In a single paragraph, at page four of the recent ‘Competitiveness Compass’, the European Commission briefly presents the ‘28th legal regime’. The latter is an additional, optional legal framework that is meant to provide ‘a single, harmonised set of EU-wide rules’, ‘including any relevant aspects of corporate law, insolvency, labour and tax law’. This legal instrument is thought for newly established, or growing companies that (aim to) operate on the Single Market, and inserted in the broader effort to ‘reduce red tape’ and streamline legal compliance – although, it seems already missing in the Commission’s most recent ‘Communication on implementation and simplification’. Nevertheless, the story of an additional, optional European legal regime, able to supersede national law and ensure legal certainty across the borders, is a recurrent ambition of the European Union but not a very fortunate one.
The historical precedent
In another age, under the fever of an ever-closer European integration, a great debate unfolded among European legal scholars: the creation of a European Civil Code. In brief, the project began with the Lando Commission, which laid the groundwork by drafting the Principles of European Contract Law (PECL), a first attempt to show a common core of European principles in private law. This effort was later expanded by Christian von Bar’s Study Group on a European Civil Code, culminating in the Draft Common Frame of Reference (DCFR)—a comprehensive, yet ultimately non-binding, attempt at unifying European private law.
However, as political realities set in, the ambition of a fully-fledged European Civil Code gradually narrowed in scope. Instead of a sweeping, all-encompassing legal framework of private law, the ambition narrowed to sales law, the Common European Sales Law (CESL), available on an optional basis to facilitate cross-border transactions. Yet, even this more modest initiative struggled to gain traction and was eventually shelved in 2015. Eventually, what started in academia returned to academia, in the form of (various) university textbooks, still taught in some law courses across Europe.
More than 35 years have passed since the initial European Parliament resolution ‘to bring into line the private law of the Member States’ requested to start the preparatory work for a ‘European Code of Private Law’. Yet, in a transformed guise, the idea of single code to navigate the European market seems to be making a subtle comeback, this time propelled by a utilitarian rationale. Today, under the broader and more flexible concept of the ‘28th regime’, i.e., a legal framework that is additional to the national legal frameworks of the 27 Member States, the EU seeks to offer a parallel, elective legal framework that businesses — particularly, start-ups and scale-ups — can choose to operate under, bypassing the different national legal frameworks. However, what did not succeed in the past and how can the concept have more chances this time around? Are there lessons to be learned?
A civil code under a different name
The European Union does not have a European Code on private matters, in the historical meaning of the term. It relies instead on sectorial regulation, as a direct consequence of the principle of conferral of powers: the EU may legislate only in the areas established by the Treaties, although, most of the time, in the areas of shared competences with Member States, it relies on its general competence, namely the harmonisation of the single market, Article 114 TFEU. The stretch of this competence is a classic debate among European law scholars, and more modestly also highlighted with regard to cybersecurity legislation. Nevertheless, considering the evolving nature which the EU faces, the extent and the kind of European legislation (i.e., directive, regulation, non-binding instrument) is a matter worth debating. European regulation is meant to be proportionate and subsidiary to national regulation (Article 5 TEU), aimed at reducing transition costs and buttress legal certainty across Europe. In this regard, the creation of an optional ‘regime’, that would contain, in an organic and coherent form, everything a (small) business would need to take the first steps and grow on the European market, could be justified on the basis of the ‘harmonisation of the level playing field’ rationale, but, more importantly, would add a symbolic value for the European Competitiveness goal: ‘doing business with European rules’.
Such additional ‘regime’, if we want to stop short of calling it a ‘code’, might well remain a subsidiary legal tool, next to existing national legal frameworks, that businesses might decide to rely on when operating across Europe. It would integrate or substitute current international standards, emerged in legal practice, that ordinarily sustain cross-border trade. This optional instrument could be more accessible to anyone – probably as accessible as harmonised European standards are – with the force of a direct institutional backing.
A new European code is all you need
Is a brand-new legal private law ‘regime’ to navigate the European Single Market the best answer that the European Commission can offer to economic competitiveness concerns due to legal fragmentation? It depends. If the goal is mere economic efficiency, reduction of regulatory barriers and ensuring legal certainty across borders, well… it may help. Intuitively, if the same regulation applies in Italy as in Romania, it will be easier to do business more smoothly in Italy and Romania simultaneously, for instance by hiring a single legal team that can take care of the contracts for both countries. However, reality, as it often happens, is a bit more complicated. Regulation needs implementation. Or, put in different terms, it needs an authority that allows a string of words to become power, because, going with Hobbes, ‘Covenants, without the sword, are but words and of no strength to secure a man at all’. And the way laws, the same set of laws, are brought alive, will always differ – to a certain extent – from country to country, authority to authority, judge to judge.
But the Commission might be aiming at something else, too. The ‘28th regime’ creates a direct ‘help line’ for its citizens, without the intermediation of other institutions or authorities, especially national ones. Different from an EU regulation, which is also directly applicable, the 28th regime, being an elective instrument, would be subject to ‘bottom-up legitimisation’ through use in legal private practice. The idea of a European ‘Business’ Code, on which new or growing market operators may rely directly on for cont(r)acts among them, seem to go beyond the ambition of levelling the playing field in Europe. It is a battle for people hearts and minds, presented as a fight against (national) fragmentation, or red tape if you like.
This time is (not) different
Although there are valid arguments to sustain that the ‘28th regime’ brought back up in 2025 is different from the European Civil Code project from the 2000s, the idea of creating an additional optional instrument to facilitate business across Europe, at its core, is the same. Therefore, it is worth asking why we should invest resources in this (old) project? My wild guess is that start-ups and scale-ups in Europe are not wishing for a new legal code. The Draghi report first, and the Competitiveness Compass now point to other, more intricated issues holding back European innovation and growth, to name just two: access to capital and demographic decline. These, although much more relevant and meaningful for European businesses, and Europe as a whole, are also more complicated obstacles to tear down, for an administrative authority, as the European Union, whose core business is law-making.
Giacomo Delinavelli is a legal & policy counsel at Arthur’s Legal, Strategy and Services, a law and strategy firm based in Amsterdam. He is also an external PhD candidate in risk governance and cybersecurity at the University of Piraeus, in Greece. Previously, he graduated from the University of Amsterdam (IViR) and Bocconi University in European law.
The views expressed in this blog post should be attributed to its author only, and do not necessarily reflect the position of his employer or affiliated institutions.