Bài viết - Party Autonomy in Rome I and II

PARTY AUTONOMY IN ROME I AND II
FROM A COMPARATIVE PERSPECTIVE
SYMEON C. SYMEONIDES*
1. Introduction: Party Autonomy .............................................................. 514
2. The U.S. Version ................................................................................... 515
2.1. The First Conflicts Restatement ................................................. 515
2.2. The Restatement (Second) .......................................................... 516
2.3. The Uniform Commercial Code (UCC) ...................................... 520
3. The Rome I Regulation ......................................................................... 522
3.1. A More Discriminating Approach ............................................... 522
3.2. Geographical Requirements ........................................................ 524
3.2.1. Carriage and Insurance Contracts ..................................... 525
3.2.2. All Other Contracts ........................................................... 526
3.3. Substantive Limitations ............................................................... 527
3.3.1. Consumer and Employment Contracts ............................. 528
3.3.2. All Contracts .................................................................... 528
3.3.3. Mandatory Rules and Public Policy ................................. 529
4. Assessment ........................................................................................... 531
4.1. The Three Layers ......................................................................... 531
4.2. Consumers and Employees.......................................................... 532
4.3. Passengers and Insureds .............................................................. 532
4.4. Other Weak Parties ...................................................................... 534
5. The Scope of the Choice-of-Law Clause .............................................. 535
5.1. Substantive or Conflicts Law...................................................... 536
5.2. Substantive or Procedural Law ................................................... 537
5.3. State Law or Non-State Norms................................................... 539
6. Contractual Choice of Law for Non-Contractual Issues....................... 540
6.1. Pre-dispute and Post-Dispute Agreements .................................. 540
6.2. The U.S. Position......................................................................... 541
6.3. Rome II ........................................................................................ 544
7. Conclusions........................................................................................... 549
*
Dean and Alex L. Parks Distinguished Professor of Law, Willamette University
College of Law; LL.B. (Private Law); LL.B. (Public Law) University of Thessaloniki;
LL.M., S.J.D. Harvard Law School. This essay is affectionately dedicated to Professor
Kurt Siehr, a veritable superstar in the constellation of comparative private international
law.
K. BOELE-WOELKI, T. EINHORN, D. GIRSBERGER & S. SYMEONIDES (EDS.), Convergence and

Divergence in Private International Law – Liber Amicorum Kurt Siehr, 513-550.
© 2010 ELEVEN INTERNATIONAL PUBLISHING. Printed in The Netherlands.
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514 SYMEON C. SYMEONIDES
1. Introduction: Party Autonomy

The principle that contracting parties should be allowed, within certain
limits, to pre-select the law governing their contract (party autonomy)
is almost as ancient as private international law itself, dating back at
least to Hellenistic times.1 Although this principle has had a somewhat
checkered history in the United States, it has been a gravamen of
continental conflicts doctrine and practice, at least since the days of
Charles Dumoulin (1500-1566).2 The latest codified expression of party
autonomy in European private international law is found in the European
Union’s Rome I Regulation of 2008 on the Law Applicable to Contractual
Obligations,3 which replaced the 1980 Rome Convention,4 as well as in the
Rome II Regulation of 2007 on the Law Applicable to Non-Contractual
Obligations.5
In the meantime, most other legal systems have recognized the principle
of party autonomy, making it “perhaps the most widely accepted private
international rule of our time.”6 Nonetheless, disagreements remain in
defining the modalities, parameters, and limitations of this principle. These
disagreements include questions such as: (1) the required or permissible
mode of expression of the contractual choice of law; (2) whether the
chosen state must have a specified factual connection with the parties or
the transaction; (3) which state’s law should define the substantive limits
of party autonomy; (4) whether the choice must be limited to the law of
a state or whether it can also include non-state norms; and (5) whether
1
A decree issued in Hellenistic Egypt in 120-118 B.C. provided that contracts written
in the Egyptian language were subject to the jurisdiction of Egyptian courts, which applied
Egyptian law, whereas contracts written in Greek were subject to the jurisdiction of Greek
courts, which applied Greek law. Thus, by choosing the language of their contract, parties
could directly choose the forum and indirectly choose the applicable law. See F. Juenger,
Choice of Law and Multistate Justice 7-8 (1993).
2
See ibid., at 16-17.
3
Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17
June 2008 on the Law Applicable to Contractual Obligations (Rome I), OJ [2008] L 177/6
[hereinafter referred to as ‘Rome I’].
4
EEC Convention on the Law Applicable to Contractual Obligations of the European
Communities (1980) (known as the ‘Rome Convention’). The consolidated text of the
Convention can be found at <http://europa.eu.int/eur-lex/pri/en/oj/ dat/1998/c_027/
c_02719980126en00340053.pdf>.
5
See Article 14 of Regulation (EC) No. 864/2007 of the European Parliament and of the
Council of 11 July 2007 on the Law Applicable to non-Contractual Obligations (Rome II),
OJ [2007] L 199/40 [hereinafter referred to as ‘Rome II’).
6
R. Weintraub, Functional Developments in Choice of Law for Contracts, 187 Recueil
des Cours 239, 271 (1984). See also Th. M. De Boer, Party Autonomy and its Limitations
in the Rome II Regulation, 9 Y.B. Priv. Int’l L. 19, 19 (2008) (“Party autonomy is one of
the leading principles of contemporary choice of law.”).
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PARTY AUTONOMY IN ROME I AND II FROM A COMPARATIVE PERSPECTIVE 515
the choice may encompass non-contractual issues. This essay offers

an outsider’s limited textual assessment of some of the modalities and
limitations of party autonomy under the Rome I and Rome II Regulations
and a comparison with the prevailing practice in the United States.7
2. The U.S. Version

2.1. The First Conflicts Restatement
American transactional and judicial practice recognized the principle of
party autonomy (then known as the ‘doctrine of the parties’ intention’)
at least as early as 1825.8 Nevertheless, in drafting the first Conflicts
Restatement, which was promulgated in 1933, Professor Joseph Beale
chose to ignore this reality because it did not fit into his territorialist
scheme. In his view, to give the parties the freedom to agree on the
applicable law would be tantamount to giving the parties a licence to
legislate.9 Instead, Beale proposed for the Restatement an inexorable lex
loci contractus rule, mandating the application of the law of the state in
which the contract was made.10
During the discussion of this subject at the annual meeting of the
American Law Institute 1928, Beale candidly admitted that his proposed
rule was “opposed to a majority of the cases,”11 but claimed that this
was inevitable because the case law was split in four different ways.
7
This assessment is based strictly on the texts of Rome I and Rome II. It is undertaken
with all the trepidation imposed by this author’s unfamiliarity with many of the nuances
of European private international law – especially the dense judicial experience with, and
extensive literature on, the Rome Convention.
8
See Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 48 (1825) (referring to a principle of
“universal law [. . .] that, in every forum, a contract is governed by the law with a view
to which it was made”); Thompson v. Ketcham, 8 Johns. 189, 193 (N.Y.1811); Andrews
v. Pond, 38 U.S. (13 Pet.) 65 (1839); Pritchard v. Norton, 106 U.S. 124 (1882); J. Story,
Commentaries on the Conflicts of Laws § 293(b) (2nd ed. 1841).
9
J. Beale, Treatise on the Conflicts of Laws, vol. 2, 1080 (1935) (“at their will [. . .]
[parties] can free themselves from the power of the law which would otherwise apply
to their acts”). In fairness to Beale, other writers of that period, including Lorenzen and
Judge Learned Hand, took the same position against party autonomy. See E. Lorenzen,
Validity and Effect of Contracts in the Conflict of Laws, 30 Yale L.J. 655, 658 (1921); R.
Minor, Conflict of Laws or Private International Law 401-02 (1901); Judge Learned Hand
in Gerli & Co. v. Cunard S. S. Co., 48 F.2d 115, 117 (C. C. A. ad, 1931). But see W. Cook,
The Logical and Legal Bases of the Conflict of Laws 389-432 (1942).
10
See Restatement, Conflict of Laws § 332 (1933). For Beale’s dominant role in drafting
the first Restatement, see S. Symeonides, The First Conflicts Restatement Through the
Eyes of Old: As Bad as Its Reputation? 32 So. Ill. U. L.J. 39 (2007).
11
American Law Institute Proceedings, vol. 6, 458 (1927-28).
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He also argued that party autonomy would lead to uncertainty because

it would often be difficult to ascertain the parties’ intent. When asked
about situations in which the parties clearly expressed their intent in
the contract, he replied with answers that assumed that the parties were
attempting to evade a fundamental policy of the locus contractus. When
asked about situations in which no fundamental policy was involved, he
replied evasively that “the man is not yet born who is wise enough”12to
inventory all gradations of public policy.
Fortunately, most American courts – including most of the courts in
the twelve states that continue to follow the First Restatement – have
ignored the Restatement’s proscription of party autonomy.13The Second
Conflicts Restatement of 1969 embraced this practice and codified the
principle of party autonomy in its all important Section 187, which is now
followed in most states in the United States.14
2.2. The Restatement (Second)

Section 187 of Restatement (Second) differentiates between: (a) issues
that the parties “could have resolved by an explicit provision in their
agreement directed to that issue,”15 such as those “relating to construction,
to conditions precedent and subsequent, to sufficiency of performance
12
Ibid., at 462 (“the man is not yet born who is wise enough to say as to a foreign law
whether the foreign law really is to be obeyed [. . .], whether [its] provisions are matters
of such interest to the state that passed them that they would be enforced or are not”).
13
See, e.g., Cherry, Bekaert & Holland v. Brown, 582 So.2d 502, 507-08 (Ala.1991)
(relying on Restatement (Second) § 187, even though Alabama follows the traditional
rules in both contract and tort conflicts); Jackson v. Pasadena Receivables, Inc., 921
A.2d 799 (Md. 2007), reconsideration denied (June 6, 2007) (relying on § 187, even
though Maryland follows the traditional rules in both contract and tort conflicts); National
Glass, Inc. v. J.C. Penney Props., Inc., 650 A.2d 246, 248-51 (Md. 1994) (same); SBKC
Service Corp. v. 1111 Prospect Partners, L.P., 153 F.3d 728 (10th Cir.1998) (same with
regard to Kansas); Bradley v. Bradley, 164 P.3d 537 (Wyo. 2007) (same for Wyoming);
Prows v. Pinpoint Retail Sys., Inc., 868 P.2d 809, 811 (Utah 1993) (relying on Restatement
(Second) § 187 before Utah adopted the Restatement for other contractual issues).
14
This following includes: (a) the twenty-three states that follow the Restatement
(Second) in contract conflicts. For a list of those states, see S. Symeonides, Choice of
Law in the American Courts in 2009: Twenty-Third Annual Survey, 58 Am. J. Comp.
L. 221, 231-232 (2010); (b) many of the fifteen other states that follow other modern
approaches. See ibid.; see also, e.g., Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148,
1150-56 (Cal. 1992) (relying on Section 187, even though in other conflicts California
follows a combination of interest analysis with comparative impairment); North Bergen
Rex Transport, Inc. v. Trailer Leasing Co., 730 A.2d 843, 847-48 (N.J. 1999) (same even
though at that time New Jersey followed interest analysis); (c) and several of the twelve
states that continue to apply the First Restatement. See supra note 13.
15
Restatement (Second) § 187(1).

and to excuse for nonperformance, [. . .] frustration and impossibility;”16

and (b) issues that are beyond the parties’ contractual power, such as
those involving “capacity, formalities and substantial validity.”17 At
least on the surface, this distinction between waivable and non-waivable
rules resembles the European distinction between non-mandatory and
mandatory rules.18
Subsection 1 of Section 187 provides that, for issues of the first category,
the parties’ choice of law is not subject to any geographical or substantive
limitations. As the official comments to the Restatement explain, this
provision recognizes the common phenomenon of ‘incorporation by
reference.’19 Noting that “most rules of contract law are designed to fill
gaps in a contract which the parties could themselves have filled with
express provisions,” the comments state that the parties may do so, either
by spelling out in detail the terms of the contract, or by “incorporat[ing]
into the contract by reference extrinsic material which may, among
other things, be the provisions of some foreign law.”20 Understandably,
therefore, this incorporation is not subject to any limitations and may
even encompass non-state norms.21
For issues that fall into the second category, namely, issues that the
parties could not have resolved by agreement, Subsection (2) of Section
187 imposes both geographical and substantive limitations. It provides
that the parties’ choice of law will be honored unless: (a) the contractually
chosen state does not have a ‘substantial relationship’ to the parties or
the transaction, and there is no ‘other reasonable basis’ for the parties’
choice;22 (b) the application of the contractually chosen law is contrary to
a ‘fundamental policy’ of a state whose law would have been applicable
in the absence of an effective contractual choice (hereinafter lex causae);
and (c) the state of the lex causae has a ‘materially greater interest’ than
the chosen state in applying its law to the disputed issue.23
The rich judicial experience in applying this section of the Restatement
is discussed in detail elsewhere.24 Suffice it to say that, for purposes of
comparison, the following features of the Restatement (Second) deserve
note:
16
Ibid., cmt. c.
17
Ibid., cmt. d.
18
See infra 3.3.3
19
Ibid.
20
Ibid.
21
See infra 5.3.
22
Restatement (Second) § 187(2).
23
Ibid.
24
See P. Hay, P. Borchers & S. Symeonides, Conflict of Laws §§ 18.4-18.7 (5th ed.
2010).

