The Interplay between Public and Private Enforcement in European Private Law: Law and Economics Perspective

Abstract: European private law is enforced by different mechanisms and tools that vary between sectors and countries. Some countries, like Germany, may have a strong private law enforcement tradition. In others, such as Scandinavian countries, public law has historically been prevalent. Some countries may be more prone to criminal law enforcement than others. These differing traditions impose a particular challenge on the European legislator that occasionally legislates with the goal of harmonizing law enforcement throughout Europe. From an economic perspective, the threat of enforcement is regarded as guiding people’s behaviour or, more particularly, providing incentives to obey the law. In this exercise, different mechanisms vary in their suitability. This article focuses on three mechanisms – private, administrative, and criminal law enforcement – and displays their economic strengths and weaknesses. Ultimately, different mechanisms need to interact to provide an appropriate enforcement response. These mixes will, furthermore, look differently depending on the country in question. This article will first set out the goals and incentives of the different law enforcement models and of the stakeholders involved. It then analyses how these parameters relate to the traditional choice between public and private law enforcement. The British financial sector is sketched as one of the few examples where a ‘hybrid’ enforcement mechanism that shows elements of both private and public laws is used.