The EC Directive on unfair terms as it affects insurance contracts — an English view
By Dr MALCOLM CLARKE
1. The EC Directive
The EC Directive on unfair terms in consumer contracts1 was implemented in the United Kingdom by The Unfair Terms in Consumer Contracts Regs. 1994.2 The Regulations are to be construed as far as possible to give effect to the Directive. All contracts, which come within the scope of the Directive and were concluded after 31 December 1994, are subject to the Directive regime. The Regulations, however, which do not adopt the Directive verbatim but purport to implement them in a way appropriate to the United Kingdom, apply only to contracts concluded after 1 July 1995. The form of the Directive, a substantial preamble followed by 11 articles and an Annex, is quite different from that of the regulations — 8 regulations followed by 3 schedules. Moreover, Member States have the option ”to afford consumers a higher level of protection through national provisions that are more stringent” than those of the Directive.3 Thus any rules of the Unfair Contract Terms Act 1977 that are more stringent than the regime are allowed in principle.4 Implementation must, however, be in the form of ”laws and regulations”; statements of practice will not suffice.5 The Regulations apply, of course, as part of English law. However, Art. 6.2 requires Member States to ”take the necessary measures to ensure that the consumer does not lose the protection granted by this Directive by virtue of the choice of the law of a nonMember country as the law applicable to the contract if the latter
1 Council Directive 93/13/EEC of 5 April 1993 (OJ 21 April 1993 L95/29). See Dean (1993) 56 MLR 581; Duffy  JBL 67; Maitland-Walker  3 ICCLR 91. On the philosophy of the Directive and differences between that and the Unfair Contract Terms Act 1977, see Collins (1994) 14 OJLS 229; Beatson  CLJ 235. 2 SI 1994 No 3159. 3 Preamble para. 12. 4 Note that overly stringent domestic law may infringe EU competition rules. See e. g. Case 120/79 Cassis de Dijon  ECR 649. Cf Case 339/89 Alsthom Atlantique v. Sulzer  ECR I-107. 5 Unusually, the draftsman has used the preamble to clarify (or qualify) the text of the Directive on the matter. This technique poses it own problems of interpretation: see Duffy p. 71.