I Facts
James Elliott Construction (“Elliott”) constructed a youth facility at Ballymun in Dublin (Ireland). The underlying contract specified that the internal floors of the building were to be laid upon with material “hardcore Clause 804 to DOE [Department of Enterprise] specification”. Irish Asphalt supplied Elliott Construction with a product allegedly meeting this requirement. After cracks in floors and ceilings required Elliott to carry out remedial work, Elliott sought compensation from Irish Asphalt. The High Court (Ireland) endorsed that tests had shown that the material did not meet Irish Standard I.S. EN 13242:2002 transposing European Standard EN 13242:2002. The court that held that Irish Asphalt had infringed its contractual obligations under section 14(2) of the Sale of Goods Act 1893 to supply aggregate of “merchantable quality” and “fit for purpose”. After appeal to the Supreme Court (Ireland) the Supreme Court stayed proceedings and asked the Court of Justice of the European Union (CJEU) the following questions:
“1. (a) Where the terms of a private contract oblige a party to supply a product produced in accordance with a national standard, itself adopted in implementation of a European standard made pursuant to a mandate issued by the European Commission under the provisions of Directive 89/106/EEC, is the interpretation of the said standard a matter upon which a preliminary ruling may be sought from the Court of Justice of the European Union pursuant to Article 267 TFEU?
(b) If the answer to question 1(a) is yes, does EN 13242:2002 require that compliance, or breach of the said standard, be established only by evidence of testing in accordance with the (unmandated) standards adopted by CEN and referred to in EN 13242:2002, and where such tests are carried out at the time of production and/or supply; or may breach of the standard (and accordingly breach of contract) be established by evidence of tests conducted later, if the results of such tests are logically probative of breach of the standard?
2. When hearing a private-law claim for breach of contract in respect of a product manufactured pursuant to a European standard issued pursuant to a mandate from the Commission under Directive [89/106], is a national court obliged to disapply the provisions of national law implying terms as to merchantability and fitness for purpose or quality, on the grounds that either the statutory terms or their application create standards which have not been notified in accordance with the provisions of Directive 98/34?
3. Is a national court hearing a claim for breach of a private contract alleged to arise from a breach of a term as to merchantability or fitness for use (implied by statute in a contract between the parties and not modified or disapplied by them) in respect of a product produced in accordance with EN 13242:2002, obliged to presume that the product is of merchantable quality and fit for its purpose, and if so, may such a presumption only be rebutted by proof of non-compliance with EN 13242:2002 by tests carried out in accordance with the tests and protocols referred to in EN 13242:2002 and carried out at the time of supply of the product?
4. If the answers to questions 1(a) and 3 are both yes, is a limit for total sulphur content of aggregates prescribed by, or under, EN 13242:2002 so that compliance with such a limit was required, inter alia, to give rise to any presumption of merchantability or fitness for use?
5. If the answers to [questions] 1(a) and 3 are both yes, is proof that the product bore the “CE” marking necessary in order to rely on the presumption created by Annex ZA to EN 13242:2002 and/or Article 4 of Directive 89/106?”Footnote
1
II Judgment
1 Question 1(a) concerning the jurisdiction of the Court
Question 1(a) concerns two pertinent question of Article 267 TFEU: First, is it necessary (Article 267 (b) subpara 1 TFEU) to interpret an EU standard of the “new approach” despite of the fact that the standard in the dispute is a national one? Second, are EU standards of the “new approach” “acts” in the meaning of Article 267(b) TFEU? The Court briefly answered the first, less interesting question affirmatively. The CJEU has jurisdiction as the national standard transposes the EU standard, and the national standard’s interpretation depends on the interpretation EU standard.Footnote
2
Far more contested is the question whether such “new approach” standards are “acts” in the meaning of Article 267(b) TFEU. There were two reasons that stood against a classification of “new approach” standards as “acts”. The first reason is institutional: these standards are issued by a private standardisation organisation mandated by the Commission, and hence no institution, body, office or agency of the EU in the sense of Article 267(b) TFEU. The second question is substantive: “New approach” standards are, from the perspective of EU law, legally non-binding to the addressees. Instead, they gain legal value primarily through incorporation into a contract.Footnote
3
Hence, it is questionable whether they can be qualified as EU law at all.
With regard to the institutional question, the Court recalls its judgments in Sevince
Footnote
4
and Deutsche Shell
Footnote
5
as authority to establish that “acts” are essentially all measures that “are by their nature measures implementing or applying an act of EU law.”Footnote
6
Possibly to justify this rather far-reaching reading of Sevince and Deutsche Shell, the CJEU recurs to the telos of Article 267 TFEU: Referring to Sevince
Footnote
7
again, the CJEU stipulates that Article 267 TFEU shall “ensure the uniform application (…) of all provisions forming part of the European Union legal system and to ensure that the interpretation thereof does not vary according to the interpretation accorded to them by the various Member States”Footnote
8
. Later the Court notes that “while the development of such a harmonised standard is indeed entrusted to an organisation governed by private law, it is nevertheless a necessary implementation measure which is strictly governed by the essential requirements defined by that directive, initiated, managed and monitored by the Commission, and its legal effects are subject to prior publication by the Commission of its references in the ‘C’ series of the Official Journal of the European Union.”Footnote
9
In essence, the Court thereby stipulates that the question whether a measure can be classified as an “act” in the sense of Article 267(b) TFEU is a question of whether the issuing private institution is embedded into an EU legal framework, not solely looking at the public or private character of the issuing institution.
In answering the second question, and referring to Deutsche Shell againFootnote
10
, the Court first clarifies that non-binding measures fall within the scope of Article 267 TFEU.Footnote
11
Applying an effects-based approach, the Court then emphasises by reference to several provisions in the underlying Directive 89/106 that the publication of “new approach” standards in the OJ of the EU have “the effect of conferring on products (…) which satisfy the technical requirements defined in the harmonised standards relating to those products, the benefit of a presumption of conformity with the basic requirements of that directive.”Footnote
12
The subsequent possibility to attach the “CE” sign to the product then grants the product in question an “EU” passport, granting them a “right” to circulate freely in the Member States of the EU.Footnote
13
This has the effect, that Member States may not impose additional requirements on such products which bear the CE sign.Footnote
14
Hence, the Court concludes that despite of the fact that proof of compliance can be achieved by other means than compliance with the EU standard, these standards have a public legal effect.Footnote
15
Consequently, the Court established jurisdiction over the “new approach” standard at issue,Footnote
16
and with it arguably also over all “new approach” standards that are regulated in a similar manner.
