Some Law and Economics of Harmonizing European Private Law

Abstract

Although harmonization of Private Law rules has been taking place in Europe through European legislative actions in areas such as Company Law, Intellectual Property, and Consumer Law, to cite a few, the process is lately under strict scrutiny as a consequence of the emergence of diverse initiatives proposing model rules for basic and general Private Law, such as those contained in the Draft Common Frame of Reference (DCFR). An ambitious and deliberate process of harmonizing Private Law in Europe is susceptible to evaluation using the lenses of Law and Economics, and there is already a substantial amount of literature to this effect. In this paper I try to offer three different lines of additional analysis to the existing literature. First, I characterize the different processes through which Private Law rules - and other legal rules, by the way - may end up looking very similarly across national borders. The main processes are indeed different in terms of the mechanism guiding them: One can observe uncoordinated convergence of substantive legal rules in various areas of the Law, but also a conscious coordination exercise with or without external promoters. Finally, the harmonization result may be the product of a political decision at a higher level of government. Thus, not only the result, but the processes itself are relevant for an economic assessment of harmonization. Second, I re-examine some of the major economic criticisms to harmonization by coordination and political fiat, and point out some of the underappreciated weaknesses of those economic critiques. Finally, I sketch what may be considered an epistemic criticism of the current harmonization exercise linked to the re-codification dimension involved in the process.