The furore comes as Consumer Affairs Commissioner David Byrne (pictured) finalises a full-scale consultation on possible changes to the existing rules approved in 1993 before proposing changes to the rules in the New Year.
Industry lawyers claim a list of ideas for possible amendments mooted by Byrne's officials could seriously damage businesses' health and should be strangled at birth.
One proposal calls for tougher penalties for companies that use unfair clauses in contracts to rob consumers of their rights. Another aims to make it illegal for a company anywhere in the EU to use a certain type of clause in a contract if another firm has already had that clause outlawed by any court elsewhere in the Union.
But legal experts such as Mike Pullen, a partner with London firm DLA warns that taken together, these two propositions spell danger. They warn that Byrne's plan for tougher penalties could lead to the criminalisation of firms who continue to use these outlawed terms.
This move, which would force firms to keep track of and act upon all relevant court judgements across the EU, would implicate firms, even if nobody had complained about their particular use of the clause.
If a French trader is stopped from using a clause, then it would be an offence for a UK or Dutch company to use similar clause, explains Pullen, adding that the rules would be particularly onerous for small companies which did not have access to multinationals' legal resources.
Another key issue, he says, is the way the updated directive could be used to block use of a special type of clause in a contract to dictate which courts could hear a legal dispute over a contract.
Such 'jurisdiction clauses' are used by companies to ensure legal certainty. They allow a British firm, for example, to insist that anyone buying goods from it would, in the worst-case scenario, have to fight any legal claims in an English or Scottish court. But a recent judgement of the European Court of Justice cast doubt on the use of such 'jurisdiction clauses'.
Industry fears that this 'Oceana' judgement, when linked to the unfair contract-terms directive, could quickly lead to the situation where all jurisdiction clauses are outlawed; forcing another onerous layer of legal bureaucracy upon companies.
For example, imagine a person living in Belgium who drives to a shop in Maastricht in the Netherlands. I can buy the goods, return to Belgium and decide to take the company to court because its jurisdiction clause [which says court cases would be held in the Netherlands] is unfair, said Pullen.
In stark contrast, Ursula Pachl, a legal advisor to European consumers' lobby BEUC, said the Commission's intention to toughen up its approach to unfair contracts would tilt the balance in consumers' favour although she insisted criminal measures should only be envisaged in worst-case scenario where firms had repeatedly offended.
Moreover, she also urged the Commission to follow-up on its suggestion that judges could 'ex officio' challenge the legality of a contract clause in a court case, even if the plaintiffs had not made a direct reference to it in a court case.
That would help matters, she said.