The Rome I Regulation (Regulation (EC) No 593/2008[1] of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations) is a regulation which governs the choice of law in the European Union. It is based upon and replaces the Convention on the Law Applicable to Contractual Obligations 1980. The Rome I Regulation can be distinguished from the Brussels Regime which determines which court can hear a given dispute, as opposed to which law it should apply. The regulation applies to all EU member states except Denmark.
Denmark has an opt-out from implementing regulations under the area of freedom, security and justice. The Danish government planned to join the regulation if a referendum on 3 December 2015 approved converting its opt-out into an opt-in, but the proposal was rejected.[2][3] While the United Kingdom originally opted-out of the regulation, it subsequently decided to opt in.[4]
Background
The regulation sets out which law be used to interpret contracts with an international element (i.e. contracts agreed by parties in different countries). Pursuant to its Articles 28 and 29, the regulation came into force on 17 December 2009 and applies to contracts concluded after that date (beginning 18 December 2009).
Overview
The broad principle of Rome I was not only to harmonise choice of law rules in contract but, subject to certain safeguards, maximise the freedom of the parties to choose the law governing their contractual relations.
Exclusions
Article 1 contains a list of exclusions from the scope of the Regulation. These include:
questions involving the status or legal capacity of natural persons;
obligations relating to family relationships (including maintenance obligations or matrimonial property regimes);
pre-contractual obligations (which are regulated by the Rome II Regulation); and
life insurance contracts.
Freedom of choice
Article 3 confirms the freedom of parties to choose the governing law of their contracts:
A contract shall be governed by the law chosen by the parties.
The choice of law of the parties can either be expressed in the contract or implied from an agreement that is "clearly demonstrated by the terms of the contract or the circumstances of the case".[5] The implied choice of law must be a real, but not imputed, choice of law that can be objectively ascertained. It is insufficient that the parties would have chosen a particular law if a choice had been made.
Article 4 deals with contracts where the parties have made no express or implied choice of governing law. It provides broadly that:
a contract for the sale of goods shall be governed by the law of the seller's habitual residence;
a contract for the provision of services shall be governed by the law of the service provider's habitual residence;
a contract relating to land or to a tenancy shall be governed by the law of the country where the property is situated;
a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence;
a distribution contract shall be governed by the law of the country where the distributor has his habitual residence;
a contract for the sale of goods by auction shall be governed by the law of the country where the auction takes place;
a contract concluded within an exchange or multilateral system in accordance with non-discretionary rules and governed by a single law, shall be governed by that law.
Article 8(2), which supersedes article 6(1) of the 1980 Convention, says,
To the extent that the law applicable to the individual employment contract has not been chosen by the parties, the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country.
The significant change is that the applicable law is that of the country "from which the employee habitually carries out" his or her work. It is intended to cover workers such as airline pilots who might not work "in" any particular country, but work "from" a country.[6]
For a temporary worker posted in another country from her home country, article 8(2) makes the law of the home country apply. It would therefore appear that, for example, the employer of a Greek posted worker in Germany could rely on the lesser protections of Greek law. Article 7(2) of the 1980 Convention stated that 'Nothing in this Convention shall restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract'. Employment law is mandatory. However, article 7(2) was not retained in the Rome I Regulation. The replacement, article 9 defines mandatory provisions as,
provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation.
It is clear that employment law is applicable in any situation to a contract falling within its scope, though some have insisted, sceptically, that employment law may not be "crucial" in this sense, following older case law of the ECJ.[7]
Mandatory provisions
Article 9 states that:
1. Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation. 2. Nothing in this Regulation shall restrict the application of the overriding mandatory provisions of the law of the forum.
Scope of applicable law
Article 12 provides that the applicable law shall govern:
interpretation;
performance;
the consequences of a total or partial breach of obligations, including the assessment of damages;
the various ways of extinguishing obligations, and prescription and limitation of actions;
the consequences of nullity of the contract.
However, in relation to the manner of performance and the steps to be taken in the event of defective performance, regard must be had to the law of the country in which performance takes place.
Assignment and subrogation
The relationship between an assignor and an assignee under an assignment or contractual rights (including by way of security) against another obligor under the original contract is governed by the applicable law of the contract of assignment.[8]
However, the applicable law of the original agreement (under which rights are being assigned) will determine if those rights are assignable, and what the relationship between the assignee and the obligor is.
