Choosing The Law: Rome II

The Rome II Regulation was applicable from 11 January 2009,

harmonising the choice of law rules that apply to non-contractual

obligations (including torts) in the European Union. Although Rome

II may introduce greater legal certainty within the EU, it is not

without its problems. In light of this, businesses would be well

advised to take steps now to ensure that there are no expensive

nasty surprises in the event of claims materialising.

Conflict of law questions, which arise in the context of

multi-national disputes, have to be dealt with in two stages:

The first is to determine the jurisdiction in which a dispute

will be heard, i.e. which country's courts have the power to

hear the dispute. In the European context, that question is

primarily dealt with by applying the Brussels

Regulation1 and is not addressed in this note.

The second stage is for the court hearing the dispute to

determine which national law (known either as the "applicable

law" or the "governing law") the dispute is subject

to. The answer to the first question can be different from the

second: for example an English court may have jurisdiction but have

to apply French law.

Until now, the rules for determining the applicable law of

contractual disputes have been codified within the EU2,

but there has been no codification of the conflict of law rules

regarding non-contractual disputes (including torts and

resitutionary claims). The courts of each Member State have,

therefore, used their own conflict of law rules to determine which

law to apply in non-contractual disputes.

That has now changed, as a result of the Rome II Regulation

(864/2007/EC) which applies from 11 January 2009 throughout the

whole of the EU, except Denmark, introducing a new standardised set

of rules to determine the applicable law for non-contractual

disputes.

Until now, the relevant conflict of law rules in England

provided that the applicable law for non-contractual obligations is

generally the law of the country in which the events

constituting the tort occur3. That, and other

important features of the English conflict rules, such as the

uncertainty about whether parties can agree in advance which law

will govern their future non-contractual relations, have now been

changed by Rome II.

The General Rule

The general rule under Rome II is that the governing law of a

non-contractual obligation in a civil and commercial matter is the

law of the country in which the damage

occurs (or is likely to occur), irrespective of

the country in which the event giving rise to the damage occurred

(or is likely to occur) and irrespective of the country or

countries in which the indirect consequences of that event occur

(Article 4). As explained above, this is different from the

previous position under English law, which applied the law of the

country in which the event occurred.

It should be noted in this context that Rome II may determine

that the law applicable is that of a country outside the EU.

The general rule under Rome II is modified in certain

instances:

Where the proposed claimant and defendant both have their

habitual residence in the same country at the time the damage

occurs then the law of that...