LLM Candidate number: KM555

LLM, Queen Mary, University of London, 2009-2010

EU Regulation 'Rome I' as a step forward in the

Europeanization of conflict of laws

Supervisor: Ms Catharine MacMillan

2

TABLE OF CONTENTS

Introduction .............................................................................................................................. 3

Chapter 1: The development of the legislative competence of the European Union on

measures promoting the harmonization of conflict of laws ....................................................... 6

1.1: The intergovernmental phase .......................................................................................... 6

1.2: The Treaty of Amsterdam ............................................................................................... 9

1.3: The Treaty of Lisbon..................................................................................................... 15

Chapter 2: The specific role of conflicts rules within the EU Private International Law and

the need for their harmonization ............................................................................................... 18

2.1: The operation of conflicts rules .................................................................................... 19

2.2: Some reflections on practical application of conflicts rules and the principle of

uniformity of decision .......................................................................................................... 21

2.3: Conclusion on the aims of Europeanization of conflict of laws ................................... 25

Chapter 3: Analysis of the most relevant provisions of Regulation Rome I ........................... 26

3.1: Rome I, article 3 – freedom of choice .......................................................................... 27

3.2: Rome I, article 4 – applicable law in the absence of choice ......................................... 29

3.3: Rome I, article 6 – consumers contracts ....................................................................... 35

3.4: Rome I, art. 7 – insurance contracts ............................................................................. 37

3.5: Other amendments to the Rome Convention ................................................................ 41

3.6: Proposals of the Commission that were not adopted in the final text .......................... 44

Conclusion ............................................................................................................................... 47

3

Introduction

EC Regulation 593/2008 on the law applicable to contractual obligations (‘Rome I’) entered

into force on 17th

December 2009, replacing in the Member States of the European Union the

1980 Rome Convention on the same matter. This change is only the most recent step of a long

process of Europeanization (or communitarization) of conflicts of laws, which began with the

original Treaty of Rome of 1957, had its turning point in the provisions of the Treaty of

Amsterdam in 1997 and now shows even further improvements in the Treaty of Lisbon in

2007. This paper aims to explain what objectives are promoted by the European authorities in

the enactment of instruments of private international law and to assess whether the provisions

of Rome I, in comparison to the previous text of the Rome Convention, are a successful

contribution to this process and, thus, an improvement of the judicial cooperation inside the

EU.

Private international law (hereinafter referred to also as ‘PIL’) greatly evolved in Europe

during the last fifty years, because of the closer judicial cooperation in civil and commercial

matters in which Member States have progressively engaged. Indeed, one can clearly see a

long and relentless process by which European authorities have gained more and more power

to legislate in this field and to decide what policies govern PIL rules. As it will be explained in

chapter one, the original Treaty of Rome did not envisage harmonization or unification of PIL

rules, nor did the Treaty of Maastricht in 1992. However, this latter declared that the “judicial

cooperation in civil matters” was a matter of common interest of Member States, since it

facilitated the achievement of the objectives of the Union, mainly the free movement of

persons. Only the Treaty of Amsterdam, that moved the whole matter from the third pillar (the

action of the European Union) to the first pillar, introduced a specific competence of the

European Community to legislate in the field of private international law. Nowadays, the

legislative power is left to the European Union, since, with the Treaty of Lisbon, the European

4

Community has ceased to exist as such starting from December 2009.

We will also examine what the main reason is for shifting the competence in the field of

private international law from the Member States to the European Community. A

fundamental factor can be identified in the relation created by the Amsterdam treaty between

the adoption of measures in the field of judicial cooperation in civil matters and the proper

functioning of the internal market (Article 65 EC Treaty). Private international law has

become, at least in part, a tool for the development of the internal market and it is considered

as a means to remove the barriers to the movement of persons that different laws and different

choice-of-law rules can create inside the European Community. The link between private

international law and the goal to develop the internal market has since then characterized the

following evolution of the matter, establishing the leading public policies underlying rules and

their application and interpretation by the European Court of Justice.

In this context, the harmonization of conflicts rules pursues specific aims. It will be seen that

the European Commission holds that a uniform regulation of choice-of-law rules within the

EU not only complements the system of mutual recognition of foreign judgments, but also

helps, inter alia, to increase legal certainty and uniformity of decision within the Courts of the

Member States; this, in turn, should reduce forum shopping.

This paper assesses whether the new Rome I regulation is able to achieve these goals in a

more effective manner than the Rome Convention. It does not address some different but

related issues, such as the criticism about the conception of private international law as a mere

instrument for the realization of the internal market, subordinated to European Law and its

Community-driven policies and, second, the ongoing debate on a European ‘choice-of-law

revolution’, as compared to the American one.

The introduction of Rome I has been praised as a positive improvement of the previous

5

regime. On one side, it will be seen what advantages the transfer of conflicts rules in the field

of contractual obligations has from an international convention into a European regulation. On

the other side, specific rules introduced by the Regulation, both as amendments of the old text

or as complete innovations, have been welcomed by some commentators for being more

comprehensive (for instance, Article 7 on insurance contracts) and clearer (for instance,

Article 4 on the law applicable in absence of choice by the parties) than the ones of the Rome

Convention. It seems from these comments that the principal objectives of the action of the

EU in the field of PIL has been accomplished.

However, Rome I rules have been criticized by other authors, who deem them too rigid

(Article 4) or unnecessarily complex (Article 7) and these opinions raise questions about the

capacity of the new provisions to achieve the goals sought, as it will be seen in chapter three.

Others also criticize the outcome of the negotiations of the final text for not implementing

some original solutions first included in the proposal of the Commission.

There is then a large number of issues worth discussing. We will first give an account of the

history of the Europeanization of conflicts rule within the developments of the judicial

cooperation in civil and commercial matters in the European Union. Part II of the paper will

analyze the specific role of conflict of laws rules and discuss the reasons and the aims of their

harmonization. It will then be possible in the third part to examine the text of Rome I, in order

to evaluate how it differs from Rome Convention. The paper concludes by summarizing

achievements and drawbacks discussed previously, in order to examine the ability of Rome I

to be an effective cornerstone of European private international law.

6

CHAPTER 1

The development of the legislative competence of the European Union on measures promoting the harmonization of conflict of laws

The analysis of the Regulation Rome I1 (hereinafter, ‘Rome I’ or ‘the Regulation’) needs to be

put into the context of the developments occurred in the field of European private

international law due to the progressive expansion of judicial cooperation between Member

States. An account will be given of the history of this process and its reasons, focusing the

attention on the area of PIL concerning choice-of-law rules, as opposed to those regarding

jurisdiction, recognition and enforcement of judgments.

1.1 The intergovernmental phase

The original EC treaty of Rome of 19572 did not provide any direct reference to private

international law nor a specific competence of the European Community in this field3.

Nonetheless, the founding Member States acknowledged the importance of an easier

circulation of judgments for the achievement of the Community objectives and, accordingly,

they agreed that Member States should enter into negotiations of legal instruments regarding

“the simplification of formalities governing the reciprocal recognition and enforcement of

judgments of courts or tribunals and of arbitration awards” (Article 220 fourth indent Treaty

of Rome4).

As a result, the European Community did not have any competence on harmonization or

1 Regulation (EC) 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law

applicable to contractual obligations, [2008] OJ L 177/6.

2 Treaty Establishing the European Economic Community, done at Rome on 25 March 1957, 298 UNTS 11 (EC

Treaty).

3 Jürgen Basedow, ‘The Communitarization of the Conflict of Laws under the Treaty of Amsterdam’ (2000) 37

CMLR 687.

4 Later this article was renumbered 293 by the Treaty of Amsterdam and finally repealed by the Treaty of Lisbon,

see para 1.3.

7

unification of conflicts law, which was left to intergovernmental negotiations of Member

States. Therefore, until 1993 (the year in which the Maastricht Treaty entered into force), the

two main instruments in the field of European private international law were the Brussels

Convention on jurisdiction and the enforcement of judgments in civil and commercial matters

(1968)5 and the Rome Convention on the law applicable to contractual obligations (1980)

6.

Both these instruments were international conventions adopted by Member States exercising

their sovereign powers, and only the former was negotiated on the basis of Article 2207. The

European authorities did not intervene on the negotiations of the Convention of Rome, which

was not formally based on a European treaty provision.

This approach of leaving to national governments the development of PIL instruments had

few drawbacks, as pointed out by Basedow8. The first of them was the need to modify and

ratify the text of the Conventions in occasion of every accession of a new State to the

European Community; the expansion of the rules was “time-consuming”9, particularly

considering the number of new Member States which have acceded the European Community

from its creation up to now10

.

Another disadvantage of the intergovernmental method was that was premised on the idea that

the national States are the primary source of private substantive law, without taking into

account that more and more substantive provisions have their source in a Community

5 [1998] OJ C27/1 (consolidated version).

6 [1998] OJ C27/34 (consolidated version).

7 The negotiation achieved a success even beyond the Treaty provision, since the Convention provided for direct

rules of jurisdiction and not only for the simplification of formalities governing the reciprocal recognition and

enforcement of judgments, as in art. 220 of the EC Treaty, see Olivier Remien, ‘European Private International

Law, the European Community and its Emerging Area of Freedom, Security and Justice’ (2001) 38 CMLR 53.

8 Basedow (n 3) 688.

9 Ibid.

10The Member States were six in 1951; they respectively became nine in 1973, ten in 1981, twelve in 1986,

fifteen in 1995, twenty-five in 2004 and eventually twenty-seven in 2007.

8

instrument11

. For instance, under the Rome Convention, in a transnational intra-community

contract it was possible to avoid the laws of any Member State, enacting the directive on

unfair terms in consumer contracts12

simply by choosing the law of a third state under Article

3 of the Rome Convention: indeed, Article 3 par. 3 applies only in internal cases and not to

transboundary contracts. It is true that this problem has been dealt with by a specific conflicts

rule inserted in the consumer directive itself, aimed to invalidate the choice of a law of a non-

member country when the contract has a “close connection” with the territory of the Member

States13

; however, the directive has to be implemented in the Member State to be effective

within private parties. It will be seen later that this particular problem has been solved thanks

to the introduction of a specific rule in Article 3.4 of Rome I14

.

