Summary of the Ius Commune Workshop on Contract Law (11 May, 2023)
The topic of this year’s workshop was “The Intersection between Sustainability and Contract Law”.
This year, the Ius Commune Workshop on Contract Law took place on Thursday, 11 May 2023, finally offline. The topic of this year’s workshop was “The Intersection between Sustainability and Contract Law”. The seminar commenced with an opening speech by dr. Caroline Cauffman of Maastricht University, who introduced the topic and reflected on the idea on how contract law can contribute to a better world and a better future. Afterwards, the participants were engaged in their presentations by five researchers, who reported on their ideas or studies on various topics, all revolving around the idea of sustainability.
The first speaker was Dr. Candida Leone from the University of Amsterdam, who presented on the topic of energy poverty, energy justice and the role of consumer law in the European energy transition. The presentation focused on her current research project, which is a work in progress. The discussion began with a question to the public on whether there is a right to energy, or even, a fundamental right to energy. Considering the current state of affairs in the EU and that it now is undergoing a shift to renewable energy, Candida pondered on the question of what consumers should do to facilitate this (e.g. insulation of homes, choosing more sustainable energy mixes, becoming energy producers through ownership of solar panels, etc.). Furthermore, Dr. Leone described her view on the fact that the profile of an active energy consumer could not, in fact, be mirrored with the one of an ‘average consumer’, and called this phenomenon ‘average consumer on steroids’, due to unawareness of how energy policy works. The discussion thus continued with the rhetorical question of whether energy poverty is a problem of general poverty; to this end, Dr. Leone discussed whether people have a right to appropriate energy provision, and if so, against whom the people can exercise this right. The discussion followed with a description of the Energy market design proposal, voted by the European Commission in March 2023, which would enforce rights (such as the right to energy sharing, the right to a second meter in the household, protection against disconnections), but still has some caveats, such as the issue of profits, which remains unaddressed. At the end, Dr. Leone reflected on the question of why it does not become a matter of contractual justice that consumers accept a fair price if the right to energy is taken seriously.
The second presentation was given by Fleur Vanswijgenhoven of KU Leuven, who presented her doctoral thesis topic on whether sustainability obligations are part of the director’s governance duties and whether they can be invoked by third parties. In her upcoming thesis, Fleur investigates this issue based on Belgian law, and departs from the current case law (more specifically, against Shell) that in the past, climate litigation cases targeted states, but more recently – companies, and even directors. Such a situation was in the case of ‘forever chemicals’, in which the Belgian government addressed directly the directors of the companies; if the directors are found liable, this would amount to a crucial precedent. The link with the topic of contract law, in this case, is that in Belgium, the mandate of directors is based on a contract; however, this is a very particular type of contract because it is ‘empty’ and dependent on an open norm. Since open norms enlarge the scope of the contract, the question of whether directors can be held liable for breach of sustainability obligations becomes more pressing. Currently, as it stands in Belgium, the corporate interest is the main open norm that the directors shall follow, and it is interpreted narrowly (in other words, the director's duty is only to make profits). However, on the EU level, this interpretation of corporate interest is enlarged, proved further by Art 25 of the Draft Directive on Corporate Sustainability Due Diligence, which provides that the obligation of directors is not only towards shareholders, but also towards stakeholders. Since contractual relations with directors are getting broader, environmental interests should be taken into account. However, Fleur reflects on what that would mean for third parties since they usually cannot rely on contractual obligations that they are not party to. The presentation concluded with a question by Fleur that she is yet to discover in her doctoral thesis, specifically, if open norms are enlarged in favour of third parties, could it be said that there are implicit third-party rights?
The third presentation, also the final before the coffee break, was given by Yannick van den Berg, PhD candidate in Sustainable Global Economic Law at the University of Amsterdam. The speaker presented on the topic of sustainability and advertising, with a focus on consumer choice to consumer habits. Yannick started with a brief description of the Green Deal and the fact that one of its main goals is empowering consumers for the green transition. The discussion also touched upon the Green Claims Directive, which could be regarded as lex specialis to the proposal for empowering consumers. Yannick explained that the Directive would include more stringent rules on comparative statements in advertisements and requirements on background information on how to use products more sustainably, as well as requirements for prior certifications for each environmental claim that the advertisement puts forward. Furthermore, Yannick explained that the current EU green policy is based on the classic economic idea of the responsibilisation of the consumer; however, one should understand that consumer behaviour is not always rational, and sometimes it is formed due to bias or habits, and in order to cover the gap, consumer habits should be studied. In this situation, the answer is practice theory, which sees daily life as consisting of interconnected and temporally and spatially dispersed social practices such as working, commuting, eating, etc. In this regard, it is to be considered that advertisement has a broader impact than just providing information to the consumer – the omnipresence of advertisements in modern societies changes consumer habits and bias, merely by its presence (e.g. seeing advertisements for a specific gasoline provider very often, unconsciously makes us choose it). In conclusion, the speaker reflected upon what the way forward could be, and considered that if social practice theories are to be taken seriously, then people need to be stricter in their approach to advertising carbon-intensive products and companies. This is because advertising for seriously polluting products could be seen as inherently misleading when they try to promote any environmental and social benefits of their products (e.g. Shell advertisements claiming that the company is investing a lot in renewable energy).