2 Question 1(b) concerning the applicable test methods
With question 1(b) the referring Court has once more embarked on a pertinent question of EU product safety law, namely whether the testing methods foreseen in the respective standards exclude the use of other testing methods to ensure compliance with the level of protection foreseen in the standard. Indirectly, this question also touches upon the pertinent question if and how far the (technical) methods to determine the protective level of standards can be scrutinised by the European judiciary. With reference to several provisions in the underlying Directive, the Court leaves it to the Member States to identify the appropriate measures, hence it does not interfere with the difficult question whether one technical method may be preferred over another. The reason the Court brings forward is a classical trade law argument: the Directive was limited to removing obstacles to trade and hence sought “to harmonise not the specific conditions and rules for use of construction products at the time of their incorporation in construction and civil engineering works but the rules governing market access in respect of those products.”Footnote
17
Hence, a national court is not bound by the Directive, “either as regards the method of establishing the conformity of such a construction product with the contractual specifications or the time at which its conformity must be established.”Footnote
18
3 Question 3 concerning the relationship of the presumption of conformity in the “new approach” with “fit for purpose” terms in national contract laws.
Question 3 regards a point of interest to all national contract laws, namely whether the presumption of conformity (fitness for use) applies beyond issues of the Directive to other provisions of national contract law concerning the sales of goods such as, in casu, a provision requiring the product to be of merchantable quality or fit for purpose. The Court answered this question in the negative. Embarking once more on the classical rationale of trade law, the purpose of the “new approach” Directive would be solely to enable circulation of the product within “the territory of all Member States of the European Union.”Footnote
19
This precludes any further harmonisation of national law beyond this purpose.Footnote
20
It hence does not apply to contractual disputes to assess whether a national contractual requirement is complied with.Footnote
21
4 Question 2 concerning the power of EU law to disapply national contract law, which implies contractual terms.
Question 2 concerns whether EU law has the power to ask a Member State to disapply default rules in national contract law for cases where parties did not agree on a term. Despite the potential of the question to bring the case law on the applicability of EU law to national contract law further, the Court unfortunately did not make use of this opportunity. Instead, it referred to previous case law, which stipulated that a “technical regulation” can be invoked in proceeding between individuals.Footnote
22
Subsuming the prerequisites of the definition of a “technical regulation”, the Court finds that the provision in the Directive in casu does not meet either of the requirements and hence, in the concrete case, EU law does not override national contract law.
III Comment
The potential of the case on EU private law cannot not be underestimated.Footnote
23
Despite of the fact that with its answer the Court did not really get to the heart of question 2, it took a remarkable stance on quite a number of heavily discussed issues in EU private law. I will first provide a short introduction to the underlying “new approach” regulation to make the reader familiar with this very special area of EU law. Subsequently, I will comment on the broader implications of the judgment. I will treat the answer of the Court not only as an answer to the special underlying Directive, but also as a general guideline to the treatment of the underlying legal problems.
1 Regulating via the “new approach”: a short introduction
Product safety regulation in the EU follows two different regulatory designs.Footnote
24
The first one can be characterised as a “new governance” approach, as the regulatory design for these products follow basically the pattern of EU’s “new governance” programme as a response to several catastrophes in the respective sectors.Footnote
25
“New governance” products are say chemicals, pharmaceuticals and foodstuffs. This category of products need to be distinguished from “new approach” products (such as the one at issue here), which concern technical regulation of trade barriers.Footnote
26
In the EU’s past, the removal of technical trade barriers was intended to be achieved by the setting of detailed, obligatory substantial and procedural standards.Footnote
27
They prescribe the actions required from special target groups instead of setting performance standards, which had been the dominant governance mode in the EU for almost 30 years.Footnote
28
This regulation technique, although in line with the classical European command-and-control method that was originally envisaged by Article 100 TEEC (now Article 114 TFEU), was subject to criticism on several accounts. For some, this traditional harmonisation approach was ill-suited to achieving the objective of market integration, as these Directives regularly covered only one of a wide range of aspects in the respective product sectors.Footnote
29
For others, the ‘Europeanisation’ approach, although being the designated method for this kind of regulation in Article 100 TEEC (now Article 114 TFEU), resulted in the use of these command-and-control-regulation to an extent which had never been exercised even in national law.Footnote
30
In their view, “it produced ‘Europroducts’, which alienated the consumer.”Footnote
31
Either way, there was wide agreement that the classical standard-setting approach envisaged by Article 100 EEC (now Article 114 TFEU) was not suitable to the achievement of the goals set by the respective Directives.Footnote
32
To cope with this criticism, a different regulatory design was needed. Due to its regulatory design, Directive 73/23/EEC (the Low Voltage Directive) formed such an exception.Footnote
33
Although issued as early as 1973, it did not follow the classical command-and-control method envisaged by Article 100 EEC (now Article 114 TFEU). It moreover formulated general and abstract goals of consumer safety and left it to private standardisation organisations to define specific standards. If these standards were complied with, the meeting of the safety goal was presumed (Article 5(1) of Low Voltage Directive). However, only the goal of consumer safety was legally binding. If it could be achieved by other means the marketing of the product was still possible. Today, we would dub such an approach “principles based” or “risk based”. This principles-based regulatory design formed a blueprint for the design of the “new approach” by the Council to govern technical barriers to trade.Footnote
34
The “new approach” encompassed seven basic criteria:
-
∙ the EU only drafts framework Directives, which set an abstract goal to be achieved;
-
∙ European Standardisation Organisations (CEN, CENELEC, ETSI) receive the competence to substantiate this general goal. Their proposals are to be adopted by national standardisation organisations and are to be published in the respective Member State;
-
∙ compliance with these standards is and remains voluntary;
-
∙ compliance with the goals of the respective Directive is presumed if the manufacturer complies with the safety standards;
-
∙ a safety clause is introduced that allows Member States and the Commission to adopt measures against products that fulfilled the requirements of the respective standards but may nevertheless be harmful;
-
∙ the manufacturer declares its conformity with the goals of the Directive by attaching a CE logo to the product. Before attachment, the products are required to undergo a conformity or certification test issued by a national agency;
-
∙ if third parties are to be involved in the certification test, they need to be accredited. This process of accreditation is established in the respective guidelines; certain criteria are, however, manifested in several community guidelines and legislation.