One of the criticisms of Rome I is that it does not address the problems caused by successive assignments (by way of security or absolutely) and the determination of priorities between subsequent assignees. Further consultations were intended in relation to these issues, and those consultations have suggested alternative possibilities, but no definitive solution.[9]
Similar rules apply to transfers of contractual rights by way of subrogation.[10] Whether or not a right of subrogation arises as a matter of law depends upon the applicable law between the parties between whom the subrogation operates, and not the contract in relation to which the rights are subrogated.[11] So, for example: Mr X deposits property with Mr Y under a contract of bailment governed by German law, and during that period that property is damaged. Mr X claims under his policy of insurance governed by English law with Z Co, who pays the claim. It will be a matter of English law whether Z Co is subrogated to any right of action which Mr X might have had against Mr Y under the original contract of bailment.
Set-off
Article 17 provides that "the right to set-off is not agreed by the parties, set-off shall be governed by the law applicable to the claim against which the right to set-off is asserted." This is potentially problematic, as by definition set-off deals with two separate claims. It seems that set-off is to be viewed defensively with respect to each claim, which creates the possibility of asymmetric application (i.e. set-off might operate to partly extinguish a German law claim, but not partly extinguish the Spanish claim which is relied upon to do so). The better view would presumably be that the set-off must be operative under each governing law to be effective under either.
Burden of proof
Although procedural matters are largely excluded from Rome I, Article 18 does state that where an applicable law raises presumptions (such as the presumption of advancement) or specifies the burden of proof, then those rules shall apply to the contractual obligations.
Renvoi
Article 20 excludes the application of the doctrine of renvoi in relation to contracts.
Public policy
Article 21 provides:
The application of a provision of the law of any country specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum.
United Kingdom
The United Kingdom originally opted out of the regulation, but subsequently decided to opt-in.[4]As of September2022[update], following Brexit, the regulation is retained EU law within the UK, subject to minor amendments.[12]
Conflict of laws is the set of rules or laws a jurisdiction applies to a case, transaction, or other occurrence that has connections to more than one jurisdiction. This body of law deals with three broad topics: jurisdiction, rules regarding when it is appropriate for a court to hear such a case; foreign judgments, dealing with the rules by which a court in one jurisdiction mandates compliance with a ruling of a court in another jurisdiction; and choice of law, which addresses the question of which substantive laws will be applied in such a case. These issues can arise in any private-law context, but they are especially prevalent in contract law and tort law.
In contract law, a choice of law clause or proper law clause is a term of a contract in which the parties specify that any dispute arising under the contract shall be determined in accordance with the law of a particular jurisdiction. An example is "This Agreement shall be governed by, and construed in accordance with, the law of the State of New York."
Choice of law is a procedural stage in the litigation of a case involving the conflict of laws when it is necessary to reconcile the differences between the laws of different legal jurisdictions, such as sovereign states, federated states, or provinces. The outcome of this process is potentially to require the courts of one jurisdiction to apply the law of a different jurisdiction in lawsuits arising from, say, family law, tort, or contract. The law which is applied is sometimes referred to as the "proper law." Dépeçage is an issue within choice of law.
In conflict of laws, renvoi is a subset of the choice of law rules and it may be applied whenever a forum court is directed to consider the law of another state.
Characterisation, or characterization, in conflict of laws, is the second stage of the procedure to resolve a lawsuit that involves foreign law. The process is described in English law as Characterisation, or classification within the English judgments of the European Court of Justice. It is alternatively known as qualification in French law.
In conflict of laws, the choice of law rules for tort are intended to select the lex causae by which to determine the nature and scope of the judicial remedy to claim damages for loss or damage suffered.
In conflict of laws, the term lex loci is a shorthand version of the choice of law rules that determine the lex causae.
In contract law, the lex loci contractus is the Law Latin term meaning "law of the place where the contract is made". It refers to resolving contractual disputes among parties of differing jurisdictions by using the law of the jurisdiction in which the contract was created.
The Brussels Regime is a set of rules regulating which courts have jurisdiction in legal disputes of a civil or commercial nature between individuals resident in different member states of the European Union (EU) and the European Free Trade Association (EFTA). It has detailed rules assigning jurisdiction for the dispute to be heard and governs the recognition and enforcement of foreign judgments.
The Hague Convention on the Law Applicable to Trusts and on their Recognition, or Hague Trust Convention is a multilateral treaty developed by the Hague Conference on Private International Law on the Law Applicable to Trusts. It concluded on 1 July 1985, entered into force 1 January 1992, and is as of September 2017 ratified by 14 countries. The Convention uses a harmonised definition of a trust, which is the subject of the convention, and sets conflict rules for resolving problems in the choice of the applicable law. The key provisions of the Convention are:
The Convention on the Law Applicable to Contractual Obligations 1980, also known as the Rome Convention, is a measure in private international law or conflict of laws which creates a common choice of law system in contracts within the European Union. The convention determines which law should be used, but does not harmonise the substance. It was signed in Rome, Italy on 19 June 1980 and entered into force in 1991.
