Foundations of Private Law - Appunti

U0 - Introduction

Course objectives and methodology

The scope and boundaries of private law within the legal discourse.

Practical example.

Definition.

To sum up.

The structure of the course.

Course objectives and methodology

• Understanding the main concepts and general principles of private law through the lenses of western legal tradition and EU law.
• Understanding the role played by private law in addressing concrete problems occurring in private relations within society and global markets.
• Grasping some of the basic tools for comprehension of private law matters from the perspective of a transnational lawyer in both purely domestic (national) and cross-border situation.
• Understanding the possible role played by EU law (and to a minor extent international law) in providing principles and rules applicable in private law contexts or influencing national systems under these aspects.
• Functional approach - mapping legal sources and legal foundations - common cores of the different systems - EU dimension.
• The exam: open and case based written questions + complementary oral part.

The scope and boundaries of private law within the legal discourse

Practical example

The hospital Alpha, located in country A, purchases a large stock of antiviral pills from the pharmaceutical company Beta, whose headquarters are located in country B.

Relationships: state - hospital (public and hierarchal); hospital - pharmaceutical company (paritarian).

Since the availability of this treatment is still very limited in the market, the State requires by law that hospitals shall adopt an internal plan defining criteria for the best allocation of this treatment, taking in due consideration the patients' vulnerability and the expected effectiveness of the treatment in the given circumstances.

Hospital - patients (practically hierarchal).

In abstract terms in private law the situations are all paritarian and free to negotiate (look at hospital - pharmaceutical company).

The Alpha allocation plan provides that the treatment shall be ensured on a “first come first served” basis, in case of shortage, priority should be given to the most aged patients.

In reality the two parties might not be on the same playing field and a hierarchal situation is present (look hospital - patient); it is not grounded on the law but on private autonomy (which the state does not have).

Where patients are admitted to the hospital, they (or their family members on their behalf) are asked to accept hospital's terms and conditions, including the treatment allocation plan mentioned above.

The allocation plan itself is trickier, was it a copy paste of the law it would be public, but if space for private autonomy was given to the hospital it would be considered as private law.

Based on this plan, Mrs Brown, a chronic disease patient, resident in country C, is refused the antiviral treatment despite her vulnerability.

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Whereas other treatments are provided, Mrs Brown cannot survive the infection and passes away.

By contrast, Mrs Green, a 78 yrs old patient resident in country D, receives the antiviral treatment and just afterwards, is affected by a severe allergic reaction that is not reported in the information provided by the pharmaceutical company.

Instruments: contracts (agreement between private parties based on private autonomy).

What are the main actors in this story? (private, public or both? individuals organisations or both?)

Private law matters can also extend to public entities in some circumstances, it is relevant to the happenings of the case but not to the general usage of private law in this situation.

Is the law infringing the rights of the patients? is the state liable?

What are the main interests at stake? (individual, collective, general interests, economic, non economic)

Not confined to individual interests it can also be considered on the basis of collective economic interests and/or general wellbeing.

If we look at the roman definition public encompasses everything that regards the public.

Also can the allocation plan not be followed in some way?

As a consequence of the adopting of an “unlawful” act the life of a patient is put at risk.

Is then the allocation plan a private or public act (difficult to understand)?

Private law can be found by looking for the type of relationship and the type of instruments used to regulate parties interests.

Definition

It can be viewed as either the regulation of everyday life or as the cement that withholds the different parts of society together by supplying pre-constitutional ground rules of respect for others and their interest (Collins).

Private law: law that deals with the rights and duties of individuals with respect to one another, it thus allows people to shape their own legal relations with others by choice so private interests are only created and maintained if private individuals wish to do so (possible conflict with countervailing considerations such as interests of third parties or public concerns).

It has five major branches: property, contract, tort, family and succession which are most of the time treated as isolated compartments.

But what are the aims of private law? there are two main schools of thought (Smits).

Private law works primarily as an instrument to reach some external goals.

Private law provides legal rules on how individuals must conduct themselves vis-à-vis others (normative view).

Usually this goal is economic efficiency (but lack of arguments for it).

This makes the focus go on the question of how people should legally treat each other, which opens the door to involving social norms and to the fact that people owe each other duties without the state telling them that is the case.

Or making the successfulness of a rule dependant on whether it influences behaviour in the way desired thanks to incentives and penalties (but no empirical basis).

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Or categorising it as distributive justice making it really public law (but this means that all interactions should be evaluated by the state and this is not correct).