The wide interpretation of the term ‘measures’ in Dassonville
Footnote
35
and especially the corresponding wide application of reasons for their justification in Cassis de Dijon
Footnote
36
built the cornerstone of this new understanding of harmonisation at European level.Footnote
37
To this end, harmonising measures by the EU according to Article 100 TEEC (now Article 114 TFEU) needed to reflect this change in understanding of the European market with regard to the free movement of goods, as it obliges the Union to establish measures that close the European market for goods which threaten the rights mentioned in both Article 36 TEEC (now Article 36 TFEU) and the Cassis de Dijon judgment.Footnote
38
According to this new vision, the fundamental freedoms grant any producer the right to circulate a product, once lawfully marketed in one Member State, freely in any Member State of the EU, in principle regardless of the respective Member State regulations. Disparate regulations may hence generally not hinder the free circulation of such a good, even if they have not yet been harmonised by secondary legislation. Secondary law is hence not needed, as in these areas the competition of legal orders and the deregulatory pressure on non-efficient legal regimes of Member States will over time lead to the harmonisation of legal rules at the most efficient level. Such a harmonisation by competition of legal orders is, however, not envisaged for regulatory measures that fall within the scope of “mandatory requirements”. Producers have to accept such disparate regulation in Member States. If the EU legal order demands harmonisation in these areas, it has to do so proactively via secondary law.
In the “New Approach” regime, the EU made use of this possibility. However, most notably, it also transferred the right to define the exact level of protection and the means by which to achieve them to standardisation organisations. Whether this was within the mandate from Cassis de Dijon, which only had the governing of the EU level and Member State level in mind (without taking recourse to private organisations), was questionable. Either way, the “New Approach” until today successfully governs the EU market subject to technical standards, bringing with this innovative regulatory method a number of legal problems, which the Court had to deal with in the instant case.
2 Access to justice 1: can “new approach” standards be subject to a preliminary ruling procedure?
A question that has long been subject to debate was whether “new approach” standards qualify as an “act” in the meaning of Article 267(b) TFEU. The European judiciary has so far, to my knowledge, only at one occasion defined the term “act” in the sense of the meaning of ex-Article 173 EEC (now Article 263 TFEU): in this sense, according to IBM v Commission, an “act” needs to be determined by the substance of the measures and can be understood as “any measure the legal effects of which are binding on, and capable of affecting the interest of, the applicant by bringing about a distinct change in his legal position”.Footnote
39
Differing from the interpretation of the meaning of the term in ex-Article 173 EEC, the ECJ had cleared that an “act” in the sense of Article 267(b) TFEU embraces also non-binding provisions,Footnote
40
hence the formally voluntary character of “new approach” standards are no obstacle for defining them as “act” in the sense of Article 267(b) TFEU. By stipulating whether a “new approach” standard can be defined as an “act” in concreto the CJEU de facto partly has recourse to its judgment in IBM v Commission by looking at the substance of the measure. The CJEU emphasises first that the private nature of the standard-issuing organisation is not enough to disqualify these standards as an “act”. Rather, still very much in the institutional language, the “new approach” standardisation organisations are embedded in an EU legal framework. The CJEU thereby explicitly denies identifying an “act” by solely taking recourse to the private nature of the issuing institution. To justify this view, it later on refers to the regulatory (public) effect of the standard.Footnote
41
This is in line with previous case law,Footnote
42
where the CJEU also embarked on the effect of the “new approach” standard to justify the categorisation of a “new approach” standard as “measures having equivalent effect” in the sense of Article 34 TFEU, despite the fact that it could have easily established an association with a public act of Germany.Footnote
43
3 Access to justice 2: a blueprint for private standards in the WTO?
In WTO law, a parallel discussion takes place. There it is questionable whether and how private standards are to be treated under WTO law. Several mainly developing countries have put this issue on the tableFootnote
44
, and it is been discussed in various fora of WTO institutionsFootnote
45
and in the literature.Footnote
46
It remains to be seen (and hoped) whether the parallel discussion on the treatment of private standards in the WTO will take notice of this judgment and will consider applying a more effects-based approach, eventually maybe allowing private standards to fall under the scrutiny of WTO law.Footnote
47
Technical standards are also already comprehensively regulated under the TBT Agreement, where the Dispute Settlement Body and the Appellate Panel have established a more formal approach to (private) technical standard-setting, always requiring a link to some public measure.Footnote
48
As market-access reasoning also generally differs substantially in WTO law (formal) and EU internal market law (effect)Footnote
49
it is unlikely that the effects-based approach taken by the CJEU in this case will be taken up in WTO discussions within and beyond the TBT Agreement.
4 Defining private standards – a step forward?
What defines a standard as a private standard? The major literature in WTO law, in sociology and in political science identify the “privateness” of standards by looking at the issuing institution.Footnote
50
In this view, the governance triangleFootnote
51
has become the most established to categorise private and public standards. According to this triangle, three different types of institutions are involved into the creation of standards: non-Governmental institutions, states, and firms.Footnote
52
The smaller the influence of states, the more the standard is considered “private”. Likewise in the WTO, Annex I No 2 of the TBT Agreement defines technical standards as a “Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not mandatory.” The Appellate Body also requires a link to a public institution involved in standard-setting to establish WTO jurisdiction.Footnote
53
China and New Zealand have provided a working definition by which private standards, where they are governed by the SPS Agreement, shall be defined as follows:
“An SPS-related private standard is a written requirement or condition, or a set of written requirements or conditions, related to food safety, or animal or plant life or health that may be used in commercial transactions and that is applied by a non-governmental entity that is not exercising governmental authority.”Footnote
54
Each of these views are linked by the fact that they see standards as “private” if they are (primarily) issued by a private body. Some legal scholars, however, have already questioned this view. They, including myself, advocate that the definition of private standards should have recourse to its effect (mostly as embedded in contracts) rather than to the issuing institution.Footnote
55
Standards are considered “private” if they gain legal effect by means of private law.Footnote
56
Both views have their strengths and weaknesses. With this judgment, the CJEU, however, endorses the latter approach for the application in EU law. It remains to be seen whether this switch in approach will also be heard by others.
