Rome Regulation I

Introduction
 The Rome I Regulation (Regulation (EC) No 593/2008)[1] of the
European Parliament and of the Council of 17 June 2008 on the law
applicable to contractual obligations is a regulation which governs the
choice of law in the European Union.
 The Rome I Regulation can be distinguished from the Brussels Regime
which determines which court can hear a given dispute, as opposed to
which law it should apply. The regulation applies to all EU member
states except Denmark, which has an opt-out from implementing
regulations under the area of freedom, security and justice.
 The regulation sets out which law be used to interpret contracts with an
international element (i.e. contracts agreed by parties in different
countries). Pursuant to its Articles 28 and 29, the regulation came into
force on 17 December 2009 and applies to contracts concluded after
that date (beginning 18 December 2009).
Parties' freedom to choose law
governing their contracts
 Rome I preserves the parties’ right to choose the law that will govern their
contract where this choice is expressly made or clearly demonstrated by
the terms of the contract or the circumstances of the case (Article 3(1)).
 The retention of this freedom of contract has been welcomed by the
shipping industry, as represented by the European Community
Shipowners’ Association, the International Chamber of Shipping, BIMCO
and the International Group of P & I Clubs in their published comments on
the proposed Regulation. These representative bodies have pointed out
that maritime contracts are essentially a matter of private rather than
public law and that one of the prime concerns for commercial entities
engaged in international trade is certainty, particularly with regard to
their rights and obligations under their contracts. That is why maritime
contracts usually contain an express choice of law clause.
Governing law in the absence of choice
 Article 4 deals with contracts where the parties have made no express or implied
choice of governing law. It provides broadly that:
 a contract for the sale of goods shall be governed by the law of the seller's
habitual residence;
 a contract for the provision of services shall be governed by the law of the service
provider's habitual residence;
 a contract relating to land or to a tenancy shall be governed by the law of the
country where the property is situated;
 a franchise contract shall be governed by the law of the country where the
franchisee has his habitual residence;
 a distribution contract shall be governed by the law of the country where the
distributor has his habitual residence;
 a contract for the sale of goods by auction shall be governed by the law of the
country where the auction takes place;
 a contract concluded within an exchange or multilateral system in accordance with
non-discretionary rules and governed by a single law, shall be governed by that
law.
Contracts of carriage
 Article 5 of Rome I deals with contracts of carriage and states that, insofar as the
parties have not chosen the law applicable to their contract, the law applicable shall
be the law of the country of habitual residence (as to which see below) of the carrier,
provided that the place of receipt or the place of delivery of the goods or the habitual
residence of the consignor is also situated in that country. If those requirements are
not met, the law of the country where the place of delivery as agreed between the
parties is situated shall apply.
 As regards contracts for the carriage of passengers, in the absence of choice the law
applicable is the law of the country where the passenger has his or her habitual
residence, provided that either the place of departure or the place of destination is
situated in that country.  Otherwise, the law of the country where the carrier has its
habitual residence shall apply. As regards choice of law by the parties to a contract for
the carriage of passengers, the parties are restricted to choosing between the country
of the passenger’s habitual residence, the carrier’s habitual residence, the carrier’s
place of central administration, the place of departure or the place of destination.
 Article 19 of Rome I defines “habitual residence” as being the place of
central administration in the case of companies and other corporate or
unincorporated bodies. Where the contract is concluded in the course of
the operations of a branch, agency or any other establishment or
performance under the contract is the responsibility of a branch, agency
or other establishment, the place where that branch or agency or
establishment is located shall be the place of habitual residence. For a
natural person acting in the course of a business, the habitual residence
is his or her principal place of business.

However, both Articles 4 and 5 of Rome I contain a “catch-all provision”

which states that in the absence of choice of law, where it is clear from
all the circumstances of the contract that it is manifestly more closely
connected with a country other than that provided for in those Articles,
then the law of that other country shall apply.
Insurance contracts

 Article 7 of Rome I deals with insurance contracts. Other than for life insurance, it provides for
free choice of law for the insurance of large risks (as defined in Article 5(d) of the First Council
Directive 73/239/EEC), whether or not the risk is situated in a Member State. If the applicable
law has not been chosen by the parties, the insurance contract will be governed by the law of
the country where the insurer has its habitual residence. Again, where it is clear from all the
circumstances of the case that the contract is manifestly more closely connected with another
country, the law of that other country will apply (Article 7(2)).

For insurance contracts covering “non-large” risks situated in a Member State, the parties
may choose, amongst other things: the law of the Member State where the risk is situated at
the time of conclusion of the contract; the law of the country where the policy holder has his
habitual residence; and, in the case of life assurance, the law of the Member State of which
the policy holder is a national. A full list of the options is set out in Article 7(3).

It is important to note that Article 7 does not apply to reinsurance contracts. They are
governed by the general provisions regarding freedom of choice and applicable law in the
absence of choice (Articles 3 and 4 respectively).
 Employment contracts

