The rules relate to the Rome Convention of 1980, which the
Commission plans to update and convert into a Community instrument
– an instrument with a working title of Rome I. This should not be
confused with Rome II, an instrument that deals with
non-contractual cross-border disputes, such as those on product
liability or defamation.
In general terms, the 1980 Convention deals with disputes over
international contracts, allowing the signatories to a contract to
choose the law applicable to their contract, and to select the
court that will hear disputes arising from that contract. It does
not apply in certain disputes – including those involving wills and
property rights related to family relationships, arbitration
agreements and disputes governed by company law.
The Commission hopes to modernise the Convention, which is the
only instrument of private international law in the Community that
is still in international treaty form.
This is not a particularly good thing, in the Commission’s view,
as it makes it possible for Member States to depart from the terms
of the Convention by means of national rules or by acceding to
multilateral conventions.
In addition, Europe’s top court, the Court of Justice, has no
jurisdiction over the interpretation of the Convention unless
signatory States give the Court of Justice that power. According to
the Commission, Member States have taken 25 years to ratify the
requisite protocols, the Court’s judgments are still not binding on
all the Member States, and the national courts are under no
obligations in this regard.
Finally, the Commission believes that a modernised EU law will
make it easier to apply the rules in the new Member States, some of
which have not yet signed a treaty of accession to the
Convention.
The new rules, set out in a proposal for a Rome I Regulation
adopted by the Commission yesterday, are designed to reinforce the
core principle of the Convention – the freedom of parties in the
business world to choose the law applicable to the relationship
between them.
The Regulation would allow the parties to choose as the law
applicable to their relationship rules originating in: the law of a
State; certain international conventions; or internationally
recognised private codifications (such as the Vienna Convention on
the international sale of goods). This upholds a practice that has
become common since 1980.
If the Community one day adopts an optional instrument on
contracts (EC Contract Law project), the Regulation would also
allow that instrument to be chosen.
The Regulation then considers those situations where parties
have not chosen the law applicable to the relationship between
them.
It specifically sets out which law will apply in certain common
forms of contract (sales of goods, services, distribution,
intellectual property), in contrast with the Rome Convention, which
left courts with a wide discretion that turned out to be a source
of uncertainty in the law.
According to the Commission, the rules have been devised so as
to respect the parties’ legitimate expectations and the effect will
be that the law of the party performing the characteristic service
of the relevant type of contract will be applicable (the seller,
service-provider, carrier, distributor, etc.).
“By providing foreseeable and simplified rules, the Rome I
proposal on the law applicable to contracts will enable Europe’s
citizens and firms to make more of the possibilities offered by the
internal market,” said Franco Frattini, Vice President of the
European Commission responsible for Justice, Freedom and Security,
yesterday.