5 Technical specifics (“science”) in court – “new approach” legislation regulates “at the border”, fundamental freedoms “behind the border”
Whether and to what extend the CJEU also controls the content of “new approach” standards (do they really reach the goal envisaged? Which method is the best one to determine compliance?) has already been subject to judgments at the European level. The most famous example may be AGM-COS MET
Footnote
57
, where a car-lift covered by the CE marking (and complying with all regulations of the standard) gave way when lifting a caravan. The Finnish official publicly warned about this product and was, as a public official, taken to Court for state liability. The question was whether Finland had to pay compensation under EU state liability law for the public warnings. The CJEU affirmed this, highlighting that the Finish official had breached EU law as it was not for him to warn the public, but rather it was for the State of Finland to invoke the safeguard clause. Implicitly, the CJEU thereby denied judgment on the substance of the standard and the respective methods applied which aimed to achieve the goal but took a formalistic stand on testing whether the relevant steps of the “new approach” procedure were taken.Footnote
58
In the instant case, the Court, without mentioning AGM-COS MET, took up this rationale and sharpened it. It emphasised that the aim of “new approach” standards is the facilitation of market access, not harmonisation of the rules concerning their use after market access.Footnote
59
The Court thereby embarked on a classical trade law argument, emphasising that “new approach” standards harmonise rules “at the border”, not “behind the border”, making rules “behind the border” subject to a competition of legal orders. Such an approach may be reasonable if one takes into account the classical underlying rationale of the fundamental freedoms. Since the judgment in Cassis de Dijon, regulations “behind the border” are, as a default option, subject to a competition of legal orders of the Member States, orchestrated by EU primary law.Footnote
60
If the EU wants to harmonise in these areas, it needs to do so via secondary legislation.
In the “new approach” the EU, however, took up the possibility to regulate and transferred responsibility for regulation, both at the border and behind the border, to private standardisation organisations. While the first one is undoubtably within the powers of the EU, the CJEU has in Cassis de Dijon assigned the competence to regulate “behind the border” as a default to Member States. EU law frames these regulations by means of primary law and may regulate also behind the border via secondary law (confined by the proportionality principle and the principle of conferral), thereby providing the EU with the possibility to re-transfer this “right to regulate” back to the EU legal order. However, as has become evident, in particular by Article 114 (4, 7 and 8) TFEU, it is the Member States who remain the ones that control the effectiveness of “behind the border” regulations, even if harmonised by the EU. It has also become evident via Article 114 (4 to 8) TFEU that the final say in whether such measures shall be upheld rests with the EU. In none of these provisions it is foreseen that outsourcing to private organisations is an option in the fine institutional balancing between the EU and Member States on who decides on “behind the border” regulations. In the instant case, the CJEU emphasised that these aspects are not even harmonised by the EU, but rest with Member States. Article 114 (4 to 8) TFEU are hence not applicable. The Court has therefore correctly clarified that Member States still retain the right to determine the methods by which they assess conformity and, at the end of the day, also to determine the content of the “behind the border” regulations.
What the Court did not mention, and what would have been highly desirable, is the fact that these different assessment methods etc can likewise form obstacles to trade and may in themselves form a market access barrier. As such, they may not be harmonised by “new approach” Directives, but may fall under the scrutiny of Article 34 TFEU. This is the major lesson from the Cassis de Dijon judgment. Whether and to what extent methods used by Member States to assess conformity determine the point in time when conformity is established etc. hence does not fall within the scrutiny of “new approach” legislation, but rather falls under the fundamental freedoms. The questions referred to the Court did not ask for a treaty-based evaluation. However, a complete answer in light of EU law might have warranted for a more comprehensive answer, also including such a treaty-based assessment.
6 Liability of standardisation organisations – as “new approach” standards are “acts”, are the standardisation organisations subject to liability?
From a normative point of view many argue for liability of standardisation organisations.Footnote
61
Cases so far brought in front of the CJEU do not pay witness to the fact that such liability will soon be established at EU level.Footnote
62
One could take the stance that by accepting that “new approach” standards are “acts” within the meaning of Article 267(b) TFEU, one could see this judgment as further indication that liability for standardisation organisations is soon to come. According to the seminal judgment in Francovich
Footnote
,63
state liability can only be established under three conditions: “The first of those conditions is that the result prescribed by the directive should entail the grant of rights to individuals. The second condition is that it should be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, the third condition is the existence of a causal link between the breach of the State’s obligation and the loss and damage suffered by the injured parties.”Footnote
64
In this sense, defining private standards as public “acts” much more clearly obliges the state than private standards, which, without such a public framing, establish rights only inter pares. Such a reading may be classified as far-fetched for several reasons: first, the Court based the classification of the “act” also by reference to the public framing of the “new approach” standards by EU law,Footnote
65
and hence did not assign private standards per se public value. From the present judgment alone one could not draw the conclusion that private standards would always have to be qualified as an “act”, regardless of whether they have public value. Second, it is furthermore questionable whether Directives framing “new approach” standards grant rights to individuals. As the Court held here, “new approach” Directives only regulate “at the border”, while the rights of individuals are regularly granted in “behind the border” regulations. The Elliott judgment does not provide any indication on whether standardisation organisations are subject to state liability.
7 Relationship between “new approach” presumption and general national contract law – has the presumption of conformity to be transposed to other provisions of national contract law which require a similar presumption?
National contract laws around the EU provide provisions where the safety of a good or service is presumed when certain requirements are met. One example is § 434 BGB, where a material defect of a thing is presumed, in absence of an agreement, “if it is suitable for the customary use and its quality is usual in things of the same kind and the buyer may expect this quality in view of the type of the thing.” Leaving aside the quarrel of whether this is to be interpreted in a subjective or an objective way, one could argue that a “new approach” standard would also indicate the “quality in view of the type of the thing” to be expected, hence compliance with an EU “new approach” standard could in effect trigger the presumption that there is no material defect in the sense of § 434 BGB. The current judgment makes clear that such an interpretation of national contract law cannot be based on the rationale of “new approach” Directives and hence on EU law. However, it is important to note that it limits its judgment to the interpretation of national contract law. It does not make any recommendation on national contract law transposing EU law, such as § 434 BGB. It remains to be seen if the Court would also endorse such a view.