(1) The Restatement imposes the same party autonomy limitations to

all contracts without differentiation;
(2) The Restatement controls party autonomy through two different
means: (a) by requiring a specified geographical connection with
the state of the chosen law or another reasonable basis for that
choice; and (b) by ensuring that the application of the chosen law
remains within the substantive limitations of the lex causae;
(3) The Restatement employs the substantive limitations of the
state of the lex causae rather than those of the forum state qua
forum.25 To be sure, under the traditional ordre public exception,
the public policy of the forum qua forum is always the last
shield for preventing the application of a repugnant foreign law,
whether that law is chosen by the parties or through the forum’s
choice-of-law rules. Theoretically, this shield remains available
to courts that follow modern approaches, but according to Judge
Cardozo’s classic test, such a shield should only be employed in
exceptional cases in which the applicable foreign law is ‘shocking’
to the forum’s sense of justice and fairness.26 The Restatement
recognizes this difference, at least as one of degree, between the
roles of the traditional ordre public exception on the one hand,
and the public policy exception in limiting party autonomy on the
other. The Restatement states that to be ‘fundamental’ within the
meaning of Section 187, a policy “need not be as strong as would
be required to justify the forum in refusing to entertain suit upon a
foreign cause of action under the rule of § 90,” which enunciates
the traditional ordre public test;27
25
In contrast, the Inter-American Convention on the Law Applicable to International
Contracts of 1994 subjects party autonomy solely to the limitations of the law of the
forum. See ibid. Art. 11 (providing that, notwithstanding the otherwise applicable law, the
provisions of the law of the forum shall “necessarily be applied when they are mandatory
requirements.”). See also ibid., Art. 18 (providing that the applicable law “may only be
excluded when it is manifestly contrary to the public order of the forum”). The Puerto
Rican Draft Code (Art. 35) takes the unique position that the chosen law is not to be
applied if it violates restrictions on party autonomy imposed by both the lex fori and the
lex causae. For the rationale behind this provision, see S. Symeonides, Codifying Choice
of Law for Contracts: The Puerto Rico Projet, in J. Nafziger & S. Symeonides (Eds.), Law
and Justice in a Multistate World: Essays in Honor of Arthur T. von Mehren, 419, 422-24
(2002) (“even when the parties’ choice exceeds the restrictions imposed by the lex causae,
the choice should not be disregarded unless it be for reasons that the lex fori itself regards
as serious enough for disregarding party autonomy in analogous fully domestic cases”).
26
See Loucks v. Standard Oil Co. of New York, 120 N.E. 198, 201-02 (N.Y. 1918) (the
foreign law must “offend[] our sense of justice or menace[] the public welfare,” or “violate
some fundamental principle of justice, some prevalent conception of good morals, some
deep-rooted tradition of the common weal,” or “shock our sense of justice”).
27
Restatement (Second), Conflict of Laws § 187 cmt. g.

(4) The Restatement requires further that the state of the lex causae
must have a ‘materially greater interest’28 than the chosen state in
applying its law to the particular issue. Although in many cases a
determination that the law of a given state would have been the lex
causae presupposes a conclusion that that state has a materially
greater interest in applying its law, this is not true in all cases,
especially those in which the judicial choice of the applicable law
is not based on interest analysis;
(5) Under the Restatement, only a ‘fundamental’29 public policy of the
materially-more- interested state of the lex causae may defeat the
parties’ choice. The quoted term is not easy to define,30 and the
Restatement does not attempt to do so.31 However, the Restatement
provides examples of (1) rules that embody such a policy: statutes
that make certain contracts illegal, and statutes intended to protect
one party from ‘the oppressive use of superior bargaining power,’32
such as statutes protecting insureds against insurers; and (2) rules
that do not embody such a policy: statutes of frauds, rules “tending
to become obsolete,” and “general rules of contract law, such as
those concerned with the need for consideration;”33
28
Ibid., § 187(2)(b).
29
Ibid.
30
See Machado–Miller v. Mersereau & Shannon, LLP., 43 P.3d 1207, 1211 (Or. App.
2002) (“To announce that a policy or a right is ‘fundamental’ is to announce a conclusion
and not a premise, and the reasoning that leads to the conclusion is almost always obscure,
hopelessly subjective, or expressed in verbal formulations that are of little help. [. . .]
Further, whether a particular interest is deemed ‘fundamental’ under such indeterminate
formulations depends on the level of generality at which the Court chooses to identify
it. To the extent the interest is described at a high level of generality, it is likely to be
‘fundamental,’ and vice versa. Further, every piece of legislation, even the most apparently
trivial, implements and therefore indicates the presence of some larger policy, which, in
turn, serves an even larger one. A speed limit is not itself a fundamental policy statement,
but its purpose is to promote highway safety, which is one way to protect the health,
welfare and safety of citizens, which is, of course, one of the most fundamental of all
public policies.” The 2001 Oregon codification provides that a policy is fundamental “only
if the policy reflects objectives or gives effect to essential public or societal institutions
beyond the allocation of rights and obligations of parties to a contract at issue.” Or. Rev.
Stat. § 81.125(2). For the background and rationale of this provisions, see S. Symeonides,
Codifying Choice of Law for Contracts: The Oregon Experience, 67 RabelsZ, 726, 739-42
(2003).
31
See Restatement (Second) § 187 cmt. g. (“No detailed statement can be made of the
situations where a ‘fundamental policy’ [. . .] will be found to exist.”).
32
Ibid.
33
Ibid. The Restatement also states that, the more contacts the transaction has with
the chosen state, the stronger the public policy of the state of the lex causae must be
to overcome the stipulation. Conversely, a ‘weaker’ policy of the lex causae state may
overcome the stipulation in the face of fewer contacts with the chosen state. Ibid.

(6) Finally, in a style characteristic of the American legal culture, the

Restatement prefers to err on the side of under-regulation rather
than over-regulation. For example, as noted earlier, the Restatement
provides only a single party-autonomy rule (Section 187) for all
contracts rather than several rules for different contracts or issues,
as it does for contracts that do not contain a choice-of-law clause.34
Secondly, the Restatement does not define some critical terms
used in Section 187, such as ‘substantial relationship,’ ‘reasonable
basis,’ ‘fundamental policy,’ and ‘materially greater interest.’35
This lack of definitiveness is a deliberate policy choice by the
Restatement’s drafters. It reflects a low degree of confidence
in their ability to provide good a priori solutions for diverse
situations and a high degree of confidence in the courts’ ability to
do the same on a case-by-case basis.
2.3. The Uniform Commercial Code (UCC)

Section 1-301 of the UCC provides that, “when a transaction bears a
reasonable relation to [the forum] state and also to another state or nation
the parties may agree that the law of either [the forum] state or of such other
state or nation shall govern their rights and duties.”36 Thus, in contracts
covered by this provision, a ‘reasonable relation’ with the chosen state is
the only express condition for allowing a contractual choice of law.
If literally applied, this provision would require a reasonable relation
with both the chosen state and the forum state. Thus, a reasonable
relation with one or more states other than the forum state would not
suffice. Obviously, such a literal reading is non-sensical, if only because
it contradicts the UCC’s otherwise very liberal stance toward party
autonomy. The forum’s lack of a reasonable relation may be a factor in
jurisdiction or forum non conveniens analysis, but it is not a good reason
to preclude parties from choosing the law of another state that has such a
relationship. It is surprising that such sloppy wording has survived nine
amendments of this provision over the last four decades. While it is true
that courts have not had difficulty with this wording, this is only because
they either ignore it or do not notice it.
The text of Section 1–301 does not expressly distinguish between a
contractual choice of law and incorporation by reference, but the official
comments correct this deficiency by stating that the parties are free to
34
See ibid., §§ 189-207.
35
Ibid., § 187.
36
UCC § 1-301(a). Because the UCC is a statute and the Restatement (Second) is not,
Section 1-301 prevails over the Restatement with regard to all contracts falling within the
scope of this section, which is coextensive with the scope of the UCC.

displace the UCC’s waivable rules by incorporating by reference in their

contract the law of a state that lacks a ‘reasonable relation’ or, for that
matter, non-state norms, such as the Unidroit principles.37
Party autonomy under Subsection (a) of Section 1-301 is subject to
multiple exceptions spelled out in Subsection (c) of the same section.
Subsection (c) lists several other sections of the UCC and provides that,
if any of those sections designates the state of the applicable law, that
law governs and “a contrary agreement is effective only to the extent
permitted by the law so specified.”38 However, Section 1–301 does not
impose a general public policy limitation on party autonomy.39 The fact
that all states of the United States have adopted the UCC may suggest that
such a limitation may be unnecessary in American interstate conflicts,
but that is certainly not true with international conflicts. Morever, even in
interstate conflicts, differences with respect to policy still do occasionally
arise because some states deviate from certain provisions of the UCC
or have adopted different interpretations of identical provisions. In any
event, some courts have engrafted a public policy limitation to party
autonomy under the UCC.40
It is worth noting that, in 2001, the UCC Commissioners proposed
a major revision of Section 1-301, which drew heavily from the Rome
Convention. Besides introducing the European concept of ‘mandatory
rules,’41 the proposed revision would, inter alia, differentiate between
consumer contracts and business-to-business contracts, as well as between
international and intra-U.S. interstate contracts, and would impose
different party autonomy restrictions for each category.42 Unfortunately,
37
See UCC § 1-301 cmt. 1, § 1-302 cmt. 2. See also UCC § 1-302(a) (providing that, “[e]
xcept as otherwise provided in subsection (b) or elsewhere in [the Uniform Commercial
Code], the effect of provisions of [the Uniform Commercial Code] may be varied by
agreement”).
38
U.C.C. § 1-301(c). The listed sections are Section 2-402 (sales of goods); Sections 2A-
105 and 2A-106 (leases); Section 4-102 (bank deposits and collections); Section 4A-507
(fund transfers); Section 5-116 (letters of credit); Section 6-103; (bulk transfers); Section
8-110 (investment securities); and Sections 9- 301 through 9-307 (secured transactions).
39
In contrast, the ill-fated 2001 version imposed such a limitation in favor of the
‘fundamental’ policy of the state whose law would govern in the absence of a valid choice-
of-law agreement (UCC § 1–301(f) (2001 Revision). The latter state was to be determined
through the choice-of-law rules of the forum state. UCC § 1–301(d), (f) (2001 Revision).
For consumer contracts, the chosen law could not deprive the consumer of the protection
of non-waivable rules of the consumer’s home state or a state in which the consumer made
the contract and took delivery of the goods. Ibid., § 1–301(e)(2).
40
See, e.g., Mell v. Goodbody & Co., 10 Ill.App.3d 809, 295 N.E.2d 97, 100 (1973);
Fairfield Lease Corp. v. Pratt, 6 Conn.Cir. 537, 278 A.2d 154 (1971); Delhomme Indus.,
Inc. v. Houston Beechcraft, Inc., 490, 669 F.2d 1049 (5th Cir. 1982).
41
See infra 3.3.3.
42
For discussion of the proposed revision, see E. Scoles, P. Hay, P. Borchers & S.

