A spontaneous order for europe? Why hayek's libertarianism is not the right way forward for european private law

European Private Law after the Common Frame of Reference

Volumn , Issue , 2010, Pages 123-146

  Hesselink, Martijn W ^a  

^a UNIVERSITY OF AMSTERDAM   (Netherlands)

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EID: 84881905981     PISSN: None     EISSN: None     Source Type: Book    
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References (96)

1. Von Bar et al. (eds.), Principles, Definitions and Model Rules of European Private Law; Draft Common Frame of Reference (DCFR) Interim Outline Edition (Munich: Sellier, 2008).
2. Green Paper on the Review of the Consumer Acquis, Brussels, 8 Feb. 2007, COM(2007)744.
3. See A More Coherent European Contract Law, an Action Plan, Brussels, 12 Feb. 2003, COM(2003)68 final. See also: European Contract Law and the Revision of the Acquis: the Way Forward, 11 Oct. 2004, COM(2004)651 final. Today, the idea of an optional code of contracts seems to be lower on the political agenda than it was in 2003 when the Commission launched its ambitious Action Plan (see the First Annual Progress Report on The Common Frame of Reference, 23 Sept. 2005, COM(2005)456 final, 5; Second Progress Report on The Common Frame of Reference, 25 July 2007, COM(2007)447 final. In the words of Diana Wallis MEP, 'it is hardly the time to be seen to be moving towards anything that remotely resembles a European Civil Code; if the voters of Europe did not want a constitution it is hardly the moment to force a civil code, even just a contract code on them. The political moment, the political context is not right; however, as with the constitution, the practical arguments in favour of greater harmonisation will remain': Diana Wallis, 'European Contract Law-The Way Forward: Political Context, Parliament's Preoccupations and Process', in: ERA-Forum Special Issue on European Contract Law-Developing the Principles for a 'Common Frame of Reference' for European Contract Law (Trier: 2006), 8 at 8.
4. On the issues see Martijn W. Hesselink, CFR & Social Justice. A short study for the European Parliament on the values underlying the draft Common Frame of Reference for European private law: what roles for fairness and social justice? (Munich: Sellier, 2008).
5. Study Group on Social Justice, 'Social Justice in European Contract Law: a Manifesto', 16 European Law Journal (2004) 653.
6. Jan M. Smits, 'European Private Law: a Plea for a Spontaneous Legal Order', in: Deirdre M. Curtin, Jan M. Smits, André Klip and Joseph McCahery, European Integration and Law (Antwerp and Oxford: Intersentia, 2006), 85. See also Jan M. Smits, 'The Harmonisation of Private Law in Europe: Some Insights from Evolutionary Theory', 31 Georgia Journal of International and Comparative Law (2002) 79; Jan Smits, The Good Samaritan in European Private Law. On the Perils of Principles without a Programme and a Programme for the Future (Deventer: Kluwer, 2000).
7. See e.g. Wolfgang Kerber and Stefan Grundmann, 'An Optional European Contract Law Code: Advantages and Disadvantages', 21 Eur J Law & Econ. (2006) 215; Stefan Grundmann, 'Europäisches Vertragsrecht-Quo Vadis?', JZ (2005) 860; Stefan Grundmann, 'The Structure of European Company Law: From Crisis to Boom', 5 EBOL Rev (2004) 601; Stefan Grundmann, 'Consumer Law, Commercial Law, Private Law: How can the Sales Directive and the Sales Convention be so Similar?', EBLR (2003) 237; Stefan Grundmann and Wolfgang Kerber, 'Information Intermediaries and Party Autonomy-The Example of Securities and Insurance Markets', in: Stefan Grundmann, Wolfgang Kerber, Stephen Weatherill (eds.), Party Autonomy and the Role of Information in the Internal Market (Berlin and New York: Walter de Gruyter, 2001).