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Case C-613/14 James Elliott Construction Ltd v Irish Asphalt Ltd (CJEU, 27 October 2016)
The CJEU has developed some remarkable answers on pertinent questions of EU private law with a view on “new approach” standards. “New approach” standards are “acts” in the meaning of Art. 267(b) TFEU by virtue of their public law effect and EU law framing. “New approach” Directives regulate only market access at the border, not behind the border, where Member State regulations apply. For this reason, EU law also does not require transferring the conformity presumption pars pro toto to the interpretation of rules from national contract law. I will illustrate the impact of this judgment on access to justice, the making of EU private law and transnational contract law, liability of standardisation organisations and on the private standards debate in WTO law.
I Facts
James Elliott Construction (“Elliott”) constructed a youth facility at Ballymun in Dublin (Ireland). The underlying contract specified that the internal floors of the building were to be laid upon with material “hardcore Clause 804 to DOE [Department of Enterprise] specification”. Irish Asphalt supplied Elliott Construction with a product allegedly meeting this requirement. After cracks in floors and ceilings required Elliott to carry out remedial work, Elliott sought compensation from Irish Asphalt. The High Court (Ireland) endorsed that tests had shown that the material did not meet Irish Standard I.S. EN 13242:2002 transposing European Standard EN 13242:2002. The court that held that Irish Asphalt had infringed its contractual obligations under section 14(2) of the Sale of Goods Act 1893 to supply aggregate of “merchantable quality” and “fit for purpose”. After appeal to the Supreme Court (Ireland) the Supreme Court stayed proceedings and asked the Court of Justice of the European Union (CJEU) the following questions:
“1. (a) Where the terms of a private contract oblige a party to supply a product produced in accordance with a national standard, itself adopted in implementation of a European standard made pursuant to a mandate issued by the European Commission under the provisions of Directive 89/106/EEC, is the interpretation of the said standard a matter upon which a preliminary ruling may be sought from the Court of Justice of the European Union pursuant to Article 267 TFEU?
(b) If the answer to question 1(a) is yes, does EN 13242:2002 require that compliance, or breach of the said standard, be established only by evidence of testing in accordance with the (unmandated) standards adopted by CEN and referred to in EN 13242:2002, and where such tests are carried out at the time of production and/or supply; or may breach of the standard (and accordingly breach of contract) be established by evidence of tests conducted later, if the results of such tests are logically probative of breach of the standard?
2. When hearing a private-law claim for breach of contract in respect of a product manufactured pursuant to a European standard issued pursuant to a mandate from the Commission under Directive [89/106], is a national court obliged to disapply the provisions of national law implying terms as to merchantability and fitness for purpose or quality, on the grounds that either the statutory terms or their application create standards which have not been notified in accordance with the provisions of Directive 98/34?
3. Is a national court hearing a claim for breach of a private contract alleged to arise from a breach of a term as to merchantability or fitness for use (implied by statute in a contract between the parties and not modified or disapplied by them) in respect of a product produced in accordance with EN 13242:2002, obliged to presume that the product is of merchantable quality and fit for its purpose, and if so, may such a presumption only be rebutted by proof of non-compliance with EN 13242:2002 by tests carried out in accordance with the tests and protocols referred to in EN 13242:2002 and carried out at the time of supply of the product?
4. If the answers to questions 1(a) and 3 are both yes, is a limit for total sulphur content of aggregates prescribed by, or under, EN 13242:2002 so that compliance with such a limit was required, inter alia, to give rise to any presumption of merchantability or fitness for use?
5. If the answers to [questions] 1(a) and 3 are both yes, is proof that the product bore the “CE” marking necessary in order to rely on the presumption created by Annex ZA to EN 13242:2002 and/or Article 4 of Directive 89/106?”Footnote 1
II Judgment
1 Question 1(a) concerning the jurisdiction of the Court
Question 1(a) concerns two pertinent question of Article 267 TFEU: First, is it necessary (Article 267 (b) subpara 1 TFEU) to interpret an EU standard of the “new approach” despite of the fact that the standard in the dispute is a national one? Second, are EU standards of the “new approach” “acts” in the meaning of Article 267(b) TFEU? The Court briefly answered the first, less interesting question affirmatively. The CJEU has jurisdiction as the national standard transposes the EU standard, and the national standard’s interpretation depends on the interpretation EU standard.Footnote 2
Far more contested is the question whether such “new approach” standards are “acts” in the meaning of Article 267(b) TFEU. There were two reasons that stood against a classification of “new approach” standards as “acts”. The first reason is institutional: these standards are issued by a private standardisation organisation mandated by the Commission, and hence no institution, body, office or agency of the EU in the sense of Article 267(b) TFEU. The second question is substantive: “New approach” standards are, from the perspective of EU law, legally non-binding to the addressees. Instead, they gain legal value primarily through incorporation into a contract.Footnote 3 Hence, it is questionable whether they can be qualified as EU law at all.
With regard to the institutional question, the Court recalls its judgments in Sevince Footnote 4 and Deutsche Shell Footnote 5 as authority to establish that “acts” are essentially all measures that “are by their nature measures implementing or applying an act of EU law.”Footnote 6 Possibly to justify this rather far-reaching reading of Sevince and Deutsche Shell, the CJEU recurs to the telos of Article 267 TFEU: Referring to Sevince Footnote 7 again, the CJEU stipulates that Article 267 TFEU shall “ensure the uniform application (…) of all provisions forming part of the European Union legal system and to ensure that the interpretation thereof does not vary according to the interpretation accorded to them by the various Member States”Footnote 8 . Later the Court notes that “while the development of such a harmonised standard is indeed entrusted to an organisation governed by private law, it is nevertheless a necessary implementation measure which is strictly governed by the essential requirements defined by that directive, initiated, managed and monitored by the Commission, and its legal effects are subject to prior publication by the Commission of its references in the ‘C’ series of the Official Journal of the European Union.”Footnote 9 In essence, the Court thereby stipulates that the question whether a measure can be classified as an “act” in the sense of Article 267(b) TFEU is a question of whether the issuing private institution is embedded into an EU legal framework, not solely looking at the public or private character of the issuing institution.
In answering the second question, and referring to Deutsche Shell againFootnote 10 , the Court first clarifies that non-binding measures fall within the scope of Article 267 TFEU.Footnote 11 Applying an effects-based approach, the Court then emphasises by reference to several provisions in the underlying Directive 89/106 that the publication of “new approach” standards in the OJ of the EU have “the effect of conferring on products (…) which satisfy the technical requirements defined in the harmonised standards relating to those products, the benefit of a presumption of conformity with the basic requirements of that directive.”Footnote 12 The subsequent possibility to attach the “CE” sign to the product then grants the product in question an “EU” passport, granting them a “right” to circulate freely in the Member States of the EU.Footnote 13 This has the effect, that Member States may not impose additional requirements on such products which bear the CE sign.Footnote 14 Hence, the Court concludes that despite of the fact that proof of compliance can be achieved by other means than compliance with the EU standard, these standards have a public legal effect.Footnote 15
Consequently, the Court established jurisdiction over the “new approach” standard at issue,Footnote 16 and with it arguably also over all “new approach” standards that are regulated in a similar manner.
2 Question 1(b) concerning the applicable test methods
With question 1(b) the referring Court has once more embarked on a pertinent question of EU product safety law, namely whether the testing methods foreseen in the respective standards exclude the use of other testing methods to ensure compliance with the level of protection foreseen in the standard. Indirectly, this question also touches upon the pertinent question if and how far the (technical) methods to determine the protective level of standards can be scrutinised by the European judiciary. With reference to several provisions in the underlying Directive, the Court leaves it to the Member States to identify the appropriate measures, hence it does not interfere with the difficult question whether one technical method may be preferred over another. The reason the Court brings forward is a classical trade law argument: the Directive was limited to removing obstacles to trade and hence sought “to harmonise not the specific conditions and rules for use of construction products at the time of their incorporation in construction and civil engineering works but the rules governing market access in respect of those products.”Footnote 17 Hence, a national court is not bound by the Directive, “either as regards the method of establishing the conformity of such a construction product with the contractual specifications or the time at which its conformity must be established.”Footnote 18
3 Question 3 concerning the relationship of the presumption of conformity in the “new approach” with “fit for purpose” terms in national contract laws.
Question 3 regards a point of interest to all national contract laws, namely whether the presumption of conformity (fitness for use) applies beyond issues of the Directive to other provisions of national contract law concerning the sales of goods such as, in casu, a provision requiring the product to be of merchantable quality or fit for purpose. The Court answered this question in the negative. Embarking once more on the classical rationale of trade law, the purpose of the “new approach” Directive would be solely to enable circulation of the product within “the territory of all Member States of the European Union.”Footnote 19 This precludes any further harmonisation of national law beyond this purpose.Footnote 20 It hence does not apply to contractual disputes to assess whether a national contractual requirement is complied with.Footnote 21
4 Question 2 concerning the power of EU law to disapply national contract law, which implies contractual terms.
Question 2 concerns whether EU law has the power to ask a Member State to disapply default rules in national contract law for cases where parties did not agree on a term. Despite the potential of the question to bring the case law on the applicability of EU law to national contract law further, the Court unfortunately did not make use of this opportunity. Instead, it referred to previous case law, which stipulated that a “technical regulation” can be invoked in proceeding between individuals.Footnote 22 Subsuming the prerequisites of the definition of a “technical regulation”, the Court finds that the provision in the Directive in casu does not meet either of the requirements and hence, in the concrete case, EU law does not override national contract law.
III Comment
The potential of the case on EU private law cannot not be underestimated.Footnote 23 Despite of the fact that with its answer the Court did not really get to the heart of question 2, it took a remarkable stance on quite a number of heavily discussed issues in EU private law. I will first provide a short introduction to the underlying “new approach” regulation to make the reader familiar with this very special area of EU law. Subsequently, I will comment on the broader implications of the judgment. I will treat the answer of the Court not only as an answer to the special underlying Directive, but also as a general guideline to the treatment of the underlying legal problems.
1 Regulating via the “new approach”: a short introduction
Product safety regulation in the EU follows two different regulatory designs.Footnote 24 The first one can be characterised as a “new governance” approach, as the regulatory design for these products follow basically the pattern of EU’s “new governance” programme as a response to several catastrophes in the respective sectors.Footnote 25 “New governance” products are say chemicals, pharmaceuticals and foodstuffs. This category of products need to be distinguished from “new approach” products (such as the one at issue here), which concern technical regulation of trade barriers.Footnote 26 In the EU’s past, the removal of technical trade barriers was intended to be achieved by the setting of detailed, obligatory substantial and procedural standards.Footnote 27 They prescribe the actions required from special target groups instead of setting performance standards, which had been the dominant governance mode in the EU for almost 30 years.Footnote 28 This regulation technique, although in line with the classical European command-and-control method that was originally envisaged by Article 100 TEEC (now Article 114 TFEU), was subject to criticism on several accounts. For some, this traditional harmonisation approach was ill-suited to achieving the objective of market integration, as these Directives regularly covered only one of a wide range of aspects in the respective product sectors.Footnote 29 For others, the ‘Europeanisation’ approach, although being the designated method for this kind of regulation in Article 100 TEEC (now Article 114 TFEU), resulted in the use of these command-and-control-regulation to an extent which had never been exercised even in national law.Footnote 30 In their view, “it produced ‘Europroducts’, which alienated the consumer.”Footnote 31 Either way, there was wide agreement that the classical standard-setting approach envisaged by Article 100 EEC (now Article 114 TFEU) was not suitable to the achievement of the goals set by the respective Directives.Footnote 32 To cope with this criticism, a different regulatory design was needed. Due to its regulatory design, Directive 73/23/EEC (the Low Voltage Directive) formed such an exception.Footnote 33 Although issued as early as 1973, it did not follow the classical command-and-control method envisaged by Article 100 EEC (now Article 114 TFEU). It moreover formulated general and abstract goals of consumer safety and left it to private standardisation organisations to define specific standards. If these standards were complied with, the meeting of the safety goal was presumed (Article 5(1) of Low Voltage Directive). However, only the goal of consumer safety was legally binding. If it could be achieved by other means the marketing of the product was still possible. Today, we would dub such an approach “principles based” or “risk based”. This principles-based regulatory design formed a blueprint for the design of the “new approach” by the Council to govern technical barriers to trade.Footnote 34 The “new approach” encompassed seven basic criteria:
∙ the EU only drafts framework Directives, which set an abstract goal to be achieved;
∙ European Standardisation Organisations (CEN, CENELEC, ETSI) receive the competence to substantiate this general goal. Their proposals are to be adopted by national standardisation organisations and are to be published in the respective Member State;
∙ compliance with these standards is and remains voluntary;
∙ compliance with the goals of the respective Directive is presumed if the manufacturer complies with the safety standards;
∙ a safety clause is introduced that allows Member States and the Commission to adopt measures against products that fulfilled the requirements of the respective standards but may nevertheless be harmful;
∙ the manufacturer declares its conformity with the goals of the Directive by attaching a CE logo to the product. Before attachment, the products are required to undergo a conformity or certification test issued by a national agency;
∙ if third parties are to be involved in the certification test, they need to be accredited. This process of accreditation is established in the respective guidelines; certain criteria are, however, manifested in several community guidelines and legislation.