In 1992 the Treaty on European Union (TEU) or Treaty of Maastricht15

, along with the

creation of the European Union, introduced for the first time an explicit reference to private

international law, even though the related competence in this field was provided for in the

third of the three ‘pillars’ forming the European institutions. In other words, it was still a

matter of inter-governmental competence of the Member States and not yet of the European

Community (the first pillar)16

. Title VI of the Treaty established provisions on “cooperation

in the fields of justice and home affairs” and Article K in particular first mentioned “judicial

cooperation in civil matters” as an area of common interest in order to achieve the objectives

of the Union, in particular the free movement of persons. In practice, the cooperation should

have consisted in information and consultations within the Council, in order to coordinate the

action of Member States, and in some powers of the Council itself to adopt joint positions and

11

Basedow (n 3) 688.

12 Council Directive 93/13/EEC, [1993] OJ L95/29.

13 Directive 93/13 art. 6.2.

14 See infra para 3.1.

15 Treaty on European Union, done at Maastricht on 7 February 1992, [1992] OJ C191/1.

16 Aude Fiorini, ‘The Evolution of European Private International Law’, (2008) 57 ICLQ 969.

9

joint actions and to draw up conventions to recommend to the Member States for adoption

(Article K 3).

In the end, these provisions did not introduce any substantial innovation in the field17

, because

they still presumed that international conventions were the exclusive instrument of legislation

on private international law; however, they were the first to consider the action concerning

judicial cooperation within Member States as a means to improve the free movement of

persons, creating the basis for the development of the European competence in PIL.

1.2 The Treaty of Amsterdam

The biggest modernization came in 1997 with the Treaty of Amsterdam18

. The competence to

adopt measures in the field of judicial cooperation in civil matters was transferred from the

third pillar (the European Union) to the first pillar (European Community); in particular, this

legislative power was granted to the Council “in order to establish progressively an area of

freedom, security and justice” (Article 61 EC Treaty, now 67 of the Treaty on the Functioning

of the European Union, TFEU). The boundaries of this competence were determined both by

the position of Article 61 and 65 (now 81 TFEU) EC treaty in the title IV, named “Visas,

asylum, immigration and other policies related to free movement of persons”, and by the

requirements found in article 65 itself:

Measures in the field of judicial cooperation in civil matters having cross-border

implications, to be taken in accordance with Article 67 and in so far as necessary for

the proper functioning of the internal market, shall include:

(a) improving and simplifying:

— the system for cross-border service of judicial and extrajudicial documents,

— cooperation in the taking of evidence,

— the recognition and enforcement of decisions in civil and commercial cases,

17

The only Convention adopted under the then art. K 3 (Brussels II Convention on jurisdiction and the

recognition of judgments in matrimonial matters) is not even entered into force; see Basedow (n 3) 691. Now, in

line with the Europeanization of private international law, this matter is governed by EC Regulation 2201/2003,

the so-called ‘Brussels II’ regulation, see n 56.

18 1997 OJ C340/1.

10

including decisions in extrajudicial cases;

(b) promoting the compatibility of the rules applicable in the Member States

concerning the conflict of laws and of jurisdiction;

(c) eliminating obstacles to the good functioning of civil proceedings, if necessary by

promoting the compatibility of the rules on civil procedure applicable in the Member

States. [emphasis added]

Art 65 provides that action in the field of judicial cooperation in civil matters should be taken

“in so far as necessary for the proper functioning of the internal market”. This constitutes a

fundamental acknowledgement of the role of private international law for the fulfillment of

the Community internal market objective, as pointed out by Meeusen19

. The concept

underlying this rule is that the diversity of rules concerning, for example, the conflict of laws

in the ever growing Community of Member States means that the same legal situation (a

contract of sale as well as a matter of family law) might be governed by different laws

depending on the State whose conflicts rule are considered. In one State the applicable law

may be more favorable for the claimant, whereas in another one the advantage may be on the

respondent. The same concern exists in regard to the differences in the rules on recognition

and enforcement of foreign decisions. This lack of uniformity represents a barrier to the free

movement of persons, which is likely to delay or hamper the creation of the internal market.

Consequently, the free movement of persons is boosted when these barriers fall or, at least, are

reduced20

, and this result can be achieved depriving progressively the Member States of their

competence in the field and granting it to European authorities.

So far, the interpretation given to Article 65 has been very wide, so that many harmonizing

provisions concerning private international law have been taken on this legal basis21

. The

requirement of the necessity of the measure for the correct functioning of the internal market

19

Johan Meeusen, ‘Instrumentalisation of Private International Law in the European Union: Towards a European

Conflicts Revolution?’ (2007) 9 E.J.M.L. 287.

20 Ibid; See ch 3.

21 Meeusen (n 19) 290. See n 56 for a non comprehensive list of secondary legislation based on art. 65.

11

is not restricting the Community legislative powers, since the free movement of persons,

which is the basic goal for every measure taken under title IV is also one of the elements

which must be ensured within the internal market (Article 14 EC treaty, now Article 26

TFEU)22

.

It is worth adding few other remarks on the circumstances in which the EC may act in the

field of PIL. First, the list contained in Article 65 is not exhaustive23

. On the other hand, the

whole subject matter was transferred to the European Community, and Article 293 fourth

indent (former Article 220) remained to govern other areas of intervention not related to civil

matters24

. Further, at least as par. (b) is concerned, to require cross-border implications for the

measures to be adopted is naturally compatible with conflicts rules, which by definition

operate when there are foreign elements25

.

The form which these ‘measures’ should take is not specified, so all the types listed in Article

249 EC treaty (now Article 288 TFEU) can be used; the biggest developments in the field of

PIL (and Rome I is within them) have been promoted through regulations26

, a form which has

general application, is binding in its entirety and directly applicable in all Member States

(Article 288 TFEU), similarly to international conventions27

. This may seem in contrast with

the wording of Article 65 (b) EC treaty, which makes reference to the promotion of

compatibility and not to unification of rules concerning the conflict of laws and jurisdiction,

but the Community experience in this field leads clearly in the direction of establishing

22

Basedow (n 3) 701.

23 Basedow (n 3) 700, who bases this assumption on the use of the word ‘include’ in the first paragraph of art.

65.

24 Ibid.

25 Remien (n 7) 74.

26 Fiorini (n 16) 974.

27 Basedow (n 3) 706.

12

uniform rules28

. Further, regulations do not have to be implemented in each Member State and

immediately become part of the “acquis communautaire”29

.

Moving the legislative competence on private international law within the European

Community has also solved the question of absence of inherent jurisdiction of the Court of

Justice of the European Union (ECJ) on international Conventions entered into by Member

States30

. While, indeed, special Protocols were signed to confer jurisdiction to the ECJ to give

rulings on the interpretation of the Brussels and the Rome Conventions31

, the Community

competence on the matter resulted in the ECJ having direct jurisdiction on it. In this regard,

however, according to Article 68 EC treaty, only courts or tribunals of final appeal could ask

the ECJ to take decisions in the field of private international law, so reducing considerably

said power of interpretation32

.

It is also to be reminded that, before the innovations of the Treaty of Amsterdam, the

European Community did implement conflicts rules33

, in particular in the context of some

directives enacted on the basis of art 95 EC treaty, now 114 TFEU. However, the practice of

28

Remien (n 7) 77.

29 See Ole Lando and Peter Arnt Nielsen, ‘The Rome I Regulation’ (2008) 45 CMLR 1687. It is worth to note

that since the Treaty of Amsterdam United Kingdom, Ireland and Denmark signed two protocols to the Treaty

which have the effect of excluding them from the measures generally taken in accordance to Title IV (art. 69 EC

treaty). There is, however, an opt-in possibility for the UK and for Ireland, which so far has always been

exercised in relation to Community measures on private international law (including Rome I), see n 79.

30 Fiorini (n 16) 972.

31 Protocol on the interpretation by the Court of Justice of the [Brussels] Convention (consolidated version),

[1998] OJ C27/28; Protocol on the interpretation by the Court of Justice of the European Communities of the

[Rome] Convention (consolidated version), 1998 OJ C27/47, entered into force on 10.08.2004.

32 Fiorini (n 16) 973; Koen Lenaerts, ‘The contribution of the European Court of Justice to the area of Freedom,

security and justice’ (2010) 59 ICLQ 255, 263. As a result, while a preliminary ruling could be asked by an

appellate court with regard to the 1968 Brussels Convention, the same court could not ask a ruling under the

Brussels I Regulation 44/2001. See par. 1.3 for the amendments brought about in this respect by the treaty of

Lisbon.

33 Fiorini (n 16) 969; Meeusen (n 19) 288.

13

these provisions, that mostly aimed either to prevent the choice by the parties of a law of a

non-member State (as in the consumers’ directive34

) or to define the scope of European PIL

provisions (as in the insurance directive35

), was unsatisfactory because the rules were

distributed in different instruments of secondary Community law and could not form a unique

and coherent body of law36

. In chapter four it will be seen how Regulation Rome I tackled the

problem of incoherence of sources of conflicts rules in relation to insurance contracts with the

insertion of a provision (Article 7), which is intended to substitute the previous regime.

In conclusion, the main feature of Article 65 of EC treaty is the acknowledgment that

difference among rules of conflict of laws of Member States may affect the free movement of

persons and thus the growth of the internal market. The European Community, then, gains full

competence on legislating on the matter of private international law37

, with the aim to remove

those legal barriers, increase legal certainty and efficiency and prevent discrimination38

.

