Significance of the rise of the EU’s Charter of Fundamental Rights: evidence from consumer and employee protection – by Stephen Weatherill

October 29, 2013

Author Articles, Law - Academic

A question of general interest in EU law asks whether the Charter of Fundamental Rights, granted binding effect from 2009, will exert a transformative or merely confirmatory effect on EU law and policy. Stephen Weatherill looks at topical insights into the answering of that question drawn from EU law on consumer and employee protection.

 

One of the thematic arguments in the new edition of my book EU Consumer Law and Policy is that the rise of the EU’s Charter of Fundamental Rights may be presentationally important in EU consumer law, but that it is unlikely to mark any alteration in substance and outcome.

Although the Charter, made binding on the entry into force of the Treaty of Lisbon in 2009, may be taken to confer a more prominent profile and a higher status on protective standards such as that concerning consumer protection which is found in Article 38 of the Charter, I argue that the EU’s standards of consumer protection were already fully in tune with the need to protect the consumer as the typically weaker party to a transaction, as foreseen in the Treaty, in the copious legislative acquis to which much of my book is dedicated and in the Court’s own interpretative approach, which has frequently emphasised the need to be sensitive to the consumer’s inferior bargaining strength. 

glass of wineMoreover, early attempts to persuade the Court that the Charter should be read in such a way as to undermine legitimate measures of regulatory intervention in the EU market were unsuccessful. So, in Deutsches Weintor (Case C-544/10 judgment of 6 September 2012), examined at the end of Chapter 8 of my book, the Court was asked whether action taken pursuant to Regulation 1924/2006, which harmonises rules governing nutrition and health claims made about food, to forbid use of the phrase ‘easily digestible’ in connection with wines, was compatible with the Charter.

On the one hand, Article 15(1) of the Charter grants the right to engage in work and to pursue a freely chosen or accepted occupation and Article 16 guarantees the freedom to conduct a business. On the other, Article 35 of the Charter requires that a high level of human health protection be ensured in the definition and implementation of EU policies and activities. (The Court did not cite Article 38 on consumer protection – it easily could have done so). The Court concluded that the Regulation promoted a high level of health protection for consumers, and that, based on a reconciliation of the several fundamental rights at stake, it struck a fair balance between them. It was compatible with EU law. I take this decision to be generally supportive of the many measures of EU law which might well restrict commercial freedom, but do so in order to protect economically weaker or less well informed parties such as consumers.

I still firmly believe that the correct understanding of the Charter of Fundamental Rights is that it confirms the priorities and policies already long associated with the EU’s track record in the field of consumer protection. But no one interested in EU consumer law can fail to be at least a little alarmed by the Court’s mischievous recent ruling in C-426/11 Alemo-Herron judgment of 18 July 2013. This is a case about employee protection on the transfer of undertakings (Directive 2001/23). A reference from the UK’s Supreme Court asked whether a particular UK judicial approach to the (measures implementing the) Directive is compatible with the Directive. The circumstances are that that UK approach, which takes a ‘dynamic’ approach to the place of collective bargains in governing the rights of employees of transferred undertakings, is noticeably more generous to the employee than the alternative competing (‘static’) interpretation. The background to the case lies in the ‘contracting out’ of services by Lewisham Borough Council (in London) to a private company.

The Court’s ruling (Third Chamber) insists on the need for a ‘fair balance’ between the employer and the employee, and finds that this is undermined by the UK ‘dynamic’ approach. The managerial flexibility of the company to which the transfer has been made would be improperly confined were the UK interpretation to prevail.

This is already controversial. The Directive is a harmonisation measure which is also concerned to achieve re-regulation of the labour market in the service of employee protection. Alemo-Herron seems to make a radical re-assessment of the measure’s purpose in favour of employer protection. Were this approach transplanted to consumer protection – and it should not be! – the Court’s interpretation of the harmonised consumer law acquis, marked by insistence that a pro-consumer approach should prevail, would be under threat. The Court has been quite open that the legislative acquis exists in part precisely because of the unacceptability of a model based on formal freedom of contract – so it has, for example, frequently said that Article 6(1) of Directive 93/13 on unfair terms is a mandatory provision which aims to replace the formal balance which the contract establishes between the rights and obligations of the parties with an effective balance which re-establishes equality between them – (eg Case C-168/05 Mostaza Claro, Case C‑137/08 VB Pénzügyi Lízing, Case C-618/10 Banco Español de Crédito, covered in Chapter 5 of my book). The recent ruling in Alemo-Herron distances the employee protection acquis from the consumer protection acquis. That seems unfortunate. But it would be much worse if  there is a new strain of thinking in the Court which is ready to roll back even the pro-consumer interpretative approach in Directive 93/13 (et al) and insist instead on the need to protect the flexibility of sellers and suppliers. This must be resisted!

Alemo-Herron  also relies on Article 16 of the EU Charter of Fundamental Rights, which (it is said) covers freedom of contract. It is claimed in the judgment that were the UK courts’ interpretation to prevail, then the private firm, to which the business has been transferred, would find its contractual freedom seriously reduced to the point that there may be damage to the very essence of its freedom to conduct a business. The aggressive protection of the constitutional value of freedom of contract is frankly breathtaking, as is the assumption that it is the firm, not the employees, that needs to be protected. This is wholly out of line with the scepticism about the reality of freedom of contract found in the EU’s consumer legislation and case law and in some of the older employee protection material as well. And, shockingly, Alemo-Herron, asserting this powerful role to be played by Article 16 of the Charter in promoting freedom of contract, cites in support the rulings in Sky Osterreich and Deutsches Weintor, while failing utterly to confess that those were rulings in which the Court authorised legislative restrictions on contractual and commercial freedom. This is deceitful!

Alemo-Herron is ‘only’ a ruling of the Third Chamber. But its influence should be resisted. In particular the judicial approach in the case has no place in EU consumer law.  I  take the view that in many respects the Charter will change the structure and presentation of arguments but rarely the substance or outcome. If freedom of contract as a constitutional value is developed in the aggressive way preferred in Alemo-Herron, then Article 16 of the Charter could prove to be transformatively (and I would say dangerously) deregulatory as a control over EU acts and over national acts too in so far as they fall within the scope of EU law. This should not happen! EU law respects and should respect values other than freedom of contract, among them the protection of the consumer.

 

EU Consumer Law and Policy, 2nd Edition, jacket coverStephen Weatherill is the Jacques Delors Professor of European Law at the University of Oxford. He also serves as Deputy Director for European Law in the Institute of European and Comparative Law, and is a Fellow of Somerville College. His research interests embrace the field of European Law in its widest sense, although his published work is predominantly concerned with European Union trade law. He has authored and co-authored a number of books, and published multiple papers in journals and edited collections.  The second edition of his book ‘Eu Consumer Law And Policy’ has recently been published by Edward Elgar.

In Oxford, Stephen’s teaching interests focus on EU law. He has taught on the European Business Regulation course, Land and Competition Law, offered to BCL and Mjur students and has also taught at undergraduate level.

Eu Consumer Law And Policy is also available as an eBook for subscribing libraries on elgaronline

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One Comment on “Significance of the rise of the EU’s Charter of Fundamental Rights: evidence from consumer and employee protection – by Stephen Weatherill”

  1. Johne24 Says:

    I think this is a real great blog post.Much thanks again. cbgaceedaded

    Reply

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