Distributive justice should play a role in private relationships but not such an extensive one.

And it gives pride of place to legal doctrine, as it is what judges and practitioners turn to when in need, a source of information on how to behave.

The roles of private law can be:

• The acknowledgement of rights and freedoms (including fundamental rights and freedoms) related with private autonomy.
• The limitation or regulation parties’ autonomy to accomplish social justice.
• The enabling and fostering of parties’ autonomy so to reach different outcomes.
• The balancing conflicting interests and tuning social and market interactions.

But what gives private law the legitimate authority it has, and what makes it so broadly accepted by the community? (Collins)

Cosmopolitan principles and the governance of the nation state

Cosmopolitan principles (universal).

The governance of the nation state (nation).

This philosophy says that there are general principles (sometimes described as natural law) that provide the foundations to private law, these principles are derived from basic insights into human nature and the elementary features of a market society, thus private law is discovered through the exercise of reason, moral argument and logical thought.

However, since the rise of nation states in Europe, it has been national institutions that have determined the content of private law and facilitated its evolution through positive laws which supported complex economic arrangements.

It always endorses some variant of a market economy (protection of private property and general freedom of contract), but when it comes to theories of justice in private law there is a variety of views, therefore, while it provides a common foundation, it does not determine precise answers.

The bottom line is that the state promises its citizens peace and prosperity (through institutionalisation and stabilisation of social rights) in return for obedience to its authority.

To secure the national goals of social justice (endorsed through the political process) private law has been continuously modified (e.g. consumer law and labour law).

Not even the methodology is common (some historical one philosophical), what is is the quest for universal principles and the rejection of the idea that all law is grounded in nation states.

One result has been the production of territorial diversity, because while differences have always existed between state, those were always provisional, while now each state has what they regard as an optimum balance between competing considerations of justice and fair distribution of wealth.

It has now found new foundations in human rights, however this turn will not solve issues of detail but might even render legal reasoning more complex as it is a binding force within a geographical boundary.

It overlaps with other sources of identity such as language, culture etc. (nationalism).

Based on this interpretation the predominant principles of justice (linked to schemes of welfare and distributive justice on the basis of social solidarity) and the primary source of legitimate authority derive from the nation state (Collins).

Ideas of social solidarity vary between states and usually have at its core an acceptance of the homogeneity of members and an obligation of political altruism (Collins).

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While the legitimate sources of private can be constitutional criteria or rule of recognition, the exclusive ones are parliamentary legislation and judge-made law, therefore the obligations created rest primarily on the authority of the nation state itself, still a strand of cosmopolitan justification stands as a scheme of relatively timeless principles (general principles of law, human rights) (Collins).

But could then private law develop at transnational level? (Collins)

The European Union

European private law can be seen in two ways: first there is the cosmopolitan imagination found in the search for a “common core” (common frame of reference) and international protection of human rights in the Council of Europe and the European Court of Human Rights, on the other the European Commission gives us a narrower vision of justice, one that says that the EU lacks the competence to replace nation states as a source.

The key idea of Europe’s notion of justice regards the advantages everyone has from the opening up of a single market, it promises an enlarged scope for choice in regards to the goods that can be readily consumed and in the legal order to which citizens can submit (even if the full realisation of this vision is blocked by culture, language and bureaucracy).

Still both the theory of justice and the Directives that can be described as European private law are thin, because while EU private law has the attractive quality of enhancing freedom it lacks the richness of national systems, and even if it emulated the “optimum balance” each country would have a different one anyway.

EU harmonisation inevitably clashes with nationalism and each country’s social justice pattern (too much for some too little for others) and these disputes can escalate into battles over sovereignty.

Transnational commercial law

This is mainly customary law, which has been codified and elaborated by trade associations and most of the time respected and enforced by state institutions, it serves the purpose of cross-border trade and therefore facilitates commerce and as it is negotiated between market participants, its justice lies in both wealth maximisation and freedom.

This also means it lacks any capacity to take into account the interest of others (externalities and third parties) and it does not have a credible claim to having the same source and degree of legitimate authority as the nation state.

It does take on the qualities of cosmopolitan law in the sense that it is used to supplement law in the event of gaps and conflicts.

While transnational commercial law has yet to escape its sectorial origins and form, EU private law could be a valid (but not perfect) candidate even if it will encounter nationalist resistance.

Sources at the basis of private autonomy

Sources at the basis of private autonomy: article 15, 16, 17 of the charter of fundamental human rights.