Following the new powers granted by the Amsterdam Treaty, the Commission and the

Council identified the priorities in the action aimed to achieve a stronger judicial cooperation

in civil matters between Member States. The 1998 Vienna Action Plan39

, recognizing legal

certainty and equal access to justice as main objectives of the intervention, affirmed the need

of “identification of the competent jurisdiction, clear designation of the applicable law,

availability of speedy and fair proceedings and effective enforcement procedures” [emphasis

34

Eg Council directive 93/13/EEC, [1993] OJ L95/29.

35 Eg Second Council directive 88/357/EEC, [1988] OJ L172/1.

36 Fiorini (n 16) 972. Remien (n 7) 59 also describes situation of choice-of-law rules in the insurance directives

as a “chaotic amalgam of approximation and diversity” and express doubts about “appropriateness of the rules”

in relation to consumer contract directives. In the same sense see Green Paper on Rome I (n 78) 17.

37 Basedow (n 3) 701.

38 Fiorini (n 16) 974.

39 Action Plan of the Council and the Commission on how best to implement the provisions of the Treaty of

Amsterdam on an area of freedom, security and justice, [1999] OJ C19/1.

14

added]. It is interesting to note that the Plan expressly called for a “revision, where necessary,

of certain provisions of the Convention on the Law applicable to contractual obligations,

taking into account special provisions on conflict of law rules in other Community

instruments (Rome I)”, so stressing the importance of the choice-of-law matter for the

achievements of the goals of the Plan and, indirectly, recognizing the inadequacy of the then

current regime.

Europeanization of conflicts rule is connected also to a further key principle, the mutual

recognition of judicial decisions in civil matters, which was recognized at the Tampere

European Council of 15th

and 16th

October 1999 (it had not even been mentioned, however, in

the Vienna Action Plan). The concept is based on the assumption that the sound operation of

the internal market can be hampered by the differences between national rules governing

recognition and enforcement of foreign judgments40

. Therefore, each Member State should

recognize judicial decisions and judgments coming from other states without any special

procedure being required and without having regard to the substance of the case. This entails

that judgments which have been rendered according to the applicable national procedural

rules would circulate freely throughout the Union, regardless of whether their substantive

outcome is different from the one that would have been reached in other Member States, with

the only limited exception of public policy issues. Mutual recognition operates also as a

“substitute mechanism” in those cases where the harmonization of substantive law is

inconvenient or too difficult41

. This approach, then, focus on the freedom of movement within

the EU, almost irrespectively of the substantial outcome of the decisions and, remarkably, of

the choice-of-law rules applied to reach them.

According to the Tampere conclusions, mutual recognition became the “cornerstone of

40

For this terminology see Reg. 44/2001 (Bruxelles I) [2001] OJ L 12/1.

41 Meeusen (n 19) 301.

15

judicial co-operation in both civil and criminal matters within the Union” and, therefore, the

importance given to conflicts rules by the Community legislator has been reduced42

. The

subsidiary position of the measures relating to harmonization of conflict-of-law rules in

respect of the mutual recognition has been clarified in the programme that the Council

adopted to implement this principle43

. Harmonization of choice-of-law rules is deemed to

“help facilitate the mutual recognition of judgments” in civil and commercial matters and

accordingly is considered “ancillary” to instruments on jurisdiction, recognition and

enforcement of judgments.

Nonetheless, development of European unified conflicts rule has never ceased, nor it seems

than that the European authorities have dismissed the importance of the subject. Indeed, five

years after the European Council's meeting in Tampere, a new multi-annual programme

(known as the Hague Programme)44

was adopted, which pushed for the work concerning the

conflict of laws regarding contractual (‘Rome I’) and non-contractual obligations (‘Rome II’)

to be actively pursued45

.

1.3 The Treaty of Lisbon

The entry into force of the Reform treaty (or Treaty of Lisbon46

) in December 2009 put

forward some formal and substantial changes to the legislative competence of the EU in the

field. Articles 61 and 65 EC Treaty become respectively 67 and 81 TFEU and were inserted in

42

Ibid.

43 Draft programme of measures for implementation of the principle of mutual recognition of decisions in civil

and commercial matters, [2001] OJ C12/1.

44 [2005] OJ C53/1.

45 Hague programme, para 3.4.2.

46 Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European

Community, signed at Lisbon, 13 December 2007, [2007] OJ C306/1. For the consolidated versions of the Treaty

on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) see [2010] OJ

C83/1.

16

a Title V named “Area of freedom, security and justice”. The Union competence is now

expressly limited by the principle of “conferral” and is expressly shared with Member

States47

, which can take measures in this field only if the European Union has not exercised

its competence or has stopped exercising it. Moreover, principles of subsidiarity and

proportionality continue to govern the use of Union competences48

.

Besides this, the amendments, at least from a substantive point of view, have been considered

limited49

. The first and more evident is that judicial cooperation in civil matters having cross-

border implications has to be based on the principle of mutual recognition of judgments first

appeared in the Tampere Conclusions, so that this latter principle eventually acquires a Treaty

basis (Article 81 TFEU). Furthermore, measures to be taken within said cooperation do not

have to be necessary for the proper functioning of the internal market anymore50

and are

completely separated from the aim of free movement of persons. Also, Article 81 TFEU

provides a closed list of areas of potential action, as opposed to the one earlier provided by

Article 65 EC treaty. However, Fiorini argues that this latter provision had already been given

a wide interpretation and then a major “impetus to any further expansion in practice” is

unlikely51

.

An important change, though, has been introduced in the role of the ECJ. Article 68 EC

47

Article 5 (2) TEU clarifies that “Under the principle of conferral, the Union shall act only within the limits of

the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein.

Competences not conferred upon the Union in the Treaties remain with the Member States.”. According to Art. 4

TFEU, the area of freedom, security and justice constitutes a shared competence between the Union and the

Member States.

48 Art. 5 (3), (4) TEU.

49 Fiorini (n 16) 975.

50 The words “in so far as necessary for” in art 81 TFEU have been replaced by “particularly when necessary

for” the proper functioning of the internal market.

51 Fiorini (n 16) 977.

17

Treaty52

has been repealed, so that the whole matter of Title V of the TFEU falls within the

scope of Article 267 TFEU and any national court can now request a preliminary reference on

this matter53

. As a result, consistency of application and interpretation of European private

international law rules should improve54

.

In conclusion, the Union competence on European PIL is now based on a “slightly wider and

more (but not entirely) clearly defined” legal basis, even though the general coherence of the

field is reduced by the coexistence of Article 67 and 81 TFEU with the provision of Article

114 TFEU, which still allows to enact isolated PIL provisions55

.

52

See n 32.

53 Art. 267 TFEU (ex art. 234 EC Treaty); See Lenaerts (n 32) 265.

54 Fiorini (n 16) 978.

55 Ibid.

18

CHAPTER 2

The specific role of conflicts rules within the EU Private International Law and the need for their harmonization

In the first chapter of this paper it was explained that the attribution of competence to the

European Community to legislate on private international law has led to a remarkable

expansion of instruments of harmonization of conflicts law in Europe, in particular in the last

ten years56

. I also described the advantages of this “communitarization” of the sources of PIL,

consisting mainly in the greater consistency in Community legislation in the field and in the

use of conflicts rules for the achievement of Community objectives, such as reducing legal

barriers to the free movement of persons in the internal market and supporting the mutual

recognition of judgments. Furthermore, uniform interpretation of the ECJ has been granted,

which shall guide national courts in the application of European PIL, so that they will share

more and more the same practical conflicts solutions, as it happened in respect of the ECJ

jurisprudence on the Bruxelles Convention and its successor, the Regulation 44/2001. It is in

this legislative process that the conversion of the Rome Convention into a EC Regulation

started in 200257

.

Apart from the issue of the benefits of Europeanization that are relevant on the ground of EU

law, a different and more general question arises about why conflict of laws rules should be

56

For this paper, the most relevant instruments enacted by the European Community in the field of private

international law within the judicial cooperation framework are: Reg. 44/2001 on jurisdiction and the recognition

and enforcement of judgments in civil and commercial matters (Brussels I), [2001] OJ L12/1; Reg. 2201/2003 on

jurisdiction and the recognition and enforcement of judgments in matrimonial matters and in matters of parental

responsibility (Brussels II), [2003] OJ L338/1; Reg. 593/2008 (Rome I); Reg. 864/2007 on the law applicable to

non-contractual obligations (Rome II), [2007] OJ L199/40. The others concern either procedural matters or

cooperation between Member States. An updated list of these measures is available at

<http://europa.eu/legislation_summaries/justice_freedom_security/judicial_cooperation_in_civil_matters/index_

en.htm> (last visited 01.08.2010).

57 See ch 3.

19

harmonized throughout the twenty-seven European Member States. In other words, it has to

be assessed what the specific goals of the harmonization process are, together with the

consequences for the practical application of these provision in the European courts. It is in

the light of these objectives that, in the next chapter, Regulation Rome I will be compared to

the Rome Convention, to show whether and how much these have been achieved.

2.1 The operation of conflicts rules

Choice-of-law provisions deal with the selection of the law applicable to a relation which

cannot be considered as a pure national case, because it contains one or more foreign elements

which are not connected to the legal order of one and the same State 58

. For instance, the

parties to a contract may be domiciled in different States, or the place of performance of the

obligations contained in the agreement may differ from that of the court before which the

claimant brought the case.

When such a situation occurs in a litigation proceedings before a judge of a Member State59

,

that judge will have to make use of the private international law rules of his or her

jurisdiction, in order to decide what law applies to the matter; the outcome, then, could be the

application of the lex fori, as well as of a foreign law.

When Member States apply divergent conflicts rules, based on different connecting factors, it

could happen that the same legal relation (for instance, a contract of sale) is thought to be

governed by two diverse laws, depending on the judge called to decide on the issue (and,

ultimately, on where the lawsuit has been brought first). For instance, one of them may

58

L Collins (ed), Dicey, Morris and Collins on the Conflict of Laws (London, Sweet & Maxwell, 14th edn,

2006), 3.