In law, dépeçage is a concept within the field of conflict of laws whereby different issues within a single case are governed by the laws of different jurisdictions. In common law countries, dépeçage can be used when a single contract provides that different parts of the contract shall be governed by different laws, or in the absence of a contract when a court's own rules on choice of law cause it to apply different bodies of law to different questions.
The Rome II Regulation (EC) No 864/2007 is a European Union Regulation regarding the conflict of laws on the law applicable to non-contractual obligations. From 11 January 2009, the Rome II Regulation created a harmonised set of rules within the European Union to govern choice of law in civil and commercial matters concerning non-contractual obligations. Additionally, in certain circumstances and subject to certain conditions, the parties may choose the law applicable to a non-contractual obligation. Analogous rules were established for contractual obligations by the Rome Convention of 1980. The Rome Convention has, in turn, been replaced by the Rome I Regulation on the law applicable to contractual obligations. The regulation applies to all EU member states except Denmark.
Canadian contract law is composed of two parallel systems: a common law framework outside Québec and a civil law framework within Québec. Outside Québec, Canadian contract law is derived from English contract law, though it has developed distinctly since Canadian Confederation in 1867. While Québecois contract law was originally derived from that which existed in France at the time of Québec's annexation into the British Empire, it was overhauled and codified first in the Civil Code of Lower Canada and later in the current Civil Code of Quebec, which codifies most elements of contract law as part of its provisions on the broader law of obligations. Individual common law provinces have codified certain contractual rules in a Sale of Goods Act, resembling equivalent statutes elsewhere in the Commonwealth. As most aspects of contract law in Canada are the subject of provincial jurisdiction under the Canadian Constitution, contract law may differ even between the country's common law provinces and territories. Conversely; as the law regarding bills of exchange and promissory notes, trade and commerce, maritime law, and banking among other related areas is governed by federal law under Section 91 of the Constitution Act, 1867; aspects of contract law pertaining to these topics are harmonised between Québec and the common law provinces.
A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. The activities and intentions of the parties entering into a contract may be referred to as contracting. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or equitable remedies such as specific performance or rescission. A binding agreement between actors in international law is known as a treaty.
The Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance, also referred to as the Hague Maintenance Convention or the Hague Child Support Convention is a multilateral treaty governing the enforcement of judicial decisions regarding child support extraterritorially. It is one of a number of conventions in the area of private international law of the Hague Conference on Private International Law in 2007. The convention is open to all states as well as to Regional Economic Integration Organizations as long as they are composed of sovereign states only and have sovereignty in the content of the convention. The convention entered into force on 1 January 2013 between Norway and Albania, with Bosnia-Herzegovina (2013), Ukraine (2013), the European Union, Montenegro (2017), United States (2017), Turkey (2017), Kazakhstan (2017), Brazil (2017), Honduras (2017), Belarus (2018), Guyana (2020), Nicaragua (2020), United Kingdom (2021), Serbia (2021), New Zealand (2021), Ecuador (2022), Botswana (2022), Philippines (2022), Azerbaijan (2023) and Canada following suit. Because the EU acceptance of the convention applies in 26 EU countries, the convention applies in 47 countries worldwide.
The Maintenance Regulation (EC) No 4/2009, formally the Council Regulation (EC) on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, is a European Union Regulation on conflict of law issues regarding maintenance obligations. The regulation governs which courts have jurisdiction and which law it should apply. It further governs the recognition and enforcement of decisions. The regulation amends the Brussels Regulation, which covers jurisdiction in legal disputes of a civil or commercial nature between individuals more broadly.
The Treaties of the European Union are a set of international treaties between the European Union (EU) member states which sets out the EU's constitutional basis. They establish the various EU institutions together with their remit, procedures and objectives. The EU can only act within the competences granted to it through these treaties and amendment to the treaties requires the agreement and ratification of every single signatory.
Raiffeisen Zentralbank Österreich AG v Five Star General Trading LLC[2001] EWCA Civ 68, [2001] QB 825 is a judicial decision of the Court of Appeal of England and Wales relating to the conflict of laws.
Soldiers, Sailors, Airmen and Families Association v Allgemeines Krankenhaus Viersen GmbH[2022] UKSC 29, [2022] 3 WLR 1111 is a judicial decision of the Supreme Court of the United Kingdom in relation to the proper law to govern contribution claims in cross-border torts.
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