8. Friedrich.A. Hayek, The Road to Serfdom (first edition 1944) (London and New York: Routledge Classics, 2005). See also his The Constitution of Liberty (Chicago: University of Chicago Press, 1978) and The Fatal Conceit; The Errors of Socialism (London: Routledge, 1988).
9. See Milton and Rose D. Friedman, Two Lucky People: Memoirs (Chicago: University of Chicago Press, 1998), 333.
10. Alan Ebenstein, Friedrich Hayek: A Biography (Chicago: University of Chicago Press, 2001), 292.
11. Friedrich A. Hayek, Law, Legislation and Liberty; A New Statement of the Liberal Principles of Justice and Political Economy (London and New York: Routledge, 2003). Volume I: Rules and Order; Volume II: The Mirage of Social Justice; Volume III: The Political Order of a Free People.
12. The idea was already present in his The Road to Serfdom, above note 8, 17.
13. Rules and Order, above note 11, 13.
14. Ibid., 55.
15. The concept of a great society refers to Adam Smith, the concept of an open society to Karl Popper. See Adam Smith, The Wealth of Nations (first edition 1776) (London: Penguin Books 1999) and Karl Popper, The Open Society and Its Enemies (first edition 1945) (London: Routledge Classics 2006) respectively.
16. The Mirage of Social Justice, above note 11, 117.
17. Rules and Order, above note 11, 22 and 74
18. The Political Order of a Free People, above note 11, 37 and 124.
19. The Mirage of Social Justice, above note 11, 109.
20. Ibid., 148.
21. See generally Franz Böhm, 'Privatrechtsgesellschaft und Marktwirtschaft', 17 Ordo (1966), 75. On ordoliberalism and European integration see Miguel Maduro, We, the Court; The European Court of Justice & the European Economic Constitution (Oxford: Hart Publishing, 1998), 126-131. On ordoliberalism and contract law see Brigitta Lurger, Grundfragen der Vereinheitlichung des Vertragsrechts in der Europäischen Union (Vienna and New York: Springer, 2002), 396-400. On ordoliberalism and European private law see Alessandro Somma, 'Social Justice and the Market in European Contract Law', 2 ERCL (2006) 181, 182.
22. With regard to the ordoliberal expression 'social market economy', which he regarded as a pleonasm-and which incidentally has now been explicitly adopted by the European Union in the Lisbon Treaty (in Article 3, Section 3)-Hayek said: 'I regret this usage though by means of it some of my friends in Germany (and more recently also in England) have apparently succeeded in making palatable to wider
23. The Political Order of a Free People, above note 11, Ch. 15.
24. The Mirage of Social Justice, above note 11, 69.
25. Ibid., 36.
26. Ibid., 142.
27. Ibid., 65 (emphasis in the original).
28. Ibid., 67.
29. Ibid., 65.
30. Ibid., 87.
31. Ibid., 133.
32. Ibid., 136.
33. Ibid., 128.
34. Ibid., 131. In The Road to Serfdom, above note 8, 106, Hayek still believed that there was a strong case for reducing inequality of opportunity.
35. The Mirage of Social Justice, above note 11, 20.
36. The Political Order of a Free People, above note 11, 159.
37. Ibid., 201-202 (note 35).
38. Rules and Order, above note 11, 72
39. The Mirage of Social Justice, above note 11, 46.
40. Rules and Order, above note 11, 134.
41. The Mirage of Social Justice, above note 11, 53.
42. Ibid., 53.
43. The Political Order of a Free People, above note 11, 98.
44. Ibid., 39 (emphasis in the original).
45. Ibid., 6.
46. Ibid., 4-5.
47. Ibid., 11.
48. Ibid., 38.
49. Ibid., 113-115.
50. Ibid., 151. In the same sense see The Road to Serfdom, above note 8, 43.
51. Cf. e.g. The Mirage of Social Justice, above note 11, 36-37, 124 and 146; The Political Order of a Free People, above note 11, 150.