these ideas proved unpopular with state legislatures and, by 2008, only
the U.S. Virgin Islands had adopted the proposed revision, thus forcing
the UCC Commissioners to withdraw it.
3. The Rome I Regulation

3.1. A More Discriminating Approach
The Rome I Regulation43 is based on the premise that “[t]he parties’
freedom to choose the applicable law should be one of the cornerstones of
the system of conflict-of-law rules in matters of contractual obligations.”44
Rome I enunciates the principle of party autonomy in Article 3, which
is appropriately entitled ‘Freedom of Choice.’ However, unlike the
Restatement (Second), which provides the same party autonomy
parameters and limitations for all contracts without differentiation, Rome
I follows a more discriminating approach which sets apart certain types
of contracts for different treatment.
As explained later, Article 3, which applies to all contracts, takes
a very liberal position toward party autonomy. However, Article 3 is
followed by four more specific and more restrictive articles which apply
to certain types of contracts, namely, contracts of carriage (Art. 5),
consumer contracts (Art. 6), insurance contracts (Art. 7), and individual
employment contracts (Art. 8). The common denomination among these
contracts (hereinafter referred to as special contracts) is that one party
(the passenger, consumer, insured, and employee, respectively) is likely
to be in a weaker bargaining position than the other party. Recital 23
openly declares a policy of protecting the weak parties by stating that,
“[a]s regards contracts concluded with parties regarded as being weaker,
those parties should be protected by conflict-of-law rules that are more
favourable to their interests than the general rules.”45
Symeonides, Conflict of Laws 983-87 (4th ed. 2004); J. Graves, Party Autonomy in
Choice of Commercial Law: The Failure of Revised U.C.C. 1-301 and a Proposal for
Broader Reform, 36 Seton Hall L. Rev. 59 (2005).
43
From the already rich commentary on Rome I, see, inter alia, F. Ferrari & S. Leible,
Rome I Regulation: The Law Applicable to Contractual Obligations in Europe (2009); U.
Magnus & P. Mankowski, Rome I Regulation (2009); R. Plender & M. Wilderspin, The
European Private International Law of Obligations (3rd ed. 2009); G. Calliess (Ed.), The
Rome Regulations: Commentary on the EC Regulations on Conflict Laws (2010). For
another American perspective, see P. Borchers, Categorical Exceptions to Party Autonomy
in Private International Law, 82 Tul. L. Rev. 1645 (2008).
44
Rome 1, Recital (11).
45
Rome I, Recital (23).

By singling out these special contracts for separate treatment, Rome I

can protect the weak parties while adopting a more liberal stance for all
other contracts. This differentiation between various types of contracts is
a significant improvement over the Second Restatement’s one-size-fits-
all approach. However, one of the questions discussed in this essay is
whether this differentiation succeeds in providing sufficient protection
to all the weak parties in these special contracts, as well as to other
presumptively weak parties in other contracts.
The scheme of Rome I consists of a complex combination of geographical
requirements for some contracts and multiple layers of ominous-sounding
– but in actuality rather infrequently operable – substantive limitations
for all contracts. The next diagram (Fig. 1) attempts to depict the Rome
I scheme, while the diagram following (Fig. 2) depicts the much simpler
scheme of the Restatement (Second).
Fig. 1. The Parameters and Limitations of Party Autonomy under Rome I
5. ‘Overriding’ mandatory rules (Art. 9(2)) and ordre public (Art. 21) of forum state
4. ‘Overriding’ mandatory rules of state of performance, if they render

performance illegal (Art. 9(3))
3. Mandatory rules of state with ‘all other relevant elements’ (Art. 3(3))
ALL CONTRACTS ALL CONTRACTS
2. Mandatory rules of lex causae

1. Geographical limitations:
Passenger contracts (Art.
Consumer contracts (Art. 6);
5); Small-risk insurance
Employment contracts (Art.
contracts (Art. 7)
As the above diagram illustrates and the following discussion explains,

under the scheme of Rome I: (1) In passenger contracts and small-
risk insurance contracts (oval shape #1 at left), the contractual choice
of law must meet the geographical requirements of Articles 5 and 7,
and must remain within the substantive limitations represented by the
larger rectangular shapes ## 3,4, and 5; (2) In consumer contracts and
employment contracts (smaller oval shape at right), the contractual choice
is not subject to geographical requirements, but is subject to the substantive
limitations of the otherwise applicable law (lex causae, rectangular #2),

as well as the substantive limitations represented by shapes ## 3, 4, and 5;

and (3) In all other contracts, the contractual choice is subject only to the
substantive limitations represented by shapes ## 3,4, and 5.
Fig. 2. The Parameters and Limitations of Party Autonomy under the
Restatement (Second)
3. Ordre public of forum state

2. ‘Fundamental’ policy of state of lex causae, if that state has a
‘materially greater interest’ in applying its law.
1. Chosen state must have a ‘substantial relationship’ or

there must be another ‘reasonable basis’ for its choice.
ALL CONTRACTS: Non-Waivable Issues
3.2. Geographical Requirements

As noted earlier, the Restatement (Second) requires a factual or
geographical connection (‘substantial relationship’) with the chosen
state for all contracts, unless another ‘reasonable basis’ exists for the
parties’ choice.46 The principal rationale for the ‘substantial relationship’
requirement is that allowing the choice of a law unconnected to the
controversy might extend party autonomy to fully domestic transactions
and enable parties to evade otherwise applicable local law. However,
this potential problem can be solved by simply exempting fully domestic
transactions from the sphere of interstate party autonomy and policing
party autonomy in multistate transactions through substantive means.47
Following this logic, recent conflicts codifications48 and international
46
See Restatement (Second) § 187(2)(a).
47
Although many American cases underscore in dicta the importance of the requirement
of a substantial relationship to the chosen law, cases that have actually struck down a
choice-of-law clause solely on this ground are few and far between. See, e.g., Sentinel
Indus. Contracting Corp. v. Kimmins Indus. Serv. Corp., 743 So.2d 954 (Miss.1999)
(disregarding a Texas choice-of-law clause in a contract for the dismantlement of a
Mississippi ammonia plant and its shipment to and reassembly in Pakistan); Cable Tel
Services, Inc. v. Overland Contracting, Inc., 574 S.E.2d 31(N.C.App. 2002); CCR Data
Sys., Inc. v. Panasonic Communications & Sys. Co., No. CIV 94-546-M, 1995 WL 54380
(D. N.H. Jan. 31, 1995).
48
See, e.g., Armenian Civ. Code, Art. 1284 (1998); Austrian Federal Statute on Private
International Law of 1978, § 35; Estonian Private International Law Act, § 32 (2002);
German Introductory Law to the Civil Code (EGBGB) as amended in 1986, Art. 27;
Lithuanian Civ. Code, Art. 1.37 (2000); Peruvian Civ. Code, Art. 2095 (1985); Quebec

conventions49 have eliminated the requirement for a substantial connection

with the chosen law, or alternatively have adopted looser or differentiated
requirements for different types of contracts. Rome I falls within the
latter category.
3.2.1. Carriage and Insurance Contracts
Rome I requires a specified geographical relation with the contractually
chosen state in only two types of contracts: contracts for the carriage
of passengers and insurance contracts. In contracts for the carriage of
passengers, Article 5(2) of Rome I limits the parties’ choice to the laws
of the country of: (a) the passenger’s habitual residence; (b) the carrier’s
habitual residence or place of central administration; or (c) the place of
departure or destination.50
With regard to insurance contracts, Article 7 differentiates between
contracts covering ‘large’ risks,51 wherever situated, and contracts
covering other risks situated within the territory of an EU member state52
Civ. Code, Art. 3111; Russian Civ. Code, Art. 1210, Federal Law No. 146 of 26 November
2001; Swiss Federal Statute on Private International Law, Art. 116; Tunisian Code of
Private International Law (Law N. 98–97 of 27 November 1998), Art. 62; Turkish Code of
Private International Law and International Civil Procedure, Art. 24 (2007); Venezuelan
Act of 6 August, 1998 on Private International Law, Art. 29.
In the United States, the Louisiana codification eliminates the requirement of a
substantial relationship, but subjects party autonomy to the public policy limits of the
lex causae. See La. Civ. Code Art. 3540 (1992). The Oregon codification does likewise,
see Oregon Rev. Stat. 81.120, 81.125 (2002), but also prohibits choice-of-law clauses
in certain Oregon consumer contacts. See O.R.S. § 81.105(2). Articles 41-43 of the
Puerto Rico Draft Code restrict party autonomy in consumer, employment and insurance
contracts. See S. Symeonides, Codifying Choice of Law for Contracts: The Puerto Rico
Projet, supra note 25, at 433-434. A New York statute declares enforceable New York
choice-of-law clauses even in the absence of New York contacts, provided that the
contract: (a) is not a consumer contract, (b) involves a transaction in excess of $250,000,
and (c) does not contravene the limitations of the UCC. N.Y. General Obligations Law
§§ 5-1401, 5-1402. For other American statutes prohibiting or restricting party autonomy
in certain contracts, see S. Symeonides, American Choice of Law at the Dawn of the 21st
Century, 37 Willamette L. Rev. 1, 29-32 (2000).
49
See, e.g., Inter-American Convention on the Law Applicable to International
Contracts, 33 I.L.M. 732 (1994), Art. 7 (providing that the contract “shall be governed by
the law chosen by the parties,” without any restrictions other than the mandatory rules of
the forum state (Art. 11); Hague Convention on the Law Applicable to Contracts for the
International Sale of Goods (1986), Art. 7(1).
50
See Rome I, Art. 5(2). The parties’ choice is also subject to the substantive limitations
of party autonomy discussed infra.
51
See Rome, art. 7(2), defining ‘large risks’ through a cross-reference to Article 5(d) of
the First Council Directive 73/239/EEC of 24 July 1973.
52
According to Article 1(4), the term ‘Member State’ means a member state of the
European Union to which Rome I applies. Although this not include all twenty-seven
present member states, this essay uses the term ‘EU Member State’ for the sake of brevity.