59 Arbitrators, instead, do not have to abide by the rules of Private International Law of the seat of arbitration, see

Julian Lew, Loukas Mistelis, Stefan Kröll, Comparative International Commercial Arbitration (Kluwer Law

International, The Hague 2003), 425.

20

provide for some implied warranties or for a particular method of assessment of damages not

present in the other60

.

This situation is held to have major drawbacks and, according to Remien, “is neither

comprehensible nor tolerable in an ‘area of freedom, security and justice’, as promised in

Article 61 EC”61

. It is argued indeed that the presence of divergent national choice-of-law

rules, which may vary and also be vague, reduces the legal security in the internal market62

,

because it makes more difficult to predict which law applies to a certain case, as well as its

final outcome. Furthermore, in the absence of clear and unified conflicts rules, uniformity of

judgments in the EU area becomes difficult to reach. This, in turn, can encourage forum

shopping, a practice that European Union has always tried to prevent63

. Last, as it was

explained above64

, the European Commission has considered the difference in choice-of-law

rules between Member States as a barrier to “the proper functioning of the internal market”.

One solution to minimize the problems described may be the adoption of a European Civil

Code or, in general, the harmonization of substantive private law in Europe. If Europe had a

unified Civil Code, there would not be the need of conflicts rules, except in relation to cases

regarding third countries. This process, though, is not achievable in the short term nor is it

necessary. It would also hardly respect the principle of subsidiarity65

.

60

For some examples of differing conflicts rules and their consequences, see Remien (n 7) 66 ff.

61 Remien (n 7) 60.

62 Ibid.

63 Forum shopping is the behaviour of someone involved in an international dispute to choose to bring a case in

front of a particular jurisdiction not because it is the most convenient place to hear the dispute, but only because

the applicable conflict of laws rules lead to the application of the law most advantageous for him (see Green

Paper on Rome I (n 78) 44.

64 See supra, ch 1.

65 Remien (n 7) 63 ff.

21

The harmonization of choice-of-law provisions, on the other side, is a method to raise legal

certainty in the internal market which is sufficient, effective and also coherent with the

principle of subsidiarity. For instance, with a unified choice-of-law rule on contracts, a breach

of a contractual obligation would be assessed according to the same law, regardless of the

jurisdiction in which the lawsuit took place. This should lead to uniformity of decision,

reduction of forum shopping, rise of mutual trust in the decision of the foreign judges, easier

mutual recognition of European judgments, as well as non-discrimination between Member

States66

. In addition, Europeanization of private international law can be said to simplify the

process of learning and applying conflicts rules in twenty-seven member states and is

eventually also proportionate to the objectives, since it often allows space for exceptions, such

as public policy or the application of the mandatory rules of the forum, and for later review of

the text of regulations.

2.2 Some reflections on practical application of conflicts rules and the principle of uniformity of decision

It has been seen so far why and how the European authorities promote uniformity of decision

throughout Europe. It is worth remembering that the recital n. 6 of Regulation Rome I

acknowledges that identical conflict-of-law rules in the Member States which designate the

same national law are capable to improve not only the certainty as to the law applicable and

the free movement of judgments, but also the predictability of the outcome of litigation, which

is supposed to be the same irrespective of where the action is brought.

It must be recognized, though, that there are at least two major drawbacks in pursuing the goal

of uniformity of decision through the means of harmonized conflicts rules. This happens

because the concept that common choice-of-law rules lead to uniformity of judgments relies

on the assumption that judges are able to apply foreign law as they apply their domestic one,

66

Ibid.

22

in terms of knowledge and interpretation, but this may not always be true.

First, in some legal systems, as in the English one, foreign law is applied only when the

parties invoke it67

, while in others (like the Italian one) the application of foreign law is

automatic (ex officio) wherever the relevant conflicts rule points to it68

. This diversity has also

consequences on the way the foreign law is proved to the judge. In the English system, for

instance, the proof of foreign law is adversarial, which means that the parties have to supply

evidence of substance and application of foreign law to the judge, by means of experts

witnesses, since it is considered as a mere fact. In other jurisdictions, like Germany and Italy,

the treatment reserved to foreign law is equivalent to that of the lex fori, so that the judge is

deemed to know and apply it autonomously, even though the parties usually provide, for

instance, foreign lawyers’ affidavits in order to help him or her in the ascertainment of foreign

law’s content. In the English approach, then, there are major obstacles to uniformity of

judgments. First, since reliance upon foreign law is optional, often the lex fori (English law)

applies as the lex causae. Also, the use of an adversarial approach means that foreign law

enters into the process only as long as and in the manner in which the parties prove it. If the

evidence is insufficient or unclear, and the court has nonetheless to decide, its decision will be

likely to be different from the one of the foreign court of the state whose law is applied69

.

Second, Fentiman argues that the means of proof of foreign law has to be adequate, because

otherwise uniformity becomes a less viable goal when confronted with the reality of the

process; in this respect, one should consider that in any legal systems the act of applying

67

Ibid; see also Richard Fentiman, ‘Foreign law in English Courts’ (1992) 108 L.Q.R. 142. It has to be noted that

this approach is considered procedural and, according to art. 1.3 Rome I, excluded from the scope of the

regulation itself.

68 Remien (n 7) 78.

69 Richard Fentiman, ‘METHODS AND APPROACHES – choice of law in Europe: uniformity and integration’,

(2007-2008) 82 Tul.L.R 2021, 2032.

23

foreign law is difficult and uncertain, because it relies on the work of judges, experts and

lawyers70

. In practice, it may prove to be extremely difficult not only to know but also to

apply correctly the rules of a foreign country. In this respect, the 1968 London European

Convention on Information on Foreign Law71

provides that the State Parties exchange

information concerning their law and procedure in civil and commercial fields as well as on

their judicial system, by means of appointed national agencies, when problems of foreign law

arise during legal proceedings; however, this instrument has not been exploited so much in

practice72

. In this respect, Remien proposes that foreign law should always be considered “as

a law and not a mere fact” and suggests to introduce a ‘preliminary reference procedure’, by

which a Court may request to an equivalent court of the Member State whose law applies an

opinion on the content of the law, on the basis of the effective situation to be decided73

. Even

though this idea does not seem to have been further discussed by scholars, it confirms the

importance of a correct use of foreign law for the success of the conflicts rules. Concluding on

this point, citing Professor Ole Lando, Fentiman argues that without sufficient means of proof

of foreign law, the uniform choice-of-law rules of the EU cannot supply any real uniformity

and the conflict of laws becomes “a weak tool for legal integration”74

.

Many of the doubts about the feasibility of a complete uniformity of decision may be correct,

even though some reflections may be made that can reduce the impact that these arguments

have on the wider discussion on Europeanization of conflicts rules.

70

Ibid, 2033.

71 CETS n. 62, available at <http://conventions.coe.int>.

72 On the London Convention see Juliette Van Doorn, Barry J. Rodger, ‘Proof of foreign law: the impact of the

London Convention’ (1997) 46 ICLQ 151.

73 Remien (n 7) 79.

74 Fentiman (n 69) 2034.

24

In particular, on the one side the circumstance that, in the English jurisdiction, rules of foreign

law must be pleaded and proved in the same way as other facts and, consequently, their use is

optional, is a major obstacle. Nonetheless, this flaw seems to operate only in England and not

in other European countries, so its practical effect is reduced. Next, with regard to the

difficulties arising from the knowledge, application and interpretation of a foreign law, one

should take into consideration that the European Union authorities are aware of the

importance of an exchange of information on different legal systems for an effective judicial

cooperation between member States. Indeed, the European Parliament and the Council in

2007 set up a general programme called ‘Civil Justice’75

, aimed (inter alia) at improving

mutual knowledge of Member States’ legal and judicial systems in civil matters, to promote

and strengthen networking, mutual cooperation, exchange and dissemination of information

and finally to ensure the correct and concrete application of Community instruments in the

area of judicial cooperation in civil and commercial matters. This initiative can be seen as a

way to educate legal practitioners (as judges and lawyers) of the content of foreign laws, to

create contacts and to share knowledge between legal experts in different countries.

In addition, there may be some other advantages in looking for consistency of decision than

just reduce forum shopping or bring about legal certainty.

There is, for instance, a practical argument which takes into consideration the perspective of

commercial entities which conduct their business in the whole territory of the European

Union. For them, litigation in a foreign jurisdiction can be more burdensome, in terms of legal

costs and of time, than being parties of proceedings in their own country. Often the foreign

party feels to be disadvantaged by the use of another language and procedure and by the

75

Decision No 1149/2007/EC Of The European Parliament and of the Council [2007] OJ L257/16.

25

ignorance of the local judicial system76

. All these drawbacks may lead to renounce to promote

a legal action in a foreign jurisdiction, because of excessive uncertainty of results. Promoting

a policy of uniformity of decision by harmonizing conflicts rules might help to eliminate at

least one factor of uncertainty, the one linked to the applicable law and, eventually, to

encourage businesses to protect their rights, when needed, through litigation proceedings

before national foreign courts. The overall effect of this policy may even be to develop trust in

the legal system of other countries and in the overall functioning of the European internal

market. It is suggested here that the pursuit of the goal of uniformity of decision in the

European Union seems legitimate, notwithstanding the difficulties that judges may encounter

in applying foreign law.

2.3 Conclusion on the aims of Europeanization of conflict of laws

In conclusion, it has been said that harmonization of conflicts rules in Europe serves a variety

of objectives. The concrete application by judges of different Member States of the same law,

chosen by uniform choice-of-law rules, may increase legal certainty inside the European

Union and promote uniformity of decisions. This, in turn, may reduce the practice of forum

shopping. Further, knowing in advance the applicable law encourages parties who have (due

to the rules on jurisdiction) to assert their rights in foreign litigation not to renounce their

rights. This leads to a more equal and fairer access to justice. Eventually, harmonization of

private international law facilitates mutual recognition of judgments, thanks also to common

rules on public policy and mandatory provisions.

76

In this sense, see Green Paper on Rome I (n 78) 8.