(Freedom to choose an occupation and right to engage in work)

1. Everyone has the right to engage in work and to pursue a freely chosen or accepted occupation.

2. Every citizen of the Union has the freedom to seek employment, to work, to exercise the right of establishment and to provide services in any Member State (art.15 ECHR).

(Freedom to conduct a business)

The freedom to conduct a business in accordance with Union law and national laws and practices is recognised (art.16 ECHR).

(Right to property)

1. Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. (...) The use of property may be regulated by law in so far as is necessary for the general interest (art.17 ECHR).

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But what is a right in private law and what is its basis? it is created to balance between general interests and third parties/general interests.

Private law regulates relationships between individuals and/or organisations which have private autonomy and who in theory are on the same playing field (equal arms presumption).

There is a distinction between mandatory (to comply with, cannot be changed, protect interests of parties) and default (comply unless decided otherwise, changeable) rules.

Mandatory rules are aimed at protecting weaker parties within a given relationship and third parties or general interests.

On powers in private law, the equal arms presumption:

• Do parties in the story above operate in a level playing field?
• Do you see any unbalanced relation therein?

The equal arms presumption may be rebutted and mandatory rules may be aimed at limiting these powers, by private law may adjust rules and principles limiting private autonomy.

In respect of power asymmetry between the parties (eg. employer-employee).

Default rules may also encourage a “fair” use of private powers.

Right in private law

An entitlement, an acknowledgement of an interest in favour of an individual/organisation so that its interests are protected within such a situation, they can be actively protected in court.

In case of infringement of a right a remedy (a protection of said rights if they are infringed) is applied, the very presence of the remedy enforces the right itself by being a deterrent (used a lot in criminal law and procedural).

General principles

Toute Société dans laquelle la garantie des Droits n'est pas assurée, ni la séparation des Pouvoirs déterminée, n'a point de Constitution (Art. 16, Déclaration des Droits de l'Homme et du Citoyen de 1789).

A legal right is “nothing but a prediction that, if a man does or omits certain things he will be made to suffer in this or that way by judgment of the court” (O.W Holmes, The Path of the Law, HLR, 1897).

Tutti possono agire in giudizio per la tutela dei propri diritti e interessi legittimi. La difesa è diritto inviolabile in ogni stato e grado del procedimento. Sono assicurati ai non abbienti, con appositi istituti, i mezzi per agire e difendersi davanti ad ogni giurisdizione (Art.24, It. Const.).

Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law (TFEU, Art. 19(2)).

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Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article [fair trial; legal aid] (CFREU. Article 47(1) (Right to an effective remedy and to a fair trial)).

Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity. (ECHR. Art. 13 (Right to an effective remedy)).

To sum up

Private law is a domain of law due to acknowledge, balance and regulate rights or other qualified interests as emerging within relations between/among individuals and entities (including public ones), which are primarily grounded on the principle of private autonomy within the limitations established in the law for the protection of third parties’ and general interests.

Unlike in the domain of public law, (private) autonomy may primarily serve individual and economic interests; however, general interests do play a role both as limitation for private autonomy and as objectives pursued through private law instruments.

Unlike in the domain of public law, the exercise of private autonomy may entail the emergence of “private powers” dealt by (private) law when balancing between private autonomy and general interests.

Not only private law identifies rights but also provides measures (remedies) for their protection, mainly (but not only) through the intervention of courts awarding some sort of “satisfaction” to the aggrieved party.

The structure of the course

The “who” questions.

Who are the subjects of private law? interests and rights that are universally recognised as fundamentally inherent to their personhood and human being?

The “what” questions.

The main interests protected by private law? are these related exclusively to physical assets or not? how can the relation between person and goods be framed? how do we know who has right of control over valuable assets?

The “how” questions.

How can parties organise their own interests through private autonomy and contracting? What are the limitations of this autonomy? What are the consequences of the use of contracts in market and society? How are rights and interests regulated by contracts protected?

How are rights and interests on goods or immaterial values protected? eg. to what extent and in which cases does the award of damages represent a viable option?

U0 - introduction 6

U1 - The sources of private law for a global jurist

Why is private law mostly grounded on national law

The first trigger was the organisation of power within the national states, insofar as they applied their private law they felt as they were affirming their identity (code Napoleon), private law becomes a distinctive feature of an economic system and may give competitive advantage.

Historical reasons are: there are other reasons such as: