These differences in the legal environment are clearly an obstacle to operating across Europe, and firms have to try to narrow the gap. Some US clients, for example, have tried to work with one form of contract across the European Union, while the EU has looked at the scope for harmonising construction law and, more recently, contract law as a whole.
Success has been limited. Clients aiming for Europe-wide contract terms have often had to recognise that imposing unfamiliar legal concepts can lead to confusion and increase cost. The EU's attempts to harmonise the rules have made little progress. Readers with long memories may recall the Mathurin report produced in the 1980s for the European Commission, which explored the scope for harmonising construction law. It contained a daunting 61 pages of schedules outlining differences in organisation, law and procedure between member states.
Mathurin is now gathering dust on library shelves. But the EU is nothing if not dogged, and in summer 2001 it launched a consultation exercise to explore the scope for harmonising European contract law. The mood has changed, however, and this project looks doomed. Some have even argued that harmonisation may be in breach of EU law on subsidiarity. It may not surprise you that this view was put forward by the English bar, which earns good money from the use of English law by international business.
Money aside, cultural and legislative differences run deep. In contrast to our common law, civil law countries – effectively the whole of mainland Europe – rely on civil codes with their origins in Roman law. One result of codification is the brevity of European contract forms – as with the New Engineering Contract, the real guts of the document are elsewhere.
The relative merits of common and civil law are a matter for debate. A criticism that can be levelled at codified systems is that they tend to militate against step changes of any kind. It is significant that innovations such as construction management and, latterly, PFI and its progeny have emerged from common law jurisdictions. Mainland European governments and businesses are increasingly keen to adopt new approaches to funding and procurement but are hampered by the straitjacket of their codes and the contract forms developed under them.
The standardising instincts of the commission can also get in the way. It recently tried, in the interest of competition, to impose a common approach to public sector bidding that could have rendered most PFI schemes uneconomic.
Although some English lawyers still flinch at the thought, we too are learning from the civil law. The Human Rights Act is a straw in the wind, and our courts are moving to a less rigid approach to contract interpretation, closer to the European model. Our courts' approach to adjudication, too, with its emphasis on the underlying purpose of the legislation, has struck a chord with European colleagues and this trend will gather momentum as courts increasingly have to interpret statutes incorporating EU directives into our law.
Convergence is happening. It is doing so organically not by diktat and this is surely the best way forward. In the meantime, it makes sense to look before you leap.
Henry Sherman is a partner at solicitor CMS Cameron McKenna.