26

CHAPTER 3

Analysis of the most relevant provisions of Regulation Rome I

In the previous chapters it has been examined how the European Community (now, European

Union) has progressively gained wider competence to legislate in the field of private

international law, and what the objectives of the Europeanization of choice-of-law rules are.

The question to address now is whether the provisions of Rome I are indeed able to achieve

these goals or not.

Before proceeding with the analysis, it is worth noting that the first Commission proposal of

the Regulation dates back to 15 December 200577

(the ‘Proposal’) and has been preceded by

extensive consultation of the Member States, the other institutions and civil society, in

particular via the Green Paper of 14 January 200378

. There has been a thorough discussion

both within the European Governments79

and the scholars80

on the text put forward, and the

final text of the Regulation moves away from the original Proposal in some important points,

77

Commission (EC), ‘Proposal for a Regulation of the European Parliament and the Council on the Law

Applicable to Contractual Obligations (Rome I)’, COM (2005) 650, 15.12.2005.

78 Commission (EC) ‘Green Paper on the conversion of the Rome Convention of 1980 on the law applicable to

contractual obligations into a Community instrument and its modernization’, COM (2002) 654, 14.01.2003. The

Green Paper received many responses, published at <http://ec.europa.eu/justice_home/news/consulting_public

/rome_i/news_summary_rome1 _en.htm> (last accessed 1.08.2010).

79 After the publication of the Proposal, the UK decided not to opt in to the proposal but nonetheless to engage in

the negotiations on it, in order to convince the Commission to introduce those amendments that were considered

necessary to opt-in at a later stage. Negotiations concluded in December 2007 and the UK Government, after

consulting the stakeholders, opted in to the Regulation at the end of July 2008 (see Ministry of Justice, ‘Rome I –

Should the UK opt in?’, Consultation paper CP05/08, 02.04.2008, available at

<http://www.justice.gov.uk/consultations/cp0508.htm> (last visited 23.07.2010).

80 On the Proposal see Editorial comments, ‘On the Way to a Rome I Regulation’ (2006) 43 CMLR 913; Ole

Lando and Peter Arnt Nielsen, ‘The Rome I Proposal’ (2007) 3(1) Jour.P.I.L. 29; Max Planck Institute for

Comparative and International Private Law, ‘Comments on the European Commission’s Proposal for a

Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome

I)’ (2007) 71 RabelsZ Bd. 225; Lagarde, ‘Remarques sur la Proposition de Règlement de la Commission

Européenne sur la Loi Applicable aux Obligations Contractuelles’ (2006) Rev. crit. d.i.p. 331.

27

as we shall see below. Since it is not possible to take into consideration all the articles of the

Regulation, nor it is convenient as some of them have almost the same text as the Rome

Convention, a choice has been made between the most significant ones.

3.1 Rome I, article 3 – freedom of choice

Article 3 of the 1980 Rome Convention embodies the first and fundamental principle of

freedom of choice, which governs (in almost every jurisdiction of the world81

) choice of law

in contracts82

. The parties are able to choose the law that they prefer, also a non-European law

or a law which has no objective connection to the contract, and Article 3 establishes rules for

the form and the time of this choice, allowing depeçage and later change of the law itself.

However, even this wide freedom is delimited because, if the contractual situation is

connected with one country only, the Rome Convention demands the application of the rules

of law of that country which the parties cannot derogate from by contract (‘mandatory rules’,

3.3). This system prevents the parties to a substantially national contract to choose a law of a

foreign state only in order to avoid the application of certain (supposedly restrictive) laws of

the country.

Rome I does not carry any substantial modification in this respect, but the wording of the new

Article 3.3 of the Regulation is aligned as far as possible with Article 14 of Rome II83

and

avoids the use of the confusing term ‘mandatory rules’. The important change made with the

conversion relates to the extension of this principle to the case in which the situation is not

national anymore, but ‘European’, that is that “where all other elements relevant to the

situation at the time of the choice are located in one or more Member States” (3.4). In this

81

See Green Paper on Rome I (n 78) 10.

82 It is to be reminded that, while the Regulation has replaced the Rome Convention in the Member States since

17 December 2009, it is still in force between those countries and Denmark (Lando and Nielsen (n 29) 1629) and

also applicable to contracts concluded before that date.

83 See Rome I, recital n. 15.

28

case, it is the Community law which cannot be derogated from by agreement, where

appropriate as implemented in the Member State of the forum, which must be applied to the

contract regardless of the will of the parties (3.4).

The establishment of a Community minimum standard may be seen as filling a gap in the

previous text. Indeed, under the Convention, when all the parties involved are Community

nationals and they choose a law of a third state, Community protective rules would remain

unapplied and the weaker party would be disadvantaged. On the other hand, the protection of

weaker parties contained in sectoral directives is not considered adequate since it applies only

to specific types of contracts and in those countries in which the directive has been correctly

transposed84

. Moreover, the adoption of this rule is in harmony with the decision of the

European Court of Justice in the case Ingmar, where the fact that some elements of the case

were located outside the Community (the principal was established in the U.S.) did not

prevent the Court to held that several articles of the directive 86/653 on commercial agents

were applicable, because the activity of the agent was exercised in a Member State85

.

Furthermore, while in the Rome Convention the choice had to be expressed or demonstrated

“with reasonable certainty by the terms of the contract or the circumstances of the case”,

Rome I provides a clearer rule according to which the choice shall be made “expressly or

clearly demonstrated” by those terms and circumstances86

. The uncertainty linked to the word

reasonable is removed so that “ for an implied choice of law agreement the threshold is

higher under Rome I than under the Convention”87

.

84

See Green Paper on Rome I (n 78) 19 and supra n 14 and accompanying text.

85 Case C-381/98 Ingmar GB Ltd v Eato Lonard Technologies Inc [2000] ECR I-263 (judgment given

9.11.2000).

86 One of the factors to consider in determining whether a choice of law has been clearly demonstrated is an

exclusive jurisdiction agreement between the parties, see recital 12 and infra para 3.6.

87 Lando and Nielsen (n 29) 1698.

29

It is suggested that the new text enhances legal certainty, thanks to removal of the

interpretative doubts related to the word ‘reasonable’ in the third paragraph and leads to an

higher uniformity of decision, due to the introduction of the Community minimum standard.

3.2 Rome I, article 4 – applicable law in the absence of choice

A major intervention has been made on Article 4 of the Rome Convention, the second

fundamental principle in choice-of-law rules, which defines the applicable law in the absence

of choice by the parties, following the criterion of the ‘proper law’ of the contract. A ‘most

closely connected country’ test is established as the main rule by the Rome Convention,

together with three presumptions in paragraphs 2 (the country in which the party who effects

the characteristic performance88

has his habitual residence), 3 (the country where the

immovable property is situated) and 4 (particular rules contracts for carriage of goods). An

‘escape clause’ is also provided by Article 4.5, according to which the first of these

presumptions must not be applied where the characteristic performance cannot be identified,

nor the other presumptions shall apply if it appears from the circumstances as a whole that the

contract is more closely connected with another country.

It will be reminded that different courts in Europe have given diverse interpretations of the

weight of these presumptions: on one side, English courts, for instance, have considered the

presumption set by Article 4.2 as a weak one and have often disregarded it, applying the

‘escape clause’ of Article 4.5 to choose another law which they considered more proper89

;

88

“It is the performance for which the payment is due [...], which usually constitutes the centre of gravity and

the socio-economic function of the contractual transaction.”, Mario Giuliano and Paul Lagarde, ‘Report on the

1980 Convention on the law applicable to contractual obligations’ [1980] OJ C282/1 1 (Giuliano / Lagarde

Report) and cfr. Rome I recital 19.

89 For cases in which the presumption in art. 4.2 has been held to be very flexible see Definitely Maybe (Touring)

Ltd v. Marek Lieberger Konzertagentur GmbH, [2001] 2 Lloyd’s Rep. 455; Bank of Baroda v Vysya Bank Ltd,

[1994 2 Lloyd’s Rep. 87, 90-94 (Q.B.); generally on ‘weak’ and ‘strong’ models of interpretation of the provision

see Simon Atrill, ‘Choice of Law in Contract: the Missing Pieces of the Article 4 Jigsaw?’ (2004) 53 ICQL 549.

30

another European jurisprudence90

has otherwise relied on the presumptions as they were the

principal rules, in order to achieve the highest level of predictability, even at the expense of

flexibility. The vague relation between the rule, its presumption and the escape clause caused

uncertainty91

and the conflicting interpretations by the Courts risked to prejudice the uniform

and coherent application of the provision. Furthermore, in particularly complex contracts, the

application of the characteristic performance rule is problematic92

.

This article has been completely amended by comparison with the Rome Convention, in order

to address the disparity of interpretation and to achieve an higher degree of predictability. The

new Article 4 provides first for eight different fixed rules for different types of contracts. For

instance, the contract for the sale of goods will be governed by the law of the country where

the seller has his habitual residence (4.1(a)), or the franchise contract by the law of the

country where the franchisee has his habitual residence (4.1(e)). When those predetermined

rules cannot operate because the contract is not listed therein or has elements which are

covered by more than one point, the criterion of the law of the country in which the person

who has to perform the characteristic performance has his habitual residence applies (4.2).

It can be seen that in the new text the old ‘closest connection’ test, with its presumptions and

the escape clause, is replaced by hard and fast rules which should provide more

predictability93

.

90

See Dutch Supreme Court in the BOA case (Société Nouvelle de Papéteries v. BV Machinenfabriek BOA,

25.09.1992, reported in XLII Netherlands International Law Review, 1995, 259 or Baros AG v Embrica Maritim

Hotelschiffe GmbH, 17.10.2008, cited by Adrian Briggs, ‘When In Rome, choose as the Romans choose’ (2009)

125 L.Q.R. 191. According to Lando and Nielsen (n 29) 1701, “many continental courts and the Scottish courts

also put greater weight on the presumptions than to flexibility”.