The wide interpretation of the term ‘measures’ in Dassonville Footnote 35 and especially the corresponding wide application of reasons for their justification in Cassis de Dijon Footnote 36 built the cornerstone of this new understanding of harmonisation at European level.Footnote 37 To this end, harmonising measures by the EU according to Article 100 TEEC (now Article 114 TFEU) needed to reflect this change in understanding of the European market with regard to the free movement of goods, as it obliges the Union to establish measures that close the European market for goods which threaten the rights mentioned in both Article 36 TEEC (now Article 36 TFEU) and the Cassis de Dijon judgment.Footnote 38 According to this new vision, the fundamental freedoms grant any producer the right to circulate a product, once lawfully marketed in one Member State, freely in any Member State of the EU, in principle regardless of the respective Member State regulations. Disparate regulations may hence generally not hinder the free circulation of such a good, even if they have not yet been harmonised by secondary legislation. Secondary law is hence not needed, as in these areas the competition of legal orders and the deregulatory pressure on non-efficient legal regimes of Member States will over time lead to the harmonisation of legal rules at the most efficient level. Such a harmonisation by competition of legal orders is, however, not envisaged for regulatory measures that fall within the scope of “mandatory requirements”. Producers have to accept such disparate regulation in Member States. If the EU legal order demands harmonisation in these areas, it has to do so proactively via secondary law.
In the “New Approach” regime, the EU made use of this possibility. However, most notably, it also transferred the right to define the exact level of protection and the means by which to achieve them to standardisation organisations. Whether this was within the mandate from Cassis de Dijon, which only had the governing of the EU level and Member State level in mind (without taking recourse to private organisations), was questionable. Either way, the “New Approach” until today successfully governs the EU market subject to technical standards, bringing with this innovative regulatory method a number of legal problems, which the Court had to deal with in the instant case.
2 Access to justice 1: can “new approach” standards be subject to a preliminary ruling procedure?
A question that has long been subject to debate was whether “new approach” standards qualify as an “act” in the meaning of Article 267(b) TFEU. The European judiciary has so far, to my knowledge, only at one occasion defined the term “act” in the sense of the meaning of ex-Article 173 EEC (now Article 263 TFEU): in this sense, according to IBM v Commission, an “act” needs to be determined by the substance of the measures and can be understood as “any measure the legal effects of which are binding on, and capable of affecting the interest of, the applicant by bringing about a distinct change in his legal position”.Footnote 39
Differing from the interpretation of the meaning of the term in ex-Article 173 EEC, the ECJ had cleared that an “act” in the sense of Article 267(b) TFEU embraces also non-binding provisions,Footnote 40 hence the formally voluntary character of “new approach” standards are no obstacle for defining them as “act” in the sense of Article 267(b) TFEU. By stipulating whether a “new approach” standard can be defined as an “act” in concreto the CJEU de facto partly has recourse to its judgment in IBM v Commission by looking at the substance of the measure. The CJEU emphasises first that the private nature of the standard-issuing organisation is not enough to disqualify these standards as an “act”. Rather, still very much in the institutional language, the “new approach” standardisation organisations are embedded in an EU legal framework. The CJEU thereby explicitly denies identifying an “act” by solely taking recourse to the private nature of the issuing institution. To justify this view, it later on refers to the regulatory (public) effect of the standard.Footnote 41 This is in line with previous case law,Footnote 42 where the CJEU also embarked on the effect of the “new approach” standard to justify the categorisation of a “new approach” standard as “measures having equivalent effect” in the sense of Article 34 TFEU, despite the fact that it could have easily established an association with a public act of Germany.Footnote 43
3 Access to justice 2: a blueprint for private standards in the WTO?
In WTO law, a parallel discussion takes place. There it is questionable whether and how private standards are to be treated under WTO law. Several mainly developing countries have put this issue on the tableFootnote 44 , and it is been discussed in various fora of WTO institutionsFootnote 45 and in the literature.Footnote 46 It remains to be seen (and hoped) whether the parallel discussion on the treatment of private standards in the WTO will take notice of this judgment and will consider applying a more effects-based approach, eventually maybe allowing private standards to fall under the scrutiny of WTO law.Footnote 47 Technical standards are also already comprehensively regulated under the TBT Agreement, where the Dispute Settlement Body and the Appellate Panel have established a more formal approach to (private) technical standard-setting, always requiring a link to some public measure.Footnote 48 As market-access reasoning also generally differs substantially in WTO law (formal) and EU internal market law (effect)Footnote 49 it is unlikely that the effects-based approach taken by the CJEU in this case will be taken up in WTO discussions within and beyond the TBT Agreement.
4 Defining private standards – a step forward?
What defines a standard as a private standard? The major literature in WTO law, in sociology and in political science identify the “privateness” of standards by looking at the issuing institution.Footnote 50 In this view, the governance triangleFootnote 51 has become the most established to categorise private and public standards. According to this triangle, three different types of institutions are involved into the creation of standards: non-Governmental institutions, states, and firms.Footnote 52 The smaller the influence of states, the more the standard is considered “private”. Likewise in the WTO, Annex I No 2 of the TBT Agreement defines technical standards as a “Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not mandatory.” The Appellate Body also requires a link to a public institution involved in standard-setting to establish WTO jurisdiction.Footnote 53 China and New Zealand have provided a working definition by which private standards, where they are governed by the SPS Agreement, shall be defined as follows:
“An SPS-related private standard is a written requirement or condition, or a set of written requirements or conditions, related to food safety, or animal or plant life or health that may be used in commercial transactions and that is applied by a non-governmental entity that is not exercising governmental authority.”Footnote 54
Each of these views are linked by the fact that they see standards as “private” if they are (primarily) issued by a private body. Some legal scholars, however, have already questioned this view. They, including myself, advocate that the definition of private standards should have recourse to its effect (mostly as embedded in contracts) rather than to the issuing institution.Footnote 55 Standards are considered “private” if they gain legal effect by means of private law.Footnote 56 Both views have their strengths and weaknesses. With this judgment, the CJEU, however, endorses the latter approach for the application in EU law. It remains to be seen whether this switch in approach will also be heard by others.