(hereinafter referred to as ‘small-risk’ contracts).53 Paragraph 3 of Article

7 requires a specified geographic relationship with the chosen state only
in the case of small-risk contracts.54 The parties to such contracts may
only choose the law of: (a) a member state in which the insured risk is
situated; (b) the country in which the insured has his habitual residence;
or (c) in the case of life insurance, the law of the member state of which
the insured is a national.55
3.2.2. All Other Contracts
For all other contracts, Rome I does not require a particular connection
with the chosen country. Only when “all other elements relevant to the
situation”56 are located in a single country other than the country of the
contractually chosen law does Rome I interfere with the parties’ choice.
In such a case, paragraph 3 of Article 3 mandates that the choice “shall
not prejudice the application of provisions of the law of that other country
which cannot be derogated from by agreement”57 (hereinafter referred to
as ‘mandatory rules’).
The two italicized words above deserve note. The drafters of Rome
I – and, before them, the drafters of the Rome Convention – could have
easily provided that, if the chosen state lacks any connection, then the
contractual choice of law shall not prejudice the application of the
mandatory rules of a state that has the most (or perhaps the most significant
or relevant), but not necessarily all, connections. Instead the drafters used
the word ‘all’ rather than ‘most’ or its equivalent. This choice of words,
which originates in the Rome Convention,58 is obviously deliberate. It
means that paragraph 3 of Article 3 poses a hurdle only in fully domestic
contracts, as opposed to multistate or international contracts. Thus, as
53
For discussions of insurance contracts under Rome I, see H. Heiss, Insurance Contracts
in Rome I: Another Recent Failure of the European Legislature, 10 Y.B. Priv. Int’l L. 261
(2008); L. Merrett, Choice of Law in Insurance Contracts Under the Rome I Regulation, 5
J. Priv. Int’l L. 40 (2009); R. Merkin, The Rome I Regulation and Reinsurance, 5 J. Priv.
Int’l L. 69 (2009).
54
Another difference between the two categories is that, in the absence of a choice-of-
law agreement, the lex causae is the insurer’s habitual residence in the large-risk contracts,
see Rome I, art. 7(2), and the law of the member state in which the risk is located in the
small-risk contracts. See ibid., Art. 7(3).
55
See Rome I, Art. 7(3), which also allows two additional choices in other types of
insurance contracts. If the laws of the country in which the insured risk is located or the
law of the insured’s habitual residence allow more choices or have more liberal limits to
party autonomy, the parties may choose a law within those limits. Ibid.
56
Rome I, Art. 3(3) (emphasis added).
57
58
See Rome Convention, Art. 3(3) (“where all the other elements relevant to the situation
at the time of the choice are connected with one country only”) (emphasis added).

long as a contract has any contacts with more than one country, the parties
may choose the law of any other country, including one that lacks any
connection.59
Paragraph 4 of Article 3 is equally lax with regard to multistate
but intra-EU contracts. It provides that if “all other elements relevant
to the situation” are located in “one or more” member states, then the
contractual choice of the law of a non-member state shall not prejudice
the application of mandatory rules of Community law, “where appropriate
as implemented in the Member State of the forum.”60 Thus, in a similar
vein as paragraph 3, paragraph 4 also becomes inapplicable even if only
one of the ‘relevant elements’ other than the chosen law is located in a
non-member state.
In summary, for contracts other than contracts for the carriage
of passengers and small-risk insurance contracts, the geographical
requirements of Rome I will be easily satisfied in all cases other than
those involving (a) fully domestic contracts, or (b) multistate contracts
that do not have any contact with a non-EU country. This laxity shifts
the burden for policing party autonomy to the substantive limitations of
Rome I. These limitations are examined below.
3.3. Substantive Limitations

Unlike the Restatement (Second), which subjects party autonomy in all
contracts to the substantive limitations of a single state (the state of the
lex causae), Rome I differentiates between certain types of contracts and
employs the substantive limitations of four potentially different states, as
well as of the European Union, depending on the contract in question. The
four states are: (1) the state of the lex causae, but only in consumer and
employment contracts; (2) the state in which ‘all other elements relevant
to the situation’ are located;61 (3) the state of performance; and (4) the
forum state qua forum.
59
According to an authoritative treatise, Rome I “permits a choice of law which involves
the application of (a) a law which has the closest connection with the contract [. . .] (b) a
law which does not have the closest connection, but which has some apparent connection
with the transaction (such as the place of performance or the residence of one of the
parties); (c) a law which has no apparent connection with the contract, but which has some
underlying connection, such as insurance, or connection with string contracts; (d) a law
which has no apparent or actual connection with the transaction, but which is chosen as
a neutral in an international contract [. . .]; (e) a law which has no apparent or actual or
actual connection with a transaction, all of whose elements are connected with one other
country (an inevitably rare occurrence).” Dicey, Morris & Collins on the Conflict of Laws
1563 (L. Collins, et al., 14th ed. 2006).
60
61
Rome I, Art. 3(3).

3.3.1. Consumer and Employment Contracts

For consumer contracts and individual employment contracts, Articles
6 and 8 provide that a choice-of-law agreement may not deprive a
consumer or an employee of the protection of the mandatory rules of the
lex causae.62 Similar provisions are found in the laws of many countries,
including Austria, Germany, Japan, South Korea, Quebec, Romania,
Russia, Switzerland, and Turkey.63
In consumer contracts, the state of the lex causae is the country in
which the consumer has her habitual residence, provided that the other
party pursues commercial or professional activities in that country or
directs such activities to that country or to several countries including
that country.64
In employment contracts, the state of the lex causae is ordinarily the
country in which (or from which) the employee habitually works, unless
the contract is more closely connected with another country.65
3.3.2. All Contracts
For all contracts (including all the special contracts discussed above),
Rome I employs five layers of substantive limitations. The first layer
is imposed by paragraph 3 of Article 3. As noted earlier, paragraph 3
provides that, when “all other elements relevant to the situation” are
located in a country other than the country chosen by the parties, the
choice may not prejudice the application of the mandatory rules of that
other country. While a country that has ‘all’ these elements most likely
will be the state of the lex causae, the reverse is not true. Thus, a country
that has significant connections may qualify as the state of the lex causae
under Rome I, but unless that country has ‘all’ the connections, its law
may not be invoked to invalidate the parties’ choice of a different law.
The second layer is prescribed by paragraph 4 of Article 3 and applies
only to intra-EU contracts choosing non-EU law. It provides that, when
“all other elements relevant to the situation” are located in “one or more”
EU countries, the parties’ choice of the law of a non-EU country may not
deviate from the mandatory rules of Community law.66
The third layer of limitations is imposed by Article 9(3), which
applies to both a contractual and a judicial choice of law in all contracts,
62
See Rome I, Arts. 6(2) and 8(1).
63
See Austrian PIL Act §§ 41, 44(3); EGBGB, Arts. 29-30; Japanese PIL Act, Arts. 11-
12; Korean PIL Act of 2001, Arts. 27-28; Quebec Civ. Code, Arts. 3117-18; Romanian PIL
Act, Arts. 101-102 (employment contracts); Russian Civ. Code, Art. 1212; Swiss PIL Act,
art. 120(2); Turkish PIL Code, Arts. 26-27.
64
Rome I, Art. 6(1).
65
Rome I, Art. 8(2-4).
66
Rome 1, Art. 3(4) (emphasis added).

and which is itself non-mandatory even though it refers to ‘overriding

mandatory provisions.’ This provision allows courts to “give effect” to the
“overriding mandatory provisions” of the place of performance “in so far
as” those provisions “render the performance of the contract unlawful.”67
Finally, Articles 21 and 9(2) interpose the ultimate and defensive limits
of the lex fori which restrict both a contractual and a judicial choice of
law in all contracts. Article 21 restates the classic ordre public exception,
which comes into play only when the application of the foreign law is
‘manifestly incompatible’ with the forum’s public policy,68 while Article
9(2) reiterates that nothing in Rome I shall restrict the application of the
‘overriding mandatory provisions’ of the law of the forum.69
3.3.3. Mandatory Rules and Public Policy
As the above description indicates, Rome I subdivides mandatory rules into
two categories: (1) rules that ‘cannot be derogated from by agreement’70
(simple mandatory rules), and (2) ‘overriding mandatory rules,’ which are
defined as those rules “the respect for which is regarded as crucial by a
country for safeguarding its public interests, such as its political, social
or economic organisation, to such an extent that they are applicable to
any situation falling within their scope, irrespective of the law otherwise
applicable to the contract.”71
The two categories differ in several significant respects,72 but for the
purposes of this discussion, the most important difference is that the
67
Rome I, Art. 9(3). The Oregon codification provides that the law chosen by the parties
does not apply to the extent that its application would: “(a) Require a party to perform an
act prohibited by the law of the state where the act is to be performed under the contract;
[or] (b) Prohibit a party from performing an act required by the law of the state where
it is to be performed under the contract.” Or. Rev. St. § 81.125(1). For discussion, see
S. Symeonides, Oregon’s Choice-of-Law Codification for Contract Conflicts: An Exegesis,
44 Willamette L. Rev. 205 (2007).
68
Rome I, Art. 21 (“The application of a provision of the law of any country specified
by this Regulation may be refused only if such application is manifestly incompatible with
the public policy (ordre public) of the forum.”).
69
Rome I, Art. 9(2).
70
Rome I, Arts. 3(3-4), 6(2), 8(1).
71
Rome I, Art. 9(1) (emphasis added). For pertinent discussion, see A. Bonomi,
Overriding Mandatory Provisions in the Rome I Regulation on the Law Applicable
to Contracts, 10 Y.B. Priv. Int’l L. 285 (2008); M. Hellner, Third Country Overriding
Mandatory Rules in the Rome I Regulation: Old Wine in New Bottles?, 5 J. Priv. Int’l L. 447
(2009). For the classic writings on the subject, see P. Francescakis, Quelques précisions
sue les ‘lois d’application immédiate’ et leurs rapports avec les règles de conflit de lois,
55 Rev. critique DIP 1 (1955); P. Francescakis, ‘Lois d’application immédiate’ et règles
de conflits, 3 Riv. dir. int. priv. proces. 699 (1966).
72
For example, the simple mandatory rules are rules of contract law that may not be
evaded by the contractual choice of another law, whereas the overriding mandatory rules
may be evaded by neither a contractual nor a judicial choice of law. Moreover, the simple

threshold for applying these rules is higher for the ‘overriding’ mandatory
rules than for the ‘simple’ mandatory rules.73 A simple mandatory rule
does not embody a public policy of the same high level as that which
is embodied in the overriding mandatory rules of Article 9, or for that
matter, the ‘fundamental policy’ limitation of the Restatement (Second).
Moreover, the violation of a simple mandatory rule does not, without
additional exceptional circumstances, justify employment of the ordre
public exception of Article 21. Also, although it is difficult to quantify
these concepts, the overriding mandatory rules seem to pose a higher
threshold than the Restatement’s ‘fundamental policy’ limitation. The
following diagram attempts to depict these varying thresholds.
Fig. 3. The thresholds for employing party-autonomy limitations under
Rome I and the Restatement (Second)
Ordre Public
Rome I, art. 21, Rest. 2nd
§ 90
Overriding
mandatory rules
(Rome I, art. 9(2)-
(3))
‘Fundamental policy’
(Restatement 2nd
§ 187(2))
Mandatory rules
(Rome I, Art. 3(3)-
(4))
mandatory rules that can defeat a contractual choice of law are those of the lex causae in
consumer and employment contracts, see Rome I, Arts. 6(2) and 8(1), and those of the
country in which ‘all other elements’ of the situation are located (which may or may not
be the lex causae) in all other contracts. See Art. 3(3)-(4) The ‘overriding’ rules that may
defeat either a contractual or a judicial choice of another law are those of the lex fori (Art.
9(2)) or the law of the place of performance, but only if they render performance unlawful
(Art. 9(3)).
73
See Rome I Preamble, Recital 37 (“The concept of ‘overriding mandatory provisions’
should be distinguished from the expression ‘provisions which cannot be derogated from
by agreement’ and should be construed more restrictively.”).