91 Lando and Nielsen (n 29) 1700; see also Green Paper on Rome I (n 78) 25.

92 Zheng Tang, ‘Law Applicable in the Absence of Choice - The New Article 4 of the Rome I Regulation’ (2008)

71(5) M.L.R. 785, 786.

93 Ibid.

31

However, unlike the Proposal, Rome I leaves space for the application of the law of the

country with which the contract is most closely connected. In the text of the Proposal, indeed,

the law identified by means of Article 4.1 and 4.2 could not be discarded at all, even in those

cases, for instance, of strong connection between two contracts in principal-accessory relation

within them94

. According to the Commission, this system would have “enhance[d] certainty

as to the law by converting mere presumptions into fixed rules and abolishing the exception

clause”, with the aim to establish rules on absence of choice “as precise and foreseeable as

possible so that the parties can decide whether or not to exercise their choice”95

. The

Member States and some scholars, however, had considered the absence of any escape clause

too rigid, and had called for the inclusion of a provision similar to Article 4.5 of the Rome

Convention96

. The inflexibility of the provisions had been considered “utterly unjustified”

(since, it was argued, the Rome Convention system already ensures predictability and

certainty of law sought by the Rome I Proposal) and completely ignoring the needs for justice

in individual cases97

.

The get-out clause contained in Article 4.3 is narrow and operates only where “it is clear from

all the circumstances of the case that the contract is manifestly more closely connected with a

country other than that indicated in paragraphs 1 or 2”98

[emphasis added]. A close

relationship with another contract, for instance, should be taken into consideration99

. The way

in which the exception correlates with the main rules has not changed in comparison with the

94

Franco Ferrari, ‘From Rome to Rome via Brussels: Remarks on the law applicable to contractual obligations

absent a choice by the parties (art. 4 of the Rome I Regulation)’ (2009) 73 RabelsZ Bd. 750, 759.

95 The Proposal, 5.

96 See for instance Lando and Nielsen (n 29) 917; Lagarde, (n 80) 338; Max Planck Institute (n 80) 266, which

also argues against the adoption of a inflexible rule citing international practice outside the EU, that mostly opts

for a flexible approach.

97 Ferrari (n 94) 760; Editorial comment (n 80) 917.

98 See a corresponding clause in Rome II, art. 4.3.

99 Recital 20 and 21 Rome I; cfr. Ministry of Justice (n 79) 23.

32

Rome Convention provision, but the clause is more restrictive than before, because the

connection of the contractual situation with the country has to be manifest, and this should

lead to less uncertainty100

.

Commenting on the future interpretation of the clause by the ECJ, Richard Fentiman argues

that the provision of Article 4.3 Rome I “suggests a search for geographical location” and

that the rule lacks any indication of whether and how the interpreter has to evaluate the

significance of different connecting factors other than the territorial one101

. The author

foresees that, given the decision of the ECJ in Osuwu (regarding the jurisdiction regime of

reg. 44/2001)102

, the ECJ will adopt a narrow interpretation of the escape clause, with the only

aim to pursue the uniformity of decision within the European Union103

. Thus, he argues, it is

likely that Article 4 of Rome I will be interpreted in the sense that laws applicable pursuant to

Article 4.1 and 4.2 can be displaced only if they have “no significant connection with the

contract”104

. As this is rare, “the article 4 exception is drastically reduced in significance,

perhaps to a vanishing point”105

. This likely interpretation is criticized by Fentiman, since the

use of PIL rules to serve the Community interests might not always lead to the best choice-of-

law solution. He claims that adherence to strict conflicts rules and an interpretation of the

clause which leaves only little space to judicial discretion do not serve commercial efficacy

and expectations of contracting parties106

. Likewise, a scholar argues that the approach of the

Dutch Supreme Court in interpreting the corresponding clause of the Rome Convention

described above is “too restrictive” and the proper approach should be an intermediate one, in

100

Ferrari (n 94) 763.

101 Fentiman (n 69) 2041.

102 Case C-281/02, Osuwu v. Jackson, [2005] ECR I-1383.

103 See above, para 2.1.

104 Fentiman (n 69) 2048.

105 Ibid.

106 Ibid.

33

which to apply the escape clause in those (yet exceptional) cases, in which factual and

relevant elements are weighted so to make a closer connection with another country obvious

and natural107

.

Lando and Nielsen support the text as being a “workable and reasonable compromise”108

. In

their view the rigid rules of the first paragraph assure predictability, while they are balanced

by the flexibility of the rest of the provision. One point of uncertainty may be the

interpretation of Article 4.2 in those cases where a complex agreement which contains two or

more points of paragraph 1 may be better considered as two different contracts, governed by

two different laws. In this case, it is suggested that the interpreter should assess whether the

terms of one of them (for instance, a distributorship contract) are severable from the other

contract term (for example, a sale contract). If it is so, the different laws of habitual residence

of either the distributor or the seller should govern the corresponding contract109

. Ferrari also

support the conservation of the escape clause, arguing though that “the degree of flexibility of

Article 4 of the Rome I Regulation [does not compare] to that of its Rome Convention

counterpart”110

.

Since the law chosen to govern the contract in all the points (a) to (h) of Article 4.1 mostly

corresponds to the law of the party who effects the characteristic performance, in most cases

the final result will be the same as applying the Rome Convention111

. Nonetheless, Tang

argues that in franchising and distribution contracts, the new rule increases certainty because

it is often difficult to establish who the characteristic performer is112

. This author however

107

Tang (n 92) 800.

108 Lando and Nielsen (n 29) 1703.

109 Ibid.

110 Ferrari (n 94) 769.

111 Tang (n 92) 787.

112 Ibid. at 789. The rule also wishes to protect franchisees and distributors, which are considered by the

34

criticizes the new text of article 4 of Rome I on several other grounds. First, she argues that

the Regulation should provide definitions of the eight different types of contracts listed in par.

1 since, for instance, the distinction between contracts for the sale of goods and for the

provisions of services may be problematical, in particular when the subject matter is

intangible (e.g. software), as well as the division between franchise, distribution or agency

contracts113

. Also, definitions of contracts of the first paragraph would clarify the application

of the second paragraph of Article 4. Furthermore, she questions the necessity of including

specific rules for sales and services contracts (Article 4.1(a) and 4.1(b)), because the

characteristic performance in these contracts is easy to ascertain and the rules would have

only the effect to complicate the procedure to determine the applicable law. Finally, she

maintains that rules should be provided for joint ventures and exchange contracts, where the

characteristic performance rule often cannot be used.

One could question some of the referred criticisms to the new text of article 4 of Rome I. The

doubt about the efficacy of a strict rule to serve the interest of the parties expressed by

Fentiman does not take into consideration that those parties would normally prefer a rule

which is as clear as possible and applied uniformly within the EU. Parties to international

contracts wish to know in advance which law will be applicable to their relations and they

may not want to leave to the courts of the Member States as much discretion as the author

does. A strict rule then helps them to achieve these objectives.

Further, fixed rules of Article 4.1 of Rome I have been construed in order to achieve a higher

level of certainty, and the criticisms of Tang on particular aspects of the provision cannot hide

the fact that the overall result brings a greater clarity for the interpreter of the Regulation. It is

suggested here that the inclusion of ‘definitions’ of the contracts listed in the first paragraph

Commission as the weaker parties (Proposal, p. 6).

113 Ibid. at 791.

35

may have been unsuitable to reach the goal of certainty, for the following reasons. First, an

agreement on ‘definitions’ would have been extremely difficult to reach during the

negotiations, and this would have caused the delay in approval of the final text. Next, the

presence of such an innovation would have called the ECJ to interpret it, in order to solve the

likely uncertainties that normally come with new provisions. We could maintain that, on the

contrary, it will be a specific duty of the ECJ to provide those ‘definitions’ and to support and

explain them with full arguments, if a question arises before it.

In conclusion, the new text does not bring in any great novelty in practice114

, and it should be

considered as an improvement, as deemed by most of the scholars. Greater uniformity of

decision may be achieved by the new form of the provision, which should help to avoid the

interpretative differences arisen with regard to the relation between principal rule and

presumptions. Higher certainty should also come from new connecting factors for franchise

and distribution contracts, while the exception to the fixed rules of the first paragraph of

Article 4 assures a sufficient grade of flexibility, if its interpretation weights properly all the

elements of the situation.

3.3 Rome I, article 6 – consumer contracts

Another point of intervention on the provisions of the Rome Convention involves the

discipline of the law applicable to consumer contracts (Article 5 of the Convention, Article 6

of Rome I). The provisions reflect the assumption that consumers do not enjoy the same

bargaining power as suppliers and that, without limits on the principle of freedom of choice,

these ‘weaker parties’ may be obliged to accept unfavourable conditions and be deprived of

the protection which they can demand when they enter into a contract, even abroad115

.

114

In this respect, it has to be reminded that the aim of the Proposal is not the introduction of a new set of legal

rules, different from the ones of the Rome Convention, see Proposal, p. 3.

115 Green Paper on Rome I (n 78) 10.

36

It will be remembered that, for contracts concluded in the circumstances described in article

5.2, the basic rule under the Convention demands that, in lack of choice in accordance with

article 3 of the Convention, the law of the country in which the consumer (as described in par.

1) has his habitual residence is applicable (5.3). Freedom to choose the governing law is

allowed, but the choice made by the parties cannot exclude the protection afforded to the

consumer by the mandatory rules of the law of the country in which he/she has his habitual

residence (5.2).

The system had been criticized for allowing a ‘double’ protection in presence of a choice of

law by the parties, and for leading to hybrid and complex solutions116

. In response to these

comments, the Proposal of the Commission removed completely the possibility to choose the

applicable law117

, making always applicable the law of the habitual residence of the

consumer. This change, though, was seen as particularly burdensome by some companies,

mainly operating in small business and e-commerce sectors, according to which the change

was unjustified and would have forced the businesses to gain knowledge of contract law in all

the countries in which they run their activities118

. This would have increased their costs and

perhaps even reduced their commerce in the internal market. In the end of the negotiations,

the limited party autonomy available under the Rome Convention was restored.