5 Technical specifics (“science”) in court – “new approach” legislation regulates “at the border”, fundamental freedoms “behind the border”
Whether and to what extend the CJEU also controls the content of “new approach” standards (do they really reach the goal envisaged? Which method is the best one to determine compliance?) has already been subject to judgments at the European level. The most famous example may be AGM-COS MET Footnote 57 , where a car-lift covered by the CE marking (and complying with all regulations of the standard) gave way when lifting a caravan. The Finnish official publicly warned about this product and was, as a public official, taken to Court for state liability. The question was whether Finland had to pay compensation under EU state liability law for the public warnings. The CJEU affirmed this, highlighting that the Finish official had breached EU law as it was not for him to warn the public, but rather it was for the State of Finland to invoke the safeguard clause. Implicitly, the CJEU thereby denied judgment on the substance of the standard and the respective methods applied which aimed to achieve the goal but took a formalistic stand on testing whether the relevant steps of the “new approach” procedure were taken.Footnote 58
In the instant case, the Court, without mentioning AGM-COS MET, took up this rationale and sharpened it. It emphasised that the aim of “new approach” standards is the facilitation of market access, not harmonisation of the rules concerning their use after market access.Footnote 59
The Court thereby embarked on a classical trade law argument, emphasising that “new approach” standards harmonise rules “at the border”, not “behind the border”, making rules “behind the border” subject to a competition of legal orders. Such an approach may be reasonable if one takes into account the classical underlying rationale of the fundamental freedoms. Since the judgment in Cassis de Dijon, regulations “behind the border” are, as a default option, subject to a competition of legal orders of the Member States, orchestrated by EU primary law.Footnote 60 If the EU wants to harmonise in these areas, it needs to do so via secondary legislation.
In the “new approach” the EU, however, took up the possibility to regulate and transferred responsibility for regulation, both at the border and behind the border, to private standardisation organisations. While the first one is undoubtably within the powers of the EU, the CJEU has in Cassis de Dijon assigned the competence to regulate “behind the border” as a default to Member States. EU law frames these regulations by means of primary law and may regulate also behind the border via secondary law (confined by the proportionality principle and the principle of conferral), thereby providing the EU with the possibility to re-transfer this “right to regulate” back to the EU legal order. However, as has become evident, in particular by Article 114 (4, 7 and 8) TFEU, it is the Member States who remain the ones that control the effectiveness of “behind the border” regulations, even if harmonised by the EU. It has also become evident via Article 114 (4 to 8) TFEU that the final say in whether such measures shall be upheld rests with the EU. In none of these provisions it is foreseen that outsourcing to private organisations is an option in the fine institutional balancing between the EU and Member States on who decides on “behind the border” regulations. In the instant case, the CJEU emphasised that these aspects are not even harmonised by the EU, but rest with Member States. Article 114 (4 to 8) TFEU are hence not applicable. The Court has therefore correctly clarified that Member States still retain the right to determine the methods by which they assess conformity and, at the end of the day, also to determine the content of the “behind the border” regulations.
What the Court did not mention, and what would have been highly desirable, is the fact that these different assessment methods etc can likewise form obstacles to trade and may in themselves form a market access barrier. As such, they may not be harmonised by “new approach” Directives, but may fall under the scrutiny of Article 34 TFEU. This is the major lesson from the Cassis de Dijon judgment. Whether and to what extent methods used by Member States to assess conformity determine the point in time when conformity is established etc. hence does not fall within the scrutiny of “new approach” legislation, but rather falls under the fundamental freedoms. The questions referred to the Court did not ask for a treaty-based evaluation. However, a complete answer in light of EU law might have warranted for a more comprehensive answer, also including such a treaty-based assessment.
6 Liability of standardisation organisations – as “new approach” standards are “acts”, are the standardisation organisations subject to liability?
From a normative point of view many argue for liability of standardisation organisations.Footnote 61 Cases so far brought in front of the CJEU do not pay witness to the fact that such liability will soon be established at EU level.Footnote 62 One could take the stance that by accepting that “new approach” standards are “acts” within the meaning of Article 267(b) TFEU, one could see this judgment as further indication that liability for standardisation organisations is soon to come. According to the seminal judgment in Francovich Footnote ,63 state liability can only be established under three conditions: “The first of those conditions is that the result prescribed by the directive should entail the grant of rights to individuals. The second condition is that it should be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, the third condition is the existence of a causal link between the breach of the State’s obligation and the loss and damage suffered by the injured parties.”Footnote 64 In this sense, defining private standards as public “acts” much more clearly obliges the state than private standards, which, without such a public framing, establish rights only inter pares. Such a reading may be classified as far-fetched for several reasons: first, the Court based the classification of the “act” also by reference to the public framing of the “new approach” standards by EU law,Footnote 65 and hence did not assign private standards per se public value. From the present judgment alone one could not draw the conclusion that private standards would always have to be qualified as an “act”, regardless of whether they have public value. Second, it is furthermore questionable whether Directives framing “new approach” standards grant rights to individuals. As the Court held here, “new approach” Directives only regulate “at the border”, while the rights of individuals are regularly granted in “behind the border” regulations. The Elliott judgment does not provide any indication on whether standardisation organisations are subject to state liability.
7 Relationship between “new approach” presumption and general national contract law – has the presumption of conformity to be transposed to other provisions of national contract law which require a similar presumption?
National contract laws around the EU provide provisions where the safety of a good or service is presumed when certain requirements are met. One example is § 434 BGB, where a material defect of a thing is presumed, in absence of an agreement, “if it is suitable for the customary use and its quality is usual in things of the same kind and the buyer may expect this quality in view of the type of the thing.” Leaving aside the quarrel of whether this is to be interpreted in a subjective or an objective way, one could argue that a “new approach” standard would also indicate the “quality in view of the type of the thing” to be expected, hence compliance with an EU “new approach” standard could in effect trigger the presumption that there is no material defect in the sense of § 434 BGB. The current judgment makes clear that such an interpretation of national contract law cannot be based on the rationale of “new approach” Directives and hence on EU law. However, it is important to note that it limits its judgment to the interpretation of national contract law. It does not make any recommendation on national contract law transposing EU law, such as § 434 BGB. It remains to be seen if the Court would also endorse such a view.