 Article 8(2), which supersedes article 6(1) of the 1980 Convention, says,
 To the extent that the law applicable to the individual employment contract has
not been chosen by the parties, the contract shall be governed by the law of the
country in which or, failing that, from which the employee habitually carries out
his work in performance of the contract. The country where the work is habitually
carried out shall not be deemed to have changed if he is temporarily employed in
another country.
 The significant change is that the applicable law is that of the country "from
which the employee habitually carries out" his or her work. It is intended to cover
workers such as airline pilots who might not work "in" any particular country, but
work "from" a country
Consumer contracts Article 6

 a contract concluded by a natural person for a purpose which can be

regarded as being outside his trade or profession (the consumer) with
another person acting in the exercise of his trade or profession (the
professional) shall be governed by the law of the country where the
consumer has his habitual residence, provided that the professional:
 pursues his commercial or professional activities in the country where the
consumer has his habitual residence, or
 by any means, directs such activities to that country or to several countries
including that country and the contract falls within the scope of such
activities.
Exclusions
 Article 1 contains a list of exclusions from the scope of the Regulation. These include:
 questions involving the status or legal capacity of natural persons;
 obligations relating to family relationships (including maintenance obligations or matrimonial
property regimes);
 negotiable instruments such as bills of exchange, cheques and promissory notes;
 arbitration agreements (which are regulated by the New York Convention) and agreements on the
choice of court (which are regulated by the Brussels Regime);
 matters of company law, including corporate capacity, winding-up and liability of directors and
officers;
 matters of principal and agent;
 trust law;
 pre-contractual obligations (which are regulated by the Rome II Regulation); and
 life insurance contracts.
Renvoi
 Article 20 excludes the application of the doctrine of renvoi in relation to contracts.
Public policy
 Article 21 provides:
 The application of a provision of the law of any country specified by this Regulation may be refused
only if such application is manifestly incompatible with the public policy (ordre public) of the forum.
Scope of applicable law
 Article 12 provides that the applicable law shall govern:
 interpretation;
 performance;
 within the limits of the powers conferred on the court by its procedural law,
the consequences of a total or partial breach of obligations, including the
assessment of damages in so far as it is governed by rules of law
 the various ways of extinguishing obligations, and prescription and limitation
of actions;
 the consequences of nullity of the contract.
 However, in relation to the manner of performance and the steps to be
taken in the event of defective performance, regard must be had to the
law of the country in which performance takes place.
Rome II Regulation
 The Rome II Regulation (EC) No 864/2007 is a European Union
Regulation regarding the conflict of laws on the law applicable to non-
contractual obligations.
 From 11 January 2009, the Rome II Regulation creates a harmonized set
of rules within the European Union to govern choice of law in civil and
commercial matters (subject to certain exclusions) concerning non-
contractual obligations, including specific rules for tort/delict (harm
caused by failure to perform a duty) and specific categories of
tort/delict, unjust enrichment, negotiorum gestio (acting as an agent
without permission) and culpa in contrahendo (misleading negotiation of
a contract).
 Additionally, in certain circumstances and subject to certain conditions,
the parties may choose the law applicable to a non-contractual
obligation.
 Scope Article 1
 This Regulation shall apply, in situations involving a conflict of laws, to non-contractual obligations in civil
and commercial matters. It shall not apply, in particular, to revenue, customs or administrative matters
or to the liability of the State for acts and omissions in the exercise of State authority (acta iure imperii)
 2. The following shall be excluded from the scope of this Regulation:
 (a) non-contractual obligations arising out of family relationships and relationships deemed by the law applicable
to such relationships to have comparable effects including maintenance obligations;
 (b) non-contractual obligations arising out of matrimonial property regimes, property regimes of relationships
deemed by the law applicable to such relationships to have comparable effects to marriage, and wills and
succession;
 (c) non-contractual obligations arising under bills of exchange, cheques and promissory notes and other
negotiable instruments to the extent that the obligations under such other negotiable instruments arise out of
their negotiable character;
 (d) non-contractual obligations arising out of the law of companies and other bodies corporate or unincorporated
regarding matters such as the creation, by registration or otherwise, legal capacity, internal organisation or
winding-up of companies and other bodies corporate or unincorporated, the personal liability of officers and
members as such for the obligations of the company or body and the personal liability of auditors to a company or
to its members in the statutory audits of accounting documents;
 (e) non-contractual obligations arising out of the relations between the settlors, trustees and beneficiaries of a
trust created voluntarily;
 (f) non-contractual obligations arising out of nuclear damage; (g) non-contractual obligations arising out of
violations of privacy and rights relating to personality, including defamation.
 TORTS/DELICTS
 Article 4 General rule
 1. Unless otherwise provided for in this Regulation, the law applicable to a non-
contractual obligation arising out of a tort/delict shall be the law of the country in
which the damage occurs irrespective of the country in which the event giving
rise to the damage occurred and irrespective of the country or countries in which
the indirect consequences of that event occur.
 2. However, where the person claimed to be liable and the person sustaining
damage both have their habitual residence in the same country at the time when
the damage occurs, the law of that country shall apply.
 3. Where it is clear from all the circumstances of the case that the tort/delict is
manifestly more closely connected with a country other than that indicated in
paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer
connection with another country might be based in particular on a preexisting
relationship between the parties, such as a contract, that is closely connected
with the tort/delict in question.
Article 5 Product liability
 1. Without prejudice to Article 4(2), the law applicable to a non-contractual obligation
arising out of damage caused by a product shall be:
 (a) the law of the country in which the person sustaining the damage had his or her habitual
residence when the damage occurred, if the product was marketed in that country; or, failing that,
 (b) the law of the country in which the product was acquired, if the product was marketed in that
country; or, failing that,
 (c) the law of the country in which the damage occurred, if the product was marketed in that
country.
 However, the law applicable shall be the law of the country in which the person claimed to
be liable is habitually resident if he or she could not reasonably foresee the marketing of
the product, or a product of the same type, in the country the law of which is applicable
under (a), (b) or (c).
 2. Where it is clear from all the circumstances of the case that the tort/delict is manifestly
more closely connected with a country other than that indicated in paragraph 1, the law of
that other country shall apply. A manifestly closer connection with another country 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