4. Assessment
4.1. The Three Layers
Despite the multiple layers of substantive restrictions to party autonomy
that Rome I employs, its application in practice is likely to produce a
fairly liberal regime, at least in contracts other than the special contracts
that Articles 5 through 8 single out for separate treatment. This is due to
the fact that the restrictions of Rome I will come into operation rather
infrequently. Specifically:
(1) The high thresholds posed by the overriding mandatory rules of
Article 9 and the ordre public exception of Article 21 will be employed
infrequently, precisely because they impose a high substantive threshold,
as they should;
(2) The substantively low threshold of the simple mandatory rules of
paragraph 3 of Article 3 will also be employed infrequently because the
geographical requirements for its employment will be rarely met – indeed,
they will be met only in fully domestic contracts because only in those
contracts would “all other elements relevant to the situation”74 be located
in a country other than the contractually chosen one; and
(3) The equally low threshold of the overriding mandatory rules of
Community law of paragraph 4 of Article 3, which applies to multistate
intra-EU contracts, may be employed slightly more frequently, but even
that threshold will become inoperable if the contract has any contact with
a non-EU country.
Nevertheless, the drafters of Rome I deserve praise for providing
targeted protection to the weak party in the four special contracts singled
out for separate treatment – namely, passenger, insurance, consumer, and
employment contracts. In this respect, Rome I is clearly superior to the
Restatement (Second), which does not provide any specific protection to
weak parties and instead leaves it to courts to provide ad hoc protection
on a case-by-case basis.
However, the fact that Rome I is superior to the Restatement does
not exempt Rome I from criticism. In this respect, two questions are
worth asking. The first question is whether Rome provides effective or
adequate protection to the weak party in the enumerated special contracts.
The second question is whether Rome I should have provided similar
protection to presumptively weak parties in other contracts, such as
franchisees or distributors.75
74
75
For a discussion of franchise contracts and distribution contracts under Rome I,
see L. García Gutiérrez, Franchise Contracts and the Rome I Regulation on the Law
Applicable to International Contracts, 10 Y.B. Priv. Int’l L. 233 (2008); M.-E. Ancel,

4.2. Consumers and Employees

Regarding the first question, the Rome I system works perfectly well
– perhaps too well – in protecting consumer and employees from the
consequences of an adverse contractual choice of law. As noted earlier,
Articles 6(2) and 8(1) provide that a choice-of-law agreement may not
deprive a consumer or an employee of the protection of the mandatory
rules of the state of the lex causae. Thus these articles essentially allow
for the possibility of ‘double protection’ under the chosen law and the lex
causae. The consumer or employee can enjoy the protection of whichever
of the two laws is more protective, and, in some instances, can enjoy
the protection of both laws for different aspects of the contract. This
may appear too generous to the consumer or employee, but the other
contracting party may easily avoid it by simply not choosing a law other
than the lex causae, as objectively determined under Rome I.
Moreover, the above provisions may be a bit too generous to consumers
and employees by guaranteeing the protection of all mandatory rules
of the lex causae without requiring that those rules embody a strong
public policy. This, however, is the policy choice made by the drafters
of Rome I. One reason for respecting this policy is because, as a general
proposition, it is better to err on the side of over-protecting, rather than
under-protecting, consumers or employees.76
4.3. Passengers and Insureds

The Rome I regime does not seem to work as well in the case of contracts for
the carriage of passengers or small-risk insurance contracts. To illustrate
the problem, let us suppose that a carriage contract between a Spanish
passenger and a British air carrier headquartered in Liechtenstein for a
trip from Spain to France contains a Liechtenstein choice-of-law clause.
In such a case, the clause would meet the geographical requirements
of Article 5(2). Suppose, however, that Liechtenstein law deprives the
passenger of the protection provided by the mandatory rules of Spain.
Should the choice-of-law clause be upheld in such a case?
In the absence of Article 5, the answer would probably be negative
because this contract would qualify as a consumer contract, and under
The Rome I Regulation and Distribution Contracts, 10 Y.B. Priv. Int’l L. 221 (2008). For
certain licensing contracts, see P. Torremans, Licences and Assignments of Intellectual
Property Rights Under the Rome I Regulation, 4 J. Priv. Int’l L. 397 (2008).
76
For a discussion of consumer contracts under Rome I, see P. 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, 34 Eur. L. Rev. 476
(2009).

Article 6(2), the clause would be disregarded to the extent that it deprives
the consumer of the protection of Spanish law, which would be the lex
causae. However, as Article 6(1) expressly declares, Article 5 prevails
over Article 6 for passenger contracts, and thus the passenger does not
enjoy the protection Article 6 provides for consumers.77 The passenger
can invoke the provisions of Articles 3(3), 3(4), 9(3), 9(2) and 21, but it is
doubtful that any of them will lead to the avoidance of the choice-of-law
clause. Specifically:
(1) Paragraph 3 of Article 3 would not help the passenger because not
“all other elements relevant to the situation [. . .] are located in
a country other than the country whose law has been chosen.”78
Here, the relevant elements are located not in a single country, as
the quoted provision contemplates, but rather in four countries;
(2) For the same reason, paragraph 4 of Article 3 will also be unavailable
to the passenger because not “all other elements [. . .] are located
in one or more Member States.”79 One of those relevant elements,
the carrier’s principal establishment, is located outside the EU.
Thus, even if Liechtenstein law violates existing mandatory rules
of Community law, the contractual choice of Liechtenstein law
may not be disregarded;
(3) Paragraph 3 of Article 9 would help the passenger only if: (a) Spain
(the country of the passenger’s habitual residence and place of
departure) qualifies as the state of performance; (b) the pertinent
Spanish mandatory rules would qualify as ‘overriding’ mandatory
rules; and (c) those rules would render the performance of the
contract unlawful. If, as is likely, any one of these conditions is
missing, the chosen law must be applied;80
(4) Paragraph 2 of Article 9 would help only if: (a) Spain is also
the forum state, and (b) its mandatory rules would qualify as
‘overriding’ mandatory rules; and
(5) Article 21 would help only if the application of Liechtenstein law
would be ‘manifestly incompatible’ with the ordre public of Spain.
Anything less than that would not defeat the chosen law.
In summary, the contractually chosen law will be applied in the above
hypothetical despite the fact that it deprives the passenger of the protection
provided by the mandatory rules of the country whose law would have been
applicable in the absence of choice (lex causae). This result is regrettable.
77
Rome I, Art. 6(1) provides that Article 6 applies “[w]ithout prejudice” to Article 5.
Recital 32 states that “Article 6 should not apply in the context of those [carriage and
insurance] contracts.”
78
79
80
Even if all conditions are present, the application of the ‘overriding mandatory rules’
is itself permissive, not mandatory.

For all practical purposes, the passenger is a consumer who should be

protected from the adverse consequences of a contractual choice-of-law
for the same policy and practical reasons for which Article 6 protects
other consumers.
The same can be said about small-risk insurance contracts. In many
of these contracts, the insured would have qualified as a consumer had
Article 7 not displaced Article 6. Article 7(3) attempts to protect insureds
by limiting the countries whose laws can be chosen in a choice-of-law
clause. However, as the above discussion of the passenger contract
illustrates, a geographical limitation does not necessarily guarantee
meaningful protection for the insured. For example, in a life insurance
contract, a contractual choice of the law of the insured’s nationality
satisfies the geographical requirement of Article 7(3)(c) but may well
deprive the insured of the protection of the mandatory rules of a country
that has a closer connection, such as the country in which the insured has
his habitual residence and in which the insurance contract was applied for,
issued, and delivered, and the risk materialized. For reasons explained
above, the tools provided by Articles 3(3)-(4), 9, and 21, would probably
not alter this equally regrettable result.
4.4. Other Weak Parties

As the above discussion illustrates, Rome I divides contracts into two
major categories: (a) the four special contracts involving presumptively
weak parties, which Articles 5-8 protect through special restrictions to
party autonomy; and (b) all other contracts, for which Rome I imposes
fairly minimal restrictions to party autonomy. This is a sensible division,
unless the first category proves to be under-inclusive. The example of
franchise contracts suggest that this may indeed be the case.
A franchise contract does not qualify as a consumer contract under
Article 6(1) of Rome I because it is not a contract “outside the trade
or profession”81 of either the franchisee or the franchisor. Yet, in many
franchise contracts, the franchisee is likely to be in as weak a bargaining
position as most consumers. Recognizing this fact, many states of the
United States have enacted statutes regulating franchises operating in their
territory and usually involving franchisees domiciled there. Typically,
these statutes prohibit waivers of the statutes’ provisions, either directly
or through the contractual choice of another state’s law. Thus, when a
contract purports to opt out of such a statute through a choice of another
state’s law, courts routinely strike down the choice-of-law clause. Cases
81
Rome I, Art. 6(1).

so holding are abundant.82 In fact, more often than not, such clauses are
disregarded even if the statute in question does not expressly prohibit
them, at least when the case is litigated in the franchisee’s home state.83
Unfortunately, Rome I does not seem to provide franchisees with
sufficient protection from the consequences of an adverse choice-of-law
clause. The only provision of Rome I on franchise contracts is Article
4(1)(e), which provides that, in the absence of a choice-of-law clause,
a franchise contract is governed by the law of the country where the
franchisee has his habitual residence.84 Thus, a choice-of-law clause in
a franchise contract will be subject only to the infrequently operable
limitations of Articles 3(3)-(4), 9, and 21 of Rome I.
For example, suppose that a franchise contract between Starbucks,
a corporation headquartered in the State of Washington, and a French
franchisee for a Starbucks franchise in France contains a choice-of-law
clause selecting the law of the friendly Kingdom of Tonga, as well as
a clause allowing the franchisor to unilaterally terminate the franchise
under certain circumstances that would not be sufficient under either
Washington law or French law. In such a case, the clause will easily pass
the test of paragraphs 3 and 4 of Article 3 because one important contact
is located in Washington and thus not all contract connections are located
in a single country (France) or in one or more EU countries. The clause
will also pass the test of Article 9, unless the chosen law: (a) violates the
‘overriding’ mandatory rules of France, either in its capacity as the forum
state (Art. 9(2)) or as the state of performance, but in the latter case only
if those rules render the contract illegal (Art. 9(3)); or (b) is manifestly
incompatible with the French ordre public (Art. 21). Nothing short of
those two high thresholds will prevent the application of Tongan law.
5. The Scope of the Choice-of-Law Clause

One frequently disputed issue is determining the intended – or, in some
instances, permissible – scope of the choice-of-law clause. Questions
of scope appear in different forms, such as whether the clause includes:
(1) the conflicts law of the chosen state or only its internal law; (2) the
procedural law or only the substantive law of that state; (3) state law
or soft law; or (3) contractual as well as non-contractual issues. Some
of these questions can be answered quickly or avoided altogether if the
phrasing of the clause is clear and explicit, but this is often not the case.
82
For citations, see Hay, Borchers & Symeonides, supra note 24, at §18.7.
83
See ibid.
84
This provision is subject to the closest connection exception of Art. 4(4).

Moreover, in some cases, the question is not so much one of contractual

intent (which usually can be answered by the wording of the clause) but
rather one of contractual power.
5.1. Substantive or Conflicts Law

Like most legal systems, the Restatement (Second), as well as American
case law, take the position that, in the absence of demonstrated contrary
intention, the parties’ choice encompasses only the internal or substantive
law of the chosen state and not its conflicts law.85 This is a perfectly
logical position because it avoids the complexities and uncertainty of
renvoi and thus preserves the attractiveness of choice-of-law clauses.
Precisely in order to reduce the uncertainty, many choice-of-law clauses
expressly exempt from their scope the conflicts law of the chosen state.86
The prevailing position in Europe, both under the Rome Convention
and now Rome I, has remained the same as that of the Restatement.87
Like many multilateral instruments, Rome I contains an anti-renvoi
provision (Article 20), which provides that the application of the “law
of any country specified by this Regulation” excludes the conflict rules
of that country “unless provided otherwise in this Regulation.”88 Article
20 applies not only to a judicial choice of law, but also to a contractual
choice of law because the latter law, no less than the former law, is a law
whose application is authorized or “specified in this Regulation.”
The only remaining ambiguity is whether Article 20 would prevent
enforcement of a choice-of-law clause that by its terms includes the
conflicts rules of the chosen state. The better view is that it would not. The
textual support for this view can be based on the fact that the other articles
of Rome I ‘provide otherwise’ with regard to this specific issue. These
85
Restatement (Second), Conflict of Laws § 187, cmnt. (h) (1971). For citations to
cases, see Hay, Borchers & Symeonides, supra note 24, at §18.9(a).
86
See, e.g., Glyka v. New England Cord Blood Bank, Inc., No. 07-10950-DPW, 2009
WL 1816955, at *3 (D.Mass. June 25, 2009) (“[a]ll agreements [. . .] are governed by
Massachusetts law (excluding conflicts of laws)”; Citgo Petroleum Corp. v. Krystal Gas
Marketing Co., Inc., No. 05-CV-0716-CVE-SAJ, 2006 WL 2645133, at *1 (N.D. Okla.
Sept. 12, 2006) (“This Agreement [. . .] is governed by and construed in all respects in
accordance with the substantive laws of the State of Oklahoma, excluding conflict of laws
provisions.”); Digital Envoy, Inc. v. Google, Inc., 370 F.Supp.2d 1025, 1029 (N.D.Cal.
2005) (the agreement is to be governed by “the laws of the State of California as it applies
to a contract made and performed in such state, excluding conflicts of laws principles.”).
87
See Dicey, Morris & Collins, supra note 59, at 1554, and authorities cited therein.
88
Rome I, Art. 20. For example, Rome I ‘provides otherwise’ in Article 7(3)(e), second
paragraph, regarding small-risk insurance contracts.

