Contractual networks and the small business act: towards European principles?

In this paper, I address the issue of contractual networks in the European context. The term “contractual networks” encompasses both multilateral contracts and networks of linked bilateral contracts. Contractual networks are hybrid forms of organisation located between markets and hierarchies. Networks differ from market contracts because the participants are not impersonal agents, but well identified players chosen on the basis of resource complementarities. They permit resource bundling that markets are unable to achieve. They differ from hierarchies because enterprises are autonomous and legally independent even if they may be economically dependent. The main characteristics of contractual networks are: interdependence, stability of relationships, long-term duration and multiplicity. Moreover, competition can also supplement cooperation as partners can cooperate on some projects whilst competing in other ways. The increasing importance of networks at EU level forces us to rethink two main policy issues: 1) how, and according to which variables, we distinguish between contract and company law in relation to inter- enterprise coordination; 2) how to regulate multilateral contracts among enterprises. So far, contractual networks have not been adequately recognised at European level where, at least implicitly, the traditional partition between exchange and organisational contracts has held firm. The European Council asked the European Commission to define a new framework for small and medium enterprises (SMEs), and the latter recently launched the Small Business Act program which will include a company law statute for SMEs. Despite the inattention of both European contract law drafters and private international law, networks, especially those among SMEs, have gained momentum in policy-making. The ever more frequent references to networks, both contractual and organisational, in relation to policies associated with competitiveness and growth suggest that it may be necessary to coordinate with the governance dimension associated with their private law regimes. The paper suggests that Principles of European contractual networks (PECON) should be defined and coordinated with the current DCFR. I sketch some of the possible guiding ideas and the necessity of coordinating substantive principles with private international law principles pursuant to the ROME I Regulation. It also proposes that the Small Business Act should incorporate guidelines concerning contractual networks, be they domestic or transeuropean.