52. The Mirage of Social Justice, above note 11, 36.
53. A Kantian (or similar) individualistic theory of moral obligation may explain the morally binding character of promises, but not their enforceability in law. See Immanuel Kant, Metaphysik der Sitten (first edition 1797-1798) (Frankfurt am Main: Suhrkamp, 1977), 219. Cf. Ernst-Joachim Mestmäcker, Legal Theory without Law; Posner v. Hayek on Economic Analysis of Law (Tübingen: Mohr Siebeck, 2007), 53.
54. Ibid., who endorses Hayek and rejects Kelsen, does not answer the question either, even where (on p. 55) he explicitly rejects a positivistic explanation for the binding force of contract.
55. Cf. Stewart Macaulay, 'Non-Contractual Relations in Business: APreliminary Study', 28 American Sociological Review (1963) 55; Hugh Collins, Regulating Contracts (Oxford: Oxford University Press, 1999), Ch. 5.
56. The Mirage of Social Justice, above note 11, 73.
57. Ibid., 38. See also The Road to Serfdom, above note 8, 38 and 115.
58. Hayek seems to assume that an unfair price rule could not be a generic rule of universal application. Cf. The Mirage of Social Justice, above note 11, 128-129.
59. Smits 2006, above note 6, 85.
60. He refers to the paper 'Competition as Discovery Procedure', in: Friedrich A. Hayek, New Studies in Philosophy, Economics and the History of Ideas (London and Henley: Routledge & Kegan Paul, 1978), Ch. 12, which was published in German as 'Der Wettbewerb als Entdeckungsverfahren', Kieler Vorträge Vol. 56 (Kiel: 1968), and was republished in Friedrich A. Hayek, Freiburger Studien; Gesammelte Aufsätze (Tübingen: Mohr Siebeck 1994), 249, as well as later also being included in Law, Legislation and Liberty, Vol. 3 (The Political Order of a Free People), above note 11, Ch. 15.
61. See e.g. Stefan Grundmann and Wolfgang Kerber, 'Information Intermediaries and Party Autonomy-The Example of Securities and Insurance Markets', in: Stefan Grundmann, Wolfgang Kerber, Stephen Weatherill (eds.), Party Autonomy and the Role of Information in the Internal Market (Berlin and New York: Walter de Gruyter, 2001); Stefan Grundmann, 'Die Struktur des Europäischen Gesellschaftsrechts von der Krise zum Boom', ZIP (2004) 2402; Stefan Grundmann, 'The Structure of European Company Law: From Crisis to Boom', 5 EBOL Rev (2004) 601; Stefan Grundmann, 'Europäisches Vertragsrecht-Quo Vadis?', JZ (2005) 860; Wolfgang Kerber and Stefan Grundmann, 'An Optional European Contract Law Code: Advantages and Disadvantages', 21 Eur J Law & Econ (2006) 215; Stefan Grundmann, 'Verbraucherrecht, Unternehmensrecht, Privatrecht-warum sind sich UN-Kaufrecht und EU-Kaufrechts-Richtlinie so ähnlich?', 202 AcP (2002) 40; Stefan Grundmann, 'Consumer Law, Commercial Law, Private Law: How can the Sales Directive and the Sales Convention be so Similar?', EBLR (2003) 237.
62. This quite apart from the fact that markets are of only limited use as a discovery device because they usually fail to reflect the effects on parties other than the contracting parties (externalities). Cf. e.g. Jürgen Habermas, Die postnationale Konstellation; Politische Essays (Frankfurt am Main: Suhrkamp, 1998), 143.
63. See e.g. Amartya Sen, Development as Freedom (Oxford: OUP, 1999).
64. Will Kymlicka, Contemporary Political Pshilosophy: An Introduction (Oxford: OUP, 2001), 102. See also Naomi Klein, Shock Therapy; The Rise of Disaster Capitalism (New York: Metropolitan Books, 2007), who argues that market fundamentalism of the Chicago School brand (remember that Milton Friedman was inspired by Hayek) cannot be introduced except in an authoritarian and violent way. She reports (on p. 84) that Hayek travelled to Pinochet's Chile several times to admire the free market laboratory, and (on p. 131) that he wrote a letter to Margaret Thatcher to urge her to use Pinochet's model for transforming Britain's Keynesian economy.
65. See, specifically with regard to Hayek's categorical rejection of the need to protect expectations outside contract, Patrick S. Atiyah, Essays on Contract (Oxford: OUP, 1986), 91.
66. Richard A. Posner, 'Hayek, Law, and Cognition', New York University Journal of Law & Liberty (2005) 161.
67. The Mirage of Social Justice, above note 11, 111: 'the two greatest threats to a free civilization: nationalism and socialism'.
68. Ibid., 58.
69. Ibid., 144.
70. See e.g. The Political Order of a Free People, above note 11, 103.
71. The Political Order of a Free People, above note 11, 132.
72. Ibid., 108-109.
73. Smits 2006, above note 6, is also in favour of an optional code.
74. See e.g. Roger Van den Bergh, 'Forced Harmonization of Contract law in Europe: Not to be Continued', in: Stefan Grundmann and Jules Stuyck (eds.), An Academic Green Paper on European Contract Law (The Hague: Kluwer Law International, 2002), 249.
75. Martijn W. Hesselink, 'The European Commission's Action Plan: Towards a More Coherent European Contract Law', 10 European Review of Private Law (2004) 397, 417.
76. R.C. Van Caeneghem, Judges, Legislators & Professors; Chapters on European Legal History (Cambridge: CUP, 1987), especially ch. 2.
77. Action Plan, above note 3.
78. Social Justice in European Contract Law: a Manifesto, above note 5. Specifically on the need for a democratic procedure see also Martijn W. Hesselink, 'The Politics of a European Civil Code', 10 European Law Journal (2004) 675.
79. See the passage quoted in the Introduction.
80. Rules and Order, above note 11, 78.
81. For a defence of Hayek's position, on his own terms, see Todd J. Zywicki and Anthony B. Sanders, 'Posner, Hayek and the Economic Analysis of Law', 93 Iowa L. Rev. (2008) 559.
82. Cf. Brian Z. Tamanaha, On the Rule of Law: History, Politics, Theory (Cambridge: CUP, 2004), 70: 'Hayek's characterization of the common law resounds of the old Medieval view that the law is discovered, not made'.
83. Collins 1999, above note 55, 82.
84. See Gunther Teubner, Recht als autopoietisches System (Frankfurt am Main: Suhrkamp, 1989), 73, who points out that Hayek's theory 'führt zu einer grotesken Überwertung von Gewohnheitsrecht und ähnlich "spontan" gebildeten Ordnungen und zu einer Abwertung von politischen Normierungen als konstruktivistisch': Posner 2005, above note 66, 151: 'he is insufficiently critical of the limitations of custom as a normative order'.
85. Richard A. Posner, 'Law and Economics in Common-Law, Civil-Law, and Developing Nations', 17 Ratio Iuris (2004) 66, 77.
86. The Political Order of a Free People, above note 11, 124.
87. Or worse, because judges are smaller in number than MPs and in many countries still tend to be recruited from a limited section of society and have access to a limited section of potentially relevant information with regard to the possible implications of their decisions for individuals.
88. DCFR, above note 1.
89. The Mirage of Social Justice, above note 11, 59.
90. Ibid., 61.
91. Rules and Order, above note 11, 100.
92. See most recently Nils Jansen and Reinhard Zimmermann, 'Restating the Acquis communautaire? A critical Examination of the "Principles of the Existing EC Contract Law''', 71(4) MLR (2008) 505.
93. See Teubner 1989, above note 84.
94. 'Introduction', DCFR, above note 1, 21.
95. Hesselink 2004, above note 78.
96. Ole Lando, 'The Structure and the Legal Values of the Common Frame of Reference (CFR)', 3 European Review of Contract Law (2007) 245, 251.