articles grant parties a great degree of freedom to choose the applicable

law and do not specifically exclude the conflicts rules of the chosen state,
despite limiting that freedom in other respects.
5.2. Substantive or Procedural Law

Whether a choice-of-law clause includes the chosen state’s procedural
law is a question that the Restatement (Second) does not address
expressly. However, nothing in the Restatement suggests that its drafters
contemplated the idea that a routine choice-of-law clause (as opposed to
a choice-of-forum clause) would include the chosen state’s procedural
law. Indeed, it would not be sensible or practical to impose on a court the
burden of complying with the rules of conducting a trial or complying
with other purely procedural rules of another state.
However, the line between substance and procedure is not always
bright. One topic with significant particular practical ramifications is
statutes of limitation, which the traditional choice-of-law system placed
squarely into the procedural category, and which many states continue to
characterize as procedural even after abandoning the traditional theory in
other respects.89 Perhaps for this reason, most cases that have considered
this issue have concluded that the choice-of-law clause did not include
the chosen state’s statute of limitation.90
Recently, however, a handful of cases decided in the few states that
have abandoned the traditional procedural characterization of statutes
of limitation (such as California) have held that a choice-of-law clause
included the chosen state’s statute of limitations.91 The particular facts
of some of these cases, coupled with the questionable quality of their
reasoning, suggest that they are of limited persuasive value – at least
compared to the more numerous cases that have reached the opposite
result. Nevertheless, these cases illustrate – or at least suggest – that
statute-of-limitations conflicts are sui generis conflicts that do not easily
fit within the existing formulae for conflicts resolution. For example, the
traditional procedural characterization of statutes of limitation, even if
ill-conceived, necessarily excludes them from the scope of a choice-of-
law clause in the same way that the traditional characterization exempts
them from the scope of the judicial choice-of-law process in general.
While this exclusion may unduly restrict party autonomy, the opposite
solution of characterizing these statutes as substantive presents its own
problems as well. A substantive characterization means that a choice-of-
89
See S. Symeonides, American Private International Law 272-294 (2008).
90
For citations, see Hay, Borchers & Symeonides, supra note 24, at § 18.9(b).
91
For citations and discussion, see ibid.

law clause may encompass statutes of limitation, provided that the clause
uses explicit language to that effect – at least in states that allow choice-
of-law clauses to encompass non-contractual issues.92
However, a substantive characterization does not satisfactorily answer
the next question: Which state’s law will be used as the standard for
defining the limits of party autonomy (lex limitatis)? As noted earlier, for
other substantive issues, the Restatement assigns the role of lex limitatis
to the state whose would have been applicable in the absence of a choice-
of-law clause. However, on this particular issue, this may well be the
wrong law in cases in which the otherwise applicable law is not also
the lex fori. For example, suppose that a contract that would otherwise
be governed by the law of State X, contains a choice-of-law clause
choosing the substantive and limitations law of State Y. If both states have
an exceedingly long statute of limitation that allows the action, but the
action is filed in State Z – whose statute of limitation would bar the action
– should State Z be compelled to hear it? Respect for party autonomy, as
well as the existing American structure which assigns exclusively to State
X the role of lex limitatis, would mandate an affirmative answer, but it is
doubtful that many American courts would agree to it in such a case (or
even that they should do so).
Rome I exempts from its scope – and thus from the scope of choice-
of-law clauses – the rules of evidence and procedure.93 However,
in continental Europe and the civil law world in general, statutes of
limitation (liberative prescription) are generally considered substantive.94
Consistent with this characterization, Rome I includes within the scope of
the applicable law, which may be chosen contractually or judicially, “the
various ways of extinguishing obligations, and prescription and limitation
of actions.”95 Thus, in the above hypothetical, Rome I would compel the
State Z court to hear the case. To be sure, this result will not encounter any
objections in Europe, where lawyers are accustomed to viewing liberative
prescription as a substantive matter to be governed by the same law as
that which governs the merits of the obligation. However, what may give
some pause is that, under the scheme of Rome I, the forum state (State
Z) would be compelled to hear the case even if State Z is itself the state
of the otherwise applicable law, unless the case falls within one of the
infrequently operable exceptions to party autonomy discussed earlier.96
92
This issue is discussed in Part 6, infra.
93
See Rome I, Art. 1(3). This provision contains an exception (through a cross-reference
to Article 18) regarding the burden of proof.
94
See S. Symeonides, American Private International Law, supra note 89, at 272. Since
1984, England follows the same position. See Dicey, Morris & Collins, supra note 49, at
1617-1618.
95
Rome I, Art. 12(1)(d).
96
In the consumer or employment contracts, the forum state, which in this hypothetical

5.3. State Law or Non-State Norms

Throughout its many provisions, including Section 187, the Restatement
uses the terms ‘local law’ and ‘law’ in a way that ties both terms to a
‘state’, which the Restatement defines as a “a territorial unit with a distinct
general body of law.”97 This definition, combined with the repeated use
of the phrase “law of the state” in Section 187, makes it clear that the
Restatement’s drafters did not contemplate the contractual choice of non-
state norms, such as the Unidroit Principles.98 This is understandable
considering that the Restatement was drafted during the 1950s and early
1960s, a period in which non-state norms did not have the clarity, maturity,
and status they have today.
However, closer analysis reveals that the Restatement is not altogether
hostile to non-state norms. To the extent that it recognizes the doctrine
of incorporation by reference for issues that fall within the parties’
contractual power,99 the Restatement allows the parties to incorporate
into their contract by reference the non-state norms of their choice.100
The UCC, which employs a similar dichotomy between variable and non-
variable rules of the UCC, allows the contractual ‘incorporation’ of non-
state norms with regard to matters governed by variable rules.101
Rome I takes the same position. An earlier proposal to allow parties
to choose certain well-recognized collections of non-state norms, such
as the Unidroit Principles, encountered resistance from several Member
States.102 The compromise was the insertion of a statement in the Preamble
of Rome I allowing for these norms the much lesser status of incorporation
by reference. Recital 13 states that Rome I “does not preclude parties
is also the lex causae, may refuse to hear the case if its statute of limitation qualifies as a
mandatory rule.
97
Restatement (Second) § 3.
98
For a detailed discussion of this issue, see S. Symeonides, Contracts Subject to Non-
State Norms, 53 Am. J. Comp. L. 209 (2006 Supp.); S. Symeonides, Party Autonomy
and Private Law-Making in Private International Law: The Lex Mercatoria that
Isn’t, in Festschrift für K.D. Kerameus (2009), available at SSRN: <http://ssrn.com/
abstract=946007>.
99
See supra 2.2.
100
Restatement (Second) §§ 187 cmt. c states that parties may “incorporate into the
contract by reference extrinsic material which may, among other things, be the provisions
of some foreign law.” The ‘extrinsic material’ may be the law of another state, but it
can also be a treatise on contract law, or a collection of non-state norms. Indeed, the
Reporter’s Notes expressly state that the parties “may also stipulate for the application of
trade association rules or well known commercial customs.” Ibid., § 187, Reporter’s Note
to Subsection (1).
101
See Symeonides, Non-State Norms, supra note 98, at 218-221.
102
For discussion of this issue, see O. Lando & P. Nielsen, The Rome I Regulation, 45
Common Mkt. L. Rev. 1687, 1694-1698 (2008).

from incorporating by reference into their contract a non-State body of

law or an international convention.”103 Thus, non-state norms, which play
such a prominent role in the arena of international commercial arbitration,
continue to encounter skepticism outside that arena.104
6. Contractual Choice of Law for Non-Contractual

Issues
6.1. Pre-dispute and Post-Dispute Agreements
One important question regarding the intended and permissible scope
of choice- of-law clauses is whether the clause may encompass non-
contractual claims, such as claims arising from a tort. This question arises
in two different situations.
The first – and rather uncommon – scenario is when the tortfeasor
and the victim, after each had knowledge of the events giving rise to the
dispute, agree on the law that will govern the dispute (hereafter post-
dispute agreements). Such agreements present no problems whatsoever.
After all, they differ little from agreements encompassing only contractual
claims, and indeed they facilitate settlement. A common variation of this
scenario is when neither litigant raises the applicability of foreign law.
In such a case, most American courts will apply the law of the forum
under a variety of rationales, one of which is that the parties have tacitly
acquiesced (i.e., agreed) to the application of the lex fori.105 Although
express post-dispute agreements to apply non-forum law are slightly
different, the need for predictability, efficiency, judicial economy,
and respect for party autonomy are good reasons to enforce – indeed,
encourage – these agreements.
The second and increasingly more common scenario is when the
eventual tortfeasor and victim agree in advance on the law that will
govern their rights and obligations arising from the tort (hereinafter pre-
dispute agreements). Clearly, this scenario can only occur when: (a) the
eventual tortfeasor and victim are parties to a pre-existing contract,
such as a contract of employment, carriage, or sale, and (b) the contract
contains a choice-of-law clause that is phrased in a way that purports to
include not only contractual claims but also non-contractual claims that
103
Rome I, Recital (13).
104
For an equally skeptical assessment of these norms, see Symeonides, supra note 98.
105
See S. Symeonides, American Private International Law, supra note 89, at 90-91.

may arise from, or are connected to, the contractual relationship. If both
of the foregoing elements are satisfied, then the next question is whether
the legal system should enforce the clause.
The parties’ position in pre-dispute agreements is qualitatively and
significantly different than in post-dispute agreements. Before the dispute
arises, the parties (assuming they are otherwise contractually related)
usually do not – or should not – contemplate a future tort, and the parties
do not know (a) who will injure whom, or (b) the nature or severity of the
injury. An unsophisticated party (or a party in a weak bargaining position)
may uncritically or unwittingly sign a choice-of-law agreement, even
when the odds of that party becoming the victim are much higher than the
odds of that party becoming the tortfeasor. Thus, pre-dispute agreements
may facilitate the exploitation of weak parties. In contrast, this danger
is less pronounced in post-dispute agreements because, after the dispute
arises, the parties are in a position to know their rights and obligations
and have the opportunity to weigh the pros and cons of a choice-of-law
agreement.
6.2. The U.S. Position

In the United States, the question of the enforceability of pre-dispute
choice-of-law agreements encompassing non-contractual claims is not
uniformly answered. The pertinent section of the Restatement (Second)
speaks of the law of the state chosen by the parties to govern their
‘contractual rights and duties.’106 The Restatement is silent on whether
the parties may agree in advance on the law that will govern the parties’
non-contractual rights, especially those arising from a future tort between
them. The most logical inference is that the Restatement does not sanction
such agreements. At the time of the Restatement’s drafting, the principle
of party autonomy, which had been born in the contracts arena, had not
migrated outside that arena. Recent codifications, including the two
American codifications, have had the opportunity to address this issue.
The 1991 Louisiana codification explicitly confines pre-dispute
choice-of-law agreements to contractual issues.107 Similarly, Oregon’s
contracts codification of 2001 also does not allow pre-dispute choice-of-
law agreements for non-contractual issues.108 Oregon’s torts codification
of 2009 continues this policy. It differentiates between pre-dispute
106
Restatement (Second) § 187(2) (emphasis added).
107
See La. Civ. Code Art. 3540 (‘conventional obligations’), and Reporter’s comments
thereunder.
108
See Or. Rev. St. § 81.120 (‘contractual rights and duties’). For discussion, see
Symeonides, Codifying Choice of Law for Contracts: The Oregon Experience, 67 RabelsZ
726, 737 (2003).

