“That was a surprisingly civilised discussion” said Eric Descheemaeker as he brought to a close the workshop on unjustified enrichment at 7 pm last Friday. The remark was understandable. The main speaker, Nils Jansen, had been arguing that it was time to abandon the idea of a unified law of unjustified enrichment. Several people in the audience had devoted time and effort to developing and promoting just such an idea.
The discussion, in the Raeburn room, was indeed civilised. But why should this be surprising? Fine intellectual effort is always to be respected and this was manifestly on display. People were keen to learn from what the speaker had to say and were looking for good ideas in his presentation. There were plenty of these too.
First there was a fascinating account of the doctrinal development of the current German law on unjustified enrichment. The speaker explained that the modern rules are derived not so much from Roman law as from a period of intense discussion between 1840 and 1880. The attempt to create a unitary law led to an integration of different notions and different problem situations some of which, like gains derived from infringements of rights and three-party situations, had not been the primary focus of the 19th century debates. The attempted integration did not work. More recently there had been a progressive disintegration.
The speaker’s conclusion was indeed that it was time to say farewell to the idea of unjustified enrichment as a separate integrated branch of the law. Parts of it, including the parts dealing with enrichment by transfers and, in particular, with the unwinding of failed contracts and the notoriously complicated three-party situations, should be dealt with in contract law. Parts dealing with enrichment by infringement of another’s rights should be dealt with in a sort of new branch of the law on non-contractual obligations which would include the traditional law of delict but go beyond it to cover claims based on the obtaining, by an infringement of a right, of a benefit which was another’s to dispose of.
Hector MacQueen, in response, explained the very different development of the Scottish law on unjustified enrichment and was not so convinced that the idea of a unified law on unjustified enrichment could or should be jettisoned. He pointed out that the areas of law into which Nils Jansen wanted to decant large areas of enrichment law had not always proved up to the task of handling the relevant problems. In Scotland, for example, restitutio in integrum had been regarded, absurdly, as both a condition for and a consequence of avoiding a voidable contract. He even seemed to cast doubt on the wisdom of dealing with the economic consequences of failed cohabitations by statute rather than by the non-statutory law on unjustified enrichment.
In the ensuing discussion John Blackie made a telling intervention when he queried whether other branches of the law had the conceptual resources to take over large parts of the law on unjustified enrichment, particularly in a small jurisdiction like Scotland where the opportunities for judicial development were few and far between. He thought that it was difficult to see how an expanded law on non-contractual obligations of the type suggested by Nils Jansen could ever be developed in practice. At a later stage in the debate there was clearly enormous doubt as to whether the law on negotiorum gestio could reasonably be used as a basis for any part of such a new law. Nor did people seem to be keen on using the law on constructive trusts for this purpose.
My own view is that there is great value in a unified law on unjustified enrichment based on the general idea that a person who obtains an unjustified enrichment which is attributable to another’s disadvantage is obliged to reverse the enrichment. It is a simple, easily remembered starting point. Each element in the formula can be elaborated later and qualifications introduced for different situations, as is done in the Draft Common Frame of Reference (DCFR). There is less risk of gaps than there is in a disintegrated approach. It would hardly be possible to decant everything into other branches of private law. For example, the law on undue transfers is not limited to contractual situations. A transfer which is not legally due may be made because a will or a court order or a statute is void. There may be no contract within sight.
The trouble with a unified approach is that the unitary idea takes you only so far before things become unpleasantly complicated. The question, as I see it, is not whether the law on unjustified enrichment should be abandoned. That would be a massive step backwards. The question is rather how the law on unjustified enrichment can be made simpler and kept within reasonable bounds. Here it is undoubtedly useful to ask whether certain aspects (such as three party situations) could not be better dealt with elsewhere. It is also desirable to deal by specific legislation with areas where there are strong policy considerations peculiar to those areas. Family law is one example. John Blackie mentioned intellectual property law as another. There could also be value in leaving some very residual matters to judicial discretion although, as Nils Jansen pointed out, the danger in a bigger jurisdiction is that cases involving the use of the discretion would accumulate and become precedents. Here he mentioned the intriguing idea, prompted by French law, of providing that decisions based on the use of such a residual discretion should be regarded in law as decisions of fact not capable of being used as legal precedents. I liked that idea! Another way of keeping unjustified enrichment law within reasonable bounds is to regard enrichment remedies as subsidiary, so that a claim based on unjustified enrichment is not available if another remedy is available.
The most creative idea in the presentation was the idea of a sort of new “infringement of rights law”. This has great intellectual appeal. Any thinking person encountering the category of enrichment by wrongs is bound to ask whether that is not the proper field of the law of delict. Roy Goode raised this very point at a meeting of the Study Group on a European Civil Code held in Oxford in December 2001 but it did not get any further. In the context of the DCFR it could not get any further because Book VI is confined to non-contractual liability arising out of damage caused to another: it does not cover liability arising out of gains derived from infringing the rights or interests of another. It would be very interesting to see a properly worked up “infringement of rights or interests law” which would have both compensatory and anti-enrichment remedies, carefully adapted to different circumstances, including the degree of fault on the part of the infringer. It would be particularly interesting if such a developed law included, or at least took full account of, public law elements such as preventative regulation, penal sanctions (including the forfeiture to the state of the proceeds of certain infringements) and state-based insurance schemes or no-fault compensation schemes. A private law scheme on its own is unlikely to solve all the problems in a satisfactory way. Shifting problems from a badly-integrated private law on unjustified enrichment into a badly-integrated private law on the infringement of rights or interests would not be the answer.
Farewell to unjustified enrichment? No thanks. Radical thinking designed to keep unjustified enrichment law within reasonable bounds? Yes please.