Also, the new provision has been clarified in some points. First, its scope of application has

been simplified and coordinated with Article 15.1(c) of reg. 44/2001, since now the

consumers rule applies when the professional pursues his commercial or professional

activities in the country where the consumer has his habitual residence, or, by any means,

directs such activities to that country (6.1); recital 24 of Rome I calls for an harmonious

116

Lando and Nielsen (n 29) 1708.

117 See Proposal, art. 5.

118 Ministry of Justice (n 79) 26.

37

interpretation of these concepts between the two regulations and the doctrine calls for a wide

reading119

. If this is not the case, Article 3 and 4 of Rome I apply. Second, the rule does not

apply only to a contract the object of which is the supply of goods or services, as it was under

the old regime. Third, the scope of the article has been modified, by comparison with the

Rome Convention, because Article 6.4 now provides, together with the two cases already

present in the old text, three new exceptions, regarding financial instruments or transactions,

in which the rule is disregarded.

It is argued here that the coordination with the corresponding provision of Regulation 44/2001

and the simplification of the scope of the provision promote an higher degree of legal

certainty in its application by the Courts.

3.4 Rome I, article 7 – insurance contracts

Another sector in which the European legislator has intervened is the law applicable to

insurance contracts. Before the entry into force of Rome I, this subject was governed by some

Insurance Directives120

, which were applicable with regard to insurance contracts covering

risks situated in a Member State, and by the general rules of Article 3 and 4 of the Rome

Convention, for contracts where the risk was situated outside the EU and for reinsurance.

Further, Member States’ laws were applicable in the unusual case where the risk was located

in the EU and the insurer was not established in the Community. This system had been

119

The wording of art. 15.1(c) reg. 44/01 has replaced art. 13.1(3) of the Brussels Convention, which would

establish the circumstances in which special jurisdiction rules for consumers applied. The present concept of

activities pursued in or directed towards the consumer’s state is aimed to broaden the application of consumers’

jurisdiction and applicable law regimes in respect to the old rules, see Paul Cachia, ‘Consumer contracts in

European private international law: the sphere of operation of the consumer contract rules in the Brussels I and

Rome I Regulations’ (2009) 34 E.L.Rev. 476, 484.

120 Directives n. 73/239 [1973] OJ 228/3, 88/357 [1988] OJ 172/1 and 92/49 [1992] OJ 228/1 (general / non-life

insurance); directives 79/267 [1979] OJ 63/1, 90/619 [1990] OJ 330/50 and 92/96 [1992] OJ 360/1 (life

business).

38

criticized since it was extremely complex and difficult to apply121

, also because of

inconsistency between the categories considered by the Directives (large / non large risks) and

the Convention (consumer / commercial contracts)122

.

The new text of Article 7, employing the Directives’ categories, now establishes three regimes

for as many types of contracts: large risks insurance123

, other insurance contracts, reinsurance;

the Regulation, unlike the Rome Convention, excludes the application of consumer contracts’

rules in this field124

. As regard the first group, regardless of where the risk is situated, parties

can choose the applicable law pursuant to Article 3 Rome I; if they do not, the law of the

habitual residence of the insurer applies, unless it is clear that the contract is manifestly more

closely connected to another country (7.2). For other insurance contracts covering ‘non-large’

or ‘mass’ risks within the Community, parties’ autonomy is limited, since only a limited

number of laws can be chosen, mainly the law of the Member State where the risk is situated

or the one where the policy holder has his habitual residence or whose he is a national.

However, in certain cases, if the Member States referred to grant greater freedom of choice of

law, the parties can cross this limit and take advantage of that freedom. If no choice has been

made, the contract will be governed by the law of the Member State in which the risk is

situated at the time of conclusion of the contract (7.3). Eventually, as reinsurance and other

contracts covering non-EU located small risks are concerned, Article 3 and 4 of Rome I apply

and then the parties enjoy full freedom of choice of the applicable law while, without a

choice, the law will mostly be that of the insurer. Additional rules are set for compulsory

121

Louise Merrett, ‘Choice of Law in Insurance Contracts under the Rome I Regulation’ (2009) 5 JPIL 49, 50.

122 Xandra Kramer, ‘The new European Conflict of Law Rules on Insurance Contracts in Rome I: a Complex

Compromise’ (2008) 4 Icfai University Journal of Insurance Law 23, 31. Further, one should consider that

implementation of the directives varies among Member States, which complicates the issue even further., ibid,

31.

123 The definition is taken from directive 73/239 art. 5(d), art. 7.2 Rome I.

124 Art. 6.1 Rome I.

39

insurance contracts (7.4) and for contracts covering risks situated in more than one Member

State (7.5). The rules are generally very similar to the provisions of the Directives125

, which in

any case are not repealed, since they continue to apply to contracts concluded before

December 2009, to Denmark and to EFTA States.

These new rules have received contrasting reactions. Lando deems that the new system is an

“improvement”, since it concentrates all relevant choice-of-law rules in one text126

. Merrett,

too, praises increased transparency and easier application of the new rules127

and adds some

further remarks. First, since the place of incorporation of the insurer is irrelevant for the

application of the Regulation, the lacuna problem of insurers established outside the EU is

solved, so that there is no more space for the application of national conflicts rules in this

case. In addition, the solution found in Article 7.2 regarding large risks is defined

“straightforward”, since ensures that standard contracts stipulated by an insurer whose

business is cross-border are governed by the same law, even in the absence of a choice;

further, there is no need to localize where the risk is situated or to examine whether the

counterparty is a consumer128

.

On the other side, problems may arise in connection with non-large risks outside the EU,

which are governed by the general rules of the Regulation, including Article 6 on consumers’

contracts. In particular, when the requirements of Article 6 are satisfied, the ‘double

protection rule’ of paragraph two applies, confusing the application of the conflicts rules.

According to this author, it would have been better to submit all non-large risks to the same

regime applied to risks situated within the EU, solving also the inconveniences associated to

125

Lando and Nielsen (n 29) 1692; Merrett (n 121) 52.

126 Lando and Nielsen (n 29) 1692.

127 Merrett (n 121) 53.

128 Ibid. 58.

40

contracts covering risks situated partly inside and partly outside the Union129

. This

fragmentation is criticized also by Kramer, who deems it unnecessary130

.

With regard to policies covering non-large risks within the EU, the choice of law permitted by

the second indent of Article 7.3, in addition to the fixed rules in points (a) to (e) of the same

provision, is deemed “essential”, since it allows insurers to choose the same governing law

for their contracts, even if they are targeted to different markets131

. However, Kramer claims

that allowing parties to take advantage of the freedom of choice granted by specific Member

States frustrates the uniformity and legal certainty sought by Rome I itself132

. Furthermore,

she argues that, as commercial contracts are concerned, the options of Article 7.3 “may be too

limited and not in conformity with the principle of freedom of choice” of Article 3 Rome I,

while for consumer contracts they may lead to a wider freedom than the provision of Article

6, overlooking consideration for consumer protection133

.

Eventually, the rule which makes applicable the law of the Member State in which the risk is

situated at the time of conclusion of the contract, in the absence of choice of law by the parties

(7.3), is a major simplification in respect to the old Directives’ regime. Even though it may

result in a disincentive to cross-borders trade, since it means the application of different laws

to different policies depending on the location of risks, this system may be crucial for the

protection of consumers134

.

Concluding on this point, Merrett argues that Article 7.3 represents an improvement of the

discipline of mass risks, even though the severance rule of Article 7.5 (apparently not

129

Ibid. 59.

130 Kramer (n 122) 36.

131 Merrett (n 121) 60.

132 Kramer (n 122) 39.

133 Ibid.

134 Merrett (n 121) 61.

41

rebuttable), applicable when the risk is situated in more than one Member State, may be hard

to apply in practice135

. In contrast, Kramer claims that the system related to mass risks

contracts “should have been carefully reconsidered” 136

.

It is hard to draw any final conclusion on the complex discipline of insurance contracts. While

a scholar claims that, for the most part, [...] the rules for choice of law in insurance contracts,

in so far as they differ from the position before the Regulation, are an improvement”137

,

another otherwise argues that the Commission failed to formulate effective uniform conflicts

rules in the insurance sector, being the final result of Article 7 of Rome I “no more than a

complex compromise” and “unnecessary complicated”138

. Nonetheless, it may be argued that

the inclusion of the subject in a single provision, which however generally keeps the rules of

the Directives, represents a step in the direction of the simplification of the subject, while

most of the criticisms may be addressed in a future revision of the Regulation, as confirmed

by the express reference to insurance contracts contained in the review clause of article 27.

3.5 Other amendments to the Rome Convention

The conversion of the Convention into a regulation has also brought about further

amendments, most of which might be considered to improve the previous regime, in the light

of the objectives discussed in chapter two.

As we have seen above, an aim of the Commission in drafting this instrument was the

consistency in the scope with both reg. 44/2001 (Brussels I) and 857/2008 (Rome II)139

.

Examples of this approach can be found in Article 1 of Rome I, where it excludes from its

application arbitration agreements (already covered by international instruments) and

135

Ibid.

136 Kramer (n 122) 39.

137 Merrett (n 121) 62.

138 Kramer (n 122) 41.

139 Proposal, p. 5.

42

agreements on the choice of court (which may be better settled by Brussels I), or likewise

obligations arising out of dealings prior to the conclusion of a contract (governed by Rome

II). It is submitted that the system of choice-of-law rules for obligations in Europe is then

coherent and complete and the interpretation by the ECJ of the three instruments should be

consistent with each other140

.

The Regulation includes a specific rule for contracts of carriage (Article 5). In relation to

those which involve goods, the presumption found in Article 4.3 of the Rome Convention has

been transformed in a fixed rule. The difference is that, if the requirements of Article 5.1

Rome I are not met, the law of the country of delivery shall apply. The interpretation of this

provision shall be the same as the corresponding of the Rome Convention141

and this

“modernized version” is deemed “a satisfactory solution”142

. Moreover, a new provision has

been introduced in relation to contracts for the carriage of passengers, which limits party

autonomy to five rigid connecting factors, with the aim of protecting the passenger-consumer

(Article 5.2). If the applicable law has not been chosen, it will be the law of the country where

either the passenger or the carrier has his habitual residence, depending on the specific

situation. An escape clause is provided in Article 5.3, with the same wording as Article 4.3.

Another important amendment has been made to Article 7 of the Convention, concerning

mandatory rules. This provision was one of the most controversial of the whole text, since, on

one side, it allowed a court to give effect to certain rules belonging not to the law governing

the contract (lex causae), but to a country with which the situation had a close connection143

(7.1); on the other side, it called for the application of mandatory rules of the lex fori, in case

they required to be applied irrespective of the law otherwise applicable to the contract. The

140

Lando and Nielsen (n 29) 1690.

141 See Recital 22.

142 Lando and Nielsen (n 29) 1706.

143 For instance, the law of the place of performance of the obligations.

43

provision of the first paragraph was indeed very vague and, in the view of the U.K., could

give rise to an unacceptable legal uncertainty and a weakening of party autonomy144

. For this

reason, the United Kingdom and six other States made use of their reservation power in

respect of Article 7.1.

Since no reservation is possible with respect to the Regulation, a compromise has been found

during the negotiations. The new provision of Article 9 Rome I is narrower in scope, in two

senses. First, the ‘overriding mandatory provisions’ (as they have been renamed) are defined

in paragraph 1 as those “the respect for which is regarded as crucial by a country for

safeguarding its public interests, […] to such an extent that they are applicable to any

situation falling within their scope” (9.1)145

. Second, effect may be given only to rules

belonging either to the law of the forum (9.2) or to “the law of the country where the

obligations arising out of the contract have to be or have been performed, in so far as those

overriding mandatory provisions render the performance of the contract unlawful” (9.3)146

.

Courts retain their discretion, but this is more limited147

. Legal certainty is then increased,

since the Regulation now provides a uniform solution for the whole of the European Union.

The U.K. has praised the outcome of the negotiations on this point148

, being one of the reasons

why the Government finally decided to opt in Rome I.

144

See Ministry of Justice (n 79) 32.

145 This definition stems from the ECJ decision in Arblade, Case C–369/96, [1999] ECR I–8453, and C–374/96,

[1998] ECR I–8385. According to recital 37, the concept of ‘overriding mandatory provisions’ should be

construed more restrictively than the expression ‘provisions which cannot be derogated from by agreement’

found in art. 3, 6, 8 Rome I.

146 In English law, see Ralli Bros. v. Cia Naviera Sota y Aznar [1920] 2KB 287 CA.

147 Lando and Nielsen (n 29) 1721.

148 Ministry of Justice (n 79) 32.

44

The last provision of Rome I which deserves to be mentioned for its contribution to clarify

conflicts rules149

is the new Article 19 introducing a definition of ‘habitual residence’, a

frequent connection factor throughout the Regulation. Article 60 of Reg. 44/2001 provides,

for the purposes to apply the rules on jurisdiction, a definition of domicile for companies or

other legal persons. This rule, which makes reference to three different criteria (statutory seat,

central administration or principal place of business), would be ineffective if applied also to

choice-of-law rules, since it would be impossible to select a single law applicable to a

contract. For this reason, Article 19 of Rome I fixes the habitual residence of companies and

other bodies in the place of central administration and the one of a natural person acting in the

course of his business activity in his principal place of business, at the time of the conclusion

of the contract; a special rule applies where the contract is concluded in the course of the

operations of a branch, agency or any other establishment.

Concluding, the new text of these provisions may result in greater consistency within

European PIL legislation and increased clarity for the interpreter of the Regulation.

3.6 Proposals of the Commission that were not adopted in the final text

Some of the rules present in the Proposal of the Commission were extremely innovative in

comparison with the Rome Convention, but they were cancelled after the negotiations,

lacking sufficient agreement on their inclusion in the final text. It might be interesting to

mention these solutions because, according to the Commission, they would have helped the

achievement of the objectives of the instrument and for some authors they would have also

represented a significant step forward in the European regime of conflicts rules.

In the first place, Article 3.2 of the Proposal allowed the parties to choose as the applicable

law “the principles and rules of the substantive law of contract recognised internationally or

149

Ibid, 36.

45

in the Community”, such as the UNIDROIT principles, the Principles of European Contract

Law or a possible future optional Community instrument150

. Lex Mercatoria as such would

have been excluded, because of its lack of precision. The possibility to choose a non-State

body of law had been proposed, in the view of the Commission, to “further boost the impact

of the parties’ will” and had been praised, for instance, by the Max Planck Institute for

Comparative and International Private Law151

. Lando and Nielsen even called for the

inclusion within the choices for the parties of the lex mercatoria, arguing that this could

reduce the “competitive advantage” of international arbitration, where this choice is normally

possible152

.

In the final text, though, the rule was removed. Too many States considered that no

democratic basis was to be found in those principles of contract law and then they might not

be equivalent to State law153

. However, recital 13 clarifies that a non-State body of law or an

international convention can be incorporated in the contract by reference and their application

is subject to the otherwise applicable national law. A wider space for Community-based

instruments of substantive contract law is left for the future (recital 14).

Another major innovation of the text first proposed by the Commission concerned the weight

to give to choice-of-court agreements in the decision on the law applicable to a contract

containing such a clause. Article 3.1 of the Proposal stated that an agreement to confer

jurisdiction on one or more courts or tribunals of a Member State meant that the parties would

also be presumed to have chosen the law of that Member State. According to Lando and

Nielsen this presumption would have been a positive development, in particular if the rule had

150

See Proposal, p. 5.

151 Max Planck Institute (n 80) 242.

152 Lando and Nielsen (n 80) 33.

153 Lando and Nielsen (n 29) 1697.

46

been changed to take into consideration only exclusive jurisdiction agreements154

. Again, the

Max Planck Institute welcomed the proposal, claiming that the “synchronisation of forum and

ius saves time and transaction costs”155

. Nevertheless, no agreement was found during the

negotiations and only a reference is now contained in recital 12, according to which a

jurisdiction agreement “should be one of the factors to be taken into account in determining

whether a choice of law has been clearly demonstrated” by the terms of the contract or the

circumstances of the case (3.1)156

. This compromise may be supported, since it suggests a

straight method of dealing with those clauses to judges all over the European Union157

.

154

Ibid, 1699.

155 Max Planck Institute (n 80) 243.

156 See para 3.1.

157 Lando and Nielsen (n 29) 1700.

47

Conclusion

Since the Treaty of Amsterdam, the European Community (now, European Union) has

progressively gained wider legislative competence in the field of private international law.

Nowadays, Member States share, in civil and commercial matters, common rules on

jurisdiction, conflict of laws and mutual recognition of judgments. This comprehensive

regime is designed to support the internal market objective by eliminating those legal barriers

that might divide the territory of the Union.

In this regard, harmonized conflicts rules for Member States play an important role. When

these rules are unified and consistently applied by national courts, legal certainty as to the law

applicable increases and persons involved in international litigation cases cease to make

recourse to forum shopping to find the most favourable jurisdiction for their rights.

Uniformity of decision is sought throughout the European courts, even with the shortcomings

described in relation to knowledge and proof of foreign law.

For this European judicial cooperation framework to progress further, though, the Rome

Convention needed to be transformed from an international instrument into a EU regulation.

Apart from bringing the advantages relating to the particular legislative form of this

instrument, such as direct and unconditional applicability, greater consistency in Community

legislation and uniform interpretation by the ECJ (in particular, after the Treaty of Lisbon),

the conversion was intended to modernize the text of the Rome Convention in those points

which had proved to be ineffective, as well as to introduce some new (although not

revolutionary) rules. Goals of this process have been a rise of the level of legal certainty, a

higher predictability of the outcome of litigation and, eventually, a support for the free

movement of judgments.

The discussion in chapter three shows that Rome I has mostly achieved these goals.

48

First, there are few new provisions which carry out a useful gap-filling function in comparison

to the previous text, like the new fourth paragraph of article 3, demanding the application of

mandatory Community law in European-related only situations, or the new rules for carriage

of passengers (Article 5) or habitual residence (Article 19).

Second, a few interventions refined the previous regime. Article 4 of Rome I, which radically

innovates the rule on the law applicable in the absence of choice (although the same result

will be obtained in most cases), provides a clearer rule in respect of the Rome Convention,

with eight fixed connecting factors for eight different types of contracts. Flexibility is gained

by the escape clause, narrowed in its application. Some problems of interpretation remain, but

it is suggested that this is inevitable, considering the significant amendments to the previous

text. Further, article 7 incorporates the previous Insurance Directives’ rules in one provision,

simplifying the regime, as far as possible: the subject remains still extremely complex and

further work is called for in the review clause of article 27 to enhance the present system.

Other amendments discussed, like the ones on consumer contracts (Article 6) and overriding

mandatory provisions (Article 9), can be considered to solve questions of interpretation of the

previous text and improve consistency and transparency in their application.

However, it is also true that Member States have decided not to introduce two provisions

which may have represented major innovations in the previous regime, such as allowing the

parties to choose a non-state body of law and the presumption of choice of an applicable law

in presence of a jurisdiction clause. No agreement was found on these solutions,

notwithstanding the positive welcome by part of the doctrine. However, reasonable

compromises have been found on the recitals, which guide the interpreter in the solution of

practical cases.

In conclusion, Rome I represents a considerable step forward to enhance the European

49

conflict of laws regime. It is now the duty of the European legislator to review the

controversial provisions and of the ECJ to interpret the complex ones, so to progress in the

established route towards a greater judicial cooperation within the Member States.