agreements (which are unenforceable) and post-dispute agreements, and

subdivides the latter into those choosing Oregon law and those choosing
the law of another state. Post-dispute agreements choosing Oregon law,
if otherwise valid, are enforceable without any limitation.109 Post-dispute
agreements choosing the law of another state are enforceable, provided
they conform to the statute that prescribes the requirements for enforcing
choice-of-law agreements regarding contractual claims, including the
public policy limitations of the otherwise applicable law.110
The case law on this issue in the United States is still unsettled.
The majority of cases have held that the choice-of-law clause did not
encompass tort claims or other non-contractual claims arising from,
or related to, the same contractual relationship.111 However, a sizeable
number of cases have held that the clause did encompass tort claims,
claims for attorney fees, and other non-contractual claims.112 Most courts
tend to view this question as a matter of contractual intent (rather than
contractual power), which in turn depends largely – but not exclusively
– on the wording of the choice-of-law clause. Under this logic, a clause
that uses the words ‘the agreement’ or ‘the contract’ does not encompass
non-contractual claims, whereas a clause referring to the ‘relationship’
resulting from the contract or to ‘any and all disputes’ between the parties
is deemed to include non-contractual claims.113
There are two problems with this formalistic position. The first problem
is that too many choice-of-law clauses are poorly or haphazardly drafted
(and often wholesale copied from other contracts or cases). As such, these
clauses provide a very weak basis from which to safely infer that the
parties did or did not contemplate non-contractual issues. Under these
circumstances, slavish reliance on the wording of the clause amounts to
an unwise subservience to form over substance and produces random
results. For example, one court concluded that a clause stating that “the
contract” shall be governed by the law of New York did not include that
state’s statute of limitation, but a clause stating that the contract “and
its enforcement” shall be governed by New York law would.114 Another
court held that a clause providing that the “Agreement is to be performed
in accordance with the laws of the State of Texas and shall be construed
and enforced with [sic] the laws of the State of Texas” did not encompass
109
See Or. Rev. St. 31.870 (1). For discussion, see Symeonides, Oregon’s New Choice-of-
Law Codification for Tort Conflicts: An Exegesis, 88 Or. L. Rev. ___ (forthcoming 2010).
110
See Or. Rev. St. 31.885, cross-referencing to the contracts codification.
111
For citations, see Hay, Borchers & Symeonides, supra note 24, at § 18.10.
112
See ibid.
113
See ibid.
114
Diamond Waterproofing Systems, Inc. v. 55 Liberty Owners Corp., 826 N.E.2d 802
(N.Y. 2005).

non-contractual claims.115 Another court held that a clause stating that

“the Agreement [. . .] shall be governed and construed in all respects in
accordance with the laws of the State of South Carolina” encompassed a
claim for punitive damages under South Carolina law.116
To be sure, one could argue that, if the wording of a choice-of-
law clause is not a reliable guide for determining whether the clause
encompasses non-contractual issues, then it is equally unreliable with
regard to contractual issues. However, there is a difference between the
two situations. It is perfectly logical to conclude that the mere act of
signing a contract containing a choice-of-law clause binds the parties
to the chosen law with regard to all contractual issues arising from that
contract, even if the clause does not explicitly include all issues or excludes
some of those issues. It is less logical to reach the same conclusion with
regard to non-contractual issues. The stakes are often higher and always
different in the non-contractual situation.
The second problem is that, in many cases in which the clause is
explicit enough to encompass non-contractual issues, the clause has been
drafted by the party in the strong bargaining position in a take-it-or-leave
it adhesion contract. Sutton v. Hollywood Entertainment Corp.117 is a
good example. Sutton was a tort action for malicious prosecution and
false imprisonment filed against a Maryland video store owner who had
the plaintiff arrested for alleged shoplifting. Besides being innocent, the
plaintiff was a customer/‘member’ of the defendant’s video store, in that
he had applied for and received a ‘membership’ card allowing him to
rent video discs. The membership agreement provided that “any dispute
arising out of or relating in any way to [plaintiff’s] relationship with
[defendant] shall be subject to final, non-appealable, binding arbitration.
[. . .] Exclusive venue for any dispute resolution shall be in Portland,
Oregon and Oregon law shall control for all purposes.”118 Relying on the
italicized language, the defendant moved to dismiss the action. The court
denied the motion, reasoning that the plaintiff’s tort claims had “nothing
whatsoever to do with the video rental contracts.”119 “It is logically
untenable” said the court, “that the membership agreements were meant
to cover [. . .] accusations of theft. Taken to an extreme, Defendant’s
reading of the arbitration clause would require arbitration of claims such
115
Medical Instrument Development Laboratories v. Alcon Laboratories, No. 05-1138
MJJ, 2005 WL 1926673, at *3 (N.D.Cal. Aug. 10, 2005).
116
Interclaim Holdings Ltd. v. Ness, Motley, Loadholt, Richardson & Poole, 298 F. Supp.
2d 746, 749 (N.D. Ill. 2004).
117
181 F.Supp.2d 504 (D. Md. 2002).
118
Ibid., at 508 (emphasis added).
119
Ibid., at 511.

as a [defendant’s] store ceiling falling in on customers, or a [defendant]

store employee brutally attacking a customer [. . .] who has signed a
membership agreement.”120
To be sure, one could argue that courts are perfectly capable of policing
party autonomy with regard to non-contractual issues (and curbing the
type of abuse that the Sutton case illustrates) as they are with regard to
contractual issues. Indeed, a review of the cases suggests that when a
court concludes that a choice-of-law clause encompasses non-contractual
issues, the court usually subjects the clause to higher scrutiny than might
otherwise be the case. Whether this is a satisfactory answer to the second
problem discussed above is a matter of opinion. Nevertheless, what is
clear is that, over time, explicit clauses of the ‘any and all’ type like the
Sutton clause will become routine. When that happens, courts will have
to employ all available safeguards (and perhaps a few more) if they are to
continue protecting weak parties such as employees and consumers.
6.3. Rome II121

Until recently, the prevailing view in Europe was to enforce only post-
dispute agreements.122 A draft of what later became the Rome II Regulation
120
Ibid., at 512.
121
From the extensive literature on Rome II, see, inter alia, A. Dickinson, The Rome
II Regulation: A Commentary (2009); J. Ahern & W. Binchy, The Rome II Regulation
on the Law Applicable to Non-Contractual Obligations: A New International Litigation
Regime (2009). For American perspectives, see P. Hay, Contemporary Approaches to
Non-Contractual Obligations in Private International Law (Conflict of Laws) and the
European Community’s ‘Rome II’ Regulation, 4(1) Eur. Legis. F. 137 (2007); J. Kozyris,
Rome II: Tort Conflicts on the Right Track! A Postscript to Symeon Symeonides’ ‘Missed
Opportunity’, 56 Am. J. Comp. L. 471 (2008); R. Michaels, The New European Choice-
of-Law Revolution, 82 Tul. L. Rev. 1607 (2008); E. O’Hara & L. Ribstein, Rules and
Institutions in Developing a Law Market: Views from the United States and Europe,
82 Tul. L. Rev. 2147 (2008); W. Reppy, Eclecticism in Methods for Resolving Tort and
Contract Conflict of Laws: The United States and the European Union, 82 Tul. L. Rev.
2053 (2008); S. Symeonides, Rome II and Tort Conflicts: A Missed Opportunity, 56
Am. J. Comp. L. 173 (2008); R. Weintraub, The Choice-of-Law Rules of the European
Community Regulation on the Law Applicable to Non-Contractual Obligations: Simple
and Predictable, Consequences-Based, or Neither?, 43 Tex. Int’l L.J. 401 (2008).
122
See, e.g., Belgian PIL Code Art. 101 (“Parties may, after the dispute has arisen, choose
which law will be applicable to the obligations resulting from the tort [. . .].”); Introductory
Law to the German Civil Code as amended in 1999, Art. 42 (“After the event giving rise
to a non-contractual obligation has occurred, the parties may choose the law that shall
apply to the obligation.”); Turkish Code of Private International Law and Civil Procedure
(Law No. 5718 of 27 November, 2007), Art. 34(5) (“The parties may explicitly choose
the applicable law after the tort occurs.”). Some countries limit the parties to the law of
the forum. See Estonian PIL Act § 54 (“The parties may agree on application of Estonian
law after occurrence of the event or performance of the act from which a noncontractual

proposed abolishing the distinction between post-dispute and pre-dispute

agreements and allowing enforcement of both. This author criticized that
proposal at that time, as well as the compromise that later found its way
into the final text of Rome II.123 The compromise is now found in Article
14 of Rome II, which continues the differentiation between pre-dispute
and post-dispute choice-of-law agreements for non-contractual claims
and allows enforcement of both, but subject to different restrictions.124
Post-dispute agreements are enforced regardless of the identity of the
parties,125 but pre-dispute agreements are enforced only if: (a) the parties
are “pursuing a commercial activity”;126 (b) the agreement is “freely
negotiated”;127 and (c) the choice of law is “expressed or demonstrated
with reasonable certainty by the circumstances of the case.”128
Actually, the requirement for free negotiation should be understood as
being applicable even to post-dispute agreements. Despite a possible a
contrario argument, the quoted phrase should be understood as evidence
of the drafters’ intent to ensure higher judicial scrutiny of pre-dispute
agreements, rather than as a licence to enforce coercive or not ‘freely
negotiated’ post-dispute agreements. The same argument could be made
regarding the requirement for an express or clearly demonstrated choice
of law. After all, Rome I contains a similar requirement for all choice-
obligation arose.”); Swiss Federal Law on Private International Law of December 16,
1987, Art. 132 (“The parties may, at any time after the occurrence of the injurious event,
agree on the application of the law of the forum.”). But see Art. 6 of [Dutch] Act of 11
April 2001 Regarding Conflict of Laws on Torts, Staatsblad 2001, 190, effective 1 June
2001(“Where the parties have chosen the law applicable to any matter relating to tort, [. .
.] that law shall apply between them [. . .].”).
123
See S. Symeonides, Tort Conflicts and Rome II: Impromptu Notes on the Rapporteur’s
Draft (Remarks delivered at seminar hosted by European Parliament rapporteur MEP
Diana Wallis in Brussels on 14 March 2005), available at <http://www.dianawallismep.
org.uk/resources/sites/82.165.40.2516d2c46d399e8.07328850/Seminar%2014%20
March/S.C.+Symeonides%2C+%27Tort+conflicts+and+Rome+II%3A+impromptu+note
s+on+the+Rapporteur%27s+draft%27.pdf>. See also S. Symeonides, Tort Conflicts and
Rome II: A View from Across, in Festschrift für Erik Jayme 935 (2004).
124
Article 14 applies to all non-contractual claims other than those arising from unfair
competition, restrictions to competition, and infringement of intellectual property rights.
See Rome II, Arts. 6(4)) and 8(3). These exclusions mean that choice-of-law agreements
on these two subjects are unenforceable, regardless of whether they are entered into before
or after the dispute. For discussions of Article 14, see T. De Boer, supra note 6; M. Zhang,
Party Autonomy in Non-Contractual Obligations: Rome II and Its Impacts on Choice of
Law, 39 Seton Hall L. Rev. 861 (2009).
125
Rome II, Art. 14(1)(a).
126
Rome II, Art. 14(1)(b).
127
Ibid.
128
Ibid. Another requirement is that the agreement “shall not prejudice the rights of third
parties.” Ibid.