After the coffee break, the fourth speaker, Mirthe Jiwa of the Free University of Amsterdam presented on the topic of privity of contract and human rights violations abroad, and specifically on the potential of the third-party beneficiary doctrine in such instances. The discussion commenced on how human rights violations occurring in global value chains have started to receive attention, specifically beginning with the Rana Plaza incident. During her research, Mirthe has posed the question of how these harms occur, in relational terms and in terms of the privity of contracts. The privity of contracts determines who are parties of the agreement and who are on the ‘outside’ (e.g. in global value chains, there are suppliers and buyers, but also third parties). The question driving Mirthe’s research is how do these contracts negatively impact third parties such as consumers. There are two ways to look at this issue: through type 1 externalities (which relate to contract performance), and through type 2 externalities (relating to contractual breach). It is also important to mention the incorporation of codes of conduct in supply chain contracts, and what are the consequences if the supplier does not abide by them. In such a case, the third-party beneficiary doctrine could be of use. While the 2009 Walmart case resting on the same considerations did not succeed, it does invite us for thinking of how we can look at the third-party beneficiary doctrine not so much as a deviation from privity, but as a continuation. The speaker concluded with the idea that from a relational perspective, the talk always starts with the individual; but if it would start with the contractual relation, it could lead to a vision on how the contract operates in a broader environment.
The fifth presentation of the day was given by dr. Kalpana Tyagi, an Assistant Professor of Intellectual Property and Competition Law at Maastricht University. Her presentation revolved around non-fungible tokens from a contract perspective, and how they contribute to the sustainability debate. The presentation began with the definition of NFTs and an explanation by dr. Tyagi on why this is a hot topic in law nowadays. The speaker explained the potential uses of NFTs, and that they could be used to represent intellectual property rights and they facilitate efficient digital trading of assets. With an idea to make transactions more sustainable and efficient, IBM has designed and implemented a block-chain based NFT platform that would facilitate patent management and acquiring. The platform works through if-clauses which translate into a digital smart contract, thus implementing automated contract-making (also known as digital execution of contracts). This proved to be a functional option because Silicon Valley companies constantly use it. As a conclusion, dr. Tyagi approached the question of what it is that we buy when we buy an NFT and presented an example that immediately engaged a hot conversation amongst the participants.
Finally, the last speaker of the day was Christopher Borucki, PhD researcher at the Institute on the Law of Obligations of the KU Leuven. Rather than presenting a research idea, Christopher presented the current framework of the Circular Economy Action Plan of the European Commission, and its initiatives meant to expand the lifespan of products. The Action Plan contains four initiatives, which are: (i) sustainable products, (ii) consumer empowerment, (iii) green claims, and (iv) the right to repair. He then went on to focus his discussion primarily on consumer empowerment through lifespan extension. Nowadays, the economy is linear – natural resources are extracted and discarded. The Action Plan proposes to depart from this and engage in a circular economy, with the idea of lifespan extension to mean continuously reusing until it is not possible anymore, even before reaching the point of recycling. Christopher then went on to discuss three focal points that are impediments to the idea of lifespan extension. First of all, he mentioned the technical and legal obstacles in the enforcement of the right to repair by consumers. Next, greenwashing by companies through misleading environmental claims also adds to the obstruction of lifespan extension. Finally, premature (or ‘planned’) obsolescence, such as specific commercial practices stimulating early replacement, continuously discourages consumers from recycling their products until they are no longer usable. The speaker then discussed four strategies to reduce obsolescence, specifically: reducing, reversing, postponing, and resisting. Finally, the discussion ended with caveats to the current Action Plan and looking forward to future Commission initiatives in the area of consumer engagement in the circular economy.
After the last presentation, dr. Caroline Cauffman thanked the speakers for their perspectives and ideas, and the participants for their input and engagement. As a closing discussion, dr. Cauffman suggested that those present at the workshop would suggest what the next year’s topic of the Ius Commune Contract Law Workshop be. While there were many ideas pitched, the participants agreed on the topic of the institutional role of contracts in infrastructure.
Written by an M-EPLI intern Catarina Martin
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