The questionable basis of the Common European Sales Law: The role of an optional instrument in jurisdictional competition

This article forms part of a special edition of the Common Market Law Review.

Publishers Abstract:
The EU is to promulgate a contract law that parties will be able to opt into for cross-border transactions. The proposed Common European Sales Law (CESL) is envisioned as an "instrument" that parties can use or ignore as they choose when they enter into cross-border transactions. The idea is that parties that fear being obliged under a foreign law they do not understand can choose instead to be bound by the CESL, requiring them to learn only one "foreign" law (the CESL) rather than 26, if they wish to engage in cross-border transactions throughout the EU.

The author makes the following points. First, contrary to the general view, the introduction of an optional instrument should increase rather than reduce transaction costs. Second, although such an instrument can nonetheless produce benefits, it is unlikely that these benefits exceed the transaction-cost harms. Third, he examines the potential dynamic effect of CESL for jurisdiction competition, and conclude that any benefits are likely to be slight.