of-law agreements regarding contractual issues.129 However, it is also

possible that the drafters of Rome II intended to allow enforcement of
merely implied post-dispute agreements, such as when both litigants
tacitly acquiesce to the application of the lex fori.130
Be that as it may, the most crucial difference between pre-dispute and
post-dispute agreements under Rome II is that pre-dispute agreements are
enforceable only if the parties are engaging in ‘commercial activity.’ In
all other respects, the two agreements are subject to the same restrictions,
which are delineated by (a) the mandatory rules of a state in which “all
the elements relevant to the situation . . . are located” in fully-domestic
cases;131 (b) the mandatory rules of Community law, in multistate intra-
EU cases;132 and (c) the ‘overriding’ mandatory rules133 and the ordre
public of the forum state in all cases.134
Compared to the uncertainty that characterizes the American case
law on this issue, there is a certain attraction to the decision of the
drafters of Rome II to adopt a clear-cut rule on this subject. However,
the critical question is whether this rule provides sufficient safeguards
that this newly-granted freedom will not be abused by strong contracting
parties. By limiting pre-dispute choice-of-law agreements to situations
in which all the parties are “pursuing a commercial activity,” Rome II
seeks to protect certain presumptively weak parties, such as consumers,
employees, and certain – but not all – individual insureds. This limitation,
however, leaves exposed a whole host of small commercial actors, such
as small businesses.
Let us return to the example of the Starbucks franchisee in France
and suppose that the ‘freely negotiated’ Tongan choice-of-law clause was
129
See Rome I, Art. 3(1).
130
This argument runs contrary to current practice in several continental countries where
courts are expected to ex officio apply foreign law. However, Rome II contemplates a
reconsideration of this practice. See Commission Statement on the treatment of foreign
law, accompanying Rome II.
131
Rome II, Art. 14(2) (emphasis added) (“Where all the elements relevant to the situation
[. . .] are located in a country other than the country whose law has been chosen, the choice
of the parties shall not prejudice the application of provisions of the law of that other
country which cannot be derogated from by agreement.”).
132
See Rome II, Art. 14(3) (“Where all the elements relevant to the situation [. . .] are
located in one or more of the Member States, the parties’ choice of the law applicable
other than that of a Member State shall not prejudice the application of provisions of
Community law [. . .] which cannot be derogated from by agreement.”).
133
See Rome II, Art. 16 (“Nothing in this Regulation shall restrict the application of the
provisions of the law of the forum in a situation where they are mandatory irrespective of
the law otherwise applicable to the non-contractual obligation.”).
134
See Rome II, Art. 26 (providing that the application of a provision of the otherwise
applicable law “may be refused only if such application is manifestly incompatible with
the public policy (ordre public) of the forum”)

broadly phrased to include non-contractual obligations. Suppose further

that Starbucks committed a tort against the French franchisee and that,
unlike French or Washington law, Tongan law favors Starbucks. This
clause would meet the initial requirements of Article 14, thus shifting the
burden on the franchisee to prove that the clause would be unenforceable
under paragraphs 2 and 3 of Article 14, or Articles 16 or 26 of Rome II.135
Paragraphs 2 and 3 of Article 14 use identical language to that of
paragraphs 3 and 4 of Article 3 of Rome I,136 respectively, except for one
difference on the issue of the pertinent time: while the Rome I provisions
speak of “all other elements relevant to the situation at the time of the
[contractual] choice,”137 the provisions of Rome II speak of “all the
elements relevant to the situation at the time when the event giving rise
to the damage occurs.”138 One could make a semi-plausible argument
that the ‘relevant elements’ contemplated by the Rome II provisions
are the elements of the tort, rather than of the contractual relationship.
If accepted, this argument could affect the outcome in a case in which
‘all’ the elements of the tort are located in one country (here, France)
even if the contractual relationship has contacts with another country.
In any event, this argument would be unavailable in this case because
the identity of the tortfeasor as a Washington corporation is a ‘relevant
element’ in both the contractual and the delictual relationship. The fact
that this element is located outside France and outside the EU means that
the contractual choice of Tongan law will satisfy the tests of paragraphs
2 and 3 of Article 14 of Rome II. Thus, the chosen law must be applied
even if it ‘prejudices’ the application of French mandatory rules (para.
2) or the mandatory rules of Community law (para. 3). The geographical
contacts of the franchisor-franchisee relationship prevent the franchisee
from invoking these provisions.
On the other hand, geography is not an obstacle to invoking Articles 16
and 26 of Rome II, if this case is litigated in France. If the franchisee is
able to prove that the application of Tongan law violates the ‘overriding’
mandatory rules of France139 or is ‘manifestly incompatible’ with the
French ordre public,140 the franchisee will be able to avoid the application
of Tongan law. However, because the threshold for applying either of
these two articles is considerably high, the franchisee, or similarly situated
small commercial actors, will remain unprotected in all cases that do not
meet this threshold.
135
These provisions are reproduced at notes 131-134, supra.
136
The latter provisions are reproduced supra at notes 56-57, 60.
137
Rome I, Art. 3(3) and (4) (emphasis added).
138
Rome II, Art. 14(2) and (3) (emphasis added).
139
See Rome II, Art. 16, supra note 133.
140
See Rome II, Art. 26, supra note 134.

One reason many European commentators may find this result

unobjectionable is because they are used to the idea of applying the same
law to the torts aspects of a case as the one that governs the underlying
contract between the same parties. Rome II preserves this idea. In stating
the ‘manifestly closer connection’ exception to the lex loci damni rule,
Article 4(3) of Rome II provides that “[a] manifestly closer connection [.
. .] might be based in particular on a pre-existing relationship between the
parties, such as a contract, that is closely connected with the tort/delict
in question.”141 One commentator has stated that “[e]ven if [the parties’]
agreement would be invalid under Article 14(1), an action sounding in
tort would still be governed by the law of their choice, as there is likely to
be a closer connection between their contractual relationship and the tort
at issue.”142 This statement would be true only if the agreement chooses
the law of a state that in fact has the ‘manifestly closest connection’
with the case. However, Article 14 does not impose such a requirement.
Indeed, Article 14 does not require any connection to the chosen state.
Secondly, there is a difference between, on the one hand, applying the
law of a given state because a court determines – after considering all
the circumstances and exercising all proper discretion – that that state
has a ‘manifestly closer connection,’ and, on the other hand, applying a
law solely because of a choice-of-law clause, which (in reality) is not at
all negotiated in many cases. Rome II seems to recognize this difference,
as well as the risk inherent in allowing pre-dispute choice-of-law clauses
for non-contractual claims, by stating in Recital 32 that “[p]rotection
should be given to weaker parties by imposing certain conditions on the
choice.”143 As the franchise example illustrates, Rome II does not always
live up to this principle. As with some other freedom-laden ideas, Article
14 may well become the vehicle for taking advantage of weak parties,
many of whom are parties to ‘commercial’ relationships.
Finally, it is not a consolation to assume that “in the area of non-
contractual obligations parties seldom exercise their freedom of
choice.”144 Even if this assumption were true today, it will not remain
true for long. In a relatively short time after the effective date of Rome II,
choice-of-law agreements encompassing tort claims will become routine.
For example, one should not be surprised if product manufacturers begin
inserting clauses selecting a pro-manufacturer law (the law of Nepal might
be a good choice) in all the contracts by which they sell their products
to business entities. Since Article 14 does not require any particular
connection with the chosen state and since both parties would be pursuing
141
Rome II, Art. 4(3).
142
De Boer, supra note 6, at 27.
143
Rome II, Recital (31).
144
De Boer, supra note 6, at 23.

a commercial activity, the clause would pass the initial test of Article 14,
thus shifting to the injured party the rather heavy burden of proving the
clause unenforceable under one of the grounds discussed above. If Rome
II is really concerned with protecting the ‘weaker parties,’145 it should not
have imposed on them this burden.
7. Conclusions
The Restatement (Second) and the Rome I and Rome II Regulations are
representative products of two different legal cultures. The Restatement
reflects a typical American skepticism toward a priori rules and a high
degree of confidence in the courts’ ability to develop appropriate solutions
on a case-by-case basis. The result of the Restatement’s application has
been a great degree of judicial flexibility, perhaps at the expense of
predictability and consistency. In contrast, Rome I and Rome II reflect
the rich continental experience in crafting a priori rules and a lesser
willingness to entrust courts with too much discretion. The result is
greater predictability and consistency and less judicial flexibility.
If one were to oversimplify, one could say that, while the Restatement
deliberately opts for under-regulation, Rome I and II necessarily opt for
over-regulation. If this contention is true, these choices are again justified
by the legal culture in which these documents operate. For example, the
fact that American state and federal judges are products of the same legal
training and tradition – despite serving different sovereigns – coupled
with the rich judicial experience in working with malleable ‘approaches’
rather than black-letter rules, explains the high degree of discretion the
Restatement accords judges. The hope is that, over time, judges will
develop uniform (or at least similar) solutions and thus will eventually
provide a modicum of consistency and predictability. Conversely, the fact
that Rome I and Rome II are designed to serve a plurilegal and multiethnic
Union, one that brings together uneven legal traditions, may explain why
the drafters opted for more black-letter rules and so few escapes.
At the same time, the drafters of Rome I deserve praise for having
the political courage and legal acumen to devise a series of specific rules
explicitly designed to protect weak parties, such as consumers, employees,
passengers, and insureds. As the discussion in this essay has highlighted,
these rules work quite well in the case of consumers and employees, but
not so well in the case of passengers, insureds, and other presumptively
weak parties, such as franchisees. Even so, it is preferable to have rules
protecting weak parties in most cases, even if those rules do not work
well in some cases, rather than not having any such rules. One can only
145
See Rome II, Recital (31).

hope that, one day, we will have the courage to attempt drafting similar
rules in the United States. Unfortunately, the recent hostility encountered
by the proposed pro-consumer revision of the UCC,146 coupled with the
pro-business tilt of American law in general,147 suggests that this day is
not likely to come in the near future.
146
See supra 2.3.
147
See Borchers, Categorical Exceptions, supra note 43, at 1659 (“U.S. law is generally
more probusiness and antiregulatory.”); ibid., at 1660 (“For a variety of reasons having to
do with legal culture and attitudes toward business regulation, it is probably the case that
exceptions to party autonomy designed to protect weaker parties in a transaction are not
likely to become prevalent in the United States.”).

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PARTY AUTONOMY IN ROME I AND II

FROM A COMPARATIVE PERSPECTIVE

K. BOELE-WOELKI, T. EINHORN, D. GIRSBERGER & S. SYMEONIDES (EDS.), Convergence and

1. Introduction: Party Autonomy

the choice may encompass non-contractual issues. This essay offers

2. The U.S. Version

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He also argued that party autonomy would lead to uncertainty because

2.2. The Restatement (Second)

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and to excuse for nonperformance, [. . .] frustration and impossibility;”16

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(1) The Restatement imposes the same party autonomy limitations to

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(6) Finally, in a style characteristic of the American legal culture, the

2.3. The Uniform Commercial Code (UCC)

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displace the UCC’s waivable rules by incorporating by reference in their

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3. The Rome I Regulation

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By singling out these special contracts for separate treatment, Rome I

4. ‘Overriding’ mandatory rules of state of performance, if they render

2. Mandatory rules of lex causae

As the above diagram illustrates and the following discussion explains,

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as well as the substantive limitations represented by shapes ## 3, 4, and 5;

3. Ordre public of forum state

1. Chosen state must have a ‘substantial relationship’ or

ALL CONTRACTS: Non-Waivable Issues

3.2. Geographical Requirements

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conventions49 have eliminated the requirement for a substantial connection

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(hereinafter referred to as ‘small-risk’ contracts).53 Paragraph 3 of Article

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3.3. Substantive Limitations

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3.3.1. Consumer and Employment Contracts

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and which is itself non-mandatory even though it refers to ‘overriding

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4.2. Consumers and Employees

4.3. Passengers and Insureds

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For all practical purposes, the passenger is a consumer who should be

4.4. Other Weak Parties

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5. The Scope of the Choice-of-Law Clause

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Moreover, in some cases, the question is not so much one of contractual

5.1. Substantive or Conflicts Law

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articles grant parties a great degree of freedom to choose the applicable

5.2. Substantive or Procedural Law

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5.3. State Law or Non-State Norms

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from incorporating by reference into their contract a non-State body of