interplay between fundamental economic freedoms and fundamental rights.

The Impact of Fundamental Rights on Dutch Private Law: Revolution or Evolution?

In many European legal systems, fundamental rights enshrined in national constitutions and international and supranational human rights instruments tend to create strong magnetic fields across the entire body of law, including private law. In particular, this trend towards the constitutionalisation of private law can be observed in the Netherlands where fundamental rights contained in the Dutch Constitution (Grondwet) and the European Convention on Human Rights of 1950 (ECHR) become increasingly relevant for private law relationships. This contribution written as the Dutch report for the XIXth International Congress of Comparative Law 2014 focuses on the impact of fundamental rights on Dutch private law, with emphasis on contract law, tort law, and property law. The author argues in favour of the evolution of private law in the light of fundamental rights, rather than a constitutional revolution in private law. In her opinion, the Dutch experience in building a complementary relationship between fundamental rights and private law based on the idea of a dialogue between the two can provide some useful insights into how the constitutionalisation of private law could proceed in other national